Centre’s hybrid-annuity model to be tested in Ganga clean-up
After reviving private sector participation in the infrastructure sector, the Centre’s hybridannuity model will be put to the test during the Ganga’s cleaning and rejuvenation.
This model has been adopted by the Ministry of Water Resources, River Development and Ganga Rejuvenation for creating sewage treatment infrastructure in 97 towns across the country.
The list of 97 towns includes 20 big towns in the country, including Kanpur, Allahabad, Haridwar and Patna. These hybrid annuity contracts for sewage treatment are usually 15-year ones where construction, operation and maintenance is done by one agency.
Forty per cent of the capital cost quoted is payable on completion of construction while the balance 60% will be paid over the life of the project as annuities along with operations and maintenance (O&M) expenses. The finances will be disbursed to the private company over the 30-month gestation period of the contract.
In this model, the concessionaire will invest in the construction of treatment infrastructure using his own equity and debt funds from financial institutions.
“A condition analysis assessment was done by international consultant Atkins (design, engineering and project management consultant) and based on the analysis we adopted the hybrid-annuity model,” Rajiv Ranjan Mishra, director general of National Mission for Clean Ganga (NMCG) said.
Earlier, these sewage treatment plants were executed on design, build, operate and transfer (DBOT) basis but it failed to attract adequate bidders. So, the government opted for this model. Companies like Essel Infra, Shapoorji Pallonji, Triveni Engineering and Toshiba are executing these contracts.
“We have relaxed the norms for participation of foreign players for these contracts,” Mishra said.
Mishra added that the earlier Central Public Works Department (CPWD) manual said only foreign players which had prior experience of executing such sewage treatment plants were allowed to bid for such contracts in India.
The central government feels that the challenges faced during the previous efforts to clean the Ganga lacked ownership, had lesser support for sustainability of assets and showed sub-optimal performance of the treatment infrastructure.
However, Himanshu Thakkar, coordinator for South Asia Network on Dams, Rivers & People, said, “The minister said on May 10 that by March 2019, 70-80% of the Ganga will be cleaned and that by December 2019, Ganga will be 100% clean. However, on ground there was no immediate sign of improvement in the state of the Ganga. None of the actions of the NMCG were a break from the past. At no stage was there even an honest attempt to review past actions to learn as to what works and what does not.”
The Namami Gange project was launched with a cost of ~200 billion, including ongoing commitments of ~72 billion and new initiatives of ~128 billion.
Nearly 65% of the fund allotment for the new initiatives has been earmarked for sewage treatment infrastructure. NMCG was registered as a society on August 12, 2011, under the Societies Registration Act 1860.
It acted as the implementation arm of National Ganga River Basin Authority (NGRBA) which was constituted under the provisions of the Environment (Protection) Act (EPA), 1986.