Download Corporate Development Task Force Status Report

India Water Markets and Opportunities
A Perspective
Agenda
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Context - CH2M HILL
India Water Market Potential And Drivers
India Water Market Opportunities
India Water Market
Prognosis
• Private And Public Partnership
Drivers And Progress
• Suggested Improvements
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CH2M HILL
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CH2M HILL
Staff Strength
Revenue
•FORTUNE 500
company (Rank
456, 2009)
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CH2M HILL – Leading Mega Programs
London Tideway
Tunnels
London 2012
Olympics
US Forces Korea
Base Location
Interceptor
Sewer, Delhi
Mumbai Airport,
India
UK Crossrail Project
DTSS/Changi
WRP
SewerFix
Panama Canal
Expansion Program
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Puerto Rico
Infrastructure
MASDAR Green City
Abu Dhabi Nuclear Civil
Program
CH2M HILL India – Multi Disciplinary Team
Our India corporate office is located in Gurgaon
• More than 150 multidisciplinary staff with
Sewerage, Program Management, Mechanical,
Electrical, Instrumentation, Urban Planning,
Financial, Institutional strengthening, GIS
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INDIA WATER MARKET
POTENTIAL AND DRIVERS
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INDIA TO REAP BENEFITS OF DEMOGRAPHIC
DIVIDEND
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INDIAN WILL BE THE 3RD LARGEST ECONOMY IN
THE WORLD BY 2050
Real GDP in 2006 (Figures in US$ Bn.)
USA
Estimated Real GDP in 2050 (Figures in US$ Bn.)
12,457
Japan
4,617
Germany
2,829
35,165
US
27,803
India
China
2,225
UK
2,213
Japan
6,673
France
2,132
Brazil
6,074
Russia
5,870
Italy
1,720
Canada
1,122
Spain
1,119
UK
3,782
Germany
3,603
3,148
South Korea
804
Brazil
787
France
India
759
Italy
Source: Dreaming With BRICs: The Path to 2050;
Global Economics; Paper No: 99; Goldman Sachs
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China
2,061
The Recent World Bank Projection of
8% GDP growth for India in 2010,
overtaking China’s projected growth
of 7.7%.
WHOLE OF ASIA – WATER STRESS/ SCARE AREA
BY 2020 – DRIVER
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INDIA WATER MARKET
OPPORTUNITIES
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KEY MARKET TRENDS/OBSERVATIONS
- OPPORTUNITIES
• Annual market in India is up to $6 to $ 8B, growing at 15 to 20%.
• Population growth, migration from rural to urban areas, tightening
regulations and aging infrastructure
• Increasing demand for improvements in the level of services, realisation at
all level that lack of infrastructure to stifle India growth story
• Energy-Water-Environment-Sustainability nexus and optimisation
• Increasing demand for River clean-up, stream, and water bodies restoration
• Funding through local sources (JUNRUM), PE funds, IFI agencies (JBIC,
WB, ADB, USAID etc.)
• Increasing PPP opportunities in Water Sector
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TOI Jun 2008
GWI
Apr 09
WATER SECTOR OPPORTUNITIES
• Water Resources – Dams/ Storage/ Catchment protection
• Ground water - Rain water harvesting/ ASR/ Ground Water
Contamination
• Conveyance, Canal, Tunnels, Pipelines
• Unaccountability for Water “UFW” or NRW, Under Value/ pricing of
water, wastages
• Sewer Conveyance, liquid and solid treatment, Sewer / Wastewater
treatment Rehabilitation
• Inadequate distribution of water resources (infrastructure, irrigation)
• Operations & Maintenance of the water and sewerage infrastructure
Opportunities exist across whole supply chain space… study, consulting,
design, EPC/ DB, Equipment Vendors, PPP projects
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INDIA WATER MARKET
PROGNOSIS
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Water Market Prognosis
• Water business is local and at differing stages of evolution
across India
• Major clients … third layer of Govt agencies ( local ULBs)..
Limited Institutional capacity
• Local market characterised by the “tentative” behaviour by
municipal / government agencies with different degree of
bureaucracy
• “Uncertainty is Certain”
• Cut –throat local competition
• Majority of Clients prefer price to value
• Water is recognised as a one of the national risks along
with energy
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LOCAL ULBs CHARACTERISTICS AND THE
VICIOUS CIRCLE
• Low institutional Capacity, insufficient Financial and Managerial
Resources
• Inadequate Coverage and Low Service Level, Poor O&M
• Low Tariff and High Non Revenue Component, Poor cost
recovery
• Unsustainable Resources Management practices
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PRIVATE AND PUBLIC
PARTNERSHIP
DRIVERS AND PROGRESS
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Need for PPP
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Financial gap…. Lack of Management Accountability
Low Service levels v/s demand for better services
Increasing affordability at least in Metro cities
Skill and Strength Gap ( Engineering, Accounting/ Financial,
Management)
• Unwillingness to adopt new technology by ULBs
• Competition among states to provide better services in a shorter
time
• Increasing willingness on part of Government
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PPP PROGRESS So Far….
Some Success
Some projects
delayed/ Shelved
Momentum
Subsided
Start of Pessimism
Future
Current
Mid
2000
Mid 90s
Early
2000
New Initiatives
Good International
Interest
Not so good results
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New effort to Prepare
PPP project s
Stakeholder
oppositions
High Profile Projects
derailed
Many initiatives
Commercial results
awaited
PPP at inflexion
point
SUGGESTED IMPROVEMENTS
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SUGGESTED IMPROVEMENTS
• General
– Enhance and make transparency on project more visible
– Poor performance track record – too many bad examples of pre bid and
post bid implementations – focus good projects and what went right
• Project Preparation
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Conduct Financial viability and Funding support
Realistic estimate of schedule and cost
Political Alignment
Get professional support if appropriate in-house support is not available
Aim and plan for high quality
Plan based on the real time and contextual data
Selection Based on QFB System
Cost Saving Opportunity
Project Risk Profile
Cost Saving Opportunity
Construction
Planning
Engineering
Start Up and
Commissioning
Procurement
5 to 10%
of Project Budget
40 to 50%
of Project Budget
35 to 50%
of Project Budget
Project Life Cycle Timeline
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+/-5%
of Project Budget
SUGGESTED IMPROVEMENTS
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Procurement
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Do not invite bid if the project is not ready
Quality and fee based selection
Adhering to the planned Schedule and time line
Transparency in the procurements process
Structured process, TOR clarity, quality of documentation, communication,
response times, dead lines etc
– Realistic expectations and appropriate risk allocation (accepted and
understood international standards)
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Delivery
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Timely availability of data
Timely approval / decision and payments
Early involvements of Stakeholders
Establishment of Project Management Unit or project Manager in client
organisation
THANK YOU
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