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Wastewater treatment plants: Chinese firm to go for ‘front-loaded tariff’

dawn.com    6/14/2016 11:15:00 AM    ReadCount:581

A leading Chinese company, which has recently expressed its interest in the installation of two out of total seven proposed wastewater treatment plants in Lahore, will charge per unit wastewater treatment cost from the government.
 
The company has formally submitted its technical and financial proposals to the Lahore Development Authority’s Strategic Policy Unit a couple of days back, Dawn learnt on Sunday.
 
According to a document, Kunming Dianchi Water Treatment Co, Ltd, has roughly made its estimation plan, stating that it will charge per unit treated wastewater/sewage cost from the government under a year-wise plan.
 
The company plans to receive Rs22.53 to Rs32.86 ($0.2154 to 0.3142) per unit wastewater treatment cost from the government.
 
By investing $272.6 million on the construction of two plants—Northeast-1 and 2 in a phased manner—the company in first year of the operation will charge Rs32.86 ($0.3142). In the first year, the firm plans to invest $123m and treat 68 per cent (204,000 m3/d –cubic meter per day) of the total 270,000 m3/d.
 
“In the second year, the firm plans to invest $92.3m and increase wastewater treatment capacity by 80 per cent (240,000 m3/d). During the second year, the government will be charged Rs27.94 ($ 0.2672) per unit wastewater cost. During the third year, another amount of $57.3m will be invested to enhance the plants’ wastewater treatment capacity by 100 per cent (270,000 m3/d) and charge Rs22.53 ($ 0.2154). From the fourth year onward, the unit price will be same,” the document reads.
 
The document says the per unit cost has been estimated keeping in view the direct treatment cost (labour, power consumption, medicament, sludge treatment), capital cost (amortization, bank interest) and cost of taxes (various taxes including business tax, income tax and VAT).
 
The final investment to be incurred on the plants shall be determined by wastewater treatment process. According to quality of the wastewater expected from Mahmood Booti sewage site, current designed process won’t be able to meet the practical needs. Therefore, the company will assign expert to collect water sample from site as soon as possible and deliver them to relevant institution in Pakistan for analysis, refine the process of the plant according to the analysis and then finish feasibility study and plant design to acquire budget.
 
“According to a rough budget we can only estimate the unit price of sewage treatment from water quantity. The final investment amount will be known from feasibility study and design, determined by final audit after the construction completed. And sewage treatment service fee will be adjusted according to the relevant terms and formula in BOT (build, operate and transfer) contract,” the documents reads.
 
According to sources, the company, a couple of days back, formally submitted its technical and financial proposals to the LDA. Following this, the LDA has also sought input from the Water and Sanitation Agency (Wasa) by sending a copy of the proposal.
 
“The financial proposal will be evaluated by the planning and development and finance departments,” a senior official told Dawn.
 
Published in Dawn, June 13th, 2016