Chennai Water

Summary of Proposed Investment

This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only.

Project number	24714
Company name	Chennai Water Desalination Limited
Country	India
Sector	Utilities
Environmental category	B
Department	Infrastructure
Status	Completed

Date SPI disclosed	May 1, 2006
Projected board date	June 1, 2006
Previous Events	Signed: June 26, 2006 Approved: June 20, 2006

View Environmental & Social Review Summary (ESRS), click here

Overview

Sponsor/Cost/Location

Development Impact

Contacts

Attachments

Project description

Chennai Water Desalination Ltd (CWDL or the company) is a special purpose company to design, construct, operate and maintain on a DBOOT basis a seawater desalination plant of 100 million liters per day (MLD) capacity at Minjur, about 35 kms north of Chennai. It is a joint venture between IVRCL Infrastructures and Projects Ltd. of India, and Befesa Construccion y Tecnologia Ambiental, S.A.U. (Befesa CTA), part of the Abengoa Group of Spain.

Chennai Metropolitan Water Supply and Sewerage Board (CMWSSB) is the municipal water authority exclusively responsible for water supply and sewerage services in the Chennai metropolitan area. To augment the scarce water supply, CMWSSB decided to establish a 100 MLD seawater desalination plant at Minjur. Through a competitive bidding process, CMWSSB awarded the design, construction and operation of the plant (for a period of 25 years) to CWDL. IFC is considering a local currency loan to the company for the project.

Anticipated development impact of the project

The development impact of the project includes the following:

- provision of drinking water supply so critically needed for the residents of Chennai city that is chronically short of drinking water;
- development of a new source – which is both abundant and renewable, but not yet exploited – that could provide safe drinking water after processing and desalination;
- being the first sea water desalination plant in the private sector on a DBOOT basis, this model will be replicated if found successful in its implantation;
- this project will bring Befesa’s appropriate desalination technology to India for the first time; and
- the project will accelerate industrialization in the state of Tamil Nadu that has faced water shortages for industrial development.

IFC's expected development contribution

IFC is considering a long term, fixed rate local currency loan to the project. IFC’s financing will support this innovative project which will not only help alleviate drinking/industrial water problems in the city of Chennai but also pioneer the use of desalination as the solution for overcoming water scarcity in the coastal areas of the country. IFC will also share its global experience in structuring and investing in water sector projects as well as BOOT type of projects. IFC will also help the company design and implement an appropriate environmental and social management system for the project.

Environmental and social issues - Category B

This is a Category B project according to IFC’s Procedure for Environmental and Social Review of Projects because a limited number of specific environmental and social impacts may result, which can be avoided or mitigated by adhering to generally recognized performance standards, guidelines or design criteria. The review of this project consisted of appraising technical, environmental and social information submitted by the project sponsor; and visits to the project site and surrounding area. The following potential environment, health and safety and social aspect of the project were analyzed:

- Environmental, social, and health and safety management systems, including assessment, compliance with national and local requirements, and community engagement;
- Water resources management and supply;
- Construction impacts;
- Water treatment and product quality;
- Hazardous materials management, including fuel storage;
- Pollution control and waste management, including brine disposal;
- Employee and community health and safety, including emergency response; and
- Land acquisition and socio-economic impacts.

Supporting documents that provide further details of environmental and social issues are listed on CWDL’s website: http://www.chennaidesal.info/

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