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The total number of water connections in 2005-06 in the city were 27,626 against 41,833
assessed households implying that a large number of connections are not covered
under water charge. There are only twelve residential metered connections in the city
and the number of industrial working metered connections has reduced to 60 over the
years.
Table 2. Connection details by type
Sl. Connection Description 2001-02 2002-03 2003-04 2004-05 2005-06
1 Un-Metered
Domestic 20,569 21,353 21,964 23,612 24,915
Non-Domestic 2,096 2,113 2,134 2,192 2,261
Sub-Total 22,665 23,466 24,098 25,804 27,176
2 Metered
Domestic - - - - 12
Non-Domestic 179 288 369 407 438
Sub-Total 179 288 369 407 450
Total no. of connections 22,844 23,754 24,467 26,211 27,626
Table 4 illustrates the charges levied by ABC municipal body towards water supply.
Table 3. Water Tariff Structure of ABC MB
1
Revision Assessment year, one can observe sizeable increase in the demand figure as result of revision.
2
Both figures under demand (past and current) are taken on net basis that is gross demand less demand
under objection, litigation or under appeal.
3
Tax per assessment is calculated on basis of gross current tax demand and not on net tax demand.
Deposits for After Revision
Before After Revision
New (11/10/2000)
S. Type of Revision (11/10/2000)
Connections
No. Consumer
(Rs) Volumetric Rate
Flat Rate (Rs per year)
(Rs per 1000 litres)
1 Domestic Rs 403 Rs 806 Rs1000 Rs1000
Non Rs 3600 Rs 3600
2 Rs 640 Rs 3580
Domestic
Revenue Expenditure:
As % of Revenue Expenses 49 55 53 45 47 50
As % of Revenue Income 36 47 40 38 35 39
As % of Revenue Expenses 48 33 40 51 43 43
As % of Revenue Income 35 28 30 43 32 34
As % of Revenue Expenses 4 12 7 4 10 8
As % of Revenue Income 3 10 6 4 8 6
Total Revenue Expenditure 347.0 373.3 412.0 406.8 440.6 Cagr 6.15
Total loan outstanding is Rs. 119.6 million. All its existing loans will be repaid by 2011-
12. Except this there are no liabilities of ABC MB.
Table 7. Outstanding Loans
Sl. Particular LIC Banks OMB4 (FIs)
1 Purpose of Loan W/S & UGD WS & UGD W/S and UGD
2 Original Principal Amount (Rs 55.1 82.275 23.46
in crore)
3 Year in which loan was taken 1979-97 2006 1990-2000
4 Repayment Period (years) 25 10-12
5 Interest Rate 8.5 to 13.0% 10.0% 12.75 to 15.5%
6 Balance outstanding as on 14.5 82.275 22.8
31/10/2006 (Rs in crore)
4
Under earlier centralized planning and capital rationing regime ULBs and State Parastatals were allowed
to raise government guaranteed bond from the Market and therefore these bonds were called Open Market
Borrowing (OMB) loans. These bonds had nothing to do with concept of ‘Municipal Bond’ or credit rating
etc. The bonds qualified for SLR and therefore were invested by Banks. Under structural reforms these
bonds have become history.
Table 8. Proposed CAPEX of ABC MB during 2007-08 to 2012-13 (Rs. in million)
Recently ABC
Sector Investment till 2012-13 Municipal Body has
Sl Minimum Desirable for the first time
Name of Service prepared long term
Requirement Requirement
1 Water Supply 1,65.9 360.0 capital investment
2 Sewerage & Sanitation 11,46.0 1400.0 plan which provided
Roads & Urban in side table. This is
3 1,46.0 290.0 spread over a six
Transport
year period starting
4 Storm Water Drains 17.0 50.0 from 2007-08 to
5 Street Lights 50.0 100.0 2012-13. In the light
Solid Waste of the background
6 67.8 100.0
Management information provided
7 Urban Poor/ Slums 3,12.3 400.0 earlier you are
8 Others 10.5 100.0 requested to advise
Total 1915.5 2800.0 ABC MB on following
aspects –
• How much investment (CAPEX) MB will be able to undertake on its own (internal
resources) without any additional (extra-ordinary) grant or any additional borrowing?
• How much investment (CAPEX) MB will be able to undertake with borrowing option?
How much borrowing it can sustain? The loans will be available for the 10 years
period at the rate of 9% p.a. if municipal body demonstrates repayment capacity.
• If higher level governments make grant available at the 50% of CAPEX without any
cap on amount and if the municipal body can put in rest of 50% matching amount
under its national urban renewal program, then how much will be the investment
capacity of the MB? And how much grant it should ask from Government?
Special Note – any additional CAPEX will increase operations & maintenance cost
by 5% of the value of capital stock created.
Special Note - The investment capacity under borrowing option should be
calculated using the debt service coverage ratio (amount of surplus available to
pay interest and to repay principal that is due) and year-on-year surplus. In case
of new debt, the debt service coverage ratio (DSCR) is to be maintained at an
average of 1.75 (cushion of 75% higher inflows after accounting for all committed
outflows) i.e. from 2006/07 to 2011/12.
Property tax and user charges are the only two sources available to improve financial
health of MB to undertake proposed CAPEX. Similarly reduction in expenditure is
another viable measure as generally MB are found cost ineffective. National government
is pushing these three reforms in MB. Infact these will be mandatory reforms if MB wish
to avail grant at the rate of 50% of CAPEX
There are not many examples of PPP in urban services in the country but in other
sectors PPP initiatives have reaped good reasults. Country has put in place PPP
facilitation legislative framework and through unbundling of urban services it is possible
to go for PPP for certain part of total CAPEX. One estimate shows that 25% of Proposed
CAPEX is conducive for PPP initiatives. Private Partner will expect minimum 15% rate of
return on his investment in such PPP initiatives. Please advise MB whether it should go
for PPPand if yes for how much amount.
You are requested to work out financial operation plan for ABC MB (in the matrix of
3X3 )of assumptions and financing option as follows -