Guide to COST-BENEFIT ANALYSIS of investment projects - Ramiri

4.4 Case Study: investment in a waste water treatment plant4.4.1 Project definitionThe project is an investment in the field of waste water treatment, and for the reuse of well purified wastewater for multiple purposes after an intensive tertiary treatment. It takes place in a Convergence region ina country eligible for the Cohesion Fund.This project includes the construction of a new water purifier, in keeping with current regulations, to servea medium-sized city (725,000 residents in the initial year, with the population growing an annual rate of0.15%). Currently wastewater is discharged untreated into the river crossing the city.The project includes the realisation of four modules of intensive treatment for water re-use, which willtreat on average, about 70% of the flow of purified waste. Below this plant, two pumping stations and apipe system will be erected to carry the treated water to the existing header tank in the irrigated area andthe existing reservoir serving the industrial network 78 . Both the irrigation network and the waterdistribution network for the industrial plants already exist.The wastewater and nearby tertiary treatment plants will take up a total area of 7,000 square meters.The industrial area is already well developed. There are more than one hundred small and medium-sizefactories and many craft workshops. At present, the water supply is obtained through wells, subjecting thegroundwater to an over-abstraction. For this reason, the local aquifer has been depleted, and its hydrogeologicallevel has been considerably lowered in recent years. The territory with irrigated agriculture, notfar from the city, is a new irrigated area and has a surface of 3,500 hectares, some of which are foreseen tobe equipped with greenhouses in the next future.The overall investment is realised by the Municipality, which will choose a private partner by means of abuild operate transfer (BOT) tender (a form of Public Private Partnership, PPP). See Annex G for thistype of PPP. The BOT horizon is fixed at 30 years and includes the time for design, erection, start-up andoperation of the system.The Municipality receives the revenues paid by the users for drainage water collection 79 and thewastewater collection and treatment services. It pays, at a stated price per unit, the operating servicecharge to the PPP private partner. The drainage collection and sewerage system is directly managed by themunicipal staff.The private partner receives the revenue coming from the water tariff paid by industrial and agriculturalusers and sustains the ‘private’ part of the project investment and the operation and maintenance costs.The Municipality receives the European and national (or regional) grants and transfers them to the privateoperator 80 , along with its own capital contribution (taken from the municipal budget). The private partnerwill provide the finance to cover the remaining part of the investment cost.In the household sector, the demand for purification comes from the users of the existing urban sewernetwork. The industrial demand for water for process uses, or for other industrial purposes, comes fromfactories and craft laboratories. The water is used to irrigate the various seasonal and multi-seasonal cropsand in greenhouses. The box below deals with the identification and the quantification of the waterdemand in the project.In the feasibility study the BAU alternative was rejected because it involves further exploitation ofgroundwater, which, as previously stated, was being depleted mainly by the existing industrial use of thewater.787980The recycled water is supplied to the factories for process and other industrial uses, but not for the human consumption.The sewage treatment plant is designed to treat rainwater up to a scale equal to 5 times the design flow of the wastewater.Proportionately for progress of the system construction.168