Implementing India’s first large scale PPP water supply project and the world’s largest ZLD system
This is the story of how Tirupur, one of India’s top industrial clusters, was raised to its feet — not once but twice. IL&FS played a pivotal role in this epic journey spanning two decades, which Global Water Intelligence UK has called ‘a phoenix rising from the ashes of an environmental catastrophe’.
In India, Tirupur is synonymous with garment manufacture: for thirty years it has been called the ‘knitwear capital of the country’, or simply ‘dollar city’. With $3 billion worth of exports in the last year, Tirupur accounts for 90% of the cotton knitwear that India exports. Nike, Reebok, H&M and Tommy Hilfiger are only a few of the global behemoths that source their wares from this South Indian town.
But soaring success and tragedy have never been too far apart here. A dry region with no perennial river, Tirupur was originally a rain-dependent agricultural economy. Repeated crop failure prompted a shift to cotton trade in the 1960s, then to the production of low value cotton hosiery until the 1980s.
Industry booms but water runs low
Cut to the early ’90s: Tirupur is home to 2,500 knitting units, 580 dyeing and bleaching units, 300 printing units, 150 embroidery units and nearly 200 other ancillary units. Already a huge contributor to India’s export economy, and an industrial town that directly employs 7,00,000 people, Tirupur is in the throes of a new water crisis.
The industries were digging as far as 50 km away and transporting the water back in tankers
To households, the municipality supplies water for a just a couple of hours once every three or four days — sometimes as little as once in ten days. Industrial units, which depend on water for bleaching and dyeing processes, receive no municipal water supply. They are digging as far as 50 km away and transporting the water back in tankers.
The depleting groundwater is not even clean — effluents from the dyeing industries have rendered it so polluted that it must be treated, at huge cost, even for industrial use. Moreover, as only one in two Tirupur garments is meeting customer specifications — an abysmal right-first-time ratio — the industry is incurring the production cost of two items for the sale of one.
Genesis of a unique PPP endeavour
When the Government of Tamil Nadu (GoTN) was unable to commit the monies required to build a water supply project for Tirupur, the Tirupur Exporters Association (TEA) along with government officials approached IL&FS to assist in realizing the dream. Built on the vision that the private sector can become an instrument of State for the development, implementation and management of large scale infrastructure projects, IL&FS came up with a public-private partnership (PPP) model.
GoTN, IL&FS, and TEA became the first stakeholders for the New Tirupur Area Development Corporation Ltd (NTADCL) — the Special Purpose Vehicle that would bring this project to fruition. This was to become India’s first water infrastructure project to be implemented on a PPP basis.
The idea of private sector involvement in infrastructure, especially in the water sector, was a very sensitive issue
The scope of the project was expanded to not only cater to the needs of the industrial units but also the wayside villages and the households in the Municipality of Tirupur. A scheme for the collection of sewage and its treatment and disposal was also integrated to sustainably deal with the massive water supply. Finally, industries were asked to commit to undertake a Zero Discharge Effluent Treatment scheme. Recovery of the investments was to be predicated on user fees via cross-subsidies, with the municipal households being charged only a fraction of the industrial fees.
Bringing all stakeholders on board
Liberalisation had only just opened up the Indian economy, and the idea of private sector involvement in infrastructure, especially in the water sector, was a very sensitive issue. The stakeholders were many and diverse; enormous time and energy was spent on studying, discussing and balancing their needs.
The common man and his representatives needed to be convinced of the affordability and benefits of the idea, while industry had to be convinced about the charges and the need for paying a price to be environmentally and socially responsible. The government had to be convinced that regulations and enforcement were key to making such an initiative successful (even if it supported private investments in the infrastructure sector), and that project costing on a life-cycle basis was far cheaper than minimizing up-front capital costs. Lenders and investors had to be convinced to invest in a project where no safety net from the government was forthcoming, and base their support on customers’ willingness to pay.
In a major achievement, IL&FS succeeded in raising money from the US Capital Markets for the project through 30-year bonds. This made the water tariffs more affordable than they would have been through the standard 7- to 10-year period to amortize the project investment.
Benefits for everyone
NTADCL built the 65 km pipeline from the Cauvery river, and provided water supply and low-cost sanitation infrastructure for the villages along the line. Tirupur, which previously had neither a sewerage system nor a drainage system, now received 118 km of sewer line, 4 sewerage pumping stations, one 30 MLD capacity waste treatment plant and 36 low-cost toilets.
The calm before the storm
With 60% of the city equipped with the sewerage system, Tirupur was now one of the best covered in India. Industrial and domestic water supply to the doorstep was available every alternate day, soon to be available daily. Community self-help groups were approached to run the low-cost toilets. The industries, now free of water-related concerns, could now focus on expanding their businesses and meeting global competition.
But Tirupur’s toughest challenge was yet to come.
In 2011, all the dyeing units of Tirupur were forced to shut down, handicapping the entire garment industry
Despite their commitment, as industries continued to dump their untreated waste into the Noyyal river, pollution levels became unbearable. The effects permeated to agriculture; when they could no longer be ignored, farmers petitioned the courts. In 2006, the court ordered the industries to either set up Zero Liquid Discharge (ZLD) or face closure.
The lack of technology and experience in the ZLD area worldwide bogged down the Tirupur treatment plants: they faced particular problems with the thermal evaporation of the brine residue from the Reverse Osmosis systems. In 2011, all the dyeing units of Tirupur were forced to shut down, handicapping the entire garment industry.
Technology innovation toward Zero Waste
Tamil Nadu Water Investment Company Ltd (TWIC), a Joint Venture between IL&FS and Government of Tamil Nadu, stepped in — this time with the highly innovative Treated Brine Reuse Technology.
This technology makes it possible to recover and sell 90% of the sodium sulphate reject from the RO treatment facility. In addition, 98% of the recovered water can be reused after the removal of brine. Not only does this take the industries close to a Zero Waste Discharge status, but makes the technology commercially viable as 50% of the treatment plant’s costs are recovered in the process.
Discharge of dyeing effluents into the river was completely stopped. IL&FS thus brought the industries back to their feet stronger, cleaner and more productive.
The Tirupur project is an extraordinary testimony to power of partnerships. First, government and industry collaborated to bring in IL&FS as a specialist infrastructure institution to help develop and implement such a project on a commercial basis. Then, GoTN and IL&FS collaborated to develop and establish a sustainable framework to raise monies and procure the technical consortia to build the project. The Tirupur plant went on to become the world’s largest ZLD Common Effluent Treatment Plant.
The 2014 Global Water Awards highly commended this project, while the Water Reuse Association USA awarded it the ‘Industrial Project of the Year’.