Smart Cities Special Purpose Vehicles

Strategic Plan and Smart City Proposal

As envisaged in Mission Guidelines, the Strategic Plan part of Smart City Proposal (SCP) varies from city to city within the cohort of 97 cities that competed in the round one of the Smart City Challenge. In case of the light house cities, similar to Strategic Plan the level of detailing in formulation of plan with specific projects proposed under both Area Based Development and Pan City Solutions varied. For example, Bhubaneswar the top rank city of round one challenge listed 75 projects and Bhopal the 20th ranked city listed only 9 projects in total under Area Based Development and Pan City Solutions together.

The process of interlinking the projects conceptualized and resources available to achieve the expected outcomes and
create a replicable model which will act like a light house to other areas within the city and also other aspiring cities is a challenging task. City level authorities which include urban local bodies, urban development authorities, parastatal agencies, municipal administration and urban development department are in existence performing a specific set of functions. To ensure timely and efficient execution of this wide variety and range of projects, it is mandated in the mission guidelines to create a Special Purpose Vehicle (SPV) for implementation of Smart City Proposal at the city level.

Special Purpose Vehicle and Smart City Proposal

The SPV will be a limited company incorporated under the Companies Act, 2013 at the city-level and will be promoted by the State/UT and the ULB jointly, both having 50:50 equity hareholding. Concept of SPVs is not new in Indian context but the approach and delivery model attached to Smart Cities Mission SPV model is unique. Smart Cities SPVs can be envisaged as the city laboratories where the resource institutions/networks within the eco-system of city development lend themselves to achieve the objective of revitalizing existing cities through a systematic improvement of entire urban living environments. Objective of this institutional framework and financial mechanism is to

  1. Sustain the urban transformations triggered with launch of new urban missions and
  2. Ensure operational independence and autonomy in decision making and mission implementation.

Convergence of funds at city level which is the underlying theme across the national missions in various ministries in India should be the primary spin-off of this new institution. For example

A Municipal Commissioner as a Chief Executive Officer of the Urban Local Body in traditional set-up might be keen on pursuing funds available under the national level sectoral schemes like Digital India by Ministry of Information and Communication Technology or Construction of Museums by the Culture Department or any other similar
social/cultural infrastructure programmes. Administrative approvals and standard operating procedure for accessing these additional sources of funding is challenging within a definite timeline. Smart City Mission SPVs are expected to fast track this process and facilitate the mobilization of resources.

Some of the concerns related to introduction of Special Purpose Vehicle (SPV) at the city level are –

Will it be a parallel system to urban local bodies or municipal administration? How to safeguard the public interest? What level of authority does SPVs have in imposing user charges especially in area based development project area?

The process of SPV formation and SPV organizational model as mentioned below would largely addresses the ambiguity around these kind of questions. As part of Smart City Proposal citizen engagement initiatives, most of the cities were successful in disseminating the message SPVs role in the implementation of SCPs. As per the mission guidelines, a Smart City Advisory Forum needs to be established at the city level to advise the SPV and enable collaboration between citizenry and city officials and other stakeholders. The CEO of the SPV will be the convener of the Smart City Advisory Forum with representations from resident welfare associations, tax/rate payers association, slum dwellers association, youth organizations and civil society organizations. Some of the 20 lighthouse cities have been organizing extensive elected representatives consultation to deliberate on the proportion and level of powers to be shared. Representation of city level officials from various departments within the general body of the proposed SPVs is also encouraging and landmark initiative considering the task at hand cannot be achieved by anyone agency, this needs to be done collectively and collaboration. This emphasizes the fact that SPV should be seen as executing agency donning the role of facilitator or moderator whenever required for smart city development collaboration at city level. The primary stakeholders of this implementation process being citizens with resource institutions as the eco-system.

Factsheet of SPVs in 20 Light House Cities

Similar to Smart City Proposals submitted during the round 1 of Smart City Challenge, the SPV models presented in SCP and incorporated by light house cities vary from city to city. Currently 14 of the 20 light house cities have incorporated Smart City SPVs which is the pre-requisite for release of first installment of Rs.200 Crore by central government. Unique models include Surat and Ahmedabad from Gujarat in which Municipal Commissioner is the Chairman of Board of Directors whereas the city of Bhubaneswar has Municipal Commissioner as the Vice-Chairman of the SPV. These SPV models are expected to evolve based on city’s own experience and learning’s from other mission cities.

Light House Cities SPV factsheet is based on information submitted as part of SCP and Company Incorporation Certificate/Government