Cabinet okays proposal for Hybrid Annuity based PPP model

The union cabinet on Wednesday approved a proposal for taking up Hybrid Annuity based Public Private Partnership (PPP) model under Namami Gange Programme that aims to reform the wastewater sector in the country.

"Hybrid Annuity based PPP model will now be adopted to ensure performance, efficiency, viability and sustainability," an official statement said here.

"In this model, a part of the capital investment (up to 40 percent) will be paid by government through construction linked milestones and the balance through an annuity over the contract duration upto 20 years," it added.

The decision was taken at the union cabinet meeting chaired by Prime Minister Narendra Modi.

Keeping in view the specialized nature of this model and to scale it up in future on sustainable basis, the government is establishing a Special Purpose Vehicle (SPV) to plan, structure, procure concessionaires, monitor implementation of such PPP projects and develop market for treated waste water through appropriate policy advocacy under overall guidance of National Mission for Clean Ganga (NMCG).

The SPV will be established under the Indian Companies Act 2013 for providing required governance framework and enabling functional autonomy.

The SPV would enter into a Tripartite Memorandum of Agreement (MoA) with participating state governments and concerned Urban Local Bodies (ULBs) for taking up individual projects.

These MoAs will aim at introducing reforms and regulatory measures for recovery of user charges on Polluters Pay principle, restrictions on usage of ground and fresh water for non-potable purposes through stricter monitoring and guidelines that promote reuse of treated wastewater.