Friday, December 9, 2016

Greenfield Smart Cities – Fuel for India’s urban vision

Published in Business World magazine, December 2016

Rationale for greenfield smart infrastructure – unparalleled potential to ‘do over’ cities
Economies globally are increasingly aiming to become smarter, by way of transforming all spheres of urban systems. Similarly, for realising India’s urban vision, structured interventions to transform Indian cities, such as the ‘Smart Cities Mission’ have been rolled out by the Government of India. The smart infrastructure projects, should accommodate scaling up of efficiencies and equip cities to effectively address evolving complex social, economic and political issues. For this, optimally utilising IT and digital technologies in improving the ‘Ease of Doing Business’ and the ‘Ease of Living’ in cities, will be central.
As part of the ‘Smart City Mission’s’ implementation methodology[1], while the envisioned area-based and pan-city developments aims to retrofit and redevelop existing components, the greenfield developments aims at introducing large-scale smart solutions. The very magnitude of possibilities and transformative outcomes of greenfield smart projects has made the concept of greenfield smart cities seem like potential panacea for Indian cities.
India’s greenfield smart cities in progress – scale and prospects warrant attention
Consider the Dholera Industrial City, which is envisioned to form the core of India’s fastest progressing Special Investment Region (SIR). Over 72 kms of major and minor roads, array of underground utilities such as stormwater drainage, water, waste water, power, gas and ICT, are part of the innovative design and conceptualisation. Aiming to be functional with infrastructure, manufacturing units and a population of around 1 lakh by 2019, the city’s long-term vision further envisions creating 8 lakh jobs by 2040.
Greenfield smart cities in India are being envisioned as optimally efficient urban centres of technology, job creation and living. The scale of investments and the areas covered by the cities help to throw light upon the magnitude of the projects.
Name of the Projects
Total Area (Sq. kms)
Envisioned Investments (INR crore)
Gujarat International Finance Tec-City (GIFT)
3.99
70,000 (cost of the total project)
Dholera Industrial City
22.5
3,000 (allocated by the government)
Naya Raipur
80
3,940 (proposed)
Lavasa
100
6,600 (incurred until now)
Sources: KPMG in India’s analysis




Potential challenges ahead for India’s greenfield cities – easier said than done
The essential focus for greenfield cities of Masdar (UAE) & Songdo (South Korea) is centred around innovative approaches related to solar energy, public transport, waste management.
The design of Masdar city takes into account the local climatic conditions. The emphasis on high-rise constructions are intended to help ensure that streets get only 30-45 minutes of direct sunlight a day in the desert climate, contributing to natural cooling. Likewise, Songdo’s proposed waste collection system eliminates the need for trash trucks.
Source: http://songdoibd.com/, http://www.masdar.ae/

The challenge for planners lies in combining smart urban development with the larger requirements of sustainable growth of cities. For example, the urban form of proposed greenfield cities has a direct correlation with energy consumption and transportation. Smart greenfield models should provide for a diverse mix of housing types, sizes, and prices within regions, communities and neighbourhoods, supported by an integrated, multimodal transportation network. Besides, the introduction of sophisticated data analytics for understanding, monitoring, regulating and planning the city would enable real-time analysis and insights. Thus, a flexible policy framework that is future oriented and citizen centric is imperative for shaping urban governance for smart greenfield cities.
Furthermore, planners need to take into account the self-sustainability of greenfield cities with regard to job creation and resource management. In greenfield projects, renewable energy such as solar and wind energy can ensure uninterrupted power supply for industries and other establishments in the city, which in turn can boost manufacturing and economic growth. 
Who invests in greenfield cities?
Greenfield projects mandate large-scale requirements of land and capital. Land acquisition (including acquiring agricultural land) should be in line with the myriad of regulations, which currently is not only time-consuming but also project-threatening. The show-cause notice to Lavasa’s developers, farmer-resistance in Dholera, etc. have had significant time-costs associated to them.
Given the nature of extensive funding requirements and limited government capacity, identification of apposite funding mechanisms for smart city infrastructure and technology investments is critical for greenfield cities. Sale of land parcels for commercial and residential purposes is a universal mechanism to recover initial capital investment by government and investors. However, it has been observed that traditional sources of financing are unable to address the requirements of innovative smart city infrastructure. Therefore, decision makers are in the process of exploring alternative sources of financing business models and partnerships, wherein, the cost recovery mechanism of each infrastructure investment is defined at the onset.
In addition to traditional approaches such as PPP (Public Private Partnership), funding for greenfield cities may also be addressed through innovative measures such as TIF (Tax Increment Financing) and data monetisation. Besides this, the recently established international financial institutions such as Asian Infrastructure Investment Bank (AIIB) and the New Development Bank (NDB) could be potential funding sources for greenfield smart cities in India.
Conversely, the discourse over the last year on Indian smart cities has revealed the general lack of willingness of infrastructure funds or sovereign wealth funds to invest in greenfield projects due to exposure of construction risk and concerns on slow procurement processes. Therefore, there is a compelling need for government to focus on developing adequate legal frameworks, institutional strength and reliability to attract this capital for greenfield smart city developments.
Inclusivity – the raison d’être of Indian cities
In the context of urban India, planners and decision makers should ensure that citizens engaged within the informal sector are ensured place, space and opportunities within proposed greenfield smart cities. Given the scale of the informal economy, future models need to take into account existing social infrastructure and address the specific needs of the vulnerable groups. Ensuring affordable smart infrastructure such as piped water and electricity through innovative mechanisms would go a long way in promoting the social objectives of greenfield smart cities.
M-KOPA Solar (www.m-kopa.com) is an innovative asset financing company that sells small-scale solar home systems (SHSs) in Africa to off-grid households on an affordable, 12-month mobile money payment plan via hire purchase.
The battery-powered 8W home system has three lights, a phone-charging facility and a chargeable radio. As of September 2015, M-KOPA actively provided affordable solar power to over 2,50,000 households in East Africa – and is adding a thousand more households per week.
A combination of innovative technology, effective distribution system, compelling value proposition, and a strong focus on customer care provided the successful foundation for an inclusive business model to deliver clean and affordable lighting for the masses. 
Source: http://arcfinance.org/



Finally comes the task of integrating societies – are we ready for an elaborate mesh of sensors and cameras recording us, companies and administration gathering data on us, in a scenario where privacy protection framework is already weak? How will property tax collection in Dholera differ from Ahmedabad (shortlisted smart city)? More importantly how will the administrative services between the 2 cities be integrated?




[1] Source: Smart Cities Mission Statement & Guidelines, Ministry of Urban Development, Government of India, June 2015, http://smartcities.gov.in/writereaddata/SmartCityGuidelines.pdf

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