Water management projects: Time to have regulatory mechanism in place

Look at the two important documents that indicate the policy direction for the water sector – the new Jawaharlal Nehru National Urban Renewal Mission and the draft water policy – and there is scope for optimism in the water management businesses, according to Mr Rajiv Mittal, Managing Director, VA Tech Wabag.

Both the policy documents talk about strengthening the water infrastructure and quality of service to the citizens, public-private partnerships and reforms for commercial viability. But is that going to make water and related services more expensive for the consumer? “Not necessarily,” says Mr Mittal.

Success stories

There are success stories, he says.

Whether in Delhi water supply or in Alandur, a middle class suburb, south of Chennai, where the sewerage system has been maintained in public-private partnership, the citizens have benefited, he says.

Delhi is self-sufficient in managing water. This was achieved through tariffs, metering and collection. They are now talking about privatising a couple of areas to bring down ‘non-revenue' water.

The average upmarket house pays Rs 600-700 a month. It is not a concern if the water supply is assured and if it is safe. Also, the common man does not pay as much.

What happens if you are dependent on water tankers? Each tanker costs over Rs 1,500 and lasts about two weeks. The weekly bill is Rs 700, the quality is questionable and supply erratic.

The Alandur sewerage project, a pioneering effort in public-private partnership has been on for nearly a decade. Each household is paying over Rs 150 a month. And not one month have they defaulted. VA Tech has a 14-year concession for this project. A part of the sewerage system was funded by World Bank and the waste water treatment plant was funded through PPP.

But to expand on these models, a regulatory mechanism is needed for the private sector to handle the job, says Mr Mittal.

An Authority – like an independent regulatory commission – is needed to strike a balance between the consumer and the private sector. It has to work with private companies and the public water utilities to fix a price for consumers and industries. It will ensure that consumers are not over charged but profits are protected. “Otherwise look at what is happening now,” Mr Mittal says, referring to a study by the Asian Development Bank.

Out of the total volume of water being supplied just 20 per cent is billed and 80 per cent goes waste. Only a part of the billed portion is collected as some do not pay. Water utilities in India recover only 30 per cent of the Operation and Maintenance Cost. In Bangladesh 65 per cent recovered.

“This cannot continue. We have to charge fair price for water to sustain the expenditure that is envisaged in the water sector,” said Mr Mittal, referring to the policy documents.

Policy Direction

According to the new JNNURM, over the next two decades investments in water supply will be over Rs 3.20 lakh crore and in sewerage Rs 2.50 lakh crore.

These are the third and fourth largest expenditures after urban roads and transport.

In operation and maintenance, the largest expenditure is going to be in water supply, an estimated Rs 5.46 lakh crore at today's prices and in sewerage about Rs 2.36 lakh crore, points out Mr Mittal. The draft national water policy speaks of an overarching national legal framework, water pricing, efficiency increase, water tariff and recycle and reuse of water.

COMMENT NOW