The city of Nagpur is one of the major industrial and investment hubs in Maharashtra. Due to its increasing population and rapid urbanisation, the city is facing a shortage of clean drinking water. Further, potable water is being extensively used for various non-potable purposes, which makes the situation worse.
With a view to overcome these challenges and reduce the stress on freshwater sources, several waste water reuse facilities are being set up in the city. In May 2018, the Nagpur Municipal Corporation (NMC), inaugurated and commenced trial operations on a waste water treatment project involving the reuse of 200 million litres per day (mld) of treated sewage. The project aims to supply the treated sewage to nearby thermal power plants (TPPs) for non-potable use. In this way, it will be able to recover the potable water previously used by TPPs to meet the city’s drinking water requirements. This additional potable water is expected to cater to at least 1.5 million people in the city.
Project background and scope
At present, Nagpur city generates about 550 mld of sewage. In 2014, NMC awarded the contract for augmenting the Bhandewadi sewage treatment plant (STP) capacity to a consortium of three companies including Vishvaraj Infrastructure Limited (VIL). Besides capacity augmentation from 100 mld to 200 mld, the project’s scope of work included the construction of two 75 mld pumping stations at Pioli and Pohra and laying of a 17 km rising main for conveying sewage from the two pumping stations to the STP.
The project was implemented in public-private partnership (PPP) mode on a design-build-finance-operate-transfer basis. As per the concession agreement signed in December 2014, the concession period for the project is 32 years – two years for construction work and 30 years of operations and maintenance (O&M). During the initial two years of construction, VIL will operate and maintain the existing 100 mld plant. Construction work on the plant began in November 2015.
Further, O&M activities at the STP will be carried out through a supervisory control and data acquisition (SCADA) system. The chambers, treatment units, flow regulation and valves, all will be controlled through SCADA. Thus, the plant will require minimal manual intervention.
Use of treated sewage and other by-products
As per the arrangement between VIL and NMC, the former has the right to sell the secondary or tertiary treated waste water to any non-potable user. Of the 200 mld capacity, VIL will be supplying 150 mld of treated water to Maharashtra State Power Generation Company Limited’s Koradi and Khaparkheda TPPs. These plants require low quality industrial standard water for ash handling and cooling towers. Treated sewage can thus act as a good substitute for fresh water in these areas. Meanwhile, NMC is planning to sell the remaining 50 mld of treated water to NTPC’s Mouda thermal power station (TPS). However, a final decision on this is awaited as the Mouda TPS is located 35 km away from the STP and thus NTPC is reluctant to bear the cost of transporting the treated water over such a long distance.
Further, VIL is planning to reuse biogas and sludge, the by-products of the treatment process. Biogas can be further converted into compressed natural gas (CNG). In fact, VIL is in talks with Swedish company SCANIA AB, which is planning to set up a plant to use CNG to run green buses in Nagpur. In addition, VIL is exploring the possibility of generating power from biogas, which can be used for operating the sewage treatment facility. It is also planning to sell the sludge generated by the STP as a biofertiliser.
However, these initiatives require a huge upfront investment in the setting up of a biogas purification or methanation plant and a captive power plant, and procurement of high pressure gas storage cylinders.
Project cost and earnings
The project has been implemented at a cost of Rs 2.36 billion. According to the PPP arrangement, VIL provided 100 per cent capital investment for the project. The Power Finance Corporation (PFC) also extended financial assistance of around Rs 1.93 billion to the city.
The key earnings for VIL include annuity payments by NMC, and revenues from the sale of treated waste water, biogas and sludge. In addition, as per the agreement, VIL is entitled to receive annuity payments from NMC after the completion of construction work. These fixed annuity payments will be made by NMC over a span of 30 years and will cover both the capital and O&M costs incurred by VIL.
According to the PPP agreement, the revenues generated by VIL from the sale of treated sewage will be shared with NMC in the form of royalty payment. The royalty will be calculated based on a pre-decided revenue sharing formula. Therefore, not only will the sale of treated sewage bring in revenues for the private concessionaire, but the royalty will allow NMC to recover the cost it will incur towards making annuity payments.
According to the cost-benefit analysis undertaken in 2016, if out of the 200 mld VIL is able to sell 100 mld of the treated sewage, then the revenue shared with NMC will allow the civic agency to recover its entire annuity costs towards the O&M activities. Further, with the sale of the entire 200 mld of treated sewage, NMC will be able to recover not only the O&M annuity, but also the capital annuity payments made to VIL. At present, VIL has been able to sell 150 mld of treated sewage and is looking forward to selling the remaining 50 mld.
Over the past couple of years, the central government has launched a number of programmes/ schemes for augmenting sewage treatment and collection infrastructure in the country. Schemes like 100 Smart Cities, the Atal Mission for Rejuvenation and Urban Transformation, the Namami Gange Mission and the Swachh Bharat Mission have been designed to help scale up such capacities. The recent growth in the number of projects for recycling and reuse is a result of the government’s focus on improving services in the sewerage sector.
With this development, Nagpur is poised to become the first city in the country to treat 280 mld of sewage water. Moreover, PFC has extended financial assistance of around Rs 1.93 billion to Nagpur Waste Water Management Private Limited, a Vishwaraj group company, to lay a 25 km long pipeline to supply treated sewage water to the Koradi and Khaparkheda TPPs.
Despite these efforts, untreated sewage is still being discharged into the Nag river. In view of the possible to the river, NMC has decided to either develop a third STP in the city or augment the capacity of the second STP. According to reports, NMC is in talks with VIL to augment the capacity of the 200 mld plant by another 100 mld. With the commissioning of the third STP, NMC’s revenues are expected to increase to Rs 500 million per annum.
Most Indian cities are facing similar issues. However, given the poor financial status of urban local bodies (ULBs), funds required to set up treatment facilities have to be mobilised from private sources. In this regard, the Nagpur STP model can be replicated by other ULBs and can be adopted to achieve the twin goals of sustainable water supply and conservation of water bodies.