Water and Sanitation Program: guidance note Financial Requirements of Urban Sanitation in India An Exploratory Analysis March 2016 The Water and Sanitation Program is a multi-donor partnership, part of the World Bank Group’s Water Global Practice, supporting poor people in obtaining affordable, safe, and sustainable access to water and sanitation services. Financial Requirements of Urban Sanitation in India An Exploratory Analysis Acknowledgments The authors gratefully acknowledge the support provided by the Central Public Health and Environmental Engineering Organization, Ministry of Urban Development, Delhi. The team would like to thank Almud Weitz, Regional Team Leader, Water and Sanitation Program – South Asia for her support and encouragement for the study and the report. The team further appreciates the insights and critique provided by our reviewers. Reviewers included Isabel Blackett, Christiaan Heymans from Water and Sanitation Program; Srinivasa Rao Podipireddy of the World Bank; and A.S. Bhal, Economic Advisor, Ministry of Urban Development. The Task Team Leader for supervising the development of this Guidance Note was Joseph Ravi Kumar. Rajiv Raman was responsible for the research and drafting of the note. The responsibility of all errors and omissions rests with the drafting team. The Water and Sanitation Program is a multi-donor partnership, part of the World Bank Group’s Water Global Practice, supporting poor people in obtaining affordable, safe, and sustainable access to water and sanitation services. WSP’s donors include Australia, Austria, Denmark, Finland, France, the Bill & Melinda Gates Foundation, Luxembourg, Netherlands, Norway, Sweden, Switzerland, United Kingdom, United States, and the World Bank. The findings, interpretations, and conclusions expressed herein are entirely those of the author and should not be attributed to the World Bank or its affiliated organizations, or to members of the Board of Executive Directors of the World Bank or the governments they represent. © 2015 International Bank for Reconstruction and Development/The World Bank Group © 2015 Water and Sanitation Program (WSP) www.wsp.org | www.worldbank.org/water 2 Financial Requirements of Urban Sanitation in India An Exploratory Analysis Table of contents Executive Summary 3 Financial Requirements of Urban Sanitation in India 5 1. Background 5 Policy and Program for Urban Services 6 2. Study Objective 8 3. The model 9 The Working of the Model 9 Data Sources and Limitations 12 4. Financial Requirements for Urban Sanitation 13 Structure of Household Sanitation Arrangements 13 Wastewater Generation and Treatment 14 Projected Financial Requirements 15 Phasing of Financial Requirements 18 5. Conclusion 19 Next Steps 19 Bibliography 20 Annexes: 1. Unit Costs Taken in the Model 21 2. A Brief Comparison with Alternate Projections 23 List of Tables ES1 Investment Requirements for Urban Sanitation during FY 2013-202 (at 2011 Prices) 4 1. Investment Requirements for Urban Sanitation during FY 2013-32 (at 2011 Prices) 15 2. Distribution of Sanitation Facilities across MPCE Quintiles - Urban 17 List of Figures 1. Latrine Facility Accessed by Urban Households – 2011 6 2. Distribution of Household Sanitation Arrangements (2011-31) 13 3. Projected Wastewater Volumes (in million liter per day ( MLD)) 14 A1: Projected Capital Investment Requirements for Urban Sanitation (2012-32) 23 List of Box 1. User Financing in Alandur, Tamil Nadu 16 www.wsp.org 1 Financial Requirements of Urban Sanitation in India An Exploratory Analysis Abbreviations and Acronyms BSUP Basic Services for the Urban Poor MGI McKinsey Global Institute BOT Build-Own-Transfer MLD million liter per day CDP City Development Plan MoUD Ministry of Urban Development CHEEPO Central Public Health and Environmental MPCE Monthly Per Capita Expenditure Engineering Organization NFHS National Family Health Survey CPCB Central Pollution Control Board NSSO National Sample Survey Organisation CT Community Toilet NUSP National Urban Sanitation Policy CSP City Sanitation Plan O&M operations and maintenance DRP Detailed Project Report ODF Open Defecation Free GDP Gross Domestic Product PPP Private Public Partnership GoI Government of India PT Public Toilet FY Financial Year RAY Rajiv Awas Yojana HPEC High Powered Expert Committee SLB Service Level Benchmark HST household-sanitation-transition STP Sewage Treatment Plant IEC Information, Education and ULB Urban Local Body Communication UIDSSMT Urban Infrastructure Development IHSDP Integrated Housing and Slum Scheme for Small and Medium Towns Development Program UIG Urban Infrastructure and Governance JNNURM Jawaharlal Nehru National Urban Renewal Mission UN United Nations lpcd liter per capita per day WSP Water and Sanitation Program 2 Financial Requirements of Urban Sanitation in India An Exploratory Analysis Executive Summary India has witnessed changing trajectories of urban growth in and examining other enabling investments that would need the past and is now poised to more than double its urban to be made. population during the next 20 years. This will be one of the fastest urban transformations witnessed in history, by This document is based on an exercise that used the 2006- sheer numbers. Currently, characterized by partial provision 11 data1 on urban sanitation arrangements to model the of sewerage networks in Indian cities (covering less than a likely changes to household sanitation over the 2011-31 third of households), high proportion of onsite sanitation period. The model has followed the trend elements visible systems (septic tank systems and pit latrines, serving about in the 2006 and 2011 data, and made a few assumptions to 47 percent urban households), and poorly maintained public keep overall trends in line. It also uses unit cost data from and community toilets, the sanitation situation is worrisome. projects compiled at WSP and adjusted to 2011 prices. This It is, in fact, often cited as a cause for poor public health model was supplemented with available data on wastewater outcomes and also poses a danger to the country’s freshwater collection and treatment infrastructure, to examine the resources. infrastructure requirements and hence investment needs. In light of the NUSP, the model also incorporated provisions for increasing household sanitation access and for the The Government of India signaled a response to this safe collection and treatment of excreta from households development and infrastructure challenge of urban India dependent on onsite sanitation. Provision has been made through the launch of a flagship program for urban for awareness creation and capacity building of relevant renewal, infrastructure development, service delivery and stakeholders, supplementing investments in infrastructure. wide-ranging urban sector reforms – Jawaharlal Nehru These are seen as necessary transition period initiatives that National Urban Renewal Mission (JNNURM) – in 2005. would need to accompany the move to an increasingly The JNNURM was followed by the National Urban sewer network-based sanitation infrastructure, during the Sanitation Policy (NUSP) in 2008 that spells out the goal significant time period for its achievement. of citywide safe sanitation provision. In the roll-up to the 12th Five Year Plan, a High Powered Expert Committee The model indicates that following current trends, urban (HPEC), headed by Dr. Isher Judge Ahluwalia, estimated India will more than double – in terms of households – over the financing requirements (report presented in 2011) for the 2011-31 period, and connect an additional 89 million urban infrastructure services over the 2011-31 period. For households to the sewer network. By 2031, households this purpose, the HPEC formulated a strategy for moving using onsite sanitation arrangements will continue to co- sanitation in urban India to a sewer network-based one and exist, but be relegated to about a third of the households. estimated the investment requirements. At the same time, Wastewater collection and treatment capacities will expand the Water and Sanitation Program (WSP), in continuation to capture 74 percent and treat 86 percent of the wastewater with its earlier work of reviewing the state of urban generated. Septage facilities would progressively expand to sanitation services (2008), explored an alternate trajectory, manage the emptying and treatment of the households using keeping in mind the mix of urban sanitation arrangements, toilets connected to septic tanks and pit latrines. 1 The National Family Health Survey (NFHS) data of 2006 and the Census data of 2011 have been used as they provide the best available details of household sanitation arrangements and the time period also reflects the on-ground impacts of the early years of the urban renewal mission initiatives. www.wsp.org 3 Financial Requirements of Urban Sanitation in India An Exploratory Analysis The projected financial requirement for the provision of (2018-22) periods, while the operating expenditure increases urban sanitation is presented for each plan period in Table over the different periods. ES.1. Capital expenditure is estimated for new construction and replacements separately for community sanitation There is a significant share of investment anticipated from (public or community facilities), wastewater collection the household sector – about 30 percent of the total capital and treatment (sewer network and treatment plants) and expenditure – for the urban sanitation transition to happen for household sanitation (individual toilets including new along assumed lines. and for the migration between technology options amongst existing). Similarly, operations and maintenance (O&M) The additional elements of community sanitation facilities expenditure is estimated for community sanitation and the and septage treatment are incorporated to achieve meaningful wastewater collection and treatment components. results during the transition period, provide alternatives to the current practice, and protect freshwater sources urgently. Conclusion The model (Table ES1) estimates a capital requirement of Programmatic support requirements for behavior change, INR 5,193 billion and an operating expenditure requirement administration, capacity building at states and Urban Local of INR 2,647 billion over the 2012-32 period. The loading Bodies (ULBs) and project management support for treatment of capital expenditure is higher in the second five year period facilities are estimated at about 12 percent of capital investments. Table ES1: Investment Requirements for Urban Sanitation During FY 2013-202 (At 2011 Prices) FIVE YEAR PERIOD 2013-17 2018-22 2023-27 2028-32 Total CAPITAL INVESTMENTS DURING FIVE YEAR PERIODS in Million INR New Infrastructure + Replacement Community sanitation 65,991 24,253 20,758 19,555 130,557 Wastewater collection and treatment 616,369 991,437 773,279 638,184 3,019,268 Septage collection and treatment 136,272 318,402 4,428 4,211 463,314 Household investments 365,272 402,608 424,419 387,735 1,580,034 5,193,172 O&M EXPENDITURE DURING FIVE YEAR PERIODS in Million INR Community sanitation 77,806 38,314 14,457 8,991 139,567 Wastewater collection and treatment 363,091 574,413 782,201 777,294 2,496,999 Septage collection and treatment 3,291 7,601 105 99 11,096 2,647,662 SUPPORT COSTS DURING PLAN PERIODS in Million INR Information, Education and Communication 134,888 183,839 158,242 135,841 612,811 (IEC) campaign, administration, capacity building, project development and project management for waste water projects Total Capital + O&M + Support 1,759,689 2,533,266 2,177,784 1,971,811 8,442,550 Source: Model estimates. 4 Financial Requirements Financial Requirements of Urban of Urban Sanitation Sanitation in India An Exploratory in India Analysis 1. Background In the west, urbanization intensified with the advent of the that, by 2030, Indian cities could generate 70 percent of new industrial revolution. However, urbanization in the non- jobs created, account for more than 70 percent of the GDP western world lends itself as a defining feature in the 20th and drive a near four-fold increase in per capita incomes century and later. The pattern of urbanization is also found across the nation (MGI, 2010). However, this positive facet to be different across the developed and developing countries, of urbanization is tainted by the poor quality of life for a with the latter as a group displaying a predominantly rural substantial proportion of the population, and made worse character (World Urbanization Prospects, 2011). Across the by low service levels in sanitation. world’s regions, South Asia is more rural and has significantly lower levels of per capita income than other regions with the Nearly 48 million people residing in urban India defecate exception of Africa and, not surprisingly, displays a modest in the open daily (Census of India, 2011). Urban India is pace of urbanization. However, even with low rates of characterized by partial provision of sewerage networks in urbanization, this presents enormous challenges due to the Indian cities (covering less than a third of households), high pressure on urban services that urban growth causes, often proportion of onsite sanitation systems (septic tank systems exacerbated by high poverty and inequities. and pit latrines, serving about 47 percent urban households) and poorly maintained public and community toilets. Lack India has witnessed changing trajectories of urban growth of space, insecure tenure, economic barriers and scarcity of – an annual rate of growth of 3.5 percent during the 1940s; water combine with behavioral reasons, force a significant followed by a substantially lower rates of growth in the 1950s proportion of the urban poor to bear the indignity of and 1960s, attributed to the adoption of a rigorous definition defecating in the open. This is exacerbated by low provision of urban centers in the Census of 1961; an all-time high rate of facilities for wastewater treatment, existing treatment of annual growth of 3.8 percent during the 1970s; and then facilities working below par, ineffective conveyance of the deceleration in urban growth over the 1980s (3.1 percent) wastewater combined with wrongful release of untreated and 1990s (2.7 percent). The provisional population totals of wastewater to lakes, rivers and water bodies. the Census 2011 indicate that urban growth is picking up again – the annual rate of growth was 3.2 percent during the Only 200 cities/towns in India (of a total 7,933 towns 2001-11 decade. About 31.2 percent of India’s population, according to Census 2011 of which 4,041 are statutory or 377 million people, lived in urban areas in 2011 – having towns) have a partial sewerage network (MoUD, 2010) grown from 286 million in 2001. Indian cities have diversity and even large cities such as Bengaluru or Hyderabad have in size, administrative arrangements,2 socioeconomic a significant onsite sanitation provision (HPEC, 2011). compositions, and are growing rapidly. According to Census 2011, 32.7 percent of the urban population (that is, 78.9 million households) had access to a Urbanization has shown significant positive linkages with piped sewer system (25.78 million households), 47 percent of economic growth. Urban India accounted for 62 to 63 the urban population relied on onsite sanitation (38.2 percent percent of the country’s Gross Domestic Product (GDP) in connected to septic tanks (30.09 million households), 6.4 2009-10. Research by McKinsey Global Institute estimates percent connected to pit latrines (5.60 million households) 2 The HPEC recognized the different institutional realities of municipal corporations (Nagar Nigams), municipalities (Nagar Palikas) and Nagar Panchayats and thus the challenges of governance in the context of the differentiated institutional structure of the third tier. www.wsp.org 5 Financial Requirements of Urban Sanitation in India An Exploratory Analysis FIGuRE 1: Latrine Facility Accessed by Urban Policy and Program for Urban Services Households – 2011 Moving forward from a limited program and policy mandate for urban areas historically, that too concentrated on urban poverty alleviation schemes, GoI launched, in 2008, the 9.96 National Urban Sanitation Policy (NUSP) aiming at totally sanitized, healthy and liveable urban centers sustaining good 4.74 public health and environmental outcomes. It attempted to 2.70 25.78 provide a roadmap for mainstreaming sanitation initiatives towards Open Defecation Free (ODF) cities and integrated 5.60 citywide sanitation for universal access, safe collection and conveyance, and safe disposal/reuse after treatment of all human excreta in urban India. The policy highlighted poor awareness, existing social and occupational aspects 30.09 of sanitation, fragmented approaches to sanitation service provision and the need to take cognizance of demands and Household with latrines - WC to piped sewer preferences of households, while increasing technology Household with latrines - WC to septic tank options and giving due priority to reaching the unserved Household with latrines - WC to pit Household with latrines - other on-site systems and the poor. While the NUSP provides an overarching Household accessing public latrines framework for sanitation, GoI recognizes that sanitation is a Households defecating in open state subject and on ground implementation and sustenance of public health and environmental outcomes requires strong Note: Figures in the pie chart denote households in million. state and city level initiatives (State Sanitation Strategies and City Sanitation Plans (CSPs)). Preceding the NUSP was the and the remaining3 to other onsite systems), 6 percent launch of the Jawaharlal Nehru National Urban Renewal accessed public latrines (4.74 million households) and 12.6 Mission (JNNURM), urban India’s national flagship percent of the urban population still defecates in the open program. (9.96 million households). The existing wastewater treatment infrastructure also needs attention, as treated effluents The JNNURM was launched in 2005 as the national flagship from 46 of 79 sewage treatment plants (under utility/ULB program for urban renewal, infrastructure development, ownership), assessed by the Central Pollution Control Board service delivery and wide-ranging urban sector reforms. It (CPCB) in 2007, failed to comply with the CPCB discharge seeks to build the capacities of cities for management, using standards (CII, cited in HPEC 2011). Also, according to inherent financial and technical resources with adequate CPCB(CPCB, 2009), the installed sewage treatment capacity support from the states and GoI, to create and manage is only 30 percent of requirement, with capacity utilization of infrastructure for providing improved urban services. about 72 percent, thus indicating that only about 22 percent The Mission seeks to achieve the objective of integrated of sewage generated in urban India is treated before disposal. development of cities, for which the cities are required to Similarly, a CPCB study on the Ganga water quality (2009) formulate a City Development Plan (CDP), bringing out a also found that the existing wastewater treatment (Class 1 and long-term vision for the cities and supporting their efforts 2 towns) plants were capable of only treating 44 percent of the through funding of project proposals (11th Five Year Plan, wastewater generated in these towns. The sanitation rating of GoI). The JNNURM is currently limited to 65 cities which 423 Class I cities done in 2009-10 by the Ministry of Urban include mega cities (seven), state capitals (17), other Class I Development (MoUD), Government of India (GoI) revealed cities with populations exceeding a million (11) and 30 other that only 20 cities passed the receiving water quality tests. cities included for their religious or/and tourist importance. 3 The remaining households have latrines that dispose night soil to open drains or are serviced by humans/animals for night soil disposal. 6 Financial Requirements of Urban Sanitation in India An Exploratory Analysis The emphasis of the NUSP is on improving the efficiency of The 11th Five Year Plan estimated the investment needs for existing sanitation infrastructure and service delivery through basic urban services to be INR 1.29 trillion and postulated a participatory, demand-responsive and citywide approach. that 54 percent of this would come from the central sector, Therefore, GoI continues to explore synergies of its various 27 percent from the states, 16 percent from institutions and programs to provide assistance for funding projects proposed external aid agencies, and the remaining (3 percent) through as part of CSPs through its schemes such as JNNURM, private sector investments. Of the central sector share, the Urban Infrastructure Development Scheme for Small and Plan provided an outlay of INR 0.5 trillion over the 2007-12 Medium Towns (UIDSSMT), 10 percent Lump Sum for period and left the balance to be covered from other sources.4 North-Eastern States, Satellite Township Scheme, and so on. About INR 0.47 trillion is reported to have been expended over the 11th plan period (2007-12) from the central sector The JNNURM has four components, namely: outlay (PC, 2011). ƒƒ Urban Infrastructure and Governance (UIG) for Mission Of the 527 UIG projects approved, 151 pertain to water cities; supply, 110 to sewerage and 72 to drainage. In terms of ƒƒ UIDSSMT Basic Services for the Urban Poor (BSUP) costs, water supply, sewerage and storm water drain account for Mission cities; and for 33 percent, 24 percent and 14 percent, respectively, of ƒƒ Integrated Housing and Slum Development Program all approved project costs (KCS, 2011; PC Working Group (IHSDP) for non-Mission cities. Report, 2012). 4 These other sources mentioned include private investments through the Private Public Partnership route and raising finances through the bond market; however, the MoUD has till date sought additional outlays from the Ministry of Finance and the Planning Commission without much success (Report of Standing Committee on Urban Development, April 2012). www.wsp.org 7 Financial Requirements of Urban Sanitation in India An Exploratory Analysis 2. Study Objective The United Nations (UN) Urbanization Prospects report India possesses a mix of onsite and sewered sanitation systems (2009) indicated that the world will become predominantly and that a provision of sewerage networks and treatment urban in a few years. The increasing interest in urban affairs systems would not lead to a mass shift from the user side. (policy and praxis), the renewal mission and the shift in global economic growth towards China and India fuelled Onsite sanitation systems are usually invested in by increased interest in urbanization, services and investment households and maintained by them through access to market needs. Following the history of various committees or service providers (for example, masons, septage collectors, institutions mandated (Rakesh Mohan Committee, 1996; and so on). Apart from state-assisted capital investments HUDCO, 2000) to estimate aggregate levels of total annual (like in the Integrated Low Cost Sanitation Scheme for investment requirements for urban infrastructure, the High the poor households), these capital investments are mostly Powered Expert Committee (HPEC) was tasked (2008) by private and from households. In the coming years, without the Planning Commission to estimate the demand for urban concomitant efforts and investments in behavior change, infrastructural services, along with other issues relevant to the urban household sanitation structure will continue the conceptualization and management of these. to exhibit a mix of different sanitation technologies and arrangements – onsite, sewered, shared/community/public In 2010, McKinsey Global Institute (MGI) brought out its and household ownership. The composition could show report “India’s Urban Awakening,” exploring the evolution variation depending on the incentives provided at the city trajectory of urban India and problems/opportunities that it level through programmatic interventions using behavior would need to cope with or address. The HPEC presented change and market-linked approaches. The objective of this its analysis and recommendations in May 2011. Both study was to review and refine earlier work on financing these initiatives have different treatments of how they have needs of the urban sanitation sector and, based thereon, addressed urbanization (for example, population trajectories project investment requirements for addressing the full cycle vary) and the assumptions that have been made (per capita of sanitation in urban areas, that is, providing universal access water supply requirements, goal of fully-sewered cities, and (for resident households and floating populations), and for so on) for exploring the possible solutions and roadmaps. safe collection, conveyance and treatment of human excreta. Both have been carried out before the publication of Census 2011 results (for household amenities), and all estimates are This exercise does not purport to be an exhaustive estimation, hinged on a composite of assumptions regarding ownership, and can be said to suffer, like other studies above, from transition possibilities and anticipated investments. providing only an aggregative national level picture, albeit, using reasonable assumptions about unit costs, as well as the The Water and Sanitation Program’s (WSP’s) work in 2008 likely sectoral transformation. The picture available from looking at the state of urban sanitation and environmental detailed estimates and Detailed Project Reports (DPRs) sanitation services (Review of Sewerage and Sanitation under CSPs are likely to be different at that scale. Software Intervention in Urban India, 2008) was revisited and reworked and program management costs have been factored in as a to accommodate the newer elements of data – revised norms percentage of the investments estimated for infrastructure of provision, updated/revised unit costs, population totals, creation and maintenance. A further limitation of this review and data on household amenities from Census 2011, and so is that it stops at estimating financial requirements, and does on. This current body of work highlights the issue that urban not delve into the financing sources or models. 8 Financial Requirements of Urban Sanitation in India An Exploratory Analysis 3. The Model The current model estimates investments required from and hence wastewater volumes), but is aligned by the household and state sectors for providing access to sanitation, household-sanitation-transition (HST) assumption. The and creation plus operations of the collection-transportation- HST is a matrix of household sanitation technologies treatment cycle for wastewater volumes projected over the that defines what proportion of new sanitation adopting 2012-31 period. This includes accounting for extending households would choose a particular sanitation treatment access to the currently unserved households; ensuring technology or arrangement – septic tank, pit latrine, sewer provision and access to the new additional households; – and what proportion of existing users are likely to migrate and accommodating for migration of households from (for example, from septic tank to sewer). This is based on one technology to another (for example, from onsite septic available historical data and modulated to accommodate the tank to sewer connection). The model also accounts for latrine stock trends visible over the 2006-11 period. The base wastewater generation, its collection and transportation scenario estimates a transition that is in line with available (network and pumping) and treatment to disposal standards data from the National Family Health Survey (NFHS (safe treatment), and also safe collection and treatment of -2006) and Census of India (2011) for most components septage coming from households to septic tanks. and modulated by the incremental adoption5 of the sewer option annually, along with similar creation of wastewater Both the HPEC and MGI models have estimated slightly collection and treatment capacities. differing population growth trajectories to compute investment estimates. The MGI growth model is reportedly The Working of the Model based on underlying economic growth assumptions (and 1. Population Projection: The model uses simple linear hence urbanizing population), and the sewage model driven trend estimation (from historical data) for plotting the by quantity (and hence water demand and thus population annual urban population over the 2012-31 period. with service assumptions) and coverage (network length 2. Water and Wastewater Quantum: Water supply for population). The HPEC growth model is based on provision is kept at 135 liter per capita per day (lpcd) population increase in urban India trended from the 1981- as per the Central Public Health and Environmental 2001 numbers and sewage model driven by quantity (with Engineering Organization (CPHEEO) norm for stated government service norms) and unit costs derived from demand estimations and 80 percent of this is taken as the JNNURM project database analysis. Thus, both models are wastewater flow, following CPHEEO planning norms. predominantly driven by the population-increase behavior 3. Mix of technical options and arrangements: The and directed by stated goals (that is, 100 percent coverage by sanitation technology and arrangement (use of Public access to sanitation by 2030 in the MGI model and by 2031 Toilet (PT)/Community Toilet (CT)) and baseline in the HPEC model). number/proportion of households resorting to open defecation) is derived from NFHS (2006) and Census The current model – discussed in this paper – is also based (2011) data, and changes estimated for the 2012-31 on projected population increases (and hence households period, with the following assumptions: 5 This amounts to an average of 3.1 million households annually during the 12th Plan period, increasing to 5.6 million during the 15th plan period. www.wsp.org 9 Financial Requirements of Urban Sanitation in India An Exploratory Analysis ƒƒ The new households will adopt sanitation individual sanitation arrangements in its expanded technologies in the same proportion as the structure Rajiv Awas Yojana (RAY) program. Recognizing that of toilet stock in the preceding year, for example, this would require a behavior change, the NUSP since the toilets connected to sewers made up 32.7 advocates the need to raise community awareness percent of the households in 2011, 32.7 percent of and participation as a means to improve sanitation; additional households in 2012 will adopt the sewer ƒƒ A portion of existing households with sanitation option; access make the migration to the sewer option (about ƒƒ Keeping the additional households increment to 3 percent or 2.8 million households7 in 2012 going various toilet technology categories, the transition up to 3.5 million by the end of the 12th Plan period amongst existing toilet technologies – from “pit and onwards to 6.1 million or 4 percent by 2031). latrine” to “septic tanks,” from “septic tanks” to This will be a reflection of a) a greater number of “sewer,” and so on – is modulated to keep to existing households becoming connected to existing sewers, trends – of decrease or increase – visible in the and b) sewers being planned and implemented in analysis of 2006 and 2011 data; new greenfield colonizations, and/or in existing ƒƒ It is estimated that about half of the urban settlements; and population, that migrated over the preceding one ƒƒ The decreasing trends observed in the stock of year for employment or residence from rural areas, households with toilets connected to a “pit latrine”, falls in the lowest four expenditure decile (NSSO, “others” is maintained, as also the decreasing trend of 2008), and could be assumed to be amongst the households with no toilets. This trend of households economically weaker sections. About 20 percent of with no access to toilets could be influenced by the urban households do not have access to safe sanitation pace of city sanitation plans – activated and made within their premises – 12.6 percent resort to open operational – and the provision of community defecation, 6 percent access public facilities and about facilities as discussed earlier. With a stated goal and 1.7 percent dispose excreta into drains or use service operational plan, one could carry out a sensitivity latrines (Census, 2011). There would be a need for analysis on this. At this stage that is not attempted. cities to reduce the number of households resorting to open defecation (12.6 percent plus possibly half 4. Septage Management: In light of the NUSP and of the in-migrant poor) in the short term through advisory on septage (MoUD, 2012), the HPEC the provision6 of communal/public facilities, while trajectories and possible initiatives during the 12th planning for housing and allied initiatives that plan, it is assumed that cities would create septage would ensure movement towards individual latrines treatment facilities to manage the treatment of septage as a longer term solution. Thus, the model assumes from toilets connected to septic tanks. With the the provision of community sanitation or public creation of wastewater treatment facilities in the mission sanitation facilities during the initial period, with cities (accounting for about 42 percent of the urban the need reducing over time. This will happen since population), about 50 percent of the septage arising in BSUP and IHSDP interventions will promote a mix urban areas is assumed to be treated at these sites, and of communal and individual facilities (more of the the provision of septage treatment facilities designed former initially), achieve traction and move towards for 50 percent of the remaining urban households 6 The resolution of all the tenure and economic issues is not felt possible in the short run and hence this two-step resolution. 7 The NFHS (2006) data indicate 18.8 percent of urban households connected to sewers (estimated as 12.6 million households), which has increased to 25.8 million in 2011 (Census, 2011), which indicates an addition of about 2.6 million annually over the five years. Assuming that a substantial reason for this uptake is the grounding of JNNURM, the model has assumed a similar range of conversion. It is also felt that unless proactive steps are taken to ease the process of connection (household investment a major factor), connection rates could taper off and hence fewer households connecting are assumed in the 13th plan. In reality, this obstacle might play out differently with fewer conversions at the earlier stages, followed by increased connections later, but keeping to the aggregate volume over the model period. 10 Financial Requirements of Urban Sanitation in India An Exploratory Analysis with septic tanks. This is felt adequate for handling ƒƒ The household, community and citywide infrastructure pit-emptying and other maintenance loads arising from unit costs are detailed in Annex 1. This note has ‘pit latrines’ and ‘others’, as cities will also need to move attempted to capture the financial requirements for concomitantly to a scheduled emptying/cleaning cycle. various categories of sanitation, which include capital It is also assumed that treatment capacities would be expenditures, operating expenditures, replacement costs ramped up to cover full treatment of existing septage and support requirements in terms of Information, load by the end of the 13th plan period. Education and Communication (IEC), capacity building, and administrative requirements. Annex 1 provides the 5. Wastewater Collection and Treatment: The starting list of capital requirements for sanitation investments, point for wastewater collection efficiency is taken as which have been used in the model estimation. 42 percent in line with the estimates from the Service Level Benchmark pilots and treatment efficiency at 22 Growth and Composition of Technical Options percent as reported by CPCB in 2009. The ramp-up of The transition matrix detailing changes in household collection efficiency – a function of network coverage sanitation arrangements has been derived based on the and connectivity – is geared to cover existing wastewater following assumptions: load captured by the end of the model period (2031); treatment capacities are ramped up to cover fully the ƒƒ The changes in household sanitation structure as of 2011 wastewater arising from sewer-connected households (Census 2011) have been incorporated; and half of the septic tank-connected households (owing ƒƒ The HPEC has indicated a backlog of 65 percent to creation of supplementary septage treatment facilities) uncovered (by sewers) households in urban India (and by the end of the 2022 with even annual increments thus 35 percent households connected to sewers) based thereafter. on their analysis of CDP data and Census data. The current model uses Census (2011) data, indicating a Other relevant assumptions made in the model are: sewer connectivity of 33 percent; and ƒƒ Households with septic tank arrangements will continue Costs to be predominant for some time. Also, survey issues ƒƒ The unit costs for onsite sanitation and community with identifying pit latrines as different from septic sanitation options have been taken from field projects tanks have alerted us to the need to possibly keep over 2001-06 and revised for 2011 prices by factoring8 the composite class9 and ensure that these together for annual inflation @ 6.5 percent; account for about 48 percent. It is to be kept in mind ƒƒ The unit costs for sewerage networks and treatment have that if JNNURM cities push for full (or high) sewer been taken from MoUD where available. The network connectivity, it will only account for 42 percent of the cost (per capita) has been taken from the HPEC estimate total urban population. Keeping current trends, the which has been worked from JNNURM CDP data; model estimates that sewer connectivity will reach 63 ƒƒ The replacement costs for sewerage networks and percent by 2031. In case of a more aggressive trajectory, treatment infrastructure have been taken from norms the anticipated outcomes could be analyzed through followed for design life by CPHEEO (30 years and 15 appropriate sensitivity analysis, which is not attempted years, respectively); and at present. 8 The Reserve Bank of India’s estimated historical average long-term inflation rate is 7.5 percent (Mohanty, 2011). However, a conservative estimate of 6.5 percent has been taken for the model. Appropriate sensitivity analysis can be carried out for other inflation estimators. 9 The households with onsite sanitation arrangements include flush/pour-flush connections to septic tanks (38.2 percent), to pit latrines (7.1 percent), other systems (1.7 percent) and with night soil serviced by humans/animals (0.5 percent) or disposed to drain (1.2 percent). www.wsp.org 11 Financial Requirements of Urban Sanitation in India An Exploratory Analysis Others Data Sources and Limitations The model imposes these assumptions and creates the A simple linear projection in urban population over the transition matrix indicating migration amongst existing 2012-31 period has been considered. Costs have been sanitation users and adoption amongst new households. derived from field/project data10 in the case of onsite and With an estimated population and hence households, the community options, while citywide estimates are pegged at model then estimates the capital investments and operations MoUD unit costs or, if not available, the unit costs derived and maintenance (O&M) expenditure required for by HPEC are used. household sanitation provision (basically CT/PT provision). The household O&M of individual toilets is not captured at The current sparse data on JNNURM implementation present. progress, and poor data on coverage of households by sewers11 at the city levels, make the estimation of trends in sewer- Additionally, the model then estimates wastewater generation adoption a difficult one. It is to be noted the Census 2011 and thereafter calculates the capital expenditure requirements data on households connected to sewers could bear with and O&M expenditure for the collection and treatment of some caution,12 even though this is the most comprehensive wastewater and septage on an annual basis. source of data at present. At the current juncture, the rating of cities on sanitation and the Service Level Benchmarks (SLBs) are attempts by GoI for strengthening data collection and reporting which would help in improved planning. 10 Unit costs for onsite and community sanitation were not available from MoUD or HPEC at the time of model generation. 11 At this point, we have no clear estimate of what the conversion/adoption rate would be for existing latrine owners in urban India where sewer networks are being put in place. 12 A cursory examination of data for the states indicates data showing households connected to sewers in most districts of Kerala. Reportedly, the state has only two cities having working sewerage systems and hence networks. However, households connected to sewers are reported in most districts (14)! 12 Financial Requirements of Urban Sanitation in India An Exploratory Analysis 4 Financial Requirements for Urban Sanitation Structure of Household Sanitation ƒƒ Households using pit latrines continue to be present Arrangements (owing partially to sanitation program support for poor The linear trend assumed with Census 2001 and 2011 households) and increase as a proportion from 5 million provides the base scenario. With the assumptions made (6 percent) to 16 million (10 percent) over the 20 year on technology migration and adoption and the resulting period; transition matrix, the projected distribution of sanitation ƒƒ Households using septic tanks are still significant and arrangements for urban households is detailed in Figure 2. while absolute numbers show a marginal increase – from 30 million in 2011 to 37 million by 2031 – their share As the number of households in urban India increase from decreases from 31 percent in 2011 to 22 percent by 78.9 million in 2011 to 169 million (a factor of 2+) in 2031, 2031; the following changes are signaled by the model: ƒƒ Households using community toilets decrease as a proportion up to nearly zero by 2031 (less than 1 percent); FIGuRE 2: Distribution of Household Sanitation Arrangements (2011-31) 180 160 Number of Urban Households (in Million) 140 120 100 80 60 40 20 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Flush/pour flush connected to sewer Pour flush connected to other Flush/pour flush connected to septic tanks Households accessing community/public toilet Pour flush connected to pit None www.wsp.org 13 Financial Requirements of Urban Sanitation in India An Exploratory Analysis ƒƒ Households using “other” types of latrines increase by households as detailed in Figure 3. The historical marginally over the 2012-31 period, but decrease in performance of collection (network) and treatment has been proportion from about 3 percent in 2011 to less than 2 modulated for an improved performance during the 2012- percent by 2031; and 31 period (see model assumptions, pages 3-4) to estimate the ƒƒ Households connected to sewers increase from 25.8 quantum of wastewater collected and treated safely. million in 2011 to 106.1 million by 2031 (a factor of 4). The estimation follows the existing pattern of collection Unlike the HPEC estimation which assumes conversion of and treatment lagging generation. The total wastewater urban India into a fully-sewered domain over the 2012-31 generated in urban India (which is a function of the water period, this scenario supposes that urban India will continue supply and hence population) from all households increases to have a mix of sanitation technologies and arrangements, from 40,727 million liter per day (MLD) in 2011 to 49,199 with sewer connectivity reaching 63 percent by the end of the MLD by 2017, 55,805 MLD by 2021 and 76,465 MLD 2012-31 period, thus adding about 81 million households to by 2031. The wastewater collected (a function of network this category over the period. expansion and connections) increases from 17,065 MLD in 2011 to 27,994 MLD in 2017, 37,334 MLD in 2021 and Wastewater Generation and Treatment 58,802 MLD by 2031. Wastewater treatment capacities,13 The projected population and the incorporation of the over the period, increase from 9,035 MLD in 2011 to sanitation transition and assumed water supply of 135 lpcd 27,023 MLD in 2017, 39,622 MLD in 2021 and to 69,583 in the urban centers would give rise to wastewater generated MLD by 2031. FIGURE 3: Projected Wastewater Volumes (in million liter per day (MLD)) 58,802 90,000 80,000 76,465 69,583 70,000 37,334 27,994 39,622 60,000 55,805 Wastewater in MLD 18,662 49,199 50,000 42,031 40,000 27,023 30,000 14,640 20,000 10,000 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Years Wastewater Generated (MLD) Wasterwater Collection (MLD) Wastewater Treatment Capacity (MLD) 13 Treatment capacities are assumed to increase faster than collection and conveyance, as the latter has a perceived lag due to pace of network construction and connectivity, a trend visible in the JNNURM cities currently. 14 Financial Requirements of Urban Sanitation in India An Exploratory Analysis It is expected that households with toilets connected to the is anticipated that the mix of onsite and network (sewer) sewer would be discharging their wastewater fully into the sanitation arrangements will exist – even in the future – network, while a portion of the wastewater arising from the unless other variables that decide household connection onsite sanitation category (pit latrines and septic tank toilets) preferences are addressed. These variables include cost and is treated onsite. The wastewater arising from the third other inconvenience factors such as distance to sewer, need category of households – those that have no access to toilets, for significant reworking of household engineering for use community facilities or ‘other’ type of toilets – would be aligning with sewer, so on. managed through the septage treatment facilities created in the interim and graduate to collection and treatment through Projected Financial Requirements the sewer network when the infrastructure becomes available The projected financial requirement for provision of urban and connected. sanitation is presented in Table 1. The financial requirement is detailed for each plan period. Capital expenditure is At present, the collection and treatment are geared – in the estimated for new construction and replacements separately model – to handle the wastewater generated by households for community sanitation (public or community facilities), connected to the sewers and half of the wastewater arising wastewater collection and treatment (sewer network and from households with septic tanks. However, the gap treatment plants), septage collection and treatment, and between generation, collection and treatment would be for household sanitation (individual toilets including new fully addressed only when all households have access to and for the migration between technology options amongst sanitation facilities and these facilities are connected to the existing). Similarly, O&M expenditure is estimated for sewer network or safe onsite sanitation and complemented community sanitation and collection and treatment of by adequate septage clearance and treatment facilities. It wastewater and septage. Table 1: INVESTMENT REQUIREMENTS FOR URBAN SANITATION DURING FY 2013-32 (at 2011 Prices) 2013-17 2018-22 2023-27 2028-32 Total CAPITAL INVESTMENTS DURING PLAN PERIODS in Million INR New Infrastructure + Replacement Community sanitation 65,991 24,253 20,758 19,555 130,557 Wastewater collection and treatment 616,369 991,437 773,279 638,184 3,019,268 Septage collection and treatment 136,272 318,402 4,428 4,211 463,314 Household investments 365,272 402,608 424,419 387,735 1,580,034 5,193,172 O&M EXPENDITURE DURING PLAN PERIODS in Million INR Community sanitation 77,806 38,314 14,457 8,991 139,567 Wastewater collection and treatment 363,091 574,413 782,201 777,294 2,496,999 Septage collection and treatment 3,291 7,601 105 99 11,096 2,647,662 SUPPORT COSTS DURING PLAN PERIODS in Million INR IEC campaign, administration, capacity 134,888 183,839 158,242 135,841 612,811 building, project development and project management for waste water projects Total Capital + O&M + Support 1,759,689 2,533,266 2,177,784 1,971,811 8,442,550 Source: Model estimates. www.wsp.org 15 Financial Requirements of Urban Sanitation in India An Exploratory Analysis Over the 2012-32 period, the financial requirement for community sanitation provision would account for about 3 the proposed capital expenditure (including programmatic percent, and septage treatment facilities about 9 percent. The support) makes up about INR 5,805 billion (69 percent wastewater collection network and treatment systems would of the total requirement including both new infrastructure account for the remaining 58 percent of capital expenditure and replacement of ageing infrastructure), while operating requirements. expenditure accounts for about INR 2,647 billion. In the progressive build-up of sanitation facilities, accounting for The bulk of the operating expenditure requirement (94 the current backlog, capital expenditure is highest during percent) is accounted for by the wastewater collection the 14th plan period (2023-27). Within the requirements network and treatment plants, while 5 percent of the O&M for capital expenditure, the household sector is expected requirements are for the maintenance of citywide community to invest about 30 percent of the capital expenditure sanitation facilities, and septage treatment accounts for less requirements (towards new toilets and transition to different than 1 percent. The operations expenses of septage facilities technologies amongst existing ones), while citywide are anticipated to be covered by household user charges for Box 1: User Financing in Alandur, Tamil Nadu Alandur raised equity funds from the public by way of pump houses, pumping plants, are carried out by the ‘one-time deposits’ or ‘connection charges’, an average municipality. of INR 5,000 per household for the underground sewerage project. About 40 percent of the total project However, the BOT contractor will operate and maintain cost was met by raising equity contribution in this project. the STP during the lease period of 14 years and hand it The state has been following a similar financial model for over to the municipality at the end of the lease period. all the 40 sewerage projects that are being executed. On an average, about 20 percent of the project cost is The financing of the project was done in a unique fashion raised by way of ‘public contribution’, which helps in through the collection of one-time deposits from users. bringing in free money to the projects resulting in a huge The project mobilized one-time deposits in the form of impact on tariffs proposed. connection charges from the citizens of Alandur. Public awareness and support were sought through an extensive Alandur Sewerage Project: Private Public Partnership communication campaign. Over INR 160 million or 40 (PPP) in Sewage Treatment Plant (STP) Development percent of the project cost of INR 350 million came from and Leveraging User Financing such user deposits. Other elements of the funding mix included loans – INR 160 million (46 percent), capital The Alandur sewerage project, initiated in 1996, is the grants – INR 40 million (11 percent) and connection fees first project in India using a PPP framework (Build-Own- – INR 10 million (3 percent). Transfer (BOT) format) and presents a unique case in the area of PPP in the urban sanitation sector. Alandur Eventually the project connected 32,000 users and 43 has a population of approximately 125,000, one-fourth percent of the slum households in the city took individual of which lives in slums. It has developed mainly as a connections. Over 14 CTs were also built as part of the residential suburb of Chennai. The proposed sewerage project for urban poor. A notable feature is the tariff system was to be developed for the targeted population structure, developed on full user charge recovery with of about 300,000 persons and had the following cross subsidies for the poor. The municipality collects components: a) a sewerage network consisting of the differential user charges based on the size of the property. main sewer line, branch sewer line and manholes; b) construction of a sewage pumping station; c) a STP; While the project has faced a number of challenges, and d) low cost sanitation. The construction of the including delays in operator selection for O&M, underground sewerage system was done through an miscommunication on separate upfront payment and engineering, procurement and construction contract connection fee, and so on, it demonstrates the scope and the STP was constructed on a BOT basis. The for implementing sanitation schemes through the PPP O&M of the sewerage system, including sewer lines, route and offers useful lessons in this regard. 16 Financial Requirements of Urban Sanitation in India An Exploratory Analysis the collection, transport and treatment (as practiced in cities Also, the current basis of planning water supply and sewerage currently). The Urban Local Bodies (ULBs) would need to infrastructure, based on population and a supply norm find avenues for requisite funds, or have access to this quantum plus the absence of any reliable estimates for groundwater of funds for sustaining the community/public facilities. use in urban India, is likely to place at risk the investment planning for city infrastructure (Planning Comm. Working The proportion of household investment to make this Group 2012). The water flow within an urban domain is progress on urban sanitation is significant. While some currently assumed to be a norm x population estimate. are households that make transitions across the sanitation However, in reality, urban households depend significantly ladder, others are new households that build sanitation on groundwater directly (own well) or indirectly (through facilities. Amongst these are also the poor households who private water suppliers such as tankers, and so on). Also, seek to access household sanitation. It is felt that the pace cities report significant losses in distribution. So it is moot to of progress on the city-sanitation front would depend assume that something in excess of the official water supply significantly on how household investments are timed and, estimate is what is flowing within the city. What are the hence, there is the possible need to examine options for return flows from this water used? Seemingly, a significant facilitating these, especially for the poor. Incentivization proportion is recharging city groundwater and possibly of access (appropriate connection charges and a user fee also contaminating it (Hunse et al, 2011). Most cities do structure that encourages connection) would be important not have accurate estimates of households connected to the as is the maintenance of credibility regarding network network and there are at least some households that connect performance and sorting out of other issues such as tenure toilet outlets to storm water drains. Estimates like the ones for encouraging connection to network. Possibly, the pilot made by HPEC assume full connectivity, a possibility very BSUP/IHSDP projects would provide useful learning. much untested in the Indian context. The model findings (as Cities in India have been experimenting with a combination also HPEC estimates) highlight the need for a large quantum of measures (see Box 1 for Alandur’s experience) to finance of investments. However, they do suggest that a mix of sanitation investments and also to generate revenue to cover options would be a reality and initiatives to address these are the O&M expenditure. needed for a direction towards the overall goal of a “sanitarily safe” urban India. Adequate information on the emerging Table 2, derived from National Sample Survey Organisation scenarios, through programmed sensitivity-analysis on such (NSSO) data (2009 survey), highlights the fact that amongst models, would provide the answer for ‘what-if ’ questions the lowest Monthly Per Capita Expenditure (MPCE) quintile arising in planning and programmatic design and enable of households, 33 percent are without latrines, while in the derisking of investments that are contingent on a “single next higher quintile 20 percent of households do not have solution” – sewer networks – and open up the need to plan latrines. In other words, of the about 13 percent households and finance transition strategies (for example, community (Census, 2011) not having a latrine, about 11 percent belong facilities, septage treatment, and so on). There are significant to the lowest two quintiles. efforts from the household and private sector in the current TABLE 2: Distribution of Sanitation Facilities Across Mpce Quintiles - Urban MPCE Quintile Class No latrine Service Pit Septic Tank/Flush Others all 0-20 33% 3% 11% 49% 2% 100% 20-40 20% 2% 10% 66% 1% 100% 40-60 10% 2% 11% 76% 1% 100% 60-80 4% 1% 8% 86% 1% 100% 80-100 1% 1% 3% 94% 0% 100% All 11% 2% 8% 77% 1% 100% Source: NSSO, 2010a. www.wsp.org 17 Financial Requirements of Urban Sanitation in India An Exploratory Analysis management of sanitation and wastewater and this needs to low completion rate of projects at the urban centers have been be better understood, to enable a more cohesive effort. reported as the major reasons (CPR, 2013). The anticipated capital investment requirements (including programmatic Phasing of Financial Requirements support) over the plan periods during the 2012-32 period The phasing of financial requirements estimated by the model start with a comparable but higher investment of INR over the plan periods predicates a steady movement towards 697,947 during the 12th plan period, increasing by about sanitation provision and creation of network and treatment a third through the next two plan periods before decreasing infrastructure. The anticipated investments total INR 7,562 in the last plan period. Considering the need to sustain billion over the 20-year period, with public investment and complete works taken up, the history of lower fund coming to about INR 5,982 billion. Of the total investment, utilization and, hence allocation, will need to be addressed. 20 percent of the investments are anticipated in the 12th Plan The financial reforms underway in the ULBs and in the fund period, 26 percent in the 13th plan period, 29 percent in the transfer mechanisms to ULBs will also need to take account 14th plan period and another 26 percent in the 15th plan of the increasing expenditure on O&M envisaged over the period. While the capital expenditure portion increases over period. the 12th to 14th plan periods and then reduces, the operating expenditure estimate increases over the four plan periods. However, going by the goals assumed by the HPEC, this could be accelerated (finishing the backlog of sanitation At the time of the launch of the national government’s investments by 2021) and the fact that city infrastructure flagship program, the JNNURM, the government had investments is likely to approximate a step function (due to committed to an investment outlay of INR 660,850 million economic capacities of STPs), appropriate scenario analysis of over a seven-year period. At the end of the seven year period, possible trajectories could be indicative of different phasing allocations fell short of this commitment, and totaled up to of investments needed. In such scenario analysis, the gross INR 451,006 million (68 percent of commitment). Program investment estimate is not expected to change; however, the management bottlenecks leading to delays in fund release and time periods of investments could. 18 Financial Requirements of Urban Sanitation in India An Exploratory Analysis 5. Conclusion ƒƒ The model estimates a capital requirement of INR 5,193 provide alternatives to the current practice, and protect billion and an operating expenditure requirement of freshwater sources urgently; and INR 2,647 billion over the FY 2012-32 period. Capital ƒƒ Possible variations could arise from the trajectory of expenditure is higher in the 12th to 14th plan periods, sewer-adoption followed and hence is dependent on the while the operating expenditure increases over the approach different plan periods; ƒƒ These investments in infrastructure and operations Next Steps enable increased access to sewer-based networks by ƒƒ As programmatic costs shall need to be added to almost a factor of four (increasing from 26 million these estimates to cover for the softer aspects of ULB households in 2011 to 106 million households in 2031), capacity building, ULB-citizen interfaces, incentives and decrease the number of households without access to (financial and others), it is desirable that a set of household sanitation from about 10 million households programmatic approaches be defined by inputs and to 0.3 million households; outcomes; and the resultant activities estimated for cost ƒƒ There is a significant share of investment anticipated and time to incorporate into alternate scenarios in this from the household sector – about 30 percent of the model; and capital expenditure; ƒƒ Sensitivity analysis for the key inputs – population, unit ƒƒ The additional elements of community sanitation costs (and hence inflation estimate) – and scenario- facilities and septage treatment need to be stressed to building for different trajectories can be developed and achieve meaningful results during the transition period, would assist in program design. www.wsp.org 19 Financial Requirements of Urban Sanitation in India An Exploratory Analysis Bibliography CPR. 2013. Budget Briefs – JNNURM. Accountability Supply and Sewerage sector. Ministry of Urban Development, Initiative. Centre for Policy Research, New Delhi. Vol. 5, Government of India. New Delhi. Issue 7, March 2013. MoUD. 2011. Unit Costs for Water Supply and Sewerage GoI. 2007. Eleventh Five Year Plan. Chapter 11 - Urban Projects. Infrastructure, Housing, Basic Services and Poverty NSSO. 2008. Migration in India, 2007-2008. NSS 64th Alleviation. Planning Commission. Round (July 2007-June 2008). National Sample Survey HPEC. 2011. Report on Indian Urban Infrastructure and Office, National Statistical Organisation, Ministry of Statistics Services. The High Powered Expert Committee (HPEC) and Programme Implementation, Government of India. for Estimating the Investment Requirements for Urban NSSO. 2010a. Housing Condition and Amenities in India, Infrastructure Services. Chair: Dr. Isher Judge Ahluwalia. 2008-09. NSS 65th Round (July 2008-June 2009). National Hunse, T.M. et al. 2011. Hydrogeological mapping of Sample Survey Office, National Statistical Organisation, Bangalore city. Memoir of the Geological Society of India. Ministry of Statistics and Programme Implementation, No. 79. 2011. Editor: Subhajyoti Das. pp. 77-103. Government of India. Lok Sabha.2012. Report of the Standing Committee on NSSO. 2010b. Some Characteristics of Urban Slums, 2008- Urban Development. Lok Sabha Secretariat, New Delhi. 09. NSS 65th Round (July 2008-June 2009). National Mohanty, Deepak. 2011. Changing Inflation Dynamics in Sample Survey Office, National Statistical Organisation, India. Speech by Mr. Deepak Mohanty, Executive Director, Ministry of Statistics and Programme Implementation, Reserve Bank of India, delivered at the Motilal Nehru Government of India. National Institute of Technology (MNNIT), Allahabad on Plannning Commission. 2012. Report of the Working Group August 13, 2011. on Urban and Industrial Water Supply and Sanitation for the Ministry of Finance. 2007-2013. India Budget, Expenditure Twelfth Five-Year Plan (2012-17). Planning Commission, Budget, Vol. 1, Central Plan Outlay for States and UTs. New Delhi. Different Years. Available online at: www.indiabudget.nic.in Planning Commission. 2012. Report of the Working Group MoUD. n.d. Report of the Committee set up to frame on Financing Urban Infrastructure for the Twelfth Five-Year National Sustainable Habitat Standards for the Urban Water Plan (2012-17). Planning Commission, New Delhi. 20 Financial Requirements of Urban Sanitation in India An Exploratory Analysis Annex 1 Unit Costs Taken in the Model A. HOUSEHOLD UNIT COSTS (in INR) Adapted from WSP (2005), adjusted for 2011 Adopted Unit Costs - CAPEX per Household 1 Pit Latrine 13,894 2 WC with Sewer Connection (A+D+E) 10,926 3 WC with Septic Tank (A+D+F) 22,293 4 Sewer Connection 3,570 5 Upgrade Existing Service/Other Latrine to Sewer 4,858 6 Upgrade Existing Service/Other Latrine to Septic Tank 16,225 7 Upgrade Existing PF Latrine to Sewer 4,677 8 Upgrade Existing Service/Other latrine to Pit Latrine 5,756 Note: 1 Unit cost for base year = initial cost + (base year - estimation year) * 6.50 % * initial cost 2 Average family size assumed as 5 persons per household B. COMMUNITY INFRASTRUCTURE COSTS Adapted from WSP (2005), Refer AA29, adjusted for 2011 Adopted Unit Costs - CAPEX per Household 1 Community Toilet Block 7,585 2 Septage Treatment Plant 597 INR/HH Adopted Unit Costs - OPEX per Household 1 Community Toilet Block 1,834 Replacement Costs after Useful Life 1 CT - Useful Life factor 5% 2 Replacement CAPEX per Household 7,585 C. CITY-WIDE ASSETS SEWERAGE Adopted Unit Costs - CAPEX per Household MoUD Norm HPEC Estimate 1 Comprehensive Sewerage Project (network+pumping+treatment) 19,980 20,935 2 Network including Pumping 13,820 3 STP only 3,649 7,165 Contd... www.wsp.org 21 Financial Requirements of Urban Sanitation in India An Exploratory Analysis Adopted Unit Costs - CAPEX per MLD 1 Comprehensive sewerage project (network+pumping+treatment) 33,300,000 2 Network including pumping 27,218,000 3 STP only 6,082,000 Adopted Unit Costs - OPEX per Household/Year MoUD Norm HPEC Estimate 1 Comprehensive sewerage project (network+pumping+treatment) 1,565 2 Network including pumping 3 STP only Adopted Unit Costs - OPEX per MLD/Year 1 Network including pumping 1,204,500 2 Treatment (STP) 1,971,000 Replacement Costs after Useful Life (as percentage of Capex) 1 Network useful life (averaged 20 years) factor 4% 2 Treatment useful life (15 years) factor 6.67% Other Costs (as percentage of CAPEX) IEC campaigning (includes public consultations) 4% Administration, training & capacity building and project development 7% Project management (includes appointing consultants for project 2% management (PMC) for waste water projects only) 22 Financial Requirements of Urban Sanitation in India An Exploratory Analysis Annex 2 A Brief Comparison with household investments. Also, HPEC estimates are factored Alternate Projections at 2009 prices, while the MGI estimate is based on 2008 A brief comparison of the model scenario with the HPEC prices and a currency conversion rate of US$1 = INR 46. and MGI estimates is provided in Figure A1. Also, the model’s estimate is based on a household-transition Note: The model’s estimate includes a household sector between technology options built on historical data and investment of INR 1,580 billion and is estimated at 2011 trended for increased connectivity to sewers. The HPEC and prices. The other estimates project a total investment for MGI models seem to aim for full sewer connectivity over the sanitation infrastructure and do not explicitly mention 20-year period. Figure A1: Projected Capital Investment Requirements for Urban Sanitation (2012-32) 6,000,000 Investment estimate in million Rupees 5,000,000 1,580,034 4,000,000 3,000,000 2,000,000 3,613,139 1,000,000 2,426,884 2,438,000 0 WSP Estimate HPEC Estimate MGI Estimate Capital Investment Household Investment www.wsp.org 23 Notes: Water and Sanitation Program The World Bank Hindustan Times House 18-20, Kasturba Gandhi Marg, New Delhi 110001, India Telephone: (91-11) 41479301, 49247601 E-mail: wspsa@worldbank.org www.wsp.org worldbank.org/water @WorldBankWater