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Background: The Hyderabad Metropolitan Water Supply and Sewerage Board (HMWSSB) identified obtaining additional water resources as a priority need. Consequently, the HMWSSB designed the Krishna River project with the support of the Government of Andhra Pradesh.
Components and Costs: The project involved extraction, treatment and transmission of water from the Krishna river, near the Nagarjunasagar Dam, known as the Krishna Water Project, Phase I. The Board proposed to draw 5.5 thousand million cubic feet (TMC) from the river with an intake well of 16.5 TMC (or 1275 million litres per day) capacity. The water treatment plant of 410 million litres daily (mld) capacity was to be located 17.7 km from the source and 135 km from the city. The transmission main from the water treatment plant (WTP) was 2.2 metres in diameter, with three enroute pumping stations. The master reservoir at Gungal is 7.7 km from the city, with a total head of 481 metres. The final connection to the distribution system was at the Sahebnagar Terminal Balancing Reservoir. M/s Mott Macdonald, an international consultancy firm carried out the engineering and the environmental impact assessment studies. Tata Consultancy Engineers conducted water quality studies. The base cost for these components was estimated to be Rs 1.25 billion at 1995 prices.
Implementation Arrangements: The project was planned for implementation under a Build-Own-Operate-Transfer (BOOT) arrangement. However, the HMWSSB exercised control over technical design and specified it in great detail, leaving little scope for the bidder to evolve more cost effective solutions.
Procurement Process: The first international tender was invited in June 1995. The tender documents included an outline of the Water Purchase Agreement. Three responses were received in October 1995. Negotiations were conducted with the help of a special team consisting of experts in financial, technical and commercial aspects along with an international consultant Duetsche Morgan Greaphel, with two of the bidders (one had been rejected for lack of experience). Unfortunately, the negotiations did not result in mutual agreement of the concerned parties and the Government of Andhra Pradesh formally closed the process in December 1996.
Current Status (1999): HMWSSB has approached the World Bank and the Housing and Urban Development Corporation (HUDCO) for possible support of implementation of the water supply project. HMWSSB is also working with the World Bank and its Water and Sanitation Program in exploring restructuring of the metro water board and private sector participation. The Board initated measures to improve efficiency by undertaking leakage detection programs, customer service, and re-organization of staff.
Lessons Learned:This case study illustrates the need to shift the focus from bulk water supply to improved management of existing systems. Private sector participation can first help to improve the operational efficiency of existing systems through controlling unaccounted for water, improving billling and collection, and energy savings. Revenues resulting from these efficiencies can then be used to make capital investments. These operational efficiencies, unlike the large bulk water supply projects, can be initiated with small investments and yet have a big pay off.

1) Mehta, Meera (1999), "A Review of Public-Private Partnerships in the Water and Environmental Sanitation Sector in India," Final Report, Department for International Development, New Delhi.
2) "Urban Finance" Quarterly Newsletter of National Institute of Urban Affairs, Vol.2, No.3, September 1999.
3) FIRE project staff update, September 2001.



Private sector participant

Designation: Managing Director
Organisation: Hyderabad Metropolitan Water Supply And Sewerage Board
City: Hyderabad
State: Andhra Pradesh
Pin: 500004
Phone: 040-33394402
Fax: 91-40-3394610



  National Institute of Urban Affairs

National Institute of Urban Affairs, Core 4B, India Habitat Centre,
Lodhi Road, New Delhi 110003, India

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