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Campaign against so-called 'privatisation' of water

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Water

In a meeting organised with the Karnataka Urban Development Minister Mr. Suresh Kumar on 23 February 2011 at the behest of Mr Kodihalli Chandrashekar of the Karnataka Rajya Raitha Sangha, representatives of various movements, networks and voluntary organisations opposed to water privatisation were present.  A major reason for this meeting was the call made last week by the Peoples Campaign for Right to Water opposing the impending visit of 16 American corporations to Bangalore next week as part of the US Water Trade Mission – organised by the US Consul General in collaboration US Department of Commerce.  Present in the meeting were Shri. P. B. Ramamurthy, Chairman, BWSSB and Mr. Arvind Srivatsava, Managing Director, KUIDFC and other officials.

Some excerpts (in italics) from the 'Press Release/ Report' (for the full report, see the attachment) released by the group after the meet, and my responses to them:

Welcoming the gathering Mr. Suresh Kumar explained that his position was absolutely opposed to privatisation of water.  This had been his position all through his political career and he explained how he had organised successful protests against proposed privatisation of water services promoted by Biwater and Vivendi in 2001 when he was in the Opposition of the Karnataka Legislature.

Those days the scope of the contracts may have been for total privatisation. But, today, it's largely for outsourcing of water supply.

On the invitation of the Minister, Mr. Rajendra Prabhakar of the Peoples Campaign for Right to Water explained that while the US Trade Mission was absolutely based on exploiting what was claimed by the US Government as US$ 50 billion water market in India, the core concern has been that the Karnataka Urban Drinking Water and Sanitation Policy, 2003 was fully supportive of such commodification and privatisation of water. As long as this policy remained, mercenary traders would continue to exploit this lacunae.

The talk about the US$ 50 billion opportunity, etc is typical of the of hype generally created by trade delegations to attract participation by the members of industry organisations. Our own trade bodies like the CII, FKCCI, etc do it too, when they take out such delegations abroad. And, yes, the floundering US industry is desperately looking for opportunities in huge markets like in India. And, given the incapacity of the municipalities/ parastatals in meeting the ever-growing demand as well as in curbing the mounting 'unaccounted for losses' (BWSSB's itself being over 40%), the pressure on the governments to find solutions, and the propensity of some neta/ babu combo's to milk the opportunity to enter into sweet-heart deals, there's a possibilty of things going wrong, as has happened in other countries, and in our own maha-Bharat, on mega scales, but in sectors other than water, so far. So, there could be a threat. But, status quo is not the answer. It will only help perpetuate the hold of the well-entrenched lobby formed of the water-tanker and bore-well industry (all in the private sector, of course), in collusion with the BWSSB mafia, which besides is largely responsible for the 'unaccounted for losses', apart from the mucking up of our water bodies - check this

The right solution can be said to have evolved in the form of the Mysore City Corporation - JUSCO outsourcing contract, perhaps with some bit of tweaking added on, based on the learnings from the present phase of execution in its third year. Going by the report cited here, Bangalore is also now set to follow the Mysore example, though it seems to be going about it very tentatively.

The Fundamental Right to Life, that contains the Right of Access to a Life Supporting Resource such as water, was therefore under constant threat.  

You can have all the water you want if you go to the source – a river, lake, or wherever; but, for it to be made available at the turn of the tap in your home, there are huge costs involved, and these have to be met. For supplies to lower middle class areas, there can possibly be a subsidy, and in public taps, the supply can even be free. But the flows have to be measured, and the government has to bear the subsidy burden. For more on that, click here.

Mr Kshitij Urs of Action Aid warned that such programmes tend to destroy control over basic resources by democratic organisations; which once in the control of the private sector would have devastating consequences on society, as had been repeatedly proven across the world.  

It is perhaps true that most water-supply upgradation schemes tried out in the past (not in India) had ended up in total privatisation, and, driven by the short-term profit maximising objective of the service providers taking advantage of the 'natural monopoly' nature of the service, led to unfair cost escalations. But, the reasons for the municipalities not wanting to continue providing the service by themselves, in the first place, hadn't disappeared at all. Not quite appreciating this, some municipalities had apparently reverted to undertaking it themselves, and are now inevitably set to re-invent the wheel, after putting the citizens to a lot of hardships, in the process.

Not just water supply, as per the provisions of the 74th amendment, municipalities in India are now required to be responsible for power supply, public bus transport services, traffic policing, etc, in additions to the myriad functions they have already been (mis)-handling so far. And, no municipality anywhere in the world can claim to have the capacity to manage all of them by itself. For more on that, click here

He reminded that a part of the reason for the popular protests in Egypt was that people were frustrated by the high cost of living, that included buying water from mercenary private players. 

Whatever the position in Egypt or elsewhere, in our maha-Bharat, it is the incapacity and inefficiency of the the government service providers in key infrastructure areas that is responsible for the rapidly rising cost of living. In sectors, where there is private participation, the prices have in fact been dropping.

Ms Nandini of the Campaign stated that no discussion whatsoever had taken place in the public domain about the intent and scope of this Trade Mission to Bangalore.

There's quite some truth in it. The government has generally been very cagey in its ways - check this

On the inclusion in the Mission's agenda of 'imparting knowledge to Indians on rain water harvesting', Nandini observed that it was indicative of the 'indignant attitude on the part of the Trade Mission is reminiscent of  colonial and imperial approaches'.

Well, Indian companies have learnt the trick of actualising blooms in deserts from Israeli's. Likewise, if the US companies have some thing better to offer than what we have been used to, what's the harm in looking at it? Nobody is going to buy it unless it's cost effective.

The Minister, Mr Suresh Kumar, read out the email to all gathered and it revealed that the US Commerce Department had decided to organise this Trade Mission without any consultation whatsoever with its Indian counterparts.  The Trade delegation had unilaterally decided the dates, locations and the agencies and locations they wished to visit.  The BWSSB was merely informed to be ready to receive the delegation and assist in such visits.

Apparently, this has been the practice so far. It's time they realised, as also they are told, that the times have changed.

Mr. Arvind Srivatsava of KUIDFC spoke next and explained in defence of ongoing privatisation efforts. He said that they had all been secured based on consensus from local Councils.  He claimed that he had personally participated in many of the meetings, and made presentations providing all choices to the Councils.  In Mangalore, for instance, he offered three options to the Council: a) manage water provisioning on their own, b) manage it through a parastatal Board and c) to privatise the water distribution.  The Mangalore Council preferred the privatisation route, he said, claiming this as evidence of acceptance of water privatisation as a democratic choiceHe also defended the privatisation of water services in Mysore as being a part of the democratic process based on consultations.  He also suggested that the public sector workers of Vanivilas Water Works in Mysore were accommodated by JUSCO (the water privatisation arm of TATAs managing the distribution network) based on a condition imposed by the Government.  In effect justifying his point that the Government was not abandoning its obligation of providing water for all, especially the poor.

In a debate that followed, Mr. Saldanha highlighted that were the workers not to protest against their transfer or retrenchment at the Vanivilas Water works, the Government's intent appeared to be to disband this loyal expertise in favour of the private sector.


For all the 'loyal expertise', it has not been able to prevent the mounting 'unaccounted for losses'.

Thus the claim that the Government intended to protect public sector workers was specious; clearly the workers remained because they fought for their rights.  

The government has an obligation to protect the interests of all sections of workers, and not just those of the public sector labour aristocracy. For more on that, click here

Mr Kodihalli Chandrashekar stated that the Raitha Sangha was clearly opposed to privatising water anywhere.  He explained to Mr. Srivatsava that when senior and articulate officers like him went to Councils in backward areas, with laptops and power point presentations, etc., the naïve councillors were so weakly informed and equipped to formulate such complex decisions or wise choices, that they would routinely surrender to the urbane communication and perceptions of officers.  

Essentially, he seems to be saying that Mangalore councillors are dumb. And, what about Mysore Grahakara Parishad (MGP) members, with whom Mr Manivannan interacted closely? - check this

Where are the deliberate efforts of the Government to communicate to the wide public and elected representatives all the implications of such privatisation efforts in threadbare detail, he enquired?

As already stated, Mr Manivannan had interacted closely with the MGP, arguably the foremost think-tank in Mysore, before finalising the contract with JUSCO. Further, when Mr K Chandrasekhar is so contemptuous of the capacity of the elected representatives from Mangalore, how come this sudden reverence for representatives from elsewhere? Well, either way, there's no denying the the importance of keeping the elected representatives in the loop in a democracy.  

He demanded that the entire State Water Policy must be reviewed in detail and publicly, involving elected representatives and experts, and that pending this exercise there was no need whatsoever to rush into any deals.

Fair enough - we have an acknowledged water expert like Mr Viswanath, and a most genuine Socialist like Ms Kathyayini Chamaraj, in our midst, apart from representatives of various other stake-holders. Do include them in the process too.

Mr Suresh Kumar speaking for the Government reassured the delegation that the Government was completely opposed to commodification and privatisation of water. He said that in principle he was one with the Protests against any such move, and that no one needs to doubt his integrity on this commitment. He confirmed that once the Budget Session of the Karnataka Legislature was complete, he would organise public debates on the State Water Policy with the intent of withdrawing the pro-privatisation of water contained presently.  He reasserted that this Government will never privatise water.

The minister's personal integrity is not at all in question (but, so is Dr Manmohan Singh's). But, how effective they have been in checking their colleagues, is what is in question. And, one hopes the minister realises that words like 'commodification' and 'privatisation' are red herrings deployed to side-track the debate from the actual issues involved.

When urged that he should not allow the Government to support the Trade Mission, given its unconstitutional and covert objectives, he said he would consult his officials as he had not been at all informed or approached by the US Consul General.

I can't see any harm in carrying on a dialogue and understanding what they have to offer. In fact, there may be scope for Indian companies like JUSCO to replicate the Mysore model in US cities, quite like Indian companies in other sectors having taken over the operations there.

Muralidhar Rao


 

 

 

 

 

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Report_Meeting_Suresh_Kumar_Water_Pvtz_240211.doc38 KB
Water_Rights_Blore_Protest_Report_280211.pdf274.64 KB

Comments

sun_n_moon's picture

Water alarms

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Well said Murali. It's time the old bogey words of privatization and the like are given a burial. The key question is which set of choices are most likely to serve the citizens, more so the urban poor. People need to be open to transparently evaluate efficacy of current route (bwssb as sole service provider) vis a vis alternatives (which include outsourcing with regulation) on a set of defined metrics - and it should be the BBMP elected reps who need to take a call on this and be held accountable for their decisions.

murali772's picture

campaign sure to have total support of the 'private sector'

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Report on the protest rally held on 28th Feb, is also attached (to the original post).

Excerpts from the same (in italics) and my responses:

The entire water services in Mysore have also been given away similarly questionably to JUSCO, a TATA Company. The campaign demands an immediate remunicipalisation of all water and sanitation services that have been handed over to private companies and a complete stop to plans that further privatise water and sanitation services across Karnataka, including those proposed for Bangalore.

Re-municipalisation is already provided for under the 74th amendment - essentially meaning the scrapping of parastatals like the BWSSB - that's all very fine. But, it's not just water supply, as per the provisions of the 74th amendment, municipalities in India are now required to be responsible for power supply, public bus transport services, traffic policing, etc, in additions to the myriad functions they have already been (mis)-handling so far. And, no municipality anywhere in the world can claim to have the capacity to manage all of them by itself. This has already been elaborated upon in the opening post, and more can be read here. So, how are the municipalities supposed to handle all these tasks?

As O and M constitutes the process by which drinking water is provided to people, and this activity is the fundamental rationale for the existence of water boards working under city municipalities, any move to outsource this amounts to serious dereliction of the Constitutional responsibilities of the State.

Going by this report, close to 25% of the 198 wards in the city, do not receive water suppiles from the BWSSB. So, what about the constitutional obligation of reaching the supply, in the first place?

There is no dispute that such actions constitute privatization and handing over life sustaining asset for private profiteering..

As already stated in the opening post, actual privatisation has already happened in a big way through the water-tanker and bore-well industry. I am sure the 'People's Campaign for Right to Water' will have this industry's fullest blessings.

The then (05-06) chairperson of BWSSB Mr Ashok Manoli made a report to BWSSB’s capabilities in providing services to the greater Bangalore area at one-third the cost demanded by private corporations. Five years later, the same privatization effort is being attempted now through a back door entry of a project ubiquitously titled ‘leakage reductuin'.

And, in the 5 years, how has the BWSSB fared? Apart from the over 40% 'unaccounted for losses', a citizen's assessment of their performance can be guaged from here.

 

Muralidhar Rao

Answer this poll here

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I started a poll to find out how many of us actually use private water.

http://praja.in/en/poll/shekhar-mittal/2011/03/13/do-you-use-commercial-water

cast your votes!

-S

 


murali772's picture

the inevitability of it all

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A report on the status of service delivery for water supply and sanitation till March 31, 2011, shows the national average of piped water facility to be only 53%, as against 100%, and average per capita supply at 69 litres per capita per day, against the ideal of 135 litres. Coverage of sewage network and solid waste management of households is 12%, as against a target of 100%.

PPP, if well-defined and structured, can be successful in the water sector, said R Raghuttama Rao, MD of IMaCS, a water consultancy firm. "It has a wrong name because it has been done the wrong way. The animal instinct of private companies needs to be tapped and caged by government agencies," said Rao, who was all for the government being the service provider/ watchdog and engaging private companies (with better resources and finances) to execute the joint projects. "Get technology into it, hold the companies accountable, set up performance indicators and look how a PPP succeeds," he said. At the moment, it looks like too many cooks with no recipe in hand, said Rao, referring to the government entities entrusted with water supply in a single city.

The Draft National Water Policy was presented at the summit by Sudhir Garg, joint secretary, ministry of water resources, Government of India - National Water Policy. The establishment of a Water Regulatory Authority in each state has been proposed, apart from a national forum to deliberate on issues relating to water and evolve consensus, cooperation and reconciliation among party states.


For the full report in the ToI, click here

Private sector entry is inevitable considering the incapacity of the government agencies to meet the ever-growing demand. It's best that they now move fast into the role that only they can play - that of the facilitator, regulator, and the controller (where essential).

Muralidhar Rao
murali772's picture

Kerala's competitive Socialism

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Seven ruling party MLAs joined the opposition to protest partial privatisation of water distribution after minister P J Joseph said the proposed CIAL-model company will have rights over three categories of water resources in the state. The firm, which will have 51% private equity, will draw water from ponds, abandoned quarries and brackish water and distribute processed water to residential localities. Joseph said the company will not draw water from the distribution network of the water authority. Congress MLA V D Satheesan said the move will destroy local community rights and water security. Later, seven 'green' MLAs gave a memorandum to chief minister.

For the full report in the ToI, click here

There is a thriving tanker water industry (rather mafia) already in place in Kerala's cities, very much like in Bangalore too. As such, when the government seeks to recognise it and regulate it, if some MLA's are opposing it, they can best be labelled "red"; certainly not green.

Congress generally outdoes the Marxist party in competitive socialism in Kerala.

Muralidhar Rao
murali772's picture

not quite the right model

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Few businesses are more basic than the supply of water. But Thames now doesn't look anything like a water company; it more closely resembles a Russian doll. Holding company sits within holding company sits within holding company: in all, there are five intermediate firms between the business that supplies the water and sorts the sewage and the eventual shareholders. That's before you reach the two subsidiary firms that go out to the markets to raise cash, one of which is naturally based in the tax haven of the Cayman Islands.

Who gains from such a corporate Byzantium? Not regulators and politicians, nor journalists and analysts, because such a layout is the opposite of transparent. But the beneficiaries are identified by John Allen and Michael Pryke at the Open University, who pored over Thames's accounts from 2007 (the first full year after the Macquarie consortium took over) up to 2012. In three of those five years, investors took more dividends out of the business than it raised in profits after tax. Bung in interim payments, and there was only one year in which the consortium of shareholders took less out of the company than it had in post-tax profits. What replaced the profits? In a word: debt, which more than doubled to £7.8bn in that period.


For the full text of the article by Aditya Chakrabortty in The Guardian, click here.

Going by the contents of the article, the whole privatisation model here appears deeply flawed. You can't be allowing for such private profiteering, through utility companies, particularly so when they are monopolies. In the very first place, like I have already stated, water being a scarce resource (particularly in India, our sources being largely monsoon dependent), privatisation is perhaps not the right approach in the case of water supply. It should instead be outsourcing of the distribution, in order to bring about greater accountability, as compared to when it is handled by government agencies, due to political interference.

I wonder if there is another side to the story.

Muralidhar Rao
murali772's picture

any takers?

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Investment in the public sector can deliver far better results than public-private partnerships. “Our Public Water future” shows that the 235 cities (that have remunicipalised) provide better services  - not only because they can reinvest all profits into infrastructure, but also because they are better placed to consider other issues such as labour rights, environmental conservation and democratic accountability. Undistracted from competing for markets, public water operators are also linking up through Public Public Partnerships to share learning and best practice, and build capacity of less well-resourced utilities.
 
For the full text of the report in "Open Democracy", click here. (Emphasis added by me).
 
Indeed fantastic. But, the question that arises is why did they de-municipalise the water supply, in the first place? Is one to believe that it was only after de-municipalisation that they realised the actual worth of municipal work?
 
"Open Democracy" is perhaps another like "The Guardian" (check here), particularly going by the sentence re-produced in bold by me (above). I will await to see a more balanced report.
 
Muralidhar Rao
murali772's picture

success stories emerging finally?

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Water privatisation may be a politically contentious issue, but that has not deterred Vishvaraj Infrastructure, a company implementing road projects worth ₹16,120 crore in Maharashtra, from foraying into water distribution on a public-private-partnership (PPP) basis.

Having started a water distribution project in Nagpur, the company is now implementing projects in five cities of Karnataka – Magadi, Bidar, Basavakalyan, Shahabad and Yadgir – to create 3.81 lakh water connections and lay 992 km of pipelines. After these projects are completed, over 81,000 people will be able to drink water straight from their taps in these five cities, as one does in developed countries, says Arun Lakhani, Chairman and Managing Director of Nagpur-based Vishvaraj Infrastructure, which plans to overhaul the water distribution network in these cities.

- - -  “Communicating with people and getting them on board is crucial while taking up such a project. There is a World Bank report that quotes not-so-successful projects and the main reason is mishandling of the social side,” he added.

For the full text of the report in The Hindu BusinessLine, click here.

Mr Lakhani has put it quite correctly. And, that's exactly what Mr Manivannan, as the then Dy Commissioner of Mysore, did by engaging with Mysore Grahakara Parishad, arguably the foremost NGO in the city, while roping in the services of JUSCO to help improve the broken water supply system. But, unfortunately, after Manivannan moved out, the mafia that ruled earlier, clawed its way back, and systematically sabotaged the entire scheme, leaving the entire city and citizens in the lurch - check here.

In the face of all of that, Vishvaraj Infrastructure succeeding in Nagpur (apart from Pune), and the many small towns in Karnataka, comes as a breath of fresh air. It'll be interesting to see how it progresses.

Muralidhar Rao
vatsan007's picture

Unfortunately, I've seen

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Unfortunately, I've seen JUSCO do this in Mysore in my own house.

The earlier promised 24x7 water-supply with JUSCO left a lot to be desired. I'm not asking for a water distribution system for 24x7 as people don't realise its value, but, even when water is supplied every day for a few hours, their shoddy work left a lot to be desired. It took months to lay the pipe, then, to fix the meters. Roads were dug up, leakages were seen everywhere after they did their job (half  job)... 

It is not that private agencies work well by default, but constant monitoring/regulation is required for them as well, especially in public space. 

 

- Srivatsan

murali772's picture

JUSCO - found wanting

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@ Srivatsan - Based as your comments are on first-hand experience, there's no disputing them. My comments have largely been based on my interactions with a few members of the MGP, as noted here (as also elsewhere in the same thread/ blog).

My overall understanding is that, right from the very beginning, the VVW lot had been upto every trick in the trade (and even outside it) to undermine the contract, backed of course by powerful politicos with vested interests - that's what I would term as the "mafia confederation". And, apparently, JUSCO too has been found wanting in the required kind of professionalism in managing the whole show. As I have commented earlier too, more was expected of a TATA company.

Perhaps Arun Lakhani's Vishvaraj Infrastructure is better equipped to play this game. Let's wait and see. Whatever, the government set-ups like VVW, and even BWSSB, are way past their sell-by dates.

Incidentally, TATA's, it must be recorded to their credit, have pulled off a largely successful job of taking over the power supply in about one third of Delhi, from the government-owned DESU/ DVB - check here. And, that job, I am sure, was as challenging too. So, it's not as if they can't do it. May be Mysoreans too need to make up their minds as to whether they want to continue with a decrepit VVW, or they want change.

Muralidhar Rao
murali772's picture

an MGP member's view

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Reproducing letter from Dr Bhamy Shenoy, who, though now largely a resident of Houston, USA, is very much in touch with the goings on in his home city, Mysore, through the Mysore Grahakara Parishad (MGP):

Dear Muralidhar

Thanks for keeping me informed on 24 x 7 water project.

You are absolutely right that JUSCO, a Tata company failed. They may give the reason that they were not allowed to function as per the contract by the corrupt politicians and officials. As I have stated often to you, a good manager is expected to overcome such problems as shown by Sridhar in successfully completing the Delhi Metro project. Despite thousands of crores of investment and many officials and politicians trying to get their "fair" share, he managed to complete it on time without a hitch. I was expecting the same from JUSCO in Mysore.

Of course it was sickening to hear how bribe was sought by MLAs, Corportaors, officials etc in Mysore from JUSCO. How I wish that JUSCO stopped functioning when they came across such hurdles rather than doing a shoddy job. They were responsible to develop a world class billing system. After all with access to world class IT experts (India supplies such software all over the world) why did JUSCO fail after trying for five years? Answer given to me was Mysore City Corporation's old system was so bad it took a lot of time. It is the kind of rationale which is given by less competent management.

I wonder if Vishwaraj really succeeded (or succeeding in Nagpur) without bribing the whole of Indis should know about it. They should be made the shining heroes of india and not just one article in Hindu Business. Why have they not come to the attention of national media?

Virus of corruption in India is far more serious than any activist is capable of projecting to the national attention. We talk of coal gate, telecom gate, Vypam, Sharada scam, Land scam in maharastra, mine scams of Reddy brothers, Vadra's land scam in Harayana, etc. These are discussed rightly at all India level. How about the daily scams indulged by small time Sarpanchs,  corporators and MLAs in each and every village, town and cities of India? Each individual corruption scam may be insignificant. But taken in totality they can prevent the development of India despite the best efforts of few active activists.

Regards, Bhamy

Muralidhar Rao
murali772's picture

de-privatisation not the panacea

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The Central Jakarta District Court ordered the Jakarta government to revert its control over water resources. This abolished 25 years of water contracts between the administration and two private water companies.

The rulings meant that control for water management returned to the public sector. - - - The de-privatisation of water services in Jakarta creates new challenges for the government. - - - It is not a panacea to end the water crisis.

- - - A post-privatisation institutional arrangement should also address the financial challenges of improving ageing water infrastructure. As control over water management returns to the Jakarta administration, the government is inevitably responsible to expand and maintain the operation of water services.

We should not underestimate the financial challenges that public water providers face in building water infrastructure. The budget for waterworks in Jakarta would have to compete with other city programs such as education and health services.

Meanwhile, the Jakarta government’s options to raise funds are limited to local tax revenues, local government bonds or borrowing from the national government. Investigating other alternative sources of financing is a critical step.


Regardless of the financing model, efficiency in water services needs to be improved. If the government chooses to involve the private sector (which is not fully shut out under the current regulation) to some extent, the strict measurement of service performance should be included in the institutional arrangements.

For the full text of the report in The Conversation, click here.

The problem in Jakarta, as in most oher cases across the world too (but, not in India), has been with the model chosen. It is pertinent to re-state here the following that I had stated in my opening post:

It is perhaps true that most water-supply upgradation schemes tried out in the past (not in India) had ended up in total privatisation, with control over the sources too, and, driven by the short-term profit maximising objective of the service providers taking advantage of the 'natural monopoly' nature of the service, led to unfair cost escalations. But, the reasons for the municipalities not wanting to continue providing the service by themselves, in the first place, hadn't disappeared at all. Not quite appreciating this, some municipalities had apparently reverted to undertaking it themselves, and are now inevitably set to re-invent the wheel, after putting the citizens to a lot of hardships, in the process.

Apparently, Jakarta government has realised this, going by its statement that "De-privatisation is not a panacea to end the water crisis", and listing out of the challenges involved. Hopefully, they'll now come up with the right kind of "outsourcing" model.

This offers a lesson for Namma Mysooru too, where the Corporators are on a suicidal mission, even with all of the facts placed before them - check here. On the other hand, I wouldn't be surprised if the Mysooru mafia confederation (comprising of course even the Corporators) see an opportunity in the Jakarta predicament, and takes its expertise there. Many things are possible in a globalised world, right?
 

Muralidhar Rao
murali772's picture

just another private-sector bashing exercise

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Now it is official. The cash-strapped Nagpur Municipal Corporation's (NMC) financial losses from water works have increased by over Rs60 crore per annum since water treatment and supply was handed over to private water operator Orange City Water Private Limited (OCW). This goes on to add to the evidences proving agreement signed between the NMC and OCW beneficial only for private water operator.

TOI had highlighted various points to prove how agreement benefitted only OCW and the civic body was at the receiving end. The state accountants general's (AG) latest audit report too exposed the same points and also dug out many favours given to OCW in the agreement. The opposition groups at NMC- Congress, NCP and BSP are up in arms against OCW and demanding termination of agreement with immediate effect. Still, the BJP-led ruling alliance at NMC has continued to shield OCW and defend the agreement.

Former corporator Vedprakash Arya has obtained information under the Right to Information (RTI) Act which shows steep increase in financial losses since roping in the private water operator. Arya has obtained department-wise data of revenue and expenditure of NMC for financial years 2009-10, 2010-11, 2011-12, 2012-13 and 2013-14. The financial losses from water works was Rs13.43 crore in 2009-10 and reduced to Rs1.17 crore in 2010-11. NMC handed over water works to OCW in 2011-12. The losses increased to Rs61.71 crore in 2011-12 and then to Rs75.87 crore in 2012-13. Then the losses were recorded at Rs65.14 crore in 2013-14.


For the full text of the report in the ToI, click here.

Now, the accounting pattern before the involvement of the private agency, and after, will vary according to the basis of the contract, and as such, comparing the two directly and declaring that huge losses have been incurred, is obviously to promote the pseudo-Socialist agenda of scuttling the contract.

Now, let us take the case of BWSSB's Cauvery water supply scheme. The cost of pumping 1450 MLD @ a conservative Rs 40/- per KL, will work out to Rs 5.80 cr (1450 x 1000 x 40) per day. Assuming a liberal 65% of it being accounted for, and billed at an average Rs 20/- per KL, the recovery would be Rs 1.89 cr, making for a shortfall of Rs 3.91 cr per day, or Rs 1427 cr per annum. This is just covering the Cauvery scheme. If you include the others, it could even be higher (The BWSSB site doesn't appear to give any info on finances).

As can be seen, this is an unsustainable proposition, particularly with costs escalating year after year, and hence the compulsion on the government to remedy the situation. Now, while engaging professional private players can bring about efficiency, and thereby reduce leakages, the basic costs will still have to be met, leading inevitably to the tariff increases. And, that's where regulation comes in. As such, if the supply has improved (providing for a better quality of life), and the regulator is ensuring a transparent fare regime, I can't see why the citizens should have a problem. It has happened in the case of power supply in Delhi (check here). I can't see why it can't happen with water supply too.

And, whatever subsidy the government may want to afford the BPL lot, can always be reached to them through Aadhaar.

Well, there are no easy solutions to pseudo-Socialism; genuine Socialists may look in here to see if they would like to change their mind-sets.

PS: It's perhaps time the press also changed its traditional approach of pandering to the Socialistic outlook of the people. The people have changed, and today, they want good quality of supply at proper value. They are not too bothered who does the job. In fact, they are also aware that government just can't do it.

Muralidhar Rao
murali772's picture

organised sector, or mafia - what's your choice?

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Another driver of remunicipalisation was of course the will to introduce greater political control over water services, particularly in regards to the long-term evolution of water rates. Councillors wanted to be a able to use the public company’s revenue stream to maintain infrastructure and improve the quality and user-friendliness of the service, instead of distributing profits to shareholders.

For the full text of the article captioned "Nice: building a public water company after 150 years of private management", click here.

In this context, I would like to reproduce the following that I had stated in my opening post (scroll up):

"It is perhaps true that most water-supply upgradation schemes tried out in the past (not in India) had ended up in total privatisation, and, driven by the short-term profit maximising objective of the service providers taking advantage of the 'natural monopoly' nature of the service, led to unfair cost escalations. But, the reasons for the municipalities not wanting to continue providing the service by themselves, in the first place, hadn't disappeared at all. Not quite appreciating this, some municipalities had apparently reverted to undertaking it themselves, and are now inevitably set to re-invent the wheel, after putting the citizens to a lot of hardships, in the process."

I would like to believe that the municipality-operated systems, in cities in the developed countries, were fairly well run, and, inspite of it all, if they chose to privatise them, it was largely on account of economic factors. As compared to that, except perhaps for Mumbai, the systems in all Indian cities are as bad or worse than our BWSSB's, apart from their being huge burdens on the tax-payer. So, very clearly municipal operation (or operation through government-owned parastatals like BWSSB) is clearly not a satisfactory option for Indian cities. The answer may lie in entrusting the job to a few 51:49 :: private:government PPP companies, quite similar to the Delhi power supply DISCOMs (check here). This is as good an arrangement as one can think of for a utility, with sufficient checks and balances in place, and with the BWSSB/ JalBoard, or whatever, being reconstituted as a regulatory body, to provide the necessary oversight.

But, unfortunately, having won the elections, making out the private sector led Discoms as the villains, Arvind Kejriwal, the Delhi CM, is now finding himself trapped in that mind-set, going by the following excerpts from a recent NIE report (for the full text, click here):

Water supply network will not be privatised in Delhi after the experience in power sector, Chief Minister Arvind Kejriwal today said.

- - - Seeking support of private companies, Kejriwal said the government is ready to use technology on large scale but ownership of water network and distribution will remain with the government.

"It is responsibility of the government to ensure clean drinking water to its citizen and we will not give this responsibility to any private company. If a government cannot supply water to the people of the city then there is no use of being in power.

"But this does not mean that we are ignoring private players. We want large scale participation from private companies in water sector but ownership and distribution channel will remain with the government," Kejriwal said while inaugurating Aquatech India trade exhibition for drinking and waste water management at Pragati Maidan.


Criticising the privatization of power sector in Delhi, Kejriwal said it has many loopholes.

"This model rewards for inefficiency of power companies. There is no benefit for spending less then why will someone cut down their expenses. Companies keep spending more to earn more and we are paying higher tariff. So water sector will never be privatised," he said.


Well, he says he wants "large scale participation from private companies in water sector". But, private sector will come in only if there's something in it for them. Now, even with the most equitable a PPP deal in place, and the Discoms having made for a sea change in the power supply scenario in the city, when you go on finding fault with them, why would they want to have anthing more to do with you? There are enough and more people who want their services, including in Nigeria (check here) and other places. You can continue battling with the borewell, tanker, and such mafia, for all you are worth. But, for all of the phobia you create of the private sector, the borewell, tanker, and such lot, are nothing but that, and in addition a part of the mafia.

The question is whether you want to deal with the organised private sector, with whom you can engage in a civilised way, or you prefer the mafia private sector with whom you make "deals". Very obviously the politicos are largely happier dealing with the latter.

Muralidhar Rao
murali772's picture

perpetuating privatised water mafia operations

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A friend forwarded me a report (accessible here) titled "preventing privatisation of water" from The Hindu.

Now, water supply in the city, to a large extent, is already in the hands of the "private sector", though operating as a "mafia confederation", comprising the borewell, tanker operators, and their benefactors in the BWSSB and other related government agencies. Where else do you think the 45% odd of the 1450 MLD of water, being pumped into the city at an enormous cost, disappearing?

So, the question has to be "do you want to engage professional private players, who can account for every drop of the 1450 MLD, to undertake the job", or do you want to continue to 'manufacture dissent' against that?

All the rest of the talk is just rhetoric, and has been addressed sufficiently in the opening post, as also in the subsequent posts.

Also, you can get a glimpse of what happened in Mysore, by checking out here.
 

Muralidhar Rao
murali772's picture

plain political jostling

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The BJP-led ruling alliance was on the back foot over a demand by opposition parties — Congress and BSP — to provide concession to water consumers who had promptly paid water bills, on the lines of the water bill amnesty scheme launched for defaulters. Water works consultative committee chairman Sandip Joshi said a decision to provide rebate facility to regular payers will be taken on Tuesday.

- - - Thakre said citizens were receiving high bills due to faulty water meters installed by private water operator Orange City Water Private Limited (OCW), and increase in water tariff by 5% every year for last four years. "First of all, citizens are not getting proper water supply. Many areas in the city are receiving contaminated water. OCW's water meters show consumption of water even though there is no supply, as they run on air also. Therefore, 40,000 of total 54,700 defaulters stopped paying water bills. This was the reason behind bringing in the amnesty scheme," they said.

- - - Denying any political motive behind amnesty scheme, Joshi said 5-10% rebate for payment within prescribed time period will be discussed in the meeting on Tuesday. "Most of the 54,700 water defaulters had bills pending from before the time OCW came in. The decision on amnesty scheme was taken by standing committee and water works consultative committee, where Congress and BSP corporators too are members. Why didn't they raise these demands in the meetings," he questioned.


- - - Ruling party leader Dayashankar Tiwari said it has became a habit for opposition party corporators to walk out of the house instead of raising demands in proper manner. "The policy giving the power to civic chief to increase water tariff was approved by the Congress-NCP government," he pointed out.

For the full text of the report in the ToI, click here.

What we see here appears to be more of political jostling than anything else. The report is dated 21st June, ie in the midst of summer in a drought (particularly severe in Maharashtra) year. As such, having set themselves up fairly robustly (see my post of 5th July, 2015, scrolling above), OCW appears to have acquitted itself fairly well in the severest of tests it has faced so far. From here on, it can only be way up, one should think.

One now also awaits similar success stories from its sister companies in Karnataka's, Magadi, Bidar, Basavakalyan, Shahabad and Yadgir too, so that these can then be replicated across cities/ towns in the country to quench their citizen's thirst.

Muralidhar Rao

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