PPP in Waste Water Management - A

Look at China
Every individual, community, city and nation grows till a tipping
point after which it needs to evolve and adapt to its environment
in order to sustain itself and prosper. With a population of 1.2
billion people and counting, it is safe to say that India has long
reached its tipping point.
At this juncture, any government, right winged or left, would find
itself stressed and lacking resources to provide stable and well
built infrastructure such as roads, health care, electricity, water
and waste management. Even with 2013-2014 witnessing a gross
tax collection of 13.64 trillion (US$210 billion) and not including
regulatory fees collected, our nation struggles to create adequate
systems. One must take into consideration that the Government
needs to provide for several facilities and infrastructure in one
amongst many others such as scientific research, agriculture,
military defence etc. However, the need of the hour cannot be
ignored. It is imperative that citizens have access to basic
necessities such clean drinking water in order to ensure good
health, prevention of diseases and an acceptable standard of
living across various strata of society.. In light of these challenges
a partnership between the Public Sector and the Private Sector is
often a highly sought after solution. A model which allows
governments to execute ambitious projects with the assistance of
privately owned, better managed and streamlined corporations
while overseeing and regulating the projects, PPP (Public-Private
Partnerships) seems like a great way ahead. Yet, over the last two
decades several individuals and organisations seem to have
developed the opinion that PPPs cause more losses and damage.
Perhaps we should look at our neighbour, the Peoples Republic of
China with the eye of a student and with the intention to
benchmark our own PPPs.

With 600 million people residing in 655 cities (as per 2008
reports), China is experiencing rapid urbanisation. If the country
were to follow current trends, just the urban population itself is
projected to pass the 1 billion mark in 2030. This roughly breaks
down to 8 mega-cities with over 10 million human beings in each
of them.
Accelerated growth has come at its own cost. Social, economic
and ecological issues have become a pressing matter for the
Chinese government. Sustainability models which were once
ignored are now being revisited and studied in order to tackle the
obstacles expected in the coming decades.
So what exactly is China doing?
Sector by sector, China is developing Public Private Partnerships.
Wastewater Treatment is at the forefront of their priority list
because of its direct impact on the life of Chinese citizens. With
growing air pollution also becoming a major concern, the
government wants to ensure they resolve the issue of waste
water management as soon as possible. PPP are being considered
for several reasons such as to reduce the inefficiencies of state
run activities and to take advantage of additional financing
brought in by private investors. Their model includes:
1. Methods to ensure that groups of every economic class
receive drinking water
2. Increase in accountability and improvement
governance of managing authorities

in

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3. Allowance for a higher level of public participation

4. Systems which encourage local bodies to take on the tasks
and responsibilities of water management.

It has not been an easy or short path. China began to sow the
seeds for PPP back in the 1990s by deregulating the water sector.
This allowed private and foreign investors to contribute towards
the water supply and waste water management infrastructure.
China has explored several models ranging from complete
privatisation of projects to foreign investors holding majority
stakes in joint ventures
There are currently an estimated 400 water supply and
wastewater PPP projects in the PRC and most of them run on a
Build-Operate-Transfer model, allowing for several private players
to form partnerships. Treatment of waste water from Shanghai,
The Huangpu River and Yangtze River provide surface water
sources for urban areas, the population of which exceeds 17
millions.
The Shanghai ZhuyuanYoulian No. 1 wastewater treatment project
(ZY1WWTP) is the first mega-ton wastewater treatment plant
(WWTP) in Shanghai, which has the capacity of treating 1.7
million m3/day. The JV benefitted from private capital investment,
bank loans and was also assisted by the indirect subsidisation
provided by the local government. bank loans.. It is worthy of note
that in return the JV had to provide an online monitoring system
and allow third-party quality checks. This is a great example of
how important government involvement and vigilance is.
Under these conditions, the plant serves 23.5 million residents
and carries out a minimum treatment of 1.4 million m3 /day.
The service fee that was attached to the PPP is almost
40% below the governments own projected cost.
The Chinese government has been successful in transferring the
financial burden of the project from the public to the private

sector by aligning the performance of the JV to a variable service

fee.
Mr. Arun Lakhani, a leading expert and advisor on PPPs and the
MD of Vishvaraj Infrastructure Limited is a great believer in a
strong and long lasting relationship being formed between the
public and private sector. "Our national highways and
expressways now competing with international standards and
getting international recognition, stand testament to the fact that
Public-Private-Partnerships are a successful model when executed
with equal accountability, efficiency and honesty", said Mr.
Lakhani.
There is much to be learned from our neighbours across the
border and it would be wise of India to pay heed to the rising need
for PPPs in major public sectors. With appropriate regulation,
monitoring and political will the Indian government can give the
Indian Infrastructure scenario the boost it needs to support our
growing nation and compete with other first world countries.