Thames Water – a private equity plaything that takes us for fools


When the water company was privatised we were promised a utopia of private sector efficiency

  •  Will Hutton ,  Guardian, The Observer, Nov 11, 2012
Victorian sewer, Knightbridge

Inside one of London’s Victorian sewers. Photograph: Kirsty Wigglesworth/PA

London remains the effluent capital of Europe. The Victorian network of sewers is overwhelmed, and untreated or semi-treated sewage is leaking into the Thames, leaving the tide to do the rest, just as it did when the great engineer Joseph Bazalgette built the system. It is no longer acceptable – for consumers or in terms of international water standards. For more than a decade Thames Water has known that it needs to builda huge 20-mile tunnel 70 metres under the river to conduct the sewage out to sea, a £4bn investment that would last more than a century.

The chancellor, George Osborne, has identified the scheme, now gone through interminable planning inquiries, as part of the national infrastructure plan. And it is reliably tipped to be included in December’s autumn statement as eligible for the new infrastructure guarantee. British taxpayers will essentially guarantee the £4bn of Thames Water borrowing, so that whatever happens investors will get their money back. This will allow Britain’s biggest water company to borrow hugely, as a government body in effect, at the keenest rates of interest.

Which is why even if you don’t live in London you should pay attention: you will be offering the guarantee. Enough of such guarantees and Mr Osborne will be able to pronounce the tideway tunnel one of 40 priority projects to spearhead a multibillion-pound infrastructure boost – without increasing public borrowing at all. Magic!

However, those with long memories will recall that one of the principal arguments for privatisation was that no such guarantees would ever be needed again. When Thames Water was privatised back in 1989, raising a paltry £922m for the government, we were promised a utopia of private sector efficiency in which the water industry’s new private sector owners would create a first-class water system at much lower prices than the government ever could. The industry could escape Treasury constraints and borrow freely. Regulation would be light touch. The “dead hand” of government should be got out of this industry as out of every other.

Thames is certainly a different company, proudly boasting that 99.98% of its sampled water meets quality standards and of a rolling investment programme to meet its regulatory obligations. And, God, has it borrowed freely! It is crippled with debt, which has jumped from £1.8bn to £8bn over the past decade under its foreign owners – first the German utility RWE and, since 2006, a group of private equity funds domiciled in Luxembourg, marshalled by the Australian bank Macquarie. Taking account of the debt means that its net worth has hardly risen at all.

Macquarie is the bank that makes Mitt Romney’s Bain Capital look saintly. Its every effort is organised to outflank regulators and tax authorities, and so make extra for itself – thus its nickname as the millionaire factory. But the game cannot start unless it owns a monopoly business, such as Thames Water, that reliably generates profits and cash. In a country such as Britain, whose politicians like to claim is “open for business” and where tough questions about corporate behaviour are rarely asked, it is an invitation to be looted, and so we have been. Responsible owners would steward their company with more care.

Thames Water has done what the regulator has asked but no more. It has not been concerned to make the water system more resilient, with, say, back-up reservoirs to guard against climate change – earlier this year, we witnessed restrictions on water use because of drought. Nor has it managed its affairs so that it has spare capacity for the unexpected or for a big project like the tideway tunnel.

Instead it is a vehicle whose over-riding priority is incredible shareholder enrichment. By maxing out on debt, all the astonishingly high interest payments can be offset against tax, so that in 2012 it paid no tax whatsoever even while paying £279.5m of dividends – subject, of course, to minimal Luxembourg taxation. T Martin Blaiklock, an infrastructure consultant whose work the Observer reports today, calculates that if Thames had made no dividend payments over the past 10 years and instead used the cash to build up reserves, it would have accumulated £4bn to build the tunnel with no extra borrowing, and thus no extra water charges. The private equity groups behind Thames, he reckons, would have merely seen their investment grow by about two-thirds since 2006 rather than enjoyed a tenfold increase – a much fairer deal all round.

As it is, the Treasury is going to endorse the way Thames has been managed by offering it the get-out-of-jail free card of an infrastructure guarantee. I favour using such guarantees to deliver infrastructure investment that would not otherwise take place, but it throws into sharp relief the co-dependence that exists between the public realm and the private sector – and one that is wholly unacknowledged either in law or culturally.

Thames Water is a utility providing 14 million Londoners with water. In law, and culturally, it is no more than a private equity plaything whose obligations to London are secondary to whatever wheeze will enrich its shareholders, who now include both Abu Dhabi’s and China’s sovereign wealth funds.

Most of England’s water companies are run the same way. As Blaiklock comments, sooner or later one of our overindebted water companies will collapse, requiring a more formal bailout than an infrastructure guarantee. (State-owned Scottish Water, by contrast, faces no such risk.) But it will have contributed precious little tax to the state that is bailing it out.

Four crucial reforms are required before the guarantee scheme is launched.

First, Ofwat, the regulator, should have much greater powers with regard to water companies’ balance sheet strategies: borrowing plans should only go forward with its prior approval and it should be able to launch periodic stress tests.

Second, as public service companies, all British water companies should pay corporation tax as a percentage of turnover, with proper deductions for investment and depreciation, but no allowances for any financial transaction with a tax haven.

Third, non-executive directors of utilities should be made legally responsible for ensuring that the utility’s first obligation is to discharge its purpose as a utility rather than to be financially engineered to induce high shareholder returns.

Fourth, the government should take a golden share in each company that accepts a guarantee.

What has happened to the English water industry over the past 20 years is as disgraceful as what happened to our banks. Britain badly needs new infrastructure investment; but it also needs a more responsible capitalism. Mr Osborne has the opportunity next month to ensure both. He cannot – and must not – offer indiscriminate guarantees for no wider economic and social return

Man with bright idea saves 50m gallons of drinking water a day #Goodnews


 

Overflowing Modak Sagar water redirected to Tansa
Man with bright idea saves 50m gallons of drinking water a day
Yogesh.Naik @timesgroup.com, Mumbai Mirror

If the city gets through the next 12 months without suffering a severe water crisis despite what has been an extremely poor monsoon, citizens will have a retired civic engineer to thank.
Prakash Limaye, who retired from the BMC‘s Waterworks department earlier this year, is based 100 km from Mumbai and is single-handedly saving nearly 50 million gallons of potable water — enough for 1 million people daily — from flowing into the Arabian Sea every day. On an average, Mumbai consumes 750 million gallons of water a day.
The idea itself is a combination of simplicity and common sense — terms not easily associated with the civic body.
Located 22 kms apart, Tansa and Modak Sagar dams are chief sources of drinking water to Mumbai. With below average rainfall this season, the water level at the 19-sq-km Tansa lake on Tansa river has stayed well below the desired level.
On the other hand, the eight-sq-km Modak Sagar, situated on the banks of Vaitarna river, started overflowing last week, and the city would have lost millions of gallons of drinking water to the sea had it not been for Limaye’s plan.
The pipeline connecting Modak Sagar to Mumbai passes through the periphery of Tansa. Limaye’s plan involves opening up valves on the pipelines at points closest to Tansa, thereby enabling the excess water to flow into Tansa instead of being wasted.
There are 30 scour valves passing through Tansa, each capable of releasing an average of 10 million gallons of water into the lake. At the moment, the BMC is opening 5-8 valves a day — saving close to 50 million gallons of drinking water in the process every day. In all, 400 million gallons of water have been banked over the last eight days.
Limaye, who has built his retirement home just 2 km from Tansa, is helping sub-engineer Vilas Aher in the operation. These valves need to be opened and shut manually — in fact, with a wrench — every day.
“Modak Sagar fills up quickly and overflows when there is a consistent rainfall of 900 mm, while Tansa requires around 1300-1400 mm of rainfall to fill to the brim. This year, we realised that it would be difficult to fill Tansa, so we proposed that the valves of the pipes that pass on its periphery be opened up,” Limaye said.
“We have opened up five scours of the pipe coming from Modak Sagar towards Tansa and also stopped the water supply (daily share of 100 million gallons) from Tansa. As a result, the level of Tansa goes up by a foot (0.33 metres) daily. Each day, nearly 50 million gallons of water gets transferred from Modak Sagar to Tansa,” Aher said.
Limaye, incidentally, had drawn up this blueprint in 2009, but a delay in getting the required approvals ensured that it was too late by the time the idea was implemented. That year, the city had to face acute water shortage, with the BMC imposing 15 per cent cuts on residential consumers.
With adequate rainfall in the next two years, the idea was as good as shelved. But with the monsoons barely registering, Limaye was at hand to prevent the taps from running dry.

 

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.

160 sorties failed but BMC to go for #cloudseeding again


 

This image explaining cloud seeding shows the ...

This image explaining cloud seeding shows the chemical either silver iodine or dry ice being dumped onto the cloud which then becomes a rain shower. The process shown in the upper right is what is happening in the cloud and the process of condensation to the introduced chemicals. Sources for image: (Photo credit: Wikipedia)

 

 

Linah Baliga, TNN Aug 1, 2012,

MUMBAI: Having failed to make artificial rains despite 160 attempts in 2009, the civic body will resort to the same technique this year to make for the shortfall. On Thursday, the Brihanmumbai Municipal Corporation (BMC) will hold a video conference with officials from India Meteorological Department (IMD), Indian Institute of Tropical Meteorology (IITM) and Israeli firm Mekorot to decide on cloud seeding methods in catchment areas of lakes supplying water to the city. Mekorot will assist BMC with technological infrastructure like radar and aircraft.

Though civic officials admitted that last time they were unsuccessful, they said this year they are trying to correct the past mistakes. “This time we are doing it under expert guidance, as we had not sought help from agencies like IMD and IITM earlier. After discussing it with IITM they have come to a conclusion that cloud seeding is now a well established science. It’s a proven thing that cloud seeding makes inefficient clouds efficient,” additional municipal commissioner Rajiv Jalota said.

 

IITM has told BMC that Israel has extensively developed its technology on cloud seeding and has been using it for over 50 years. “Fortunately, we had a MoU with Israel’s water and energy department in June, last year. Since the past 15 days, we have been in touch with Israel’s national water company Mekorot to undertake this experiment,” he said.

In 2009, attempts were made over Tansa and Modak Sagar lakes with the help of Hyderabad-based Agni Aviation and the civic body spent Rs 8 crore on the project. Civic officials from the hydraulic department claimed that the experiment failed as BMC was unable to calculate the difference in amount of rainfall in catchment areas after cloud seeding was carried out.

Jalota said that the last experiment in 2009 at Tansa and Modak Sagar was done with the help of an aircraft and also by burning silver iodide crystals.

This time around, the experiment will involve sprinkling of silver iodide on clouds over Tansa, Bhatsa, Upper Vaitarna and Modak Sagar lakes to induce precipitation and subsequently artificial rains. “The technicians will be sitting inside the aircraft to monitor every step. The cloud seeding will be done at the base of the cloud when the cloud is having an updraft and has a reflectivity between 30dbz and 35dbz. This is the time the cloud is best suited for cloud seeding. It takes half-an-hour for the clouds to be efficient and it rains. The average speed of the cloud will be 15 metres per second,” Jalota said.

He said the civic body is in touch with Mekorot’s Mumbai base in Bandra Kurla Complex. “The modalities will be worked out on Thursday, whether or not to use IMD’s radar. We will also decide on whether Mekorot will provide us with just the aircraft or even manpower to operate the aircraft,” said Jalota.

If all goes well, Mumbaikars will also get an additional 455 million litres per day, as gates of Middle Vaitarna dam will be opened and water from the dam will be released by September.

Don’t make water supply out to be rocket science

The BMC should stop looking at outlandish ideas for maintaining supply to taps. Statistics indicate that Mumbai would not have to go through water cuts had the BMC simply turned its attention to plugging the leaks in the distribution chain and the widespread pilferage. The BMC has managed to keep the level of water cut down to 10 per cent this year but some long-term planning and attention to basic details could have done away with even this bit of pain.

 

 

 

 

Groundwater contaminated, Punjab battles uranium curse


 

Chandigarh, July 13, 2012

Groundwater contaminated, Punjab battles uranium curse

IANS

Union Rural Development Minister Jairam Ramesh has confirmed the presence of uranium and other heavy metals in groundwater in the state, particularly the Malwa region, and serious efforts are afoot to control the damage. File photo
The Hindu Union Rural Development Minister Jairam Ramesh has confirmed the presence of uranium and other heavy metals in groundwater in the state, particularly the Malwa region, and serious efforts are afoot to control the damage. File photo

The high incidence of cancer and other diseases in Punjab’s Malwa belt has been highlighted over the last decade. Now, union Rural Development Minister Jairam Ramesh has confirmed the presence of uranium and other heavy metals in groundwater in the state, particularly the Malwa region, and serious efforts are afoot to control the damage.

The worst affected is southwest Punjab’s fertile Malwa belt — the area south of the river Sutlej — comprising the districts of Mansa, Bathinda, Moga, Faridkot, Barnala, Sangrur and some parts of Ludhiana.

Ramesh, during a visit here last week, admitted that substantial quantities of uranium, arsenic, mercury and other heavy metals had been found in the tested samples of groundwater in Punjab.

“The level of uranium in the ground water is 50 percent over the WHO norms. The source of this is not yet known. Punjab is the only state to have uranium in its water,” Mr. Ramesh said.

Of the 2,462 samples of water collected from tube wells across Punjab, 1,140 samples had tested positive for the presence of uranium and arsenic.

The effect of all this can be seen in the growing number of patients in the Malwa belt with cancer and other diseases and children being born with abnormalities. In fact, a train that connects Bathinda with Bikaner in neighbouring Rajasthan is known as the ‘Cancer Express’ as it ferries a large number of cancer patients from Punjab to Bikaner for treatment at a cancer hospital.

The union government, which has promised to give Punjab Rs.525 crore to make its water uranium free, has already sanctioned a water testing laboratory at Mohali, 10 km from here.

Environmentalists blame the rampant use of pesticides, fertiliser and other chemicals — as Punjab took the lead in the Green Revolution and became the country’s No. 1 state in food grain production — for the contaminated groundwater.

According to Umendra Dutt, director of the Kheti Virasat Mission, an NGO that works for agriculture and environment causes, an immediate plan is needed to tackle the multiple environmental toxicity in Punjab’s water.

“The rampant use of pesticides and agro-chemicals to achieve the green revolution is responsible for this situation,” Mr. Dutt said.

Some other environmentalists blame the pollution and waste from thermal plants and explosives used in past wars for the contamination of the water.

The Punjab government has sought technical help from the Bhabha Atomic Research Centre (BARC) to tackle the growing problem of uranium in groundwater.

Deputy Chief Minister Sukhbir Singh Badal has said the Punjab government would launch a war against uranium pollution in water, which was only specific to Punjab.

Scores of people in Bathinda, Mansa, Sangrur and other districts have died or are suffering from cancer and other diseases owing to uranium contamination.

Badal said that Chief Minister Parkash Singh Badal had already requested Prime Minister Manmohan Singh to allocate a special budget to tackle the problem of uranium as it has been done in the case of arsenic and fluoride contamination.

He said the BARC team was trying to locate the source of uranium contamination and the Punjab government was taking all possible measures to provide a reverse osmosis (RO) system for the supply of safe drinking water in the affected areas.

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