Financing urban water and sanitation projects that include the poor - Need examples of commercially viable projects

Original Query: Chetan Vaidya, USAID-India, New Delhi
Posted: 13 March 2006

USAID and the Union Ministry of Urban Development are jointly working on a national program to address urban infrastructure needs in five states in India.

The program focuses on capacity building of state and municipal institutions for the development, financing and management of viable water and sanitation services with market-based financing.

The project aims to increase urban infrastructure investment by increasing participation of municipalities, the private sector, and community organizations in the development and delivery of commercially viable urban infrastructure services; improving capacity of municipal and state governments, infrastructure agencies, and other urban professionals to manage urban growth, mobilize resources and improve infrastructure services; and supporting development of a marketbased
urban infrastructure finance system

The Objective of the Indo US Financial Institutions Reform and Expansion (FIRE) Project is develop commercially viable urban infrastructure projects including the water sector and sewerage and the current need is to base the recovery estimates, on the entire balance sheet of the Municipal Corporation as a whole, rather than project itself.

In this context, I would be grateful if members could share examples of commercially viable projects that have provided increased access to water and sanitation services by poor people living in the cities, in projects funded under market based financing (like bonds, pooled finance or private sector participation). In these projects were the poor covered through a separate grant or cross-subsidized by other users, and what considerations were taken into account in
determining the approach to take?

Please see attachment below for the responses.