Business Today

Getting smarter

India's urban infrastructure could change for the better as work begins on Smart Cities.
twitter-logo Goutam Das        Print Edition: August 13, 2017
Getting smarter

It was too fresh to forget. On October 12, 2014, as the cyclonic storm Hudhud slapped the port city of Visakhapatnam with wind speeds of over 185 km/hr, the terminal roof of the city's airport came crashing down; the radar link of its cyclone warning centre collapsed; colonies were inundated; vehicles damaged. About 30 per cent of the city's tree cover was lost. The state government estimated the damages at Rs 21,908 crore.

When a smart city awareness campaign kicked off in 2015 - through media announcements, cycle rallies, WhatsApp messaging, door-to-door surveys - citizens of Visakhapatnam picked climate resilience as one of the top priorities. And during the Urban Development Ministry's Smart City Challenge, where aspiring cities competed for being selected as a 'smart city', Visakhapatnam specifically listed that its "disaster and emergency management strategy will focus on emergency evacuation plan, delivery of basic functions and services during emergencies with the goal of eliminating loss of life and displacement during and post disaster".

The city has progressed well since. It was picked in Round One of the competition along with 19 other cities. Last year, the city released a set of Request for Proposals (RFPs).

"The first RFPs bundled six projects and all of them were technology-based solutions. An integrated approach to e-governance and disaster management was introduced. There were four bidders and the contract was eventually awarded to L&T and Fluentgrid," says Vishal Kundra, a city planner and designer with the city's project management consultant AECOM. Fluentgrid's website says,"11 city functions like CCTV surveillance, street lighting, air quality monitoring, bulk water supply, solid waste monitoring, green cover monitoring and beach safety poles have been integrated with a command and control centre to realise the ultimate safe city monitoring project."

Many other cities have rolled out RFPs around a command and control centre, while a few have already awarded the contracts, much like Visakhapatnam. But such a contract is just one spec in what is a mammoth exercise involving everything from affordable housing and redesign of public spaces to creating core infrastructure, efficient use of energy, proper waste and traffic management. India's Smart Cities Mission has thus far picked 90 cities across four rounds. The cumulative cost of projects is a staggering Rs 1,89,256 crore. If successfully implemented, that will impact an estimated 95,955,046 of India's urban population and revitalise cities creaking under rural to urban migration and out-of-date infrastructure. This mission is critical, considering that 63 per cent of India's GDP is generated in cities and about 70 per cent of the country's net new employment is expected to be generated in urban areas by 2030.

Swift Start

Round one of the Smart Cities Challenge selected 20 cities with Bhubaneswar, Pune, Jaipur, Surat and Kochi leading the list. The government then came out with a list of 13 "fast track" cities.

"Most of the 20 cites in Round One and the fast track cities have floated RFPs and some on of them have on-boarded vendors. Work has started, especially around the technology side," says N.S.N. Murty, Partner & Leader - Smart Cities, at consulting major PwC. "On the hard infrastructure side, work has started but it will take more time. Time will be taken to execute surveys and the design part. But lot of smart road and solar roof-top projects are being executed currently. Tenders have also been taken out for solid waste management - collection, transportation, vehicle management. Street lighting is taking shape in a big way," he adds. PwC is consulting about 15 cities in technology and Public-Private Partnership (PPP) work.

Surat, for instance, has already completed some projects such as rain water harvesting. "Projects that could be completed in one year, we have already done that," says M. Nagarajan, CEO, Surat Smart City. "Water treatment and sewage treatment plants, intelligent traffic control systems, Surat Money Card Project, automatic fare collection for city bus - these will happen in the current and the next financial year," he informs. Surat also wants to build a bigger version of a 25-seater command and control centre it currently has.

Every city, or state, has adopted multiple approaches towards how it awards contracts. Seven cities in Madhya Pradesh have cleared the challenge thus far. They have now jointly floated an RFP. "Integrated command and control has to be done by every city. So the state decided that instead of taking our separate city-level RFPs, they would float a single RFP that has command and control centre on the cloud," Murty says. "That will be provisioned to every city. Each city will only have to just create the physical infrastructure of the local command centre with dashboards and video walls. However, the application and data centre is on the cloud. It will help all cities be ready with the platform on the same day."

Some cities, such as Bhubaneswar, are bundling many solutions under one RFP. "Bhubaneswar has parcelled all smart applications across the city into one RFP. It is large and involves traffic management, city surveillance, e-governance for the municipal side and citizens, city mobile app, vehicle tracking management system for solid waste management, smart classrooms, smart health care, elements around traffic violation management system, etc.," says Murty. Such RFPs require a consortium approach from vendors considering that no company would be able to meet every requirement.

Dr. Krishan Kumar, Municipal Commissioner of Bhubaneswar, is a hard working man - some consultants this writer spoke to said he worked from 7 a.m. to 2 a.m. every day when the Smart Cities programme began. His LinkedIn profile tells us of his inclinations: "IAS/Smart Cities/Sustainable Transport/Infrastructure/PPP". He also thinks ahead of time. "We are setting up a Bhubaneswar Urban Knowledge Centre, which is a soft component. Most of our cities are short on capacities to perform various functions. So, the idea was to have experts who can be accessed by all the city departments," he says.

The city has proposed projects worth Rs 4,537 crore, more than half of it expected to be financed through PPPs-a difficult task by all accounts.

Irrational Exuberance?

There is a false sense of optimism, particularly around the financing part of these projects in many cities, Neeraj Gupta, Principal Investment Officer, PPP Transaction Advisory, IFC (South Asia), tells this writer on phone.

"All the officials are very passionate about what they are trying to achieve. Nevertheless, it is pretty safe to say that they will not be able to achieve even half of what they have planned to in terms of PPPs and borrowings from the commercial market," he says. Lenders are worried about the scale of ambition. Some cities want to hike water charges by four times over the next five years; also raise property taxes. "All the tough decisions they haven't been able to take for the last four decades, they think they will be able to do in the next five years," Gupta says, adding that there is a big risk of things going wrong because city commissioners are in a hurry.

In some cities, things could go helter-skelter because they don't have the right set of advisors; in others because they are influenced too much by private contractors. "I wish someone were to slowdown a little bit and think of the entire ecosystem, instead of jumping from one project to another," Gupta says. He cites an example - that of Waste-to-energy, a specialised subject with many divergent view points. IFC has worked on many projects in China, where the waste characteristics are similar to India. "There is so much we can learn from China. But because we are moving in such a hurry, commissioners are not able to think through this very well. They get directives from the ministry - each smart city has to issue municipal bonds and everyone will now make a beeline. No one is thinking if the city really needs commercial financing, and if the city can afford it? Can their balance sheets leverage municipal bonds?," he asks. "May be a direct loan is better for the city."

Experts believe that a lot of "the output" would be visible by next year when many more projects are due for completion. Core infrastructure projects and those around housing, both heavy ticket investment areas, may not cruise at the pace commissioners or even the Ministry of Urban Development expect. The irrational exuberance around financing could be the culprit. ~


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