WATER GLOBAL PRACTICE Wastewater: From Waste to Resource The Case of Nagpur, India Treating Wastewater for Reuse in Thermal enforcement of mandatory water reuse targets for Power Generation industries. The national target is to treat and reuse Context 50 percent of total wastewater by 2022 (PwC 2016). Water stress has become a problem in most Indian Some cities have set their own, more ambitious targets, cities, as rapid population growth increases simul- and states such as Gujarat (Government of Gujarat, taneously water demand by households, industries, 2018) and  Maharashtra (IndianExpress, 2017) have and power plants. Utilities need to meet this growing implemented new policies to promote wastewater demand while ensuring fair tariffs for users and pro- reuse. Moreover, the government of India has adopted moting a sustainable use of water resources. policies, established strong mechanisms of regulation, ­ and provided funding for various programs, such as As federal and state governments look for innovative the Jawaharlal Nehru National Urban Renewal Mission alternatives to freshwater, the reuse of treated waste- (JNNURM), to enable municipal authorities to enter water is gaining attention and being promoted at the into public-private partnership (PPP) arrangements federal and state levels. In addition to the environmen- to attract private funding. As a result, municipalities tal, health, and social benefits of treating wastewater; across the country have started to implement waste- treated wastewater can become a reliable water source water reuse projects. Most of these initiatives are led for industrial users, freeing up freshwater resources by utilities, through partnerships with the private sec- for households and helping address water scarcity in tor, and with the central government covering part of big cities. the capital costs. The success of these projects reveals The government of India has taken steps to promote that wastewater reuse activities can be viable if prop- wastewater reuse, starting with the regulation of erly structured and supported by enabling policies industrial water consumption and the setting and and institutions. 1 This note focuses on the case of Nagpur. Nagpur is the The partnership took the form of a build-operate- largest city in central India. It has considerable politi- transfer (BOT) end-user contract with a 30-year cal and geographical importance but limited sources of concession, with the option for extension. NMC agreed freshwater. Demand for water increased substantially to provide the raw wastewater, and MahaGeCo agreed over the decade before the project due to population to be in charge of the transportation and treatment growth and economic development. Large amounts of needed to be able to reuse the wastewater effluent freshwater were used to generate electricity in thermal from the NMC sewerage system. The contract was power plants owned and operated by the Maharashtra developed to ensure a regular source of water to the Generation Company Ltd. (MahaGenCo) . To meet 1 power plant (the raw wastewater) while providing NMC increasing electricity demand, in 2008 MahaGenCo with a constant stream of revenue from MahaGenCo decided to increase its power capacity, a move that (in the form of raw wastewater fees). The city would required additional water supply for its operations. also reap the environmental, health and social benefits Before the project described below, wastewater treat- from the extra wastewater treatment. ment capacity in Nagpur was low. The city generated The investment project included a raw wastewater around 425 million litres a day of wastewater. However, intake facility with a pumping station of 130 million the Nagpur Municipal Corporation (NMC) had only one liters per day, a 2.3-kilometer pipeline to the wastewater wastewater treatment plant, with a capacity of just treatment facility, a wastewater treatment plant with 100 million litres a day (ICLEI 2010). Given the water secondary and tertiary treatment to meet MahaGenCo’s scarcity in the region and the heavy water demand water quality requirements, a 16.2-kilometer pipeline for the upcoming power plant, MahaGenCo decided from the wastewater treatment plant to the power to partner with NMC to explore the use of wastewater plant, and a one-day reservoir of treated wastewater at from Nagpur for its operations. the Koradi Thermal Power Plant for back-up (figure 1). CHALLENGE The fact that MahaGenCo was the only end-user of Water scarcity wastewater ensured strong project ownership and Low wastewater treatment capacity management, which were facilitated by regular Increased water demand for the power sector communication and coordination with the municipal OBJECTIVE OF THE REUSE PROJECT authority. There was no bidding process, because the Diversify water supply sources by incorporating alternative MahaGenCo directly approached NMC and selection sources (treated wastewater) and invest in sanitation and was done on a sole-source (nomination) basis (FICCI wastewater infrastructure for the city. Water Mission and 2030 WRG 2016). The collaboration between NMC and MahaGenCo ensured that the Solution: The Build-Operate-Transfer End-User synergies of wastewater treatment and reuse were Public-Private Partnership Model fully exploited through the contractual arrangement. The water reuse project, which came into operation in 2015, reuses municipal treated wastewater from An important aspect of this project is that MahaGenCo Nagpur for cooling purposes in the new power plant did not undertake the transport and treatment of (the Koradi Thermal Power Plant) built and operated the wastewater but instead selected an engineering, by MahaGenCo. MahaGenCo and NMC signed a procurement, and construction  (EPC) contractor Memorandum of Understanding in 2008 “Construction and an operations and maintenance (O&M) operator and Operating Agreement of Treatment and through a single-stage competitive tender (FICCI Water Transmission Facilities for Reclaimed Water Usage”. Mission and 2030 WRG 2016). 2 Wastewater: From Waste to Resource FIGURE 1. Diagram of the Nagpur wastewater reuse project Secondary and Tertiary WWTP WASTEWATER One day Storage 2.3 km pipe reservoir Power Plant TREATED WASTEWATER 16.2 km pipe Source: adapted from Sharma, 2013. Note: WWTP = wastewater treatment plant Financial and Contractual Agreements concession period (ITAC, 2019). This income represents The capital cost of the project was about INR 195 crore twice the amount of depreciation of the asset and (US$28 million), excluding the cost of land, which NMC allows NMC to cover the operating and maintenance agreed to provide. NMC also agreed to cover part of the cost of the existing wastewater treatment plant in capital cost with a grant of INR 90 crore from JNNURM. Bandewhadi and the cost of some rehabilitation works. MahaGenCo agreed to finance the rest and to assume Benefits of the Wastewater Treatment Project in cost overruns (FICCI Water Mission and 2030 WRG 2016). Nagpur, India MahaGenCo committed to build, operate, and maintain the wastewater treatment plant and pay NMC a fixed Economic Environmental and social amount of INR 15 crore (US$ 2.25 million) a year for the • For the power plant. Treated • The project reduces net raw wastewater (110 million liters a day). For flows that wastewater is less expensive, freshwater extractions by of more consistent quality and the power sector, freeing up exceeded the contracted amount, MahaGenCo agreed quantity, and more sustainable freshwater resources for other to pay NMC INR 2.03 per cubic meter of raw wastewater. than freshwater. The power uses (around 47 Mm3 per plant pays INR 3.4 instead of annum (Sharma, 2013)). The benefits of the deal to MahaGenCo are the cost INR 9.6 per cubic meter of • Increased urban wastewater savings of using wastewater rather than freshwater water. Using wastewater also treatment capacity results in to meet its water requirements. The treatment and results in increased resilience to cleaner and healthier water droughts, reducing supply risks provision of water through this arrangement cost bodies, with the associated • For NMC. The revenue stream environmental and social Mahagenco about INR 3.4 (US$0.05) per cubic meter from treated wastewater fees benefits (Sharma, 2013). Its costs would have been significantly can cover the O&M costs of • The project serves as model higher if it had sourced fresh water from another other wastewater treatment for other cities and states to municipal or irrigation project (about INR 9.6 (US$0.13) plants. follow. per cubic meter for recent projects) (World Bank 2016). Institutional and Policy Environment For NMC, given that its investment was a grant from Local governments in India are responsible for the JNNURM program, the royalties from the sale of providing wastewater services. Various central, state, wastewater to MahaGenCo represent an extra revenue and local government agencies regulate wastewater stream of nearly INR 400 crore (US$ 60 million) over the reuse (Figure 2). Wastewater: From Waste to Resource 3 The key policy documents supporting wastewater the country’s environmental objectives and encour- reuse throughout the country include the following ages the reuse of reclaimed water over freshwater (ECA, 2019): through preferential tariffs. • The Water (Prevention and Control of Pollution) State policies: In 2017 the State of Maharashtra adopted Act of 1974 sets out norms for sewage and indus- a new policy that makes wastewater reuse a primary trial effluent discharges. It mandates that indus- responsibility of municipalities and directs them to tries and local bodies treat wastewater to a draft action plans to increase wastewater reuse (NDTV, specified quality level before discharging it. 2017). To make the projects economically viable, the • The National Urban Sanitation Policy of 2008 pro- state government mandates that power plants and industrial units located within 50 kilometers of the motes the reuse of recycled water. It suggests a min- municipalities buy and use treated wastewater for imum target of 20 percent wastewater reuse in every nonpotable uses once it is available. Public funding has city. been approved to build more wastewater treatment • The National Water Policy (2012) recognizes the plants in the region. However, the government is also importance of reusing treated wastewater to meet encouraging a private funding model. FIGURE 2. Institutional framework for municipal wastewater reuse in India Ministry of Ministry of Urban Ministry of water resources Development (MoUD) Environment Central Public Health and Central Pollution Central Ground Namami Gange Environmental Engineering Control Board Water Board Mission Organisation (CPHEEO) (CPCB) Department of State State Pollution Municipal water boards Control Board Administration Urban Urban local water utilities bodies (ULBs) Domestic and industrial water consumers Source: PwC 2016. 4 Wastewater: From Waste to Resource Lessons Learned explore other options, such as the reuse of treated Thanks in part to this project, the city of Nagpur is wastewater. on its way to becoming the first Indian city to reuse • The proximity of the power plant to the wastewa- more than 90 percent of its wastewater.2 Many factors ter treatment plant, which lowered water trans- contributed to the project’s success, which became a port costs. catalyzer for the development of other wastewater reuse projects in the city: Notes • A 1. Thermal power plants require water for cooling purposes. More infor- well-designed contractual arrangement facili- mation on the water requirements of power plants can be found in tated clear project ownership and management by the website of the “Thirsty Energy” Initiative by the World Bank: https://www.worldbank.org/thirstyenergy the end-user and the urban body. The main driver of the project was the end-user’s need to obtain 2. https://timesofindia.indiatimes.com/city/nagpur/nmc-to-become​ -nations-first-city-to-reuse-91-sewage/articleshow/67494230.cms secure sources of water at an affordable cost. • The BOT end-user PPP model ensured that References wastewater treatment was done according to the ECA (Economic Consulting Associates). 2019. “From Waste to Resource: Why and How Should We Plan and Invest in Wastewater? Policy, requirements of the end-user (the power plant). Institutional and Regulatory Incentives.” Unpublished technical • Having a single end-user that committed to take background paper prepared for the World Bank. London. all the treated wastewater reduced the wastewater Government of Gujarat, 2018. Policy for reuse of treated wastewater. May 2018. http://www.indiaenvironmentportal.org.in/files/file/Policy_ demand risk. Reuse_Of_WasteWaterA.pdf • Government support and political will: Central, state FICCI Water Mission, and 2030 WRG. 2016. Urban Wastewater Public- and local governments have a number of support Private Partnerships. White Paper. https://www.2030wrg.org/wp-content​ schemes and initiatives to promote wastewater /uploads/2016/04/FICCI-Water-Mission-2030-WRG-White-Paper-Urban​ -Waste-Water-PPPs-V6Rev1-With-Pix.pdf reuse. Government policies on water resource Hastak, S., 2015. 24X7 Water Initiative and Waste Water Reuse – Case Study management and wastewater reuse were clear. Nagpur. http://icrier.org/Urbanisation/events/23-2-15/Nagpur%2024x7_23​ The Government of Maharashtra and NMC were .02.15.pdf. strongly committed to the project. ICLEI (International Council for Local Environmental Initiatives). • Strong communication and coordination between 2010. Nagpur, India: Water Sector Audit Enables Efficient Use of Water and Energy Resources in Nagpur. http://www.iclei.org.br/polics/CD​ the water utility and the end-user helped fully /­P 2_4​_ Estudos%20de%20Caso/2_Agua/PDF108_EC110_Nagpur_India​ exploit the synergies of wastewater treatment and .PDF. reuse. Reusing treated wastewater met the water Sharma, 2013. Mahagenco – Nagpur Municipal Corporation wastewater reuse demand of the thermal power plant allowing the project at Nagpur: water supply for 3x660 MW Koradi TPS. Presentation. http://mohua.gov.in/upload/uploadfiles/files/2_%20Mahagenco%20 limited availability of freshwater in the region to be NMC%20Revised%20presentation%201(C)%20130%20MLD%20STP%20 used for other purposes. The case study highlights (1)06.pdf the benefits of taking advantage of the linkages ITAC (International Technical Assistance Consultants). 2019. “From between the water and energy industries. Waste to Resource. Why and How Should we Plan and Invest in Wastewater?” Unpublished technical background report prepared for • Physical Factors: the World Bank. • The shortage of freshwater in the region, and the Indian Express, 2017. Maharashtra govt makes reuse of toilet water man- datory for cities. Nov 2017. https://indianexpress.com/article/cities​ high costs of sourcing additional freshwater for /mumbai/maharashtra-govt-makes-reuse-of-toilet-water-mandatory​ the project, encouraged MahaGenCo and NMC to -for-cities-4918336/ Wastewater: From Waste to Resource 5 NDTV, 2017. Maharashtra Chief Minister Signs Policy To Make Wastewater World Bank 2016. Approaches to Capital Financing and Cost Recovery in Usage Compulsory In State’s Industries. Nov 2017. https://swachhindia​ Sewerage Schemes Implemented in India: Lessons Learned and .ndtv.com/maharashtra-chief-minister-signs-policy-to-make-wastewa- Approaches for Future Schemes. March. http://documents.worldbank​ ter​-usage-compulsory-in-states-industries-14142/ .org/curated/en/658201467618250938/Approaches-to-capital-financing​ -and-cost-recovery-in-sewerage-schemes-implemented-in-India​ PwC. 2016. Closing the Water Loop: Reuse of Treated Wastewater in Urban -lessons​-learned-and-approaches-for-future-schemes India. https://www.pwc.in/assets/pdfs/publications/2016/pwc-closing-the​ -water-loop-reuse-of-treated-wastewater-in-urban-india.pdf. 6 Wastewater: From Waste to Resource ­ ank. Some rights ­ © 2019 International Bank for Reconstruction and Development / The World B reserved. 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