Water -Not Worth The Parchment? Many A Slip To The Sip


NARENDRA BISHT
GOVERNANCE: WATER SUPPLY
Not Worth The Parchment?
All the contracts are generous, but privatised water hasn’t really got our cities overflowing with joy
LOLA NAYAR , Oulook Magazine

Many A Slip To The Sip

  • 30 Number of Indian cities where private sector and MNCs have been roped in by civic bodies to manage the water supply.
  • 0 No project has so far delivered on lofty commitments; most continue to face major opposition from the consuming public and civil society.
  • 100 Average percentage rise in water tariff in cities and urban areas with privatisation projects. More to follow?
  • 0 Obligation on water conservation or sewage treatment by PPPs, even as public funds and manpower is being provided to them.
  • 35 Duration, in years, of management contracts being signed by civic bodies, up from pilot management projects for a few years.

***

Across the road, on the other side of the gleaming new malls of south Delhi, is the older but not quite glamorous settlement of Hauz Rani. It’s summer, holiday time. But every evening, when they ought to be playing, dozens of young children, jerrycans in hand, troop to the nearby colonies and to a public tap near the malls to lug water back home—for drinking, cooking, was­hing and cleaning. The life-sustaining liquid, always in short supply, is evide­ntly scarcer this summer. Not atypical, you’d say, that’s how things are in India.

Now, into this scenario, enters a troika of private companies, promising salvation. Suez, SPML Infra and Degremont, in a consortium, have got a 12-year contract from the Delhi Jal Board to supply 24×7 water over a 14 sq km expanse that includes Hauz Rani. So is salvation really round the corner? Similar projects  from across the country have ominous stories to tell. In Mysore, Nagpur and Khandwa, private efforts to ramp up public water supply are croaking under the weight of expectations. Costs are up, supply erra­tic and discretionary—they have not been above parching the less posh parts so as to cater to the tony neighbourhoods. And in the worst-case scenario, alternative sources of water, like tubewells or public taps, get blocked for good measure. As India prepares to go down the privatised water route, it’s a good juncture to ask, after bijli and sadak, is paani too slipping out of reach of the aam aadmi?


Photograph by Nilotpal Baruah

Mysore, Karnataka

  • Model: PPP contract for remodelling of water supply distribution system of Mysore city
  • Firm & cost: JUSCO; Rs 234.5 crore
  • Earlier tariff: Rs 125 up to 25 KL @ Rs 5/KL, Rs 8/KL from 25–50 KL and so on
  • Proposed tariff: Slab starting from Rs 5/KL for domestic connections
  • Status: Local protest against JUSCO and municipal officials on poor project planning and implementation; Rs 7 crore penalty imposed on JUSCO for various lapses in the project; committee constituted to resolve issues.

The average middle-class consumption of water is 20-30 KL per month; City profiles by Outlook /Manthan

Three more Delhi areas (Vasant Kunj, Mehrauli, Nangloi) have been given over to the public-private partnership (PPP) model that Prime Minister Manmohan Singh tirelessly asserts is the answer to the nation’s ills. All told, the capital is among 30-odd cities where civic bodies have called in private entities, including mncs, to “manage” the water supply. The number is set to go higher as more cities approach the Jawaharlal Nehru National Urban Mission (JNNURM) which—ironically, considering the man after whom it is named—makes private participation a precondition for financial support.

Civic bodies have been pushed, despite strong protests, into experimenting with the PPP model. The government’s justification has been that the private sector will bring in investments, technology and management efficiency, none of which a cash-strapped public sector can offer. Yet a study of 13 private water and sanitation projects by the Planning Commission has praise for none. In four cases—Latur, Mysore, Dewas and Khandwa—the project viability has itself been questioned.


Photograph by Sanjay Rawat

Delhi, NCR

  • Model: Build, operate and maintain for 12-15 years in three pilot projects
  • Current tariff: Rs 600/month average
  • Proposed tariff: DJB to decide
  • Firms and cost: Suez, SPML Infra and Degremont (Malviya Nagar); SPML Infra, Tahal Consulting and Hagihon Jerusalem Water (Mehrauli and Vasant Kunj); Suez and SPML combine (Nangloi); Rs 253.30 crore
  • Status: Survey work has started in proposed areas for improving infrastructure. Activists are questioning the logic of DJB outsourcing O&M while providing all raw material.

The average middle-class consumption of water is 20-30 KL per month; City profiles by Outlook/Manthan

When the state cedes control of as vital a public asset as water, it allows business to hold the poor to ransom and fleece them.

But the march towards privatisation  continues. Current models of pub­lic-pri­vate water partnerships are div­erse, from refurbishing the infrastructure to service contracts for billing, collection and met­ering. At present, most projects are foc­u­sing on distribution improvement. Even so, only a few places have seen experiments with citywide distribution, with hardly encouraging results at that. Many more projects are coming up: Naya Rai­pur in Chhattisgarh has decided to give its water distribution contract to Jindal Co on the PPP model. Kolhapur, Maharashtra, has the distinction of being the first to go in for PPP for sewage treatment.

“Six years ago, activists and residents’ welfare associations in Delhi, Bombay and Bangalore were able to stall a World Bank-led move to have the private sector take over water supply projects by making it a condition for granting loans,” says S.A. Naqvi of the Citizens’ Front for Water Democracy. “Ironically, the Centre is now taking exactly the same route through JNNURM.” It’s nob­ody’s case that India’s moribund water supply system is not in dire need of help, as the Hauz Rani scenario illustrates. It’s also not that its residents would be cussedly averse to paying; anyone who has sampled Delhi’s ‘machine ka thanda paani’ knows service doe­sn’t come free. But as water PPPs begin to come apart, the que­stion is not whether citizens should pay for unlimited use of a finite commodity like water, but to whom and how much? When Hauz Rani’s saviours, the neighbouring colonies, receive water for a mere two and a half hours a day, the answer isn’t so easy. The Delhi PPP experience is not unique:

  • In Mysore, JUSCO, a Tata enterprise, has faced severe time overruns, paid penalties and faced pubic outrage
  • In Khandwa, Madhya Pradesh, all indications are of the project being unsustainable in the long run
  • In Latur, Maharashtra, SPML has been forced to hand back the water supply management to a government entity after local opposition.

“The results of PPP projects in urban water supply in India—even globally—aren’t encouraging. They don’t seem to be the solution that they were thought to be,” says Gaurav Dwivedi of Manthan Adhyayan Kendra, a study group. “These are expensive projects and municipal bodies are at risk of losing control of water supply to private companies due to long contract periods from which there is no getting out.”


Photograph by Vivek Pateria

Khandwa, Madhya Pradesh

  • Model: PPP Build Own Transfer (BOT) concession contract for 25 years
  • Firm and cost: Vishwa Infrastructure; Rs 115.32 crore
  • Earlier tariff: Rs 150 per month/connection
  • Proposed tariff: Rs 11.95/KL
  • Status: Construction phase ongoing, delayed by around two years. Investigations by JNNURM expert committee on irregularities. Local committee formed to look into people’s objections to privatisation including removal of non-revenue water, loss of municipal control, tariff hikes, etc.

The average middle-class consumption of water is 20-30 KL per month; City profiles by Outlook/Manthan

On paper, the case for privatisation of water supply, like telephony and aviation, seemed sound. Meeting the growing water demands of growing cities requ­i­red high investment. Better quality water called for sophisticated infrastru­cture. The private sector held the allure of money, technology, and also its famed managerial skills in implementation, delivery, acc­ou­ntability. Win-win. In reality, however, the experience has been quite the opposite as the state willingly cedes control over a vital public asset such as water under the garb of a PPP and watches haplessly as the poor are fleeced.

In many cities, private companies have brought little to the table. Naqvi says all the contracts awarded actually “have mechanisms to ensure the private parties don’t have to put in any of their own investments. During the initial two and a half years of the pilot projects, when the consortiums will be doing distribution, Delhi Jal Board will be paying very high management fees, besides the power bill, delivering treated water at the colony and providing its own employees to the private partner free of cost.”


Photograph by Sangeeta Mahajan

Nagpur, Maharashtra

  • Model: PPP contract for distribution, operation and maintenance and uninterrupted water supply (24×7) for 25 years
  • Firm and cost: Veolia Water and Vishwaraj Environment; Rs 566 crore
  • Earlier tariff: Rs 150–200 per month/connection
  • Proposed tariff: Rs 7.90/KL
  • Status: Several problems arising in project implementation, from steep water tariff hikes, dissatisfaction with meters, increased water consumption in demo zone after project implementation etc

The average middle-class consumption of water is 20-30 KL per month; City profiles by Outlook/Manthan

“The results of PPP projects in India are not encouraging,” says Gaurav Dwivedi. “They don’t seem to be the solution they were thought to be.”

On top of that, private companies are seen to be tinkering with that invaluable (and often scarce) commodity called democracy. Despite initial hiccups, electricity distribution saw some improvements after privatisation in cities like Delhi due to the presence of multiple sources of power. But private water companies have to depend on a finite number of sources. Diminishing rainfall, depleting water tables and raging wars between states have seen water become scarcer. So, supplying 24×7 water to one area in a city as promised by a private operator means depriving a number of other areas of their rightful due. It also means creating an artificial demand with an eye on the bottomline.

Worse, says Prof U.N. Ravi Kumar, a Mysore-based water consultant who has been engaged in the revival of water bodies. Private water suppliers are not making any effort to look at issues like waste water management or conserving water resources, he says. “All the projects we hear about are presentations by the companies and project promoters. Governments can easily get swayed by promises of 24×7 supply.” In other words, the private players have sold a pipe dream and are getting access to exploit and monetise public water resources without adding to it.


Photograph by AFP, From Outlook 24 June 2013

Hubli, Karnataka

  • Model: PPP contract for provision of 24/7 continuous water supply including refurbishment of distribution network
  • Firm and cost: Veolia Water; Rs 235.10 crore
  • Earlier tariff: Rs 90 per month per connection
  • Proposed tariff: Rs 6/ KL for 0-8 KL, Rs 10/KL for 8-15 KL, Rs 15 for 15-25 KL and minimum charge of Rs 48 per month
  • Status: Questions about the lack of transparency in the project particularly with respect to the tariff structure; uncertainty about financial implications for local people when support is removed.

The average middle-class consumption of water is 20-30 KL per month; City profiles by Outlook/Manthan

In many cities where private operators have moved in, anecdotal evidence shows that, while the rich and well-off can be assured of better supplies at a higher cost, those defaulting on even one bill end up paying dearly with water supplies being stopped. While private players have been relentless in enforcing the rules on individual domestic connections, they seem to have fallen prey to their political masters while dealing with commercial connections—which usually default on a much larger scale than domestic ones.

Ashok Govindpurkar, a veteran Nat­ionalist Congress Party councillor from Latur, says they were widely supported in their protest against private management of water supply in their city of four lakh population as households having or seeking to instal a handpump needed to get permission. “The cost of a water connection for Rs 1,700 plus a meter cost of Rs 2,400 was a huge burden on the poor,” he says. Adds Gaurav Dwivedi of Manthan Adhyayan Kendra, “Water PPPs do not have a pro-poor orientation even tho­ugh this is the section of the community, especially in urban settings, which needs water supply and sanitation services at low costs on an urgent basis.” It does not call for any particular political bent to see that, in India, this would only worsen the country’s overall indices.

The private companies complain about being demonised. “In Latur, water was supplied once a week before we took over. We improved the situation and supplied it on alternate days,” says Rishabh Sethi, exe­cutive director, SPML. “The lack of support and coordination between government entities with respect to their contractual obligation has been the main reason for the project being kept in abeyance. Plus plentiful local opposition, including from local political groups.”


Photograph by Amit Haralkar

Latur, Maharashtra

  • Model: Management contract for 10 years
  • Firm & Cost: SPML; Fixed management fee (IRR of 19.6 per cent)
  • Earlier tariff: Rs 100/month
  • Proposed tariff: Rs 150 (plus meter cost of Rs 2,400 + connection cost Rs 1,700)
  • Status: The first case where a private management contract has been rolled back following three years of protests by people and most political parties barring Congress. The project has now been given to a public sector entity.

The average middle-class consumption of water is 20-30 KL per month; City profiles by Outlook/Manthan

In Mysore, JUSCO’s plea for renegotiation of the contract is meeting with widespread opposition. Despite some benefits having accrued to ‘chronic problem’ localities in the city, many other areas are seeing a drop in supplies. Ditto Nagpur, where the distribution project was extended to cover the whole city even before the assessment of the pilot was done. “I don’t think private participation has worked anywhere in India for a sufficiently long period or provided a credible appraisal performance,” says water activist Himanshu Thakkar.

JUSCO is not the only company trying to renegotiate the terms of its contract, but the Mysore city corporation is in a fix. It is facing a financial squeeze and has no answer to the public ire. Also, there’s  little option of throwing out the private company without inviting protracted litigation. With the long-term contracts loaded in favour of private companies, civic bodies are caught between a rock and a hard place. And the only way out, it seems, is to wait like its counterparts in Europe and declare water supply a public sector operation after the contract runs out.

Justice Sachar alleges pvt water companies getting undue benefits


Nivedita Khandekar, Hindustan Times
New Delhi, January 12, 2013

Continuing his attack on ‘privatisation’ of water supply in Delhi, Justice (retired) Rajinder Sachar has questioned the role of Delhi Jal Board (DJB) in such policy decisions. He has also alleged that private companies were being given undue benefit in the name of 24×7 water supply programmes under public private participation (PPP) model.

A patron of water privatisation and commercialisation resistance committee, Justice Sachar had first written to Chief Minister Sheila Dikshit in November, raising pertinent issues vis-à-vis privatisation attempts by the DJB. However, instead of Dikshit, he received a reply from Jal board’s CEO Debashree Mukherjee. “Bureaucrats are not in the position to respond to constitutional and policy matters raised by me in the earlier letter,” Sachar has pointed out to Dikshit in another letter sent this week.

The DJB had in 2012 launched three pilot programmes for 24×7 water supply under the PPP model to improve the water distribution system in Malviya Nagar, Nangloi, Vasant Vihar and Mehrauli.

Sachar has pointed out that the DJB has referred to reduction of the non-revenue water (NRW) but the contract agreement signed by the Nangloi project shows that the private operator will not be required to reduce NRW for the first four years.

“This shows that the NRW is not an issue except for justifying privatisation,” he alleged.

Sachar also called for an independent tribunal, which will decide on the water tariffs and the changes required in them, with full public participation. “Despite an automatic 10 % hike incorporated in the cycle, the DJB has failed to guarantee that there would be no mid-term revision,” he alleged.

After the CM’s instructions, DJB has not affected its annual 10 % hike in tariff applicable from January 1. “We reassessed that the privatisation of water services will have serious ramifications for the people. I have drawn your attention to the latest anti-privatisation trends in the world (and), would like you to directly deal with the issue,” Sachar has appealed to the CM.

Despite repeated attempts, the CM remained unavailable for comments.

 

Privatisation of water supply set in motion #wakeupcall


SATURDAY, 04 AUGUST 2012 00:08 RAJESH KUMAR | NEW DELHI

Following Planning Commission’s directions, Delhi Jal Board (DJB) has approved a proposal to involve Public Private Partnership (PPP) for better distribution and maintenance of water supply in Malviya Nagar, Mehrauli and Vasant Vihar in south Delhi areas.

DJB’s high-level meeting chaired by Chief Minister Sheila Dikshit on Friday approved a proposal to this effect. The Delhi Government will brief the Planning Commission about the proposal. Under the project, the entire distribution network in a particular area would be handed over to the private parties. They would be in-charge of maintaining the water pipeline networks. They would be responsible for repairing all leaking pipelines in the locality.

The decision was taken to save distribution losses which ranges between 40 to 50 per cent, sources said.

According to the proposal, a total of 32.21 square km would be covered in the pilot project.  Messers Suez Environment India Private Limited and, SPML Infra Limited and Degremont would look into Malviya Nagar project while M/s SPML Infra Limited, Tahal Consulting Engineers and Hagihon Jerusalem Water and Wastewater Works would look into Mehrauli and Vasant Vihar distribution system. The Degremont is the same company, handling the Sonia Vihar water treatment plant which supplies water in South Delhi areas.

The contracts would be awarded for 10-12 years for the key operators. Under the project, the assets will remain with the DJB and the Board would pay to private parties for distribution and maintenance.

Cost of Rs 253.30 crore is estimated for Malviya Nagar project, including recovery of 30 per cent operator’s contribution in Rs 87.68 crore (Rs 171.62 crore – Rs 83 crore) of rehabilitation and development cost. For Mehrauli and Vasant Vihar projects, the estimated cost is Rs 201 crore. The areas to be covered in Malviya Nagar include Khirki, Saket, Adhchini, Begumpuri, Chirag Delhi, Hauz Rani, Shivalik, Pushp Vihar, Sheikh Sarai, Qutub Institutional Areas, Nav Jeevan, Sarvodaya Enclave; Qutub, Lal Tanki, Bawaji Wala, Kishan garh and Garhwal colony in Mehrauli areas; West End Enclave, Shanti Niketan, Anand Niketan in Vasant Vihar areas.

After the meeting, Dikshit told that the Planning Commission of India had approved the proposal and this model would be different. “In this model, the assets will remain with DJB. This will ensure up-gradation to un-interrupted and pressurised water supply, reduction in the coping costs, minimal chances of contamination, free of cost change in service lines, prompt grievances redressal and improvement in services to consumers at no extra cost. It will increase revenue generation and will also reduce energy consumption,” she said.

It may be noted that DJB supply 76 MLD water per day to Malviya Nagar; 10-13 MLD in Mehrauli and 7 MLD in Vasant Vihar. Total 32,148 jal board connections are registered in Malviya Nagar which has a population of 3.82 lakh, while 7,216 connections in Mehrauli having population of 1.87 lakh. In Vasant Vihar, the population is nearly 50,000 and estimated connections are 6,847.

Since 2002, the Delhi Government has been planning to initiate water sector reforms on the lines of the proposals given by the World Bank. DJB also appointed PricewaterHouseCoopers as the consultant for the project. PWC suggested that DJB enter into contracts with companies who would manage the distribution network. But by 2006, the whole issue died down due to large scale protests. In 2011, the Delhi Government appointed a committee under the chairman of PK Tripathi to suggest a roadmap for water distribution reforms.

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