R -- Financial Institutions Reform and Expansion (Debt Market Development) FIRE-D Phase III

The scale and rate of urban growth of cities in India ,which has occurred largely in an unplanned way, has led to serious infrastructure deficiencies that reduce business productivity, deflect new investors, and compromise the quality of life for all income strata, particularly burdening the urban poor. An annual resource gap of approximately Rs 17000 crores (US $ 3.5) Billion has been estimated for the period 1996-2006 in the water and sanitation sector alone. However, the problem of improving urban infrastructure delivery is not only an issue of money. Oftentimes local governments and other infrastructure project sponsors lack the capacity to develop good ‘bankable’ projects that can absorb capital resources from the market and be operated in a financially sustainable manner. USAID/India’s response to the need for improved urban infrastructure service delivery is its Financial Institutions Reform and Expansion Project (FIRE-D) .Begun in 1994, FIRE Project (Phases I and II ,1994-2003) has established a position on the cutting edge of reforms in India’s water and sanitation sector. Project achievements; have served as key building blocks for the sector’s reform agenda. These include : the acceptance of the concept of commercial viability as a factor in water sanitation project structuring; the introduction in India of market based mechanisms for municipal credit rating and accessing domestic capital markets to finance urban infrastructure; raising the profile of urban sector issues in India and their systematic redressal; development of Model Municipal legislation to fully implement the 74th Constitution Amendment on decentralization and devolution of powers to ULBs; ground breaking of India’s first BOOT project on water sanitation in Tirupur; first pooled financing issue with DCA credit enhancement for financing water sanitation projects; initiation of municipal accounting reforms and promotion of state level city manager’s associations . However, there is an urgent need for institutionalization of the reform process with support for consolidation, scaling up and replication of water sanitation project development and implementation with market based financing mechanisms being adopted in more states and cities. Based on the lessons learnt from the FIRE –D Phase I & II and feed back received from GOI and counterpart institutions ,USAID/India intends to continue to support implementation of GOI urban sector reform agenda through FIRE D-III (2003-2008) program ,which is designed to address : - Sustainable state level institutional models for project development & financing - Enhanced market based financing initiatives - Increased project successes The ultimate objective of providing improved access of water and sanitation services in cities, particularly for the urban poor. USAID anticipates awarding a cost plus fixed fee completion contract (CPFF) for 5 years under FIRE(D)-III program. Detailed information about this solicitation is contained in the RFP that will be available with the Regional Contracting Officer, USAID/New Delhi and shall be published in the Federal Business Opportunities web site http://www.eps.gov/.