O.

P JINDAL ORGANIZATION

Presented By : S K Chopra, Business Head Date : 17th April 2008

Federation of Indian Chambers of Commerce and Industry

Cityscapes 2008: Convention on Urban Infrastructure

Theme: Innovating Change & Rejuvenating Cities with Public-Private Linkages

Role of Private Sector in Urban Development & JNNURM:

An Integrated Approach of Jindal Water Infrastructure Limited (JWIL) and Jindal Urban Infrastructure Limited (JUIL)

About O. P. Jindal Organization

4th largest Indian industrial group; 2nd largest Indian private steel producer; Four major group companies JSW Steel Jindal Steel & Power Ltd Jindal Stainless Jindal Saw
Jindal ITF Ltd -Water & Wastewater; -Waterborne Transport; -Shipyards, Rail & -Waste Management

Core values Value-based investing - best value Focused on long-term asset appreciation Market capitalization of group now > US$15 billion

JWIL- Functional Expertise Across Five Verticals Serving a Diversified Customers

Residential & SEZs

Industrial Clusters & Estates

Operator & Management Desalination Contracts in Processes Public Utilities

EPC with Operation & Management Projects

Water & Wastewater (W-W) Management

Integrated Water & W-W Management

Integrated Water & Resource Management

Investment & Operator & Management

Supply, Engineering, Commissioning Operation & Management

Multilateral Institutions

Central Government

State Governments

Private/ Corporate

Municipality/ Municipal Corporation

JWIL Focusing on Practices Across Five Verticals

Practice Areas Strategy Benchmarking Benchmarking // Due-Diligence/ Due-Diligence/ System System Assessment/ Assessment/ Technology Technology

Jindal Water Infrastructure Limited is a Specialist Water & Wastewater Infrastructure Development and Management Firm with focus on Five major practice areas

Risk Management Operations Improvement Reform & Restructuring

Processes Processes // E-S-A E-S-A // Resources Resources // Risk Risk modeling modeling // Software Software

Cost Cost Rationalization Rationalization // Process Process re-engineering re-engineering // Institution Institution Building Building

Regulatory Regulatory Framework Framework // P-P-P P-P-P Initiatives/ Initiatives/ Transparent Transparent Governance Governance

Long term O&M

Automation/ Automation/ Ring Ring Fenced Fenced System/ System/ Resource Resource Management/ Management/ Equity Equity

Business Verticals

Residential & SEZs

Industrial Clusters & Estates

O&M Contracts in Public Utilities

Desalination Processes

EPC With O&M

Professional Solutions for Public and Private Sector Clients

CURRENT MAJOR PROJECTS

Barmer Raw Water Conveyance Project

Sitarganj 8 MLD CETP Project

Timarpur-Okhla Waste-to-Energy Project

Client RAJWEST POWER Ltd Private Sector Project Project duration 1 year EPC + 10 years O&M 184 km Length, 1m dia. DI Pipeline 4 Pumping Stations 1250 cu.m per hour Source of Water from IGNP Payment on Milestone basis Fully Automated OFC based SCADA Scheme; Project Cost INR 330 crores

Client- SIDCUL-ELDECO SPV Private Public Project Model; Project Duration 1 Year EPC & 29 Years O&M; Zero Discharge Compliant 8 MLD CETP; Conventional Process Tariff based on KPIs Equity Participation Fully Automated Scheme

Client Govt of NCT of Delhi Delhis First Waste-to-Energy Project generating 20MW Power Technology - Mechanical Segregation, Drying, Densification for production of RDF Pellets Fuel RDF Pellets Operating regime 365 days Plant to be Operational within 670 days

Major Concerns in Urban Infrastructure Sector

Insufficient Financial & Managerial Resources with ULBs/Parastatals/ Utilities; Institutional Delinquencies and High Administrative Overheads Inadequate Coverage and Service Level Low Quality of Service and Lack of Consumer Orientation High Non-revenue Component Wastage Pilferage Unaccounted-for Losses Free Riders Inefficient Operation and Maintenance Poor Monitoring and Cost Recovery Unsustainable Resource Management Practices High Capital And Maintenance Costs

Risks in Water Infrastructure Projects

Market Uncertainties Varying Demand Fluctuating Prices / Land value Procedural Hurdles Land acquisition Land transactions Development permissions / Operational permits Construction Risks Price escalation & cost over-runs Time over-runs Labour unrests

Operational Risks - Tariff and cost recovery Political Risks - Policy Changes - Conflicting political interests Judicial interventions - Court orders / directives - Regulatory Authority

Need for Alternative Models

Government / local administration/ public agencies are unable to meet the increasing demand of infrastructure and services In view of physical and financial resource constraints and concerns of equitable distribution, supply has not been keeping pace with demand. Need for alternative models involving: Commercialization to ensure cost recovery & sustainability Privatization to bring in finance, technology & management capacity Community participation to ensure responsiveness and sense of ownership / involvement Regulatory authorities to ensure integration and co-ordination

BUSINESS POTENTIAL FOR PRIVATE SECTOR

Jawaharlal Nehru Urban Renewal Mission (JNNURM) Long term Commitment by Govt. of India through JNNURM Reform Process at State Level through Financial Commitment Outlay - INR 120,536 crores Focus towards water supply & sanitation, transport, SWM, Urban Poor, slums
ESTIMATED INVESTMENT UNDER JNNURM FOR 63 CITIES (INR Cr) Category Cites Invst. ULBs Contribution Cities > 4 million pop 7 57,143 28,871 Cities 1-4 million pop 28 57,143 17,143 Selected Cities < 1 million Pop 28 6250 625 Total 63 1,20,536 46,639

BUSINESS POTENTIAL FOR PRIVATE SECTOR

Urban Infrastructure Development Scheme for Small and Medium Towns UIDSSMT

Objective:
a) Improve infrastructural facilities and help create durable public assets and quality oriented services in cities & towns; b) Enhance public-private-partnership in infrastructural development; and c) promote planned integrated development of towns and cities.

Coverage:
The scheme will apply to all cities/towns as per 2001 census

Financing Pattern:
Sharing of funds 80:10 Central : State & balance 10% raised from FII; Cities/towns/Para-statals will be sanctioned project-based grants/loans, additional resources from financial institutions/private sector/capital market. Admissible Components: Water Supply (incl. Desalination Plants) and Sanitation Services; Sewerage and Solid Waste Management; etc

This scheme is admissible to all the States except JNNURM Towns/ Cities

ROLE & POTENTIAL OF PRIVATE SECTOR IN JNNURM

Stages
CDP

Current Status
Complete

Role for Private Sector

No Role

Nature of Role
None

DPR

Partially Complete/ Continuing Partially Started

Role Can Start

Technology/ IWRM PMC/ Resources Utility Operator as per KPIs VGF/ BOOT/ Take Burden of ULBs/ States Share

Works

Substantial Role

O&M

Yet to Start

Substantial Role

Financing

Fund Allocation as per Category A, B & C (50, 70 & 90 %)

Substantial Role

No of Cities in Phase-1

- 63 Nos.

Commercialisation to Privatisation
Need for unbundling of projects to facilitate private participation
Potential Unbundling Packages (a Partial List) WATER SUPPLY

Integrated Water resource management & Development of source Extraction, Conveyance & Treatment of Water and Bulk Supply - Water Purchase Agreement Distribution / Operation, Maintenance and Management (O&M) Billing / Revenue Collection
SANITATION

Sewerage network (Collection & Conveyance System) STPs/ Pumping Stations (Installation and O&M) Recycling & Reuse of Recovered Wastewater (for Industrial Processes)
SOLID WASTE MANAGEMENT

Collection, Separation and treatment Distribution of by-products (scrap material, manure, fuel pellets) Biomethanation Waste-to-Energy

APPROACH TOWARDS PPP INITIATIVES

Proposed PPP Model Poor O & M and Services Improving Infrastructure & Service Coverage Private Financial Institutions will not invest Private Financial Institutions willing to invest Improving O&M Services Higher Tariff and Cost Recovery

Low Tariffs and Poor Cost Recovery Deteriorating Infrastructure and Service Coverage

JWIL/ JUILs Focus Towards Well Run Utility

Customer orientation

reporting & listening to clients

being answerable to another party for Accountability policy decisions, for the use of resources, and for performance being independent to manage professionally without arbitrary interference by others

Autonomy

JWIL/ JUILs Focus Towards Well Run Utility

financial financial

political

strategic
Space to maneuver

political

strategic
Space to maneuver

technical

technical
Perceived Trend

Current Trend

JWIL/ JUILs Focus Towards Well Run Utility

.. from traditional hierarchical set up to flatter decision-making structures

Hard measures
Business plans Systematic reporting between various levels Incentives (rewards and penalties) to achieve welldefined performance targets Standard processes, streamlined procedures Cost accounting techniques that link resources to outputs Outsourcing, market testing Benchmarking

Soft measures
Training to improve staff skills Strong corporate culture Moral and behavior norms that inspire staff and management to excel Clear vision and mission statements Shaped by top management

JWILS TYPICAL TEMPLATE FOR PROJECT IMPLEMENTATION FRAMEWORK FOR PROJECTS UNDER P-P-P INITIATIVES
Consultancy & Planning Services Period - 6 to 8 months
Benchmarking & baseline data generation Surveys and Investigations Technical, Financial, Envn., Socio-economic Studies Detailed Project Report (DPR) with Capital Investment Plan (CIP)

Development / Rehab / Modernization / Works Period - 14 to 18 months

Detail Engineering Support Rehabilitation, modernization and Works Implementation Centralized Complaint Redressal Centre Automation works

Operation, Management & Maintenance Period - 20 to 30 years

Operation, Maintenance and Management of Schemes Billing & Revenue Collection Complaint Redressal as per KPIs Training and Capacity Building

CONCLUSION
JWIL Approach to Achieve: Institutionally, Every Individual Project to look like a Corporate Body Follow an Efficient and Transparent Governance System Technically, Improved Water and Wastewater Management Reduction of Pollution Regional Levels Reduction in failures of incidents of civil, electrical and mechanical equipments Financially, 100% Recovery of Revenue and Bills from stakeholders Fully Computerized Finance Management and Billing System Ring Fence Budgeting System for all Components Public Participation and Public Awareness Mainstreaming of all Stakeholders (especially SME) in this program Efficient and Centralized Complaint Redressal System Operation Management and Maintenance Independent Operation and Maintenance (O&M) Cell and Pollution Monitoring and Management Teams On-the-job training to Client/ Industrys Seconded Staff

Thank You

References: Government of India; State Governments of Gujarat, Rajasthan, Maharashtra, AP, NCT of Delhi; The World Bank Group ADB HUDCO IFC

Contact Address: Jindal Urban Infrastructure Limited 28, Shivaji Marg, New Delhi. PIN 110015. India P: +91-11-30589700 F: +91-11-30589766 E: info@jindalurban.com W: www.jindalurban.com

Contact Address: Jindal Water Infrastructure Limited 28, Shivaji Marg, New Delhi. PIN 110015. India P: +91-11-30589700 F: +91-11-30589766 E: info@jindalwater.com W: www.jindalwater.com