In the first major workshop after submitting the Ganga River Basin Management Plan 2015 (GRBMP) to the Government of India earlier in January, the IIT Consortium (IITC), responsible for preparing the master plan, shared a draft blueprint to finance the rejuvenation and restoration of River Ganga at India International Centre.
The blueprint was a collective output of a multi-stakeholder group, IITC+ (IITC Plus) that has more than 150 national and international members. IIT Kanpur and Oval Observer Foundation, which is one of the working group members of the IITC+, organized the workshop jointly,
Presenting a plan to a diverse group of audience, Dr. Vinod Tare, Professor at IIT-Kanpur and Coordinator for GRBMP, outlined that the policy requires a paradigm shift in the approach to addressing the underlying problem.
GRBMP suggests that the magnitude of the problem requires a capital expenditure of nearly INR 6-7 lakh crores (appx USD 100bn) just to address the sewage, industrial effluents and municipal solid waste that is dumped into the river. It is essential that PPP models succeed as private sector capital base is crucial to compliment what the Government plans to spend.
For this to happen, certain boundary conditions are crucial. The first condition is making zero liquid discharge essential for large industrial polluters and second is creation of a market for treated sewage that is so central to the success of the plan.
Only then will the market generate the much needed confidence to private sector investors that may invest in the water treatment projects.
“The fundamental risk in a PPP type structure that the Government has to address is the counterparty payment risk. If that is addressed through guarantee instruments, then this market can indeed take off, said Sanmit Ahuja, a subject matter expert and a lead member of the IITC+ group.
He also presented ten advanced financial and economic instruments that can further make the PPP framework robust and bankable. These include, Ganga Blue Bonds, Shadow Tariffs, Credit wrapping and Enhancement, Water Quality Trading, Take-out Financing, F/x and Interest Rate Derivatives.
Dr. Tare stressed the need to focus on developing Urban River Management Plans (URMPs) for the various strands of the Ganga River Basin. He also invited the multiple stakeholders to participate in development of these plans that would help accelerate the development of the projects.
He also explained the proposition of creating a Water Trading Corporation, on the lines of Power Trading Corporation that can address the market risk for independent water producers.