GOVERNMENT OF ANDHRA PRADESH

ABSTRACT

MA & UD Dept – Guidelines on levy/fixation of floor rates (user charges)

under Sewerage in Urban Local Bodies of the State – Orders – Issued.
==============================================================
MUNICIPAL ADMINISTRATION AND URBAN DEVELOPMENT (J1) DEPARTMENT

G.O.Ms.No.196 Dated:23.11.2020.
Read the following:-

From the Commissioner & Director of Municipal Administration, A.P.,

Guntur Letter Roc.No.14034/43/2020-KSec (3509553/2020), Dated
19.11.2020.
-ooo-
O R D E R:

In the letter read above, the Commissioner & Director of Municipal

Administration, A.P., Guntur has proposed to issue Guidelines on levy /
fixation of floor rates for user charges for sewerage in Urban Local Bodies of
the State of Andhra Pradesh.

2. Government, after careful examination of the matter, hereby issue

Guidelines on levy / fixation of floor rates for user charges for sewerage in
Urban Local Bodies of the State of Andhra Pradesh, as annexed to this
order.

3. A copy of this order is available on the internet and can be accessed

at the address https://goir.ap.gov.in/.

4. The Commissioner & Director of Municipal Administration, A.P.,

Guntur and the Municipal Commissioners of Urban Local Bodies in the
State of Andhra Pradesh shall take further necessary action in the matter.

[BY ORDER AND IN THE NAME OF THE GOVERNOR OF ANDHRA PRADESH]

J.SYAMALA RAO
SECRETARY TO GOVERNMENT
To
The Commissioner & Director of Municipal Administration, A.P., Guntur.
All the Municipal Commissioners of ULBs in the State through the C&DMA,
AP, Guntur.
Copy to:
The PS to Additional Secretary to Hon'ble Chief Minister
The OSD to Hon'ble Minister for MA&UD Department
The PS to Secretary to Government, MA&UD Department
SF/SC.
// Forwarded :: By Order //
SECTION OFFICER

Annexure continued…
ANNEXURE to G.O.Ms.No.196, MA&UD (J1) Dept., Dated 23/11/2020

Guidelines on levy / fixation of floor rates for user charges for

sewerage in Urban Local Bodies

1. Reforms on strengthening Urban Local Bodies

With rapid urbanization there is commensurate increase in

demand for good quality Urban Infrastructure and Services. Cities are
seen as engines of economic growth. To meet this requirement ULBs
have to be equipped with sufficient resources especially finances. The
Central Finance Commissions have also recommended that the Urban
Services have to be ring fenced to such a degree that they are
completely self-sufficient, in their operation and maintenance.

In this context, Government of India has stipulated certain

reforms in the Urban Sector, some of which include notifying floor rates
of user charges in respect of the Sewerage which reflect current costs and
also put in place a system of periodic increase in floor rates of these
sewerage charges.

2. Provisions in the Municipal Laws:

As per Section 15-A of the A.P. Municipal Corporations Act 1994,

Section 7-B of Visakhapatnam Municipal Corporation Act 1979 and
Vijayawada Municipal Corporation Act 1981, and Section 147-A of the AP
Municipalities Act, 1965, the Government may direct the Municipal
Councils/Corporations, to levy and collect user charges for Sewerage at
such rate and manner or method to defray the capital and operation &
maintenance costs of sewerage and s e w a g e t r e a t m e n t w o r k s
u n d e r t a k e n i n t h e M u n i c i p a l Councils/Corporations.

The said Municipal Laws also stipulate that it is obligatory on the part
of the owner or occupier of the premises falling in areas served, to get
the premises connected to the sewerage system

Section 330 of A.P. Municipalities Act, 1965 and Section 586 of the
Municipal Corporations Act, 1955, provides the power to the Councils and
Corporations respectively to make byelaws not inconsistent with the
provisions of the Acts.

3. Present Scenario of O&M Cost Recovery:

At present 11 ULBs are having UGD for sewerage, which are

varying in the network coverage and stages of commissioning.
There is no uniformity in methodology adopted by the Municipal
Councils/Corporations for levy of User Charges. Some ULBs are
collecting the sewerage charges on connection basis while the others
are collecting the same on seat basis and some other ULBs are
collecting on the basis of certain percentage on water charges.

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Despite the methodology, as on date, there is a deficit in

Cost Recovery under the Sewerage Sector when compared to
Operation & Maintenance costs in these ULBs. To address this
deficit, there is a need to revise the sewerage charges to make the
ULBs self-sufficient in terms of Operation and Maintenance Costs,
so as to meet the needs of the citizens for effective management of
the service delivery standards.

4. Methodology for fixation of sewerage charges:

4.1 User categories and Tariff of User Charges:

To arrive at a break-even tariff for realizing the O&M

expenditure, 'a connection to seat base user charge levy
mechanism' is prescribed under which, basic connection charges
shall be levied up-to a prescribed number of seats and for every seat
over and above the prescribed number, there shall be additional
connection charges in each category.

User Categories and Tariff of User Charges:

Tariff per month

(in Rs.) p.m. Additional
User Category Tariff (per
seat) p.m.
Min. Max.
Buildings/Flats up to
30 35 5.00
Domestic

375 Sft (upto 2 seats)

Buildings/Flats with more

60 80 10.00
than 375 Sft (upto 3 seats)
*Commercial (upto 3 seats)
Premises used for Business/Mercantile/
Commercial activities such as Shopping
Complexes and Retail stores Markets, 150 250 25.00
Theatres, Private Offices, FoodParlors,
Function Halls, Restaurants, Malls,Hotels,
Manufacturing Units etc.,

**Institutional (upto 10 seats)

Schools, Colleges, Hospitals, Hostels,
Public Offices, Nursing Homes, Railway
300 600 15.00
and Bus Terminals, other public
buildings etc.,

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Note: For inclusion of buildings (except domestic category)

u n d e r Commercial and Institutional Categories, see the relevant
definitions in the Andhra Pradesh Building Rules, 2017 and classify
the relevant buildings under these 2 categories for the purpose of this
G.O.

The Municipal Councils/Corporations are required to fix Self

Sufficiency rate within the category wise tariff ranges given above and
such self sufficiency rate shall be increased every year by 5% to recover
the increased O&M Costs, by passing resolution. After the increase the
same shall be treated as self sufficiency rate for that year.

4.2 Fixation of Self Sufficiency Rate based on the above tariff range:

The ULB shall arrive at the Self Sufficiency Rate, category wise,
within the Minimum and Maximum range as specified in para-4.1
above, by following the below steps:

Step No.1:
To arrive the category wise UGD connections that can be given
considering the existing sewerage network coverage (Domestic,
Commercial and Institutions) i.e. existing connections and balance
connections in the sewerage network that can be given (total
connections). Data shall be firmed up during actual calculations.

Illustration: ULB name: XXXXX

Underground Drainage Connections

Coverage
User Category (Total Connections
that can be given)
Existing Balance

Buildings/Flats up to
Domestic

375 Sft 6504 13620 20124

Buildings/Flats with
more than 375 Sft 13205 27656 40861

Commercial 1523 3191 4714

Institutional 3098 6488 9586
Total 24330 50955 75285

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Step No.2:
To arrive the O&M cost per annum considering the total
connections that can be given i.e. 75285 as arrived in the above
table

Illustration: ULB name: XXXXX

SI.
No.
Item of the Expenditure Amount
(Rs.in.Lakhs)

Salaries of all categories of employees in sewage

1 section 199.00

2 Electrical consumption charges 154.6

3 Consumables 134.6
Cost of maintenance/replacement of pipelines and
4 other material 100.65

Repair to pump sets, motors and other sewerage and

5 electrical installations 235.7

6 Loan annuities (of borrowings taken for sewerage

installation) Nil

7 Total Expenditure (per annum) 623.25

Step No.3:
To arrive the category wise (Domestic, Commercial and
Institutions) revenue that can be realized per annum based on
existing monthly user charges from the total connections that can
be given (Number of total connections as arrived at Step No.1).

Illustration: ULB name: XXXXX

Number of Existing R e v e n u e
Connections Tariff Generated ( p e
User Category (in annum)
Rupees) (Rs. In Lakhs)
Buildings/Flats up to 375
Sft (upto 2 seats) 20124 30 72.45
Domestic

Buildings/Flats with more

than 375 Sft (upto 3 40861 30 147.1
seats)

Commercial 4714 30 16.97

Institutional 9586 30 34.51
Total 75285 271.03

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Step No.4:
To calculate the basic user charges that can be fixed to each
category for achieving self-sufficiency (to meet 100% O&M cost arrived at
Step no.3), by adopting the floor rates prescribed at para 4.1.

To achieve this, different trails have to be made using minimum

rates in the first instance, to see if the O&M is being met with the
number of connections in each category. The category wise
collectable demand arrived at Step No.3 will also help in getting a rough
idea of deficits and increases to be made during the trail calculations.

Illustration: ULB name: XXXXX

No. of Proposed Revenue
Connections Tariff Generated
User Category
(in Rupees) (per annum)
(Rs. In Lakhs)
Buildings/Fla
ts up to 375
Sft 20124 30 72.45
upto 2 seats)

(upto 2 seats)
Domestic

Buildings/Fl
ats with
more than 40861 60 294.2
375 Sft (upto
3 seats)

Commercial (upto 3
4714 150 84.85
seats)

Institutional (upto 10
9586 300 345.10
seats)
Total 75285 796.59

In the above example, by adopting the minimum floor rates for

each category as given in para 4.1 the ULB is achieving self-sufficiency.
This might vary during calculations after collaborating the ground
level data.

However, during the trail runs of calculations, if minimum rates

are not sufficient for arriving at 100% O&M cost recovery, the ULB
has to increase the minimum rates for Institutional and Commercial
categories first.

To the extent possible, the charges for Domestic Category

have to be retained at the minimum rates in the proposed range,
and shall be increased only if there is a gap in the O&M cost
recovery, even after the floor rate ranges under the Institutional and
Commercial categories are exhausted, so as to ensure lesser burden on
the Domestic Users.
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4.3 For Donation charges, it is suggested that the users can be broadly
categorized with the prescribed floor rates as given in the table below: (the
floor rates do not include other costs such as supervision charges, material,
road cutting etc which will be fixed by the ULB based on local requirement
during grounding of the connection):

Donations Proposed

Buildings/Flats up to 375 Sft Rs.1000/-

Domestic Buildings/Flats with more than
375 Sft
Rs.3500/-
Commercial Rs.10000/-

Institutional Rs.20000/-

The users in all the categories are given concession for payment of
donations and other additional costs for grounding the connection on
installment basis. The donation charges can be collected in 8 half yearly
installments.

4.4 In case of ULBs with FSTPs, the following floor rates have to be notified
for adoption once the FSTPs are brought into operation

Capacity Tariff per Trip (in Rs.)

(in Liters)
User to Operator Operator to ULB
Up to 3000 2500 - 3500 375 - 525
3000 - 5000 3500 - 4000 525 - 600
Above 5000 4000 - 5000 600 - 750

5. Transitional Provisions:

5.1 Fixation of tariff during the transitional period i.e., for the 1st
year;

(a) When the existing rate is less than the self-sufficiency rate arrived
and –

i. the existing rate is required to be increased by 15% or more to reach

the self-sufficiency rate, the increase shall be limited to 15%.
ii. the existing rate is required to be increased by less than 15%, to
reach the self-sufficiency rate, the percentage of increase shall be
the actual gap percentage.

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(b) W h e n t h e e x i s t i n g r a t e i s m o r e t h a n o r e q u a l t o t h e
self- sufficiency rate arrived, there shall not be any reduction in
the existing rate and the existing rate will be increased by a nominal
increase of 2%.

5.2 Calculation of Rates for the subsequent Years;

(a) When the existing rate (i.e., the rate fixed for the previous year) is
less than the self-sufficiency rate for the current year and –

i. the existing rate is required to be increased by more than 15% to

reach the current year's self-sufficiency rate, the increase shall
be limited to 15%.
ii. the existing rate is required to be increased by less than 15% to
reach the current year's self-sufficiency rate, the percentage of
increase shall be the actual gap percentage.

(b) When the existing rate (i.e., the rate fixed for the previous year) is more
than or equal to the self-sufficiency rate for the current year, there
shall not be any reduction in the existing rate. The current year rate
shall be fixed at a nominal increase of 2%.

6. Roll Out Mechanism:

The Municipal Commissioners shall submit detailed proposals to the

following Committee, showing the existing and the proposed monthly tariff
arrived at, duly following the above procedure, along with bye-laws and the
Council Resolution, to this effect.

1. Commissioner & Director of Chairman

Municipal Administration, A.P., Guntur

2. Engineer-in-Chief (Public Health) Member

3. Superintending Engineer, Public Health Member-

concerned
Convenor

Upon receipt of the said proposal, the Committee shall study the proposals
of the Municipal Commissioners and recommend the proposed sewerage
tariff to be adop ted by the Muni ci pal Counci l s/Corporati ons.
After due consideration of the recommendations of the Committee, the
Municipal Councils/Corporations shall follow the procedure prescribed for
publication of Draft and Final Notifications of the Bye-laws and Tariff
in the ULBs for effecting the same from 01.04.2021.

J.SYAMALA RAO
SECRETARY TO GOVERNMENT