A Systematic Approach to Securing Capital and O&M Funds for Scaling FSM

4 Poster Track: Applied Research » 5 Financial aspects in FSM

Speaker: Srinithi Sudhakar

Summary – for publication in conference brochure:

The Government of Tamil Nadu (GoTN) has recognised Fecal Sludge Management (FSM) as a stand-alone and viable complementary solution to networked sanitation systems to scale up across the State. The GoTN, with support from the Tamil Nadu Urban Sanitation Support Programme (TNUSSP), has framed a State Investment Plan (SIP) to provide treatment facilities for an estimated population of 25 million across 663 Urban Local Bodies (ULBs) in a phased manner. While the GoTN focuses on capital investment for treatment facilities, Operation and Maintenance (O&M) costs are to be funded by ULBs, and costs for de-sludging met by private sector.

Introduction, methods, results and discussion:

Recognising the importance of FSM to achieve 100% sanitation, the GoTN issued the Operative Guidelines (OG) for Septage Management in 2014. In implementing the OG, it became evident that establishment of adequate treatment facilities was both a critical and an easily actionable first step to scaling up solutions across the State, leading to the creation of the SIP.

The OG promotes optimal utilisation of existing treatment facilities through co-treatment. To implement this, the SIP adopted an approach of clustering ULBs (located within a 10 km radius) around existing or proposed treatment facilities. This approach is scaled up across the State in a phased manner, as follows:

  1. Phases I and II covers a population of 15 million through co-treatment at Sewage Treatment Plants (STPs).
  2. Phase III secures municipal SWM sites to locate Fecal Sludge Treatment Plants (FSTPs) and covers a population of 4 million.
  3. Phases IV and V are clusters in small Town Panchayats or standalone FSTPs, and cover a population of 6 million.

The GoTN is working on two phases simultaneously – Phase I and Phase III. In 2018, the government sanctioned budgetary allocations for Phase III of INR 200 crores (USD 26 million) for 49 FSTPs and in 2019, INR 31 crores (USD 4 million) for an additional 11 FSTPs. Currently, 60 FSTPs are under various stages of construction. These upcoming FSTPs will provide approximately 1,545 KLD of treatment capacity serving a population of 4 million. Co-treatment is being enabled at 50 STPs covering a population of 10 million.

However, factors such as the prevailing de-sludging practices, that vary significantly and are under limited regulation, effect demand for treatment capacity. It is therefore, difficult to accurately ascertain the potential utilisation of treatment facilities. To mitigate this uncertainty, an incremental approach, through modular FSTPs that allow for capacities to be increased proportional to demand, has been adopted.

While the State Government has focused on capital investment through the SIP, the responsibility of meeting the O&M costs of FSTPs rests with ULBs. TNUSSP has estimated costs to range between INR 11 Lakh and 15 Lakh (USD 15-20,000) per annum or INR 38,000 and 57,000 (USD 500-800) per KLD, for the upcoming FSTPs with capacities of 20, 30 and 40 KLD. 

Various options for ULBs to fund O&M costs are being considered. This includes levying a user charge and preliminary calculations indicate costs per household to be between INR 28 (USD 50 cents) and INR 182 (USD 2) per year. An alternative is utilising a proportion of the water and sanitation (W&S) tax collected in Municipalities/Corporations. Initial assessments suggest not all are able to cover O&M costs even if 50% of the tax is utilised for FSM purposes.

De-sludging costs are the other significant costs associated with FSM. In Tamil Nadu, these are borne by households, and studies undertaken by TNUSSP indicate rates charged by private operators are largely reasonable. Providing services at discounted rates for the urban poor is being considered.

(Population figures and costs are approximate)

Conclusions and implications:

The SIP sets out the investment required to provision fecal sludge treatment facilities at scale. Aggregating costs of treatment infrastructure provided a powerful argument to the GoTN in support of implementation of FSM when compared to networked systems.

Once implemented, the focus shifts to sustaining the use of treatment facilities. This includes ensuring adequate funds are available for their O&M, especially given the current public health crisis, due to which ULBs are likely to face competing priorities.

To this end, the GoTN has mandated ULBs within clusters to share O&M costs proportionate to their respective populations. The Government has directed ULBs within clusters to sign a Memorandum of Understanding (MoU), which establishes a formal process by which ULBs adopt and utilise shared treatment facilities. The MoU is a significant step towards securing the financial sustainability of treatment facilities, as it ring-fences funds collected for O&M purposes.

As treatment facilities become operational, governance of de-sludging operations too will influence their utilisation. For this purpose, a Standard License Agreement has been recently adopted by the GoTN, mandating de-sludging operators to adopt proper de-sludging and disposal practices, and promoting the use of treatment facilities through nominal Tipping and License Fees.

Relevant references:

Commissionerate of Municipal Administration 2014 Operative Guidelines for Septage Management for Local Bodies in Tamil Nadu. Municipal Administration and Water Supply Department
Government of Tamil Nadu.
Municipal Administration and Water Supply Department 2014 Septage Management – Operative Guidelines for Septage Management for Urban and Rural Local Bodies in Tamil Nadu – Approved – Orders Issued (G.O. (Ms) No. 106.). Government of Tamil Nadu.
Municipal Administration and Water Supply Department 2018 In principle approval for creation of 49 numbers of Faecal Sludge and Septage Management (FSSM) treatment facility to cover 51 Municipalities and 59 Town Panchayats – Orders – Issued (G.O. (Ms) No. 88.). Government of Tamil Nadu.

Download Attachment