This report aims to highlight some of the successful financial management practices adopted by Urban Local Bodies (ULBs) in India when implementing sewerage schemes. The findings are presented in two parts, the first part of the report discusses the approach adopted for capital financing of sewerage schemes in the state of Tamil Nadu, and the second part presents the findings from a review of the operational expenditure and revenue generation of various ULBs across the country. The aim of the report is to share successful capital financing and cost recovery practices adopted by ULBs in India and enable improvement in provisioning of sewerage systems (only where feasible and economically viable, typically only in larger towns with a population greater than 50,000) and ensure availability of sufficient funds for proper Operation and Maintenance (O&M) of the schemes implemented.
- An analysis of operational expenditures and revenues of various ULBs across the country 9 reveals that they have adopted a variety of measures to recover O&M costs.
- Impact of deposit collection on loan requirement and annuity outflow: It was observed that the public deposits collected by ULBs contributed to about 10-20 percent of the project cost.
- Public deposits can be effectively used to meet a share of the capital funds required as demonstrated in various towns across Tamil Nadu.
- A mix of grant funds, loans and public equity through deposit collection was utilized for implementing the sewerage projects in Tamil Nadu.
- A review of successful sewerage schemes implemented in Tamil Nadu reveals that increase in share of loans to meet capital expenses and subsequent requirements of financial commitment towards debt servicing, seems to have a positive impact on the performance of the ULBs, with respect to providing HSCs.
- The lack of availability of adequate treatment capacity combined with underutilization and underperformance of sewerage infrastructure actually created is a significant cause for the continued pollution of water bodies in the country despite significant investments having been made in several large river basins.
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- Copyright 2016 World Bank Group