Engaging the Community

Indian examples

Seshadrinathan Prakash Chief Operating Officer IL&FS India

The context

General Environment

Underdeveloped water and sanitation service Capacity to pay Conflicting interest household, agriculture, industry Lack of singular responsibility (in Government) Poor regulation

Location

INDIA

Tirupur Growth Story

Market Market Products Products

Domestic Domestic

Vest Vest

Indirect IndirectExports Exports Domestic Domestic

U/garments U/garments T Tshirts shirts U/Garments U/Garments T Tshirts shirts Cardigans Cardigans Jerseys Jerseys Pullovers Pullovers Blouses Blouses Skirts Skirts Sportswear Sportswear

Direct DirectExports Exports Indirect Exports Indirect Exports Domestic Domestic

Tirupur An interlinked Cluster

Dyeing & Bleaching Units Processing Units Tirupur Cotton Knitwear Producers Weaving & Knitting Units Embroidery Units Garment Producers 25000 Knitting & Garments making units Local Support Institutions Local Market Tirupur Exporters Association (T.E.A) Ancillary Units Making Thread Buttons Elastic Labels Cones Packaging Bags Packaging Materials Printing Units Specialist Tailors Cotton Spinning units Cotton Ginning Units

Bombay & Delhi based export trading houses

South Indian Research Allocation (S.I.T.R.A.) Foreign Buyers Apparel Export Promotion Council

Two examples

Two projects
Issue Issue Solution Solution

Water Water & &Environment Environment

Integrated Integrated Water WaterProject Project

USD 250 mn

Effluent Effluent & Environment & Environment

Integrated IntegratedEffluent Effluent Reuse Project Reuse Project

USD 100 mn

Water Project Scope

Source Capacity Urban Population Rural/Semi Urban Population Industry Sanitation Coverage Low Cost Sanitation for Slums

River, 60 kms away 185 Mld (250 Mld) 3,46,551 (2001 Census Figure) 4,00,266 (2001 Census Figure) 700 Units 60% of Households of Tirupur

IL&FS Role : Investor, manager, client interface

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The Water Project Structure

IL&FS Project Sponsor GoTN Project Sponsor Users Other Investors

GoTN
Grant of Concession

NTADCL

Service

Water Charges

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USERS

The Water Project Design

Project Model

Industrial users and Government shareholders in the Project SPV All key decisions taken in consultation

Project Design

Benefit community at large (185 Mld surface water + sanitation)

25% capacity for village drinking water 25% capacity for municipal drinking water 50% capacity for industries Improving sanitation in slums and municipality part of the project

Indias first PPP Project

How do we get it done?

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Water Project Benefits

Industry (700 bulk users)

Improvement in quality & availability of water leads to in process improvements and competitiveness Responsible citizen

Public Health (700,000 population)

Improvement in health and hygiene due to availability of treated water

Environment

Recharging and regeneration of ground water aquifer Reduction in TDS levels in effluent with improvements in quality of input water

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Water Project Lessons

Engaging with Government

Support of Government crucial for project implementation Can you strictly enforce contract conditions when Government is a partner? Eg: Ground water abstraction, reduction in subsidy

Engaging with Community

How do you engage with a community which has different benefit perceptions? (Eg: tariff, quality of water) If industrial demand goes down, project becomes financially unsustainable

Engaging with Investors

Heads I win, tails you lose Short term orientation

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Industrial Waste Water Project

Problem Over 700 industries engaged in dyeing & bleaching operations Generates between 100-120 MLD of effluent, with a high content of salt, color and suspended solids Existing treatment processes does not meet standards Adversely affects quality of water in the Noyyal river and the Orathuplayam Dam, which services agricultural demand Solution The Madras High Court came down heavily on the industries and mandated that industrial units implement a zero liquid discharge system

IL&FS Role : Project Manager, arranger of finance and O&M

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Project Design

Project Model

Community Ownership, similar to SHG Part leveraging on Government support

Project Design

Reuse of water essential

To meet environmental obligation Tariff sustainability

Engaging with Indian Courts

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Project structure for waste water

Special Purpose Vehicle

CETP 1

CETP 2

CETP 3

CETP 4

21 Member Units

17 Member Units

15 Member Units

67 Member Units

Three such SPVs were created and financed under the project
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Waste Water Project Benefits

Industry Recovery of water and salt from effluent and reuse in the process Compliance with the regulatory norms Agriculture Substantial reduction in ground water pollution Less dependence on ground water leading to the recharge of aquifers Environment Overall improvement in river and ground water availability and quality

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Waste Water Project - Lessons

Be transparent in dealings

How soon can we complete? Admitting mistakes

Be prepared to go beyond normal duties

responding to litigation in the court, member grievance, regulatory authorities, Government Short term financing

Willingness to engage

Member meetings

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Why it worked?

Water Project

Criticality of water for process Economic costs of the alternative very high Integrated project design User participation

Effluent Project

Legal and environmental pressure on change Economic costs of ZLD comparable with benefits User participation

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Conclusions

Different stakeholders
Industry Government / Politicians A public private community project NGOs Consumer Activists Households Urban/Rural Bankers Investors Developers Agriculturist

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Summary

Select Project based on a clear demand and sustainability A participative institutional structure for Project Implementation Financial commitment from beneficiaries is necessary Continuous communication with the stakeholders Balance risks in a transparent manner amongst the stakeholders Community behavior can be unpredictable

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Thank You
s.prakash@ilfsindia.com