Public-Private Partnership for Wastewater Treatment and Power Generation
Summary
Nagpur is simultaneously facing water stress due to a growing population and developing industry, along with struggling to treat wastewater due to limited infrastructure capacity. To further support the city's development, there is a significant demand for electricity, which requires water for thermal power generation.
In order to meet the need, the Nagpur Municipal Corporation and the Maharashtra Generation Company entered a public-private partnership under a build-operate-transfer contract that would use municipal wastewater as the source of water for the power plant. There have been significant economic, environmental, and social benefits to this partnership, however, sufficient political support is required for its success.
Water stress is a common problem in most Indian cities, as rapid population growth simultaneously increases water demand from households, industries, and power plants. Nagpur, a large city in central India, has limited sources of freshwater yet has seen the demand increase substantially over the past decade, fueled by population growth and economic development (World Bank, 2019). Further, wastewater treatment capacity in Nagpur is low, with the city generating 425M liters of wastewater per day and the Nagpur Municipal Corporation (NMC) operating one treatment plant with a capacity of 100M liters per day (World Bank, 2019). Another issue the city faces is a need for additional electricity which, in order to scale up, requires large amounts of freshwater for thermal power plants. Due to the high costs associated with the sourcing of additional freshwater, there is a need to explore alternative sources of water. Compounding these issues is the splitting of responsibilities for wastewater services and for wastewater reuse between local governments and various central, state, and local government agencies, respectively (World Bank, 2019).
Intervention
Given the water scarcity in the region, the low municipal wastewater treatment capacity, as well as the high water demand for the scaled-up thermal power plant, and following a 2008 decision to increase its power plant capacity, Maharashtra Generation Company Ltd. (MahaGenCo, which is a major power generating company in the state of Maharashtra and is the largest power producing company in India controlled by a state government [MahaGenCo, 2023]) partnered with NMC to explore the use of wastewater from Nagpur for its operations (World Bank, 2019). The aim was to ensure a regular source of water to the power plant, while Nagpur would reap the environmental, health, and social benefits from extra wastewater treatment (World Bank, 2019). Further, the state government had adopted a policy in 2017 that made wastewater reuse a primary responsibility of municipalities and mandated that power plants within 50km of municipalities buy and use treated wastewater for non-potable uses once available (World Bank, 2019). As a result, the state government has approved public funding to build more wastewater treatment plants in the region and is encouraging a private funding model to support projects.
The partnership between MahaGenCo and NMC took the form of a build-operate-transfer (BOT) end-user contract with a 30-year concession, with the option for extension: NMC agreed to provide raw wastewater and MahaGenCo agreed to be responsible for the transportation and treatment needed to be able to reuse the wastewater effluent from the NMC sewerage system (World Bank, 2019). The investment project included key infrastructure, such as a raw wastewater intake facility, pipelines, a treatment plant with secondary and tertiary treatment, and a one-day reservoir of treated wastewater for back-up (World Bank, 2019). For MahaGenCo, there are significant project benefits, such as the cost savings of using wastewater rather than freshwater to meet the water requirements for power generation (World Bank, 2019). Rather than being responsible for the transport and treatment of wastewater, MahaGenCo elected to use an engineering, procurement, and construction contractor and an operations and maintenance operator through a single-stage competitive tender process (World Bank, 2019).
As the sole end-user of wastewater, MahaGenCo had strong project ownership and management, facilitated by regular communication and coordination with NMC. The capital cost of the project was approximately USD 28M, excluding the cost of land, which NMC agreed to provide in addition to the capital cost of USD 11M (provided by a grant from the Government of India via the Jawaharlal Nehru National Urban Renewal Mission [JNNURM] ). MahaGenCo committed to build, operate, and maintain the wastewater treatment plant and pay NMC a fixed amount of USD 2.25M per year for the raw wastewater (approximately 110M liters/day), and for wastewater flows that exceed the contracted amount, MahaGenCo will pay NMC USD 0.02/m 3 (World Bank, 2019).
Challenges
This project highlighted the importance of sufficient support (political and economic) from government actors and, should there be insufficient support, it is likely that the private sector will not be as inclined to collaborate. Furthermore, PPP contracts are often complicated and need to be properly structured to ensure successful implementation.
Outcomes
In part due to this project, Nagpur is on its way to becoming the first Indian city to reuse more than 90% of its wastewater, supported by concerted government action to promote wastewater reuse (World Bank, 2019). There have been clear economic, environmental, and social benefits. The use of treated wastewater for the power plant is less expensive and more sustainable than freshwater, and NMC is able to secure an additional revenue stream from treated wastewater that can support in covering the operation and maintenance costs of other wastewater treatment plants (World Bank, 2019). Further, the project reduces net freshwater extractions by the power sector, freeing up freshwater resources for other uses (approximately 47M m3 annually), and increased urban wastewater treatment capacity results in cleaner and healthier water bodies (World Bank, 2019). The BOT end-user PPP model ensured that wastewater treatment was being done according to the end user's specifications (i.e., the power plant) and supported strong project ownership and management (World Bank, 2019). Overall, the success of the project demonstrates that wastewater reuse activities can be viable if properly structured and supported by enabling policies and institutions (World Bank, 2019).
References
Public-Private Partnership for Wastewater Treatment and Power Generation
Summary
Nagpur is simultaneously facing water stress due to a growing population and developing industry, along with struggling to treat wastewater due to limited infrastructure capacity. To further support the city's development, there is a significant demand for electricity, which requires water for thermal power generation.
In order to meet the need, the Nagpur Municipal Corporation and the Maharashtra Generation Company entered a public-private partnership under a build-operate-transfer contract that would use municipal wastewater as the source of water for the power plant. There have been significant economic, environmental, and social benefits to this partnership, however, sufficient political support is required for its success.
Water stress is a common problem in most Indian cities, as rapid population growth simultaneously increases water demand from households, industries, and power plants. Nagpur, a large city in central India, has limited sources of freshwater yet has seen the demand increase substantially over the past decade, fueled by population growth and economic development (World Bank, 2019). Further, wastewater treatment capacity in Nagpur is low, with the city generating 425M liters of wastewater per day and the Nagpur Municipal Corporation (NMC) operating one treatment plant with a capacity of 100M liters per day (World Bank, 2019). Another issue the city faces is a need for additional electricity which, in order to scale up, requires large amounts of freshwater for thermal power plants. Due to the high costs associated with the sourcing of additional freshwater, there is a need to explore alternative sources of water. Compounding these issues is the splitting of responsibilities for wastewater services and for wastewater reuse between local governments and various central, state, and local government agencies, respectively (World Bank, 2019).
Issue
Intervention
Given the water scarcity in the region, the low municipal wastewater treatment capacity, as well as the high water demand for the scaled-up thermal power plant, and following a 2008 decision to increase its power plant capacity, Maharashtra Generation Company Ltd. (MahaGenCo, which is a major power generating company in the state of Maharashtra and is the largest power producing company in India controlled by a state government [MahaGenCo, 2023]) partnered with NMC to explore the use of wastewater from Nagpur for its operations (World Bank, 2019). The aim was to ensure a regular source of water to the power plant, while Nagpur would reap the environmental, health, and social benefits from extra wastewater treatment (World Bank, 2019). Further, the state government had adopted a policy in 2017 that made wastewater reuse a primary responsibility of municipalities and mandated that power plants within 50km of municipalities buy and use treated wastewater for non-potable uses once available (World Bank, 2019). As a result, the state government has approved public funding to build more wastewater treatment plants in the region and is encouraging a private funding model to support projects.
The partnership between MahaGenCo and NMC took the form of a build-operate-transfer (BOT) end-user contract with a 30-year concession, with the option for extension: NMC agreed to provide raw wastewater and MahaGenCo agreed to be responsible for the transportation and treatment needed to be able to reuse the wastewater effluent from the NMC sewerage system (World Bank, 2019). The investment project included key infrastructure, such as a raw wastewater intake facility, pipelines, a treatment plant with secondary and tertiary treatment, and a one-day reservoir of treated wastewater for back-up (World Bank, 2019). For MahaGenCo, there are significant project benefits, such as the cost savings of using wastewater rather than freshwater to meet the water requirements for power generation (World Bank, 2019). Rather than being responsible for the transport and treatment of wastewater, MahaGenCo elected to use an engineering, procurement, and construction contractor and an operations and maintenance operator through a single-stage competitive tender process (World Bank, 2019).
As the sole end-user of wastewater, MahaGenCo had strong project ownership and management, facilitated by regular communication and coordination with NMC. The capital cost of the project was approximately USD 28M, excluding the cost of land, which NMC agreed to provide in addition to the capital cost of USD 11M (provided by a grant from the Government of India via the Jawaharlal Nehru National Urban Renewal Mission [JNNURM] ). MahaGenCo committed to build, operate, and maintain the wastewater treatment plant and pay NMC a fixed amount of USD 2.25M per year for the raw wastewater (approximately 110M liters/day), and for wastewater flows that exceed the contracted amount, MahaGenCo will pay NMC USD 0.02/m 3 (World Bank, 2019).
Challenges
This project highlighted the importance of sufficient support (political and economic) from government actors and, should there be insufficient support, it is likely that the private sector will not be as inclined to collaborate. Furthermore, PPP contracts are often complicated and need to be properly structured to ensure successful implementation.
Outcomes
In part due to this project, Nagpur is on its way to becoming the first Indian city to reuse more than 90% of its wastewater, supported by concerted government action to promote wastewater reuse (World Bank, 2019). There have been clear economic, environmental, and social benefits. The use of treated wastewater for the power plant is less expensive and more sustainable than freshwater, and NMC is able to secure an additional revenue stream from treated wastewater that can support in covering the operation and maintenance costs of other wastewater treatment plants (World Bank, 2019). Further, the project reduces net freshwater extractions by the power sector, freeing up freshwater resources for other uses (approximately 47M m3 annually), and increased urban wastewater treatment capacity results in cleaner and healthier water bodies (World Bank, 2019). The BOT end-user PPP model ensured that wastewater treatment was being done according to the end user's specifications (i.e., the power plant) and supported strong project ownership and management (World Bank, 2019). Overall, the success of the project demonstrates that wastewater reuse activities can be viable if properly structured and supported by enabling policies and institutions (World Bank, 2019).
Issues |
|---|
Water Scarcity and Access |
Solutions |
|---|
Wastewater Management & Reuse |
References
Delmon, V. R. (2023, March 15). 5 trends in public-private partnerships in water supply and Sanitation. Public Private Partnership Knowledge Lab. https://ppp.worldbank.org/public-private-partnership/5-trends-public-private-partnerships-water-supply-and-sanitation
Home. MAHAGENCO. (2023, July 27). https://www.mahagenco.in/
Wastewater: From Waste to Resource - The Case of Nagpur, India. World Bank. (2019). https://openknowledge.worldbank.org/server/api/core/bitstreams/3562b938-2903-5c1b-879b-a525ddf4ed96/content