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IFC Helps Structure India’s First Hybrid-Annuity PPP For Sewage Treatment, Boosts National Clean Ganga Mission


In New Delhi:                                                                  
Suveen Sinha                                                                  
Phone: +91 11 41111051                                                

Email:
SSinha10@ifc.org

Tanu Chhabra Bahl                                        

Phone: +91 11 41111064                                            
Email:
TBahl@ifc.org


New Delhi, India, October 11, 2017India’s National Mission for Clean Ganga, and the state governments of Uttarakhand and Uttar Pradesh, today signed the first two agreements with private sector companies to build sewage treatment plants in Haridwar and Varanasi.

IFC and DevCo, a multi-donor facility affiliated with the Private Infrastructure Development Group, helped structure this first public private partnership for sewage treatment using hybrid-annuity payment model.

Under the hybrid-annuity model, the government pays 40 percent of the project cost linked to construction milestones. The remaining 60 percent is paid over 15 years as annuities to the private concessionaire along with operation and maintenance expense. This makes the project more viable for the concessionaire.


In Haridwar, HNB Engineers Private Ltd. won the contract to construct, operate, and maintain a sewage treatment plants with an aggregate capacity of 82 million liters per day (MLD). In Varanasi, a consortium led by Essel Infra Projects Ltd will develop a 50 MLD sewage treatment plant. The construction period for these projects is around 2 years and the operation and maintenance period 15 years.


“These projects are the country’s first two hybrid annuity projects for the development of sewage infrastructure. They will ensure that untreated sewage from these cities does not flow into the Ganga, giving a boost to our flagship Namami Gange program,” said Shri U.P. Singh, Director General, National Mission for Clean Ganga. “With IFC’s help in designing the hybrid-annuity structure and well-balanced bid documents, the projects will increase private sector’s participation in this important initiative.”


Over three-quarters of the sewage generated in the towns and cities flows untreated into the 2,525-km long Ganga river, which is a water source for 400 million people, or 43 percent of India’s population. About 3036 MLD sewage is generated from 118 towns in 11 states. Only 50 percent of this is treated. Successful implementation of this program will help millions by improving the water quality in the Ganga basin.


As the lead transaction advisor, IFC helped design the hybrid annuity structure, balancing public and market risks and creating a competitive bidding process. The market response was unprecedented with Varanasi receiving eight bids and Haridwar, six bids.


“Hybrid annuities are widely used globally to make payments for large-scale infrastructure projects. Adopting these in the sewage sector for flagship Namami Gange program for the first time will help deepen private sector engagement in this vital space,” said Mengistu Alemayehu, IFC’s Director for South Asia. “In partnership with the state and central government, we are introducing a bankable model that can be used to roll out similar PPP projects in more than 100 cities in the Ganges basin.”


Since 1956, IFC has invested in over 400 companies in India, providing $17 billion in financing to the private sector. This is IFC’s biggest portfolio in the world. As part of advisory services, IFC works with the private sector and helps governments design and implement PPPs that are tailored to local needs.

About NMCG

The National Mission for Clean Ganga is an authority under Environment (Protection) Act (EPA), 1986. The key objectives of NMCG are to ensure effective abatement of pollution and rejuvenation of the river Ganga by adopting a river basin approach to promote inter-sectoral co-ordination for comprehensive planning and management, and to maintain minimum ecological flows in the river Ganga with the aim of ensuring water quality and environmentally sustainable development.


About IFC

IFC, a member of the World Bank Group, is the largest global development institution focused on the private sector in emerging markets. Working with more than 2,000 businesses worldwide, we use our capital, expertise, and influence to create markets and opportunities in the toughest areas of the world. In FY17, we delivered a record $19.3 billion in long-term financing for developing countries, leveraging the power of the private sector to help end poverty and boost shared prosperity. For more information, visit
www.ifc.org.

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