The Blueprint for Water Privatisation in Delhi

The Chief minister of Delhi has been behaving like the CEO of a company implementing World Bank programmes. After power privatisation at the behest of World Bank, project 'water reforms' in Delhi is being carried out through a dismantling of water distribution by the Delhi Jal Board, a nodal agency of the government for water treatment and distribution in the city. If successful, the Congress government in alliance with World Bank would starve the poor of water.

The Saga of the Delhi Government and WB’s Murky Water Deals

The deal…
  • The government laments the politicisation of water. Water shortage in Delhi is attributed to water loss. Interestingly, if water levels declared by DJB was happening then either the water table in Delhi should rise or there should be floods round the year. Yet of course, neither happens. The government instead of investigating ‘the case of the missing water’ launches water reforms “for improving water distribution in the city.”
  • In 1998, Delhi Jal Board (DJB) approaches the World Bank for a loan of over Rs100 crore. Curiously, the Delhi government has a surplus budget. The Bank suggests that a consultant be hired, who would “suggest” reforms. The Bank offers Rs7 crore loan for hiring the consultant.
  • 35 consultants apply and 6 get short listed following evaluations based on World Bank guidelines. Price Waterhouse Coopers (PWC), ranks 10 th. World Bank changes its mind and says short listed companies should be from a developing country and PWC dutifully claims it is Indian because it has a branch in India ! PWC scales upto sixth position!
  • DJB evaluates the technical proposal, PWC does not qualify the 75 marks criteria and gets rejected for being incompetent. WB is unhappy and demands to know the basis of low marks given to PWC. Objections are raised about criteria and sub-criteria. It insists the formation of a new evaluation committee, whose structure, composition and procedures are laid out.
  • PWC again scores badly. WB zeroes in on the ‘culprit’ evaluator and demands rejection of the low marks given by him. DJB obliges. PWC gets the contract to lay the blue print for privatisation and WB shows the company as a consultant hired for examining corruption charges against bank officials!
The blueprint…
  • PWC generates a report that identifies inequity in water distribution and suggests privatisation without investigating the causes.
  • Possible solutions to Delhi ’s water problem include use of groundwater, its recharging through rainwater harvesting and its planned- equitable utilisation but PWC does not treat these as part of solutions. Well of course, this does not spell interest for the water companies and who cares for equity?
  • It shows total water availability in Delhi at 820 MGD when it is known to be around 640 MGD. It is not specified on how shortfall is to be overcome.
  • This PWC recommendations are accepted- so what if it accentuates and legitimises inequity in water distribution. Delhi Government thus, applauds not only the murky deal but also the interference and violation by WB of the country’s sovereignty and people’s right to decide and participate on issues surrounding basic necessities.
  • And yes, the WB loan, which comes to mere Rs120 crores per year and quite affordable by the surplus rich Delhi government, comes with stiff terms and conditions. The whole project ensures that money flows from the pockets of the people to the bank accounts of these companies and their facilitators in the Delhi government.

If the agreement/ contract is signed in November …

  • Once all the zones of DJB are handed over to the companies-which is to happen in two years- the water bills will increase by at least six times. The monthly bill of a family living in a resettlement colony currently paying Rs52 will immediately increase to Rs300. Hikes will continue. In Manila , water prices shot up by 700 percent within three years of privatisation, even after promises of no increase in tariffs for the first ten years. Water rates tripled in Nelspurit in South Africa and the poor, who could not afford these rates found their water supplies disconnected. People took their children out of schools and skipped meals to buy water. People drank polluted water and cholera spread.
  • Some of the dreaded companies (operating under the same or a different name) that drove people to desperation are being wooed by Delhi government with due sponsorship from WB. Company one, Suez deprived at least 2 lakh people in El Nato and La Paz and people there could not afford the new water connection at Rs23, 000 as average family income was only Rs25 a day. Company two, SAUR is facing enquiries for having bribed government officials to get water contracts in Mozambique , Zimbabwe , Lesotho and in South Africa . Company three Bechtel, in Cochabamba , Bolivia , increased water tariffs so high that riots broke out and a 17-year old boy died and 175 people were injured. Bechtel demanded compensation of 2.5 million dollars against the Bolivian for being kicked out. Veolia similarly was kicked out of Argentina and Puerto Rico .
  • Even after such “reputed” companies come to Delhi , those who pay will still not have the promised 24 hour water supply as the contract says the DJB first has to supply sufficient quantities of water at the input zone of a company! And even after that the company need not supply water to individual houses as only the District Metering Areas (DMA) in each zone needs to be supplied water. Thus the company would have fulfilled its job even if a poor settlement in a DMA does not receive water. It would have done its job even if all the water gets diverted to a five-star hotel in the same DMA! In Puerto Rico , water companies cut off water supply to residential areas and diverted it to swimming pools, five star hotels and amusement parks.
  • After the agreements in December 2005, water may be diverted from other parts of Delhi to the South zones to ensure the success of the companies taking over the water supply in the first leg.

And of course…

  • The complaint redressal that takes 24 hours to 3 days now, will be relaxed to allow companies to redress grievance from anything between 5 to 20 days. 20 days without water! And yes, the government will not control the functioning of the companies thus leaving no platform for redressal.
  • Water tankers, tubewells and public taps in poor settlement will be first cut off and supposedly five poor families will be provided one group connection- leaving the families to fight amongst themselves over billing. But fights will only happen if water is to be provided, which is unlikely considering that the plans do not mention laying of new water pipelines in areas where the poor live.
  • Interestingly, the problem of water leakage where this whole murky story began, will still not be solved. According to DJB records water leakage, in South Zones is around 24 percent but for purposes of privatisation DJB has decided it is 55 percent and water companies are being asked to reduce the leakage to 34 percent in three years! Is Congress government in Delhi allowing the companies to fleece the people and driving people thirsty so that it can further worsen leakage!

Radhika Menon

(based on information provided by Arvind Kejriwal)

Delhi with its population of 13.78 million (Census 2001) gets over 88 percent of its water supply from the Yamuna and Ganga canals and about 12 percent from groundwater.

The shortfall between demand and supply is estimated to be between 150-200 mgd (million gallon per day). Since, different sections consume different amounts of water the official standards for provision of water are also different. The standard for provision of water to planned colonies is 225 lpcd (litre per capita per day), 155 lpcd for resettlement colonies and urban villages and 50 lpcd for Jhuggi Jhopri (JJ) clusters.

The key finding of a document by the National Capital Region Planning Board (1999) points out that the problem is not one of supply but of inequitable water distribution. It says that the level of supply to Cantonment Area is as high as 509 lpcd whereas that to Mehrauli area is just one-eighteenth of it. The problem cannot be reduced to one of spatial distribution – the more posh the area, the more assured the water supply. It is obvious that the supply, assurance and quality of water received (from tanker and community based handpumps) by poorer sections of the population are more lacking than that to the middle and upper sections of the city. Incidentally this section also happens to be the one, which cannot invest, in compensatory strategies like private borings etc. Under these circumstances the Delhi government's priorities look suspect when it talks of 24 X 7 for posh colonies instead of equitable distribution of water within the city.

In the tenth plan period (2002-2007) the Delhi government plans to augment the water supply capacity in the city by 300 mgd. The problem was posed as one where the water treatment and sewerage systems have reached their highest installed capacity and additional investment is required for increasing the treatment capacity and efficiency . In the meanwhile the elected government and its executive bodies who were accountable for the poor state of public utilities went on lamenting about the inefficient services and widespread corruption in the bureaucracy to make a case for 'efficient water management operations by the private sector' .

Water privatisation has been on the agenda of Delhi Government since the year 2000 when it hired Price Water-House Coopers (PWC) to develop a roadmap for the same. In the meantime, the Government of India came up with a new water policy centered on privatization in 2002. The draft (2003) as well as the final (2004) report of PWC was not made public and both the DJB and the government continued to deny plans of privatisation in order to confuse the public before the parliamentary elections. The timetable suggested for water privatisation in the city is being more or less followed – like preparation of the Water Sector Vision (January 2004), Water and Waste Water Reforms Act – Independent Regulator (February 2004) and tariff rise. Last in the scheme according to the PWC report is privatisation of Delhi Jal Board (DJB) by December 2006.

The independent regulator (Delhi Water Regulatory Commission) was established to explore the possibility of privatizing water supply utility well before the suggested deadline. The tactic of setting up Independent Regulator is very commonly used by World Bank whenever it pushes privatisation of any utility/service be, it water, electricity or insurance. The design behind this was that the elected government may possibly skirt direct responsibility for tariff hike. In the meantime a situation of a 'water crisis' was fashioned to blunt public outcry against the tariff hike. Based on the experiences world-wide of political backlash following privatisation of public utilities, the government took recourse to hike in water prices before the privatisation had been fully accomplished simulating these as steps in 'rationalisation'. In December 2004, the Delhi government hiked the water tariff based on fixed and consumptive charges. The hike in domestic bills was between 2.5 to 10 times for domestic consumers and more for commercial and industrial consumers. According to newspaper reports the average monthly bills for the middle-income groups went up from Rs. 32 to Rs. 155.

Case Of Sonia Vihar Water Treatment Plant

The approach followed by the World Bank while pushing for privatisation is of bit-by-bit reform of particular service elements . The Sonia Vihar water treatment facility is a case in point. A contract was signed by the Delhi government with Suez-Ondeo Degremont to build and operate a water treatment facility at Sonia Vihar and a 400 mgd sewage treatment plant at Rithala. DJB has paid Rs. 188 crore to Degremont for the former. The contract freed Degremont of any responsibility for the more difficult task of cost recovery, which will remain the responsibility of the institutions for water supply in Delhi namely DJB and the municipal authorities of the MCD, NDMC and Cantonment Board. Though Sonia Vihar plant continues to be the hub of controversies, estimates of Water Workers Alliance, New Delhi indicate that over 1,900 installations (1,000 tubewells, 300 sewage and booster pumping stations, and 600 water tankers) of the DJB have already been transferred to MNCs and other private players. Billing processes have been privatised as also sewer desilting and maintenance (in twenty one zones). There have been deliberate attempts by the Delhi Jal Board to under-value the assets and over-value the services such that multinational companies could take over the assets and various other utilities of the Jal Board.

The Sonia Vihar plant which has been set up with a loan amounting to Rs. 3,598 crore and interest liabilities of Rs. 1619 crore has a proposed intake capacity of 635 mld of raw water sourced from Upper Ganga Canal of the Tehri dam project. The water will be transferred through a 3.25 m diameter pipe along a stretch of 30 kilometers from Muradnagar (UP) to Sonia Vihar. Degremont will set up, run and maintain the plant over a ten-year period under a Build Own Operate (BOO) contract. The Delhi government has provided Degremont a counter-guarantee of assured returns for the contract period against treated water supplied from the plant along with productivity incentives to the company in return for an assurance of a 90-95 percent ratio of treated to raw water. Degremont will be provided with water and power free of charge and will also receive a "base service charge" from DJB which will be higher than the latter's operational costs . Strangely, the justification of 'full cost recovery' does not apply to the private player, who will get these free and that too without any investments.

Resentment has already built up against the diversion of Ganga water from Western U.P. and the ensuing loss of livelihoods because of thousands of hectares of land going out of cultivation. It is estimated that the benefits to Degremont from the public investments made on laying Ganga Canal, building Tehri dam, (laying) the pipeline from Muradnagar to Delhi, cost of rehabilitation and compensation comes out to Rs. 158,149.31 crores of non-recurring and Rs. 7040 crores of recurring costs( Shiva). It is the Delhi government and not Degremont, which will pay Rs. 24 crore to the U.P Irrigation Department for outstanding dues for Ganga water. The contract between DJB and Degremont has a guarantee clause, which, forces the public sector or utility to continue to pay the private sector utility even when it fails to deliver the service. Thus the public pays twofold - in making the public investment, and then in paying higher tariffs.

That the motive force for the course taken by the government is privatisation and not solution of a water crisis becomes clear from the statement made in Financial Express , which says, "Where for-profit companies are unlikely to venture (like in villages) have water cooperatives". While the post liberalization phase has burdened the poor with subsidy reduction, there has been an increase in sops to the investors through reduction in corporate tax, capital gains tax, import duties etc. Instead of offering public utilities to the private sector on a platter the government should build and improve them at public cost.

– Amita Bhaduri