7. Project O&M planning
Long term project sustainability requires that long term O& M is planned in terms of
(a) Institution framework including billing & collection (organization & operations) strategy and
(b) Tariff and user-cost recovery (financial) strategy
7.1 Institution framework (organization & operations) strategy
The DPR is to incorporate/include information relating to the following five areas:
(i) The institution to be engaged in the O&M of the created infrastructure asset/enhanced infrastructure assets.
(ii) Brief outline of the existing method of billing & collection (including user/customer-segment wise differentiated strategy, if any)
(iii) Select performance metrics in regard to billing & collections (for the most recent completed financial year, and if possible, for the current quarter of the ongoing financial year)
• the billing/billable ratio (in terms of physical and financial units separately)
• cost of billing & collection (in absolute terms; as percent of total cost; and details of the cost break up)
• any other, if possible (The basis, assumptions and method of calculations in regard to the above
are also to be provided)
(iv) Brief description/analysis of the key issues and obstacles in regard to O&M (including billing/collection issues) and proposed countermeasures to overcome them for the sector in general and for the project in particular (v) The scope for private entity/community /NGO to be involved in defined aspects of O&M for any specific/all components of the infrastructure asset.
• Private entity/ community entity/NGO can participate through a variety of models for performance based O&M (even without participating in the infrastructure construction; in this context, contract periods can be of shorter duration10 since capital cost has not been borne by the private entities and to prevent service delivery complacency on the part of the contracted entities)
In case project is of augmenting/partial revamping nature.
Smaller period than the case when the private entity also finances capital asset construction
Key issue
Has the Project Report assessed the requirements and planned for long term O&M sustainability?
Detailed Project Report: Preparation Toolkit
• The ULB can aim to promote competitiveness among an empanelled group of such entities and distribute geographical regions (eg identified ward areas) among a limited number of selected private/community based/NGO entities.
This would enable comparisons of performance.
(vi) The DPR should explicitly define the requirements of manpower, energy, spares and consumables etc. for O&M on an annual basis giving details of existing usage, norms and proposed additional requirements..
7.2 Tariff and user cost recovery
In regard to tariff and user cost recovery, the DPR is to provide:
(i) The tariff (revenue) model for each customer/user group for the sector (including underlying assumptions) and forecast growth of customer/ user groups over the next 20 years.
(ii) Unit cost of service and unit price (existing year and forecast for next 20 years)
(iii) Outline plan to restructure tariff system to any or all categories of user groups to comply with MoA requirement (institution of full cost recovery user charges)
In this regard, cross-subsidization requirements/ strategy if applicable are to be explicitly specified and addressed.
(The basis, assumptions and method of calculations in regard to the above are also to be provided)
