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It's all money for the drains... in a Chennai town

Vinay Kamath

CHENNAI, Feb. 20

A UNIQUE experiment in community involvement and private sector participation in a town sewerage project is on at Alandur, a municipality on the outskirts of the city. When it sees the light of day three years hence, it will be one dream that a community looking for a hygienic sanitation system won't mind going down the drain. For, by then, 18,000 households in the municipal area would have forked out Rs. 5,000-6,000 each, while a private construction company would have contributed Rs. 8 crores of its o wn funds to bring a Rs. 34-crore sewerage and treatment project to fruition.

The Alandur project could well become a model for other municipalities and, indeed, two other municipal zones around Chennai, Valsaravakkam and Ambattur, are looking at this experiment and have begun mobilising public support. Like many of the housing co lonies that have sprung up, Alandur has no sanitation system to write home about, a problem compounded during the rains when sewage mixes with the town's water supply. To depend on a resource-strapped government would have meant a long delay.

Ms. S. Malathi, Municipal Administration Secretary, Tamil Nadu, says that after a detailed engineering plan on the sewerage system was drawn up for Alandur, the municipality had to look for means to finance it. ``The public health advantages in a good se werage system perceived by the people in Alandur was so great that it was a driving force for the project; it is very much a demand-driven investment,'' Ms. Malathi told Business Line.

Projects like these, she said, get delayed because of the mismatch between the branch and main sewer work and the sewage treatment plant (STP). While the country's experience in inviting capital investment in a sewerage project is virtually nil, the admi nistration worked out a model where the STP would be given to a private party, to be put up at its own investment, while the contract for the pipelines would also be awarded to it to make the entire project attractive.

In this case, bidding against Subash Projects and L&T, a Hyderabad-based construction company specialising in water and sewage pipelines, IVRC Ltd, bagged the BOOT contract. While it will undertake the pipeline work on behalf of the municipality, the Rs. 8-crore investment for the STP will be from its own funds.

The STP will be set up at Perungudi, on the outskirts of Chennai, and a good 8 km or so away from the Alandur pumphouse which will pump the sewage collected to the STP. The STP will come up on 20 acres of land given as a grant by the municipal administra tion. The project, without this indirect subsidy, would have cost much more.

The Alandur municipality will receive a Rs. 3-crore grant from the State Government for the project. For the rest of the finances, it applied to the Megacity fund of the Centre as well as to the Tamil Nadu Urban Development Fund (TNUDF), which has a Worl d Bank line of credit to fund urban infrastructure projects.

The Megacity fund, set up by the Urban Development Ministry to finance projects in the metros, funds those projects where the agency asking for the aid accesses 50 per cent of the requirement from other sources. The TNUDF also laid a stipulation that at least 50 per cent of those availing of the connections would have to pay upfront for the loan to be given.

The Megacity funds are cheaper at 5 per cent but payable over a 10-year period while the TNUDF loan would come at 16 per cent but with a 20-year tenure. Said Ms. Malathi: ``All of us felt queasy as we had never done a project like this before, people hav e so little faith in the system and asking them to pay up-front was a tall order.''

However, Mr. R.S. Bharathi, Chairman of the Municipality, was unfazed. The zone has a population of 1,65,000 and 26,000 assessments. In a move of resounding public support for the project, 11,400 people had already paid up Rs. 5,000 each till January-end . After January 31, it has been hiked to Rs. 6,000 and Mr. Bharathi is confident that eventually the municipality will receive contributions from at least 18,000 people.

``I had to virtually canvas support like an election rally, addressing public meetings in streets to explain the benefits of this project to the community,'' he said. Close observers of this project say that this kind of public mobilisation is unpreceden ted, especially with a multi-party municipal council in place.

The result of this mobilisation would mean accessing less of debt funds from the loan bodies. From the Rs. 24-crore loan it had planned to avail of, the municipality would need only Rs. 19 crores or even less if the public collections increase.

The project, awarded on a supply or pay contract to IVRC Ltd, assures 12 million litres per day of sewage to the STP. The municipality will be collecting Rs. 150 a month from each household once the drains start flowing. The STP will revert to the munici pality in 14 years' time.

The other interesting facet of this project is that an independent project management consultant appointed by the municipal administration will monitor the project right through the three years to make sure it gets done on time. Monthly updates on the pr oject progress will also be given to the community at large. As the public has contributed, interest is expected to run high.

The administration is watching this project keenly as its success will mean a successful model for other municipalities to follow. In principle, clearances have been given to two other municipal zones, Valsaravakkam and Ambattur, where the advance amoun ts to be collected are Rs. 12,000 and Rs. 9,000 respectively because of the lower density of population.

As Ms. Malathi says: ``Citizens are fairly unwilling to pay, but it's a process of convincing them that you mean business and giving them an assurance that if nothing happens they will get their money back with interest. If Alandur succeeds, it would be a good model.''