Water Privatisation

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A Report by ‘Research Foundation for Science, Technology and Ecology’ for National Commission for Women, January, 2005, Page 105-125.

Water Privatisation has suddenly come to mean big bucks in India. With water resources in the country fast depleting and the government throwing up its hands, at least five global Corporates are ready to tap the over $ 2,000 million market. They have already set up shops in several States and are confident of seeing their projects approved, with the central government literally rolling the red carpet to welcome them. (Shiva and Jalees 2003)

To facilitate “private partnerships,” the ministry of urban development in May 2003 released a set of guidelines to State governments for creating a “welcoming atmosphere” in the drinking water sector.

Neither the guidelines nor the National Water Policy, 2002, which advocates more private involvement in the water sector bother to see the result of such corporatization elsewhere in the world. As in Bolivia, where riots broke out in the city of Cochabamba after a 35 per cent increase in water bills, such experiment have been contentious almost everywhere. According to a study compiled by David Hall, director of the Public Services International Research Unit at the University of Greenwich, privatisation of water of the Philippines, Germany, Brazil, Nairobi and Argentina have led to a tremendous increase in water prices, triggering public outrage. Making profit on people’s most basic needs is the dream of many corporate executives. (Shiva and Jalees 2003)

Global players are keenly watching the developments in India and are slowly seeping into the sector. Degremont, a subsidiary of France’s Suez, has projects in six cities of India and has plans for further expansion. The company is dealing in treatment of water exclusively. Future expansion will depend on the kind of trade environment the government creates.

Degremont has a project in Delhi; the Sonia Vihar treatment plant is being developed by the company on a Build Operate and Transfer (BOT) contract for a fixed period of seven to ten years during which its profits are guaranteed by the government.

While private companies like Degremont have the government subsidizing their profits, other international agencies are looking forward to the civic bodies reforming their tariff structure to pay back loans.

It perceives water not as a fundamental right of the people, but as a commodity the government can no longer afford to make available to its people free of cost or at subsidised price. This approach, according to Himanshu Thakkar of the South Asia Network on Dams, River and People (SANDRP), is fundamentally flawed. “Water is a natural resource and the government owns it only because it promises to make it available to people. On what basis has the government made water a commercial product? On what basis are the private companies selling bottled water to people? Who has allowed them to make profit out of this natural resource (Joshi, 2003)

i, 2003) The answer to shrinking water resources and growing needs, according to Thakkar, does not lie in privatisation but in community participation and transparency on the part of the distributing agencies. Conservation efforts in India have been pioneered not by the government but by the community leaders like Anna Hazare and Rajender Singh. The irony, says Thakkar, is that while the government claims that it does not have any money to make infrastructure improvements in the existing maintenance and distribution system, it is willing to subsidise profits for the foreign trade companies in the water sector.

It is like privatising national assets and nationalizing private losses. The country is being sold and nobody has the courage to speak out. Why would a multinational invest in water without expecting you to pay back several timed the amount?

Nevertheless, Indian policy-makers justify privatisation as a necessary step for reforms in the water sector. “Everyone looks at it as a natural resource for which nobody should be asked to pay. The problem is that the water, which reaches your house has to be first taken to the treatment plants, has to be treated and then piped to homes. All this costs money. Where is that going to come from?” says Planning Commission (Joshi, 2003).

Access to a fair share of clean, healthy water is a basic human right and indeed the basis of our existence. According to the World Health Organization, 60 per cent (3.6 billion) of the world’s population lacks access to essential sanitation facilities. It is estimated that in the next quarter of the century, the proportion of the world’s population living in countries with significant water-stress could rise from 34 per cent (1995 figures) to 63 per cent. This would mean that water related conflicts would increase, as communities try to fulfil their basic needs.

Although, less than ten per cent of the world’s water systems are currently under private control, at the present rate it is possible that the top three MNCs, i.e., Suez and Vivendi of France and RWE-AG of Germany, alone will control over seventy per cent of the water system in Europe and North America in a decade.

Vivendi that earned $ 5 billion a decade ago in its water related revenues had increased its profits to over $ 12 billion by 2002. RWE, which moved into the world market, with its acquisition of Britain’s Thames Water, increased its water revenue by a whopping 9,786 per cent in ten years. All three are among the top one hundred corporations in the world. Together, their annual revenue in 2001 was almost $ 160 billion, and is growing at ten per cent a year – outpacing the economies of many countries in which they operate. They also employ more staff than most of the government's (Barlow, 2003).

The state has a great duty vis-à-vis distribution of drinking water. Our rivers are sacred, so too our lakes and dams, which serve several social uses. Aqua robbery by corporates is becoming common. The core principle of the public law is that the state is a trustee of all natural resources and is under a legal duty to protect them. These are resources and are meant for public use and cannot be converted into private ownership (Iyer, 2003).

The ancient Roman Empire developed a legal theory known as the “Doctrine of Public Trust.” The public trust doctrine primarily rests on the principle that certain resources like air, sea, water and the forest have such a great importance to the people as a whole that it would be wholly unjustified to make them a subject of private ownership. The said resources being a gift of nature, they should be made freely available to every one irrespective of the status of life. The doctrine enjoins upon the government to protect the resources for the enjoyment of the general public rather than to permit the use for private ownership or commercial purpose.

The Ganga or Narmada belongs to the people and the state cannot abandon its fiduciary obligation. It is unconstitutional, unethical and violative of human rights to sell or negotiate disposal of publicly owned water resources for mineral water rackets by industrial giants. Equally dangerous, mischievous and mala fide are permissions granted to macro corporates to dig dam to the bowels of earth, pump up waters in enormous quantities and leave the lakes and neighbouring wells deprived of the blessing of nature.

Serious questions are raised when the public properties are given to the corporations. Public funds bear the burden of public accountability (Dhawan, 2003).

Water and international financial institutions (IFIs) like the World Bank, Asian Development Bank and IMF have required developing countries to open up their water distribution to private sector investment and foreign companies as a condition of rescheduling debt. Bolivia, for example, had to accept comprehensive water privatisation as a condition of receiving new loans. And it doesn’t start or end with just drinking water. Large dams are mostly built with the support (or pressure) of IFIs like Asian Development Bank, affecting not only drinking water but also the livelihoods and homes of hundreds of thousands of people.

The IMF and the World Bank, along with other financial institutions, support a ‘full costrecovery’ principle. Financing criteria favour multi-utility service providers from many development providers, and this is also influencing the development of the water multinationals taking over other sectors.

As no one can survive without water, the multinational water companies have discovered a profitable market. The biggest multinational water companies come from Europe – Vivendi, Suez-Lyonnaise, Thames Water.

These companies have a record of corruption and bribery, pollution, and ignorance for the health and safety of both their employers and their customers. Extensive interlinks exist between executives from major water companies, the government and other sectors, mainly banking and international finance.

Vivendi is the world’s largest water service provider through its subsidiary, Generale des Eux, and operates in 90 countries. Suez Lyonnaise des Eaux has operations in 120 countries, supplying water to 72 million people. The water industry is expanding rapidly the range of their activities and the geographic reach of their services. (Shiva and Jalees 2003)

Main strategies of entry


● Entering into public-private partnership or joint venture with an institution on the desired region. For example, Vivendi and RWE Group became major parties in 1999 in a consortium covering 49.9 per cent privatisation of Berliner Wasserbetriebe, resulting in the largest water sector privatisation company.

● Buying a share in an existing entity in desired region and eventually turning it into a wholly owned subsidiary. Vivendi has made it very clear that it wants to acquire other water companies’ assets and operate them.

● Buying smaller operations that have established a presence in a geographic region or have developed new technologies.

Target areas within the water sector


The corporations are targeting four areas within the water sector. They are:

Water and waste, Water services,
Water treatment,
water-related construction and engineering,
Innovative technologies.

This can be targeted in several ways, such as developing internal capacity by acquiring subsidiaries with expertise; developing formal partnerships with other multinationals in other sectors; and entering joint ventures or one-contract partnerships with corporations in other sectors to work on individual projects.

Because of the management complications of big companies, many a times regional governments maintain ownership because of the corporation’s lack of necessary regional .

knowledge and wish to retain involvement in the former public sector projects. But more often, exclusive control is given to the corporation. Virtually, all successful international efforts to privatise water have focused on privatising the ownership of the existing infrastructure; a growing trend is to attain rights to water access.

WTO and Water
Water is treated as a service, under the General Agreement on Trade in Services (GATS) under WTO – water distribution and collection, waste water and so on. Under the WTO, water would be merely a tradable service. Among other problems arising, water is an essential part of agriculture, but not discussed within that framework. Instead of ministries and other bodies working with agriculture, rural development and so on, trade negotiators and multinational corporations formulate water regulations. MNCs are not interested in water availability for small farmers and communities but simply of making more profits, selling their services as the solution to the world’s water problems.

By subjecting water access to market trends and WTO decision-making processes, an agreement like GATS is likely to exacerbate the world’s water problems. Minority interests – mostly those of global corporations and foreign investors – would take precedence, with potentially devastating implications for fragile ecosystems and the poor communities.

Water as such is not a part of the current GATS agreement. The European Commission (EC) has now introduced a clause on “environmental service” with dead-end environmental services to whisk problems under the carpet instead of taking precautionary measures. The force behind this, are as described before, water MNCs lobbying behind the scenes in the European Commission and also USA. Key players are the likes of European Services Forum and US Coalitions of Service Industry that almost dictate the trade policy according to their needs.

European Commission


Leaked documents from the European Commission revealed an ambitious agenda for services liberation. EC is requesting WTO Members to open up a whole of sectors, including water as ‘environmental service.’

Requests concerning the water sector made to SAARC countries including India, Indonesia, Malaysia, Pakistan, Philippines and Thailand all dealt with water collection, purification and distribution services through mains, except steam and hot water; wastewater services and treatment, remediation of contaminated/polluted water.

Most Favoured Nation Treatment


National treatment is one of the core principles in the World Trade Organization. It means that domestic and foreign companies should be given equal treatment, i.e., the same benefits. Conditions of competition should not be in favour of Member’s domestic services industry. Another core principle is the Most Favoured Nation (MFN) treatment, which means that members must give other members’ “treatment no less favourable than that accorded to like service and service suppliers of any other country.” MFN treatment prohibits preferential arrangement among groups of Member States in certain sectors or of reciprocity provisions, which confine access benefits to trading partners granting similar treatment.

Thirsting for Profits


The Global Corporates are thirsty for profit as shown by the following examples (Shiva and Jalees 2003):

● The World Bank estimates the global market for water to be worth $ 800 billion.
● The price of one litre bottled water could deliver 3,000 litres of tap water to homes.
● Ten corporate giants are vying for control, including French based corporation Vivendi, SuezLyonnaise des Eaux and Bouygues (Saur); US based Enron (Azurix); German based RWE Group; and UK based companies Thames water, United Utilities, Severn Trent, Anglian Water, and the Kelda Group.
● Four of the top 10 water companies are ranked among the 100 largest corporations in the world by the Global Fortune 500: the RWE Group (no. 63), Vivendi (no. 69), SuezLyonnaise (no. 70) and Enron (no. 85).
● Vivendi and Suez-Lyonnaise are considered the General Motors and Ford Motor in the global water industry. Suez operates in 120 countries and Vivendi in 90 countries around. Together, US $ 10 billion out of their combined revenues of US $ 70 billion comes from water service alone.
● The global water industry is going through constant rapid changes. Between 1994 and 1998, there were no less than 139 water related mergers and acquisitions. In 1999, the rate of acquisitions and mergers reached record levels, including the acquisition by Vivendi of the US Filter Co., valued at over US $6 billion.

Externally Aided Projects in Urban Water Supply and Sanitation in India


So far, 15 projects have been implemented with World Bank/French assistance. The Ministry of Urban Development also supports external aided projects in the water supply and sanitation sector (Website of Ministry of Urban Development and Poverty Alleviation, Government of India, 26 December 2002). Currently, 19 projects are in different stages of Implementation. The details are in tables.

Projects Implemented
Projects Under Implementation

Some Myths and Reality


World Over, WTO and the World Bank have been pushing for privatisation of water, as in other sectors. In India too, there is a strong push in that direction. For example, in States like UP, Karnataka, Maharashtra and Rajasthan, various World Bank Projects are pushing in this direction. In States like Gujarat, Madhya Pradesh, and Chhattisgarh, Asian Development Bank is pushing in this direction.

Following are some examples (of course, there can be more such instances) to show the reality as against the myths propagated in support of water sector in WTO agenda (A dossier by South Asia Network on Dams, Rivers and People, Delhi 2003).

Myth 2: NP would lead to more efficient Water Sector.


Reality: The people of Nairobi, Kenya, for example, were forced to fork out over R (Rands) 160 million when Nairobi’s water was privatised to French multinational, Generales Des Eaux. Soon after the company, they decided to install a new (but not budgeted for) R 1.5 billion billing and revenue collection service. Although the Mayor complained, the company proceeded and put water prices up by 40 per cent in order to pay for the new system. During this time, 3,500 municipal workers were replaced by 45 foreign staff who earned massive salaries from a total R 13.6 million in the second year of the contract, rising to R 31.2 million per year by the end of the contract.

Privatisation of water was also found bad for the poor of Guinea. Before privatisation in 1989, fewer than 40 per cent of the urban population had access to piped water. The Government was short of funds and needed donor finance. Private participation was a condition of World Bank lending. The work force was cut almost in half form 504 employees to 290 and right after privatisation, water prices were increased. The connection rate rose only by 9 per cent by 7 years leaving over 30 per cent of Guineans still without water. The high price of water meant people could not afford to get connected; it was difficult for even wealthy people to pay.

Myth 3: NP would provide clean water.


Reality: The most recent example is the World Bank’ role in creating the conditions that caused the current cholera epidemic in South Africa.

Myth 4: NP would provide equitable access to water.


Reality: The World Bank’s insistence on full cost recovery service cut-offs to those unable to pay forced a number of communities to access unclean water sources in South Africa recently.

The World Bank has funded some rural water schemes in Ghana. These have failed because the Bank demanded that rural communities pay upfront cash amount towards constructing the water system. “The policy has resulted in excluding poor communities incapable of paying from enjoying their right to consume potable water,” says the CAP-Ghana of Water.

Myth 5: NP would provide sustainable water services.


Reality: Biwater, which privatised Nelspruit’s water, withdrew from a Zimbabwean water privatisation project when it became clear that citizens could not pay the tariffs that would be required for Biwater to make a profit.

Myth 6: NP would mean less corruption.


Reality: The World Bank’s preference for massive projects led to the exceedingly and unnecessary expensive (and fatally corrupt) Lesotho Highlands dam project, which caused water price to jump, forcing even more communities to be a cut off. Twelve multinationals are being prosecuted for paying bribes in connection with huge water engineering contracts for the water supply scheme. [The trial began in Lesotho Government for what is expected to be a very complex and costly trial.]

In France, the home of ‘delegated management’ (the World Bank’s favourite form of privatisation), the major multinationals have been convicted of bribery. In Milan, in neighbouring Italy, police are investigating politicians’ alleged role to have received bribes from a private company for a concession to build a new sanitation plant.

In Indonesia (during the infamous Suharto’s regime), Jakarta’s water was privatised through a French and a British consortium: both were in partnership with companies owned by Suharto’s relatives and cronies.

Some of the World Bank Researchers note: “Our empirical research provides clear evidence of the importance of public procurement corruption, defined as efforts to secure public contracts through payment of kickbacks to officials, as an oft-used channel of influence as well.” “…the extent to which firms with foreign direct investment and transnationals are also involved in playing public procurement kickbacks and engaged in other forms of corruption.” …“Conventional recommendations of economic and trade liberalization advocated to address administrative corruption will not suffice.”

The two dominant water multinationals, Suez-Lyonnaise and Vivendi, are convicted in corruption cases.

Myth 7: NP would make water sector economically viable.


Reality: The World Bank’s preference for massive projects led to the exceedingly and unnecessary expensive (and fatally corrupt) Lesotho Highlands dam projects, which caused water prices to jump, forcing even more communities to be cut off.

Myth 8: NP will create competitive market, to the advantage of consumers.


Reality: Water and Sanitation sectors by their very nature create monopolies in their respective service areas.

There are only four European multinationals that have the monopoly worldwide on water for profit. One of these, French Vivendi, has recently started raising water prices in the poorest countries of the world because they need extra cash to inject into a Hollywood studio they acquired recently.

Myth 8: NP has been successful elsewhere.


Reality: In Europe, water privatisation has been failing for decades, and in several towns water has been “re-municipalised” or taken back from whichever multinational messed up the service.

In Africa, recent research conducted by London-based Greenwich University’s Public Service International Research Unit uncovered that where water was privatised, it was as disastrous as the European experience.

Elements of Water Supply Privatisation

Privatisation of water supply can involve any or all components from the source of water (say a dam), filtration and distribution, to the collection, treatment and disposal of wastewater and sewage. Hence the term normally used is Water Supply and Sanitation (WSS). The privatisation itself can be at various levels and of various types. A brief summary is given below (Dharmadhikary, 2002):

Service Contracts – Involves short-term contracts for provision of specific services. For example, metre reading and billing. No financial risks are involved, and also there is no direct legal relationship with the consumer.

Lease / Management Contract – As the name suggests, either the private company leases out of the facility from the civil authority, or the latter appoints the company for managing the facility. In either case, the ownership remains public; private company is normally not responsible for new investments or expansion. Some commercial risk is involved in so far as day-to-day operations are concerned.

BOOT Contracts – Build Own Operate Transfer Contract in which the private company builds some part of the infrastructure - say the treatment plant, or filtration plant – and runs it for a regular charge on the system. Normally, these would be long-term contract, with a purchase agreement that would guarantee a minimum demand (the equivalent of the “take-orpay” clause of Power Purchase Agreement (PPAs) in the power sector).

Concessions – Long term contracts in which the private company takes full charge of the system, takes responsibility for the provision of the service and is also responsible for expansion, new investment, recover of bills, etc.

Divestures – Where the Government divests its equity in a utility that is then bought off by a private company. This may be full or part divesture.

In most cases, the establishment of an independent regulator, whose functions normally include setting the tariffs, is a part and parcel of privatisation.

While the private sector participation in water supply is just beginning in India, it has been extensive in Latin America and Southeast Asia. What are the implications of the privatisation of water supply? To understand this, we need to look also at the experience of water privatisation in other countries.

Bolivian Experience in Water Privatisation


It is unlikely that many would have heard of Cochabamba before 1999. Till this time, the city was probably best known for the El Cristo de la Concordia, an immense statute of Jesus Christ, higher than the Cristo del Corcovado in Rio de Janeiro in Brazil. The beautiful Andean city of Cochabamba in Bolivia lies in a fertile valley at 2,558 metres above sea level, surrounded by the Tunari hill, the Alalay lagoon and the San Sebastian hill (Dharmadhikary, 2002).

In 1999 began the story that was to bring a different sort of notoriety to Cochabamba. In 1999, the whole system of water supply for this city was handed over to a consortium of private companies called Aguas Del Tunari, led by the American corporation Bechtel. The water supply system in the city was in a mess, plagued by chronic shortages, and most of the poorest neighbourhoods did not have access to piped supply. Privatisation of water supply was projected as the only solution to solve its many problems. Brought in with the intention of improving the water supply in the city, Aguas Del Tunari was given extraordinary special considerations to attract it to invest in the city.

The Rs.12,500 crores concession (contract) was for 40 years, and assured the company a rate of return on investment of 15 per cent, linked to the consumer price index of the USA. It also gave the company full rights to all the water in the district. The immediate result was that the water charges doubled, and then trebled. On the outskirts of the city, some of the communities had built their own cooperative water supply systems based on common tube wells and distribution networks about 5 years before the concession was signed. Aguas Del Tunari was given the right to install metres on the wells of these community systems, and not only that, charge the people for the metres too. The rapidly rising prices resulted in the average worker being charged about 25 per cent of his/her salary as the monthly water bill As the prices rose, the company declared – without any hesitation or remorse – that it would disconnect all those who could not pay for the water.

As the anger spread, the people took to the streets. The crowd captured the central plaza in the city. Instead of mediating between the people and the company, the Government brought in the army to suppress the people. The main leaders of the movement were arrested. The struggle became more intense – people started calling it la Guerra del aqua – the Water Wars. One day in April 2000, as the army confronted the people, a 17 year-old boy, Victor Hugo Daza was killed. This was the turning point in the struggle. There was no looking back after this, and the company finally had to leave the country.

A Jolt and a Wake Up Call


Cochabamba came as a huge shock to those advocating privatisation of water supply. Since about a decade and a half, the winds of privatisation and globalisation have been blowing all over the world. Around the globe, sectors that have traditionally been in the public domain are being privatised. These include power, transport, railways, insurance, and water.

The company has now filed an arbitration proceeding in the International Centre for the Resolution of Investment Disputes (ICSID), a dispute resolution mechanism created by and located in the World Bank. Aguas Del Tunari / Bechtel is suing Bolivia for 25 million US dollars (Rs.120 crores) for losses. The proceedings in this Centre are carried out in total secrecy and the common people, including people affected/to be affected by its decision have no say. Further, Bechtel has resorted to fudging to take its claims to this centre. It has claimed itself to be a Dutch Company to take advantage of a Bolivia-Dutch treaty, which invokes the ICSID in case of any trade dispute. Bechtel shifted its registration to Holland only after the Cochabamba concession was signed. In early September 2002, several hundred organisations from all over the world wrote to the World Bank to conduct the proceedings of this arbitration in public, and allow the people of Bolivia to become parties to the proceedings.

Structural adjustment programmes have forced country after country to adopt the programme of LPG – Liberalisation, Privatisation and Globalisation. It is being argued that LPG is the only path to economic development. The reasoning given for this is that the Governments no longer have the funds required for the huge investments necessary in these sectors. Further, Governments have proved to be inefficient, corrupt and must make way for the more efficient private sector.

Since water is such a vital part of the economy and infrastructure, it is not surprising that there has been an enormous push for the privatisation of water services. As a result, in many parts of the world, the water sector has seen large-scale privatisation. The events in Cochabamba came as hard reminder that the rosy picture of privatisation of water services also had plenty of thorns. And Cochabamba is not an isolated case. As it happened in Cochabamba, it also helped focus the world’s attention on many similar, albeit not so dramatic, cases.

Past few years have seen growing push in India for bringing in private companies in a big way in the water sector. This privatisation of the sector raises a large number of issues. It is necessary that this be preceded by intense debates, discussions and in-depth examination. Otherwise, who knows how many Cochabambas may take place in India?

Failure of Water Privatisation in Manila

The privatisation six years ago of Manila’s 120 years old Metropolitan Waterworks and Sewerage System (MWSS) was the world’s first and largest such effort. International funding agencies have since upheld the Manila System as a success story urging other Asian countries to adopt the model.

But if the Philippine NGOs like Freedom from Debt Coalition and the Institute for Popular Democracy are to be believed, Manila is a basket case of privatisation’s failure. While the water supply has improved for the city’s wealthy, tariffs have skyrocketed 150 per cent. Many communities do not have water connection. The private companies are not concerned about water conservation and have reneged on their commitments (Chinai, 2002).

The privatisation of MWSS was carried out, notwithstanding opposition from civil society groups, among them the Freedom from Debt Coalition (FDC). Among the issues raised by FDC was the nature of water as a service, not a source of money. FDC views water as too important a resource to risk giving its provisioning to corporations whose primary motive is profit. This is further exacerbated by the Philippine government’s lack of a credible regulatory capacity and its political system’s malleability and being open to capture by vested interests.

The people’s wariness against the turning over of water provisioning to private hands was drowned out when the results of the bid were announced. Maynilad submitted a bid of P 4.96/ cum while Manila Water submitted P 2.32. The pre-privatisation rate of MWSS is P 8.78 per cubic metre of water. Promoters of privatisation were blowing their trumpets, proclaiming to the world the merits of privatisation (Freedom from DEBT Coalition).

MWSS five years later


Did privatisation succeed in bringing water to the people of Manila? Less than five years after the privatisation of MWSS, the failure of privatisation was for all to see.

Not even five years has passed after MWSS was privatised, the only tangible gain brought about by privatisation, low water rates, went in tatters. Maynilad, from its P 4.96 bid, is now charging its customers P 15.46 per cubic metre. How was this possible? The Lopez-owned Maynilad was able to ally itself with the MWSS Regulatory Office’s Chief Regulator himself to push for an amendment to the contract to allow them to increase tariff rates through an automatic currency exchange rate adjustment (auto-CERA) mechanism. This was despite the fact that the auto-CERA mechanism has no basis in the concession agreement.

Although the increases were not enough to cause riots, subsequent increases might. At an ongoing rate of raising process at MWSS, Maynilad is asking for a P 30.92 per cubic metre of water.

ADB and Maynilad


The Asian Development Bank (ADB), lender of almost half of the loans assumed by Maynilad when MWSS was privatised, pushed for the contract revision, which will allow Maynilad to increase water tariffs. It argued that the increases were necessary to make Maynilad viable. The contract was amended, tariffs increased, and people’s lives became harder, but Maynilad still wants more rise in tariff rates.

Maynilad did not become viable. And ADB knows it. The Bank now wants Maynilad to secure a sovereign guarantee from the Philippine government before it will release a $ 350 million term loan to the ailing water firm. What in effect has happened is that the profits were privatised while the risks remained with government and ultimately, in taxpayers’ hands.

Private is not always better than public sector


When government privatised MWSS, it was with the steadfast belief that the private sector can do wonders for the water sector because it will make the MWSS run efficiently.

In the view of Maynilad, the company should have registered profits starting 1999. Instead, Maynilad is losing, and losing big. In the year 2000, they were supposed to earn P 604 million but actually incurred P 2.4 billion in losses. In 2001, instead of earning P 477 million, they lost P 1.037 billion.

Why? Because of high non-revenue water (NRW). According to their targets, NRW should have been decreased to around 30 per cent by 2001 from 57 per cent in 1997. Instead, NRW ballooned to almost 66 per cent. Maynilad is also losing big bucks because of the firm’s inability to efficiently collect water tariffs.

Worse, Maynilad is squandering its money not on capital expenditures such as laying pipes but on the salaries of its pampered executives, both foreign and local alike. It has also incurred very high advertising costs.

Indian Experience: Agitation in Sivaganga


People in Sivaganga in Tamil Nadu are agitating against a soft drink maker’s plans to exploit large amount of water from the region, which is already facing water scarcity. On 28 April 2003, more than 7,000 people participated in a rally against Sakthi Sugar Mills at Padmathur. The sugar mill has entered into a contract with the soft drink maker to prepare and package some of its products, using its groundwater resources, 75,000 litres a day. Unlike at Plachimada in Kerala where the resentment among the local people manifested as an angry protest only three years after the bottling plant began operation, the agitation in Sivaganga is a pre-emptive one (Viswanathan, 2003).

The plant will have a production capacity of 600 bottles per minutes; the packaging units might resort to indiscriminate exploitation of groundwater, which would lead to scarcity of water for drinking and irrigation purposes. The unit had plans to dig bore wells up to a depths of 3000 ft. on the Vaigai river bed, besides using the unutilised part of the quantum of water permitted specifically for industrial use by sugar mill, which is 49 lakhs litres a day.

The plant would affect the water supply to Sivaganga, Manamudari, and Thiruppuvanam towns and about 80 villages. The effluents let into a canal during actual run of the unit caused the death of couple of cows and some sheep in a village close to the factory.

In the Thiruppuvanam panchayat union, where the wells of the Sugar mills are located, the groundwater reserves have fallen significantly from 13,351 hectares metre in 1985 to 7,463 hectares metre in 1992. The intensity of ground water extraction has increased rapidly. The quantum of water, drawn as a proportion of the water remaining underground, increased from three per cent in 1985 to six per cent in 1992.

Water Privatisation in Palakkad District of Kerala


Coca-Cola and Pepsi, arch-rival and thirst-busters for millions worldwide, have found common cause in Kerala against protest groups agitating against the way the bottling units of the two multinationals are depleting and polluting groundwater resources to the detriment of people in the drought-prone district in Palakkad (Kumar, 2003).

Within two years of its inauguration, and especially since April 2002, protests had become a regular feature in front of the Coca-Cola unit in Plachimada, as several places in Chittur taluk, including 10 colonies of Dalits and tribal people, began to experience a severe drinking water shortage. Despite the company’s claims that the unit is a “greenfield soft-drink bottling factory,” where a major share of the water not bottled, is recycled and used to recharge the groundwater, residents of surrounding villages continued to complain that indiscriminate extraction of groundwater had dried up many wells and polluted several others.

The company’s initial attempts to provide water in truckloads to some of the affected villages was not appreciated, and the agitators continued to demand that it should take steps to restore groundwater aquifers and ensure continuous water supply in the affected villages, or face the prospect of closure.

Ironically, the bottling unit was established in 2000 on 38 acres (15.2 hectares) of mostly multi-cropped agricultural land, barely 2 kms away from the river Chitturpuzha and near a number of reservoirs and irrigation canals. Until recently, according to the protesters, every day the company drew nearly 1.5 million litres of groundwater and about 85 truckloads of products left the factory premises.

A study conducted by some well-known environmentalists, and members of the Kerala Sastra Sahitya Parishad (KSSP), too had warned that the extraction of groundwater by Coca-Cola at the current rate would stem the possibility of groundwater recharge and lead to deficient rainfall pattern of the region. The report also warned of deterioration in the quality of groundwater as a result of over-exploitation. The State government had refused to take note of the plight of the villagers or to ask the company to curtail the extraction of groundwater.

The Pudusseri Panchayat has cancelled the license of Pepsi unit, because the people of the village and surrounding areas had experienced one of the worst instances of water scarcity this year. There was a severe shortage of drinking water. While earlier there was enough water to operate the pumps for four to five hours a day, this year the pumping had to stop in less than an hour. The panchayat had examined these factors in detail and found that the Pepsi unit had been indulging in over-exploitation of groundwater sources, given the general drought situation prevailing in the area. (Shiva and Jalees 2003)

Privatisation of water: The Tiruppur case


Tiruppur has entered into the global map by virtue of the fact that the knitwear industries located in this town contribute to Rs.4,500 crores every year by way of foreign exchange. Tiruppur, the largest producer of knitwear products in India, is located in Coimbatore district in western Tamil Nadu. The population of this town is about 255,000. This town however starves due to inadequate water for both industries as well as for domestic uses. Agriculture is also badly affected and stressed due to lack of water. This region does not have any perennial water supply from surface sources. The groundwater is depleted with water dropping up to 1,200 feet in many parts of the district.

New Tiruppur Area Development Corporation Ltd. (NTADCL), a company is initiated to supply water to the industries of Tiruppur town and to the domestic users. This is a project in which many agents are participating. They are Tamil Nadu Government, Tiruppur Exporters’ Association (TEA), Tiruppur Municipality, Infrastructure Leasing and Financial Services Ltd. (IL & FS), the Tamil Nadu Corporation for Industrial Infrastructure Development Ltd. (TACID), NTADCL and Indo-US Financial Institutions Reform and Expansion (FIRE) Project. This project aims to supply 185 million litres of water per day from Bhavani river to cater to the needs of about 100 dyeing and bleaching units located in this area as well as to supply water to 1.6 million people located in the Tiruppur municipality and the adjacent Panchayats. The detailed project components are the following (Janakrajan, 2003):

● Treated piped water supply of 60 million litres per day (MLD) to Tiruppur municipality and 21 adjoining towns and village panchayats.
● Treated water supply of 100 MLD to over 700 dyeing and bleaching industries within the Tiruppur Planning Area.
● A sewerage system for Tiruppur.
● Onsite sanitation facilities for 88 designated slum areas within Tiruppur municipality.

NTADCL will be responsible for transmission, treatment of water supply, distribution of water outside municipal limits where most of the industry is located, treatment of the collected sewage and maintenance of the sewage treatment plants.

Resource mobilization of the project: Basically, TEA, TACID and IL & FS together are responsible to design and execute the project. Therefore, a public limited company called New Tiruppur Area Development Corporation (NTADCL) was formed in 1995 to see through the project. The NTADCL will contract out the construction and maintenance of the system to a Build, Operate and Transfer (BOT) consortium, which is the Mahindra Consortium (Mahindra & Mahindra, United International, North West Water, and Bechtel). USAID has provided long term (30 years) loan guarantees for US $ 25 million with IL & FS to help finance this project. Total estimated cost of the project is Rs.12 billion of which equity share of Rs.3.9 billion will be contributed by the Union Government, IL & FS, the Tamil Nadu Corporation for Industrial Infrastructure Development, the Tiruppur Exporters Association and the Mahindra-led consortium. The project has a debt component of Rs.6.98 billion and a subordinate debt of Rs.750 million.

The project is supposed to be in full operation within six years. It is boasted that this is the first public-private partnership project to access commercial funds for the water sector in India. The Tiruppur experiment is going to be the benchmark for private initiatives in the sector and it will build a strong case for private financing of water projects in India in the future.

Treatment of effluent generated by the industries is not taken care of by the company. One of the important processes in the making of knitwear products is dyeing and bleaching. This particular process not only consumes enormous quantity of water, but almost the same quantity of water is discharged as effluent. The major part of effluent is discharged into the Noyyal river and to a significant extent in other small streams such as Nallar and Jamunai rivers. The available evidence confirms that the effluents discharged by these units are quite hazardous causing serious health problems. This is evident from the type and extent of chemicals used in the bleaching and dyeing processes. The estimated water requirements of the bleaching and dyeing units in Tiruppur is about 120 million litres per day (mid) of which about 60 per cent is met by groundwater as transported by the tanker-trucks from the rural neighbourhood. What is really disturbing is the fact that a comparable quantity of water is let out as effluent in the Noyyal river and other streams, which has already caused permanent damage to the river, top soil and most important of all, the groundwater.

Even 30 years earlier, the local textile operators have confirmed that groundwater is contaminated around the areas where dyeing and bleaching units discharge their effluents. In the absence of any perennial source of surface water, the villages around Tiruppur entirely depend upon groundwater for agriculture. As groundwater is contaminated, agriculture as the key occupation seems to have been abandoned in many villages.

The Government of Tamil Nadu has constructed a dam across this river (called Orathapalayam dam) in the year 1992, about 10 kms below the Tiruppur town, with a view to provide irrigation for 8,000 hectares. This dam’s catchment area is 2,245 sq. kms, which includes most of the area in which the dyeing and bleaching units are located. The construction of this dam has turned out to be a mockery and has resulted in the wastage of public resources. This is simply because a large quantity of water (about 120 mld) consumed by the Tiruppur dyeing and bleaching units is conveniently led into the Noyyal river (in the form of untreated trade effluent), contributing thereby to the ‘additional storage level’ of the dam. Thus, the dam effectively performs the role of a storage reservoir for the contaminated water, contributing quite significantly to the pollution of environment, in particular, groundwater. Unless 20,000 cusecs of water is released into the river Cauvery, a major river into which Noyyal joins in the downstream. The release of water from the Orathapalayam dam would be extremely harmful to the crops, soil, animals and groundwater.

In February 1997 when there was no appreciable flow in the river Cauvery, the water from the Orathapalayam dam was released with a view to minimize the damage to the villages around the dam. Since the dam was opened without any prior public notice, it resulted in a great havoc to crops, animals, soil and groundwater. This polluted water of the Noyyal river joined Cauvery 32 kms down the Orathapalayam dam. It is reported that the water quality remains bad even at 300 feet depth, rendering it unfit even for irrigation.

If the new water company in Tiruppur brings additional water (185 million litres per day), the pollution threat is going to escalate further. The existing common effluent treatment plants (CETPs), a total of eight, hardly function but satisfy the Supreme Court order. Further, these CETPs are not designed to treat the TDS, which is the biggest pollutant. Since the treatment system is very expensive, no industry is willing to treat the effluent. Therefore, the new company will pose additional problem by bringing more water to the town.

The other problem related to Water Company is the fixing of the price of water for the domestic users. The rates are not decided so far but it goes without saying that the new rates for water is going to adversely affect the common man in the region. (Shiva and Jalees, 2003)

In brief privatisation of water will have devastating implications, some of them are listed below (Sharma and Naqvi 2004).
(i) Privatisation is an attack on the community rights over water.
(ii) Privatisation of water will result in the hike of water tariff.
(iii) Privatisation of water will reduce the availability of water.
(iv) Privatisation of water will affect the quality of water.
(v) Privatisation of water will result in the exploitation of consumers.
(vi) Privatisation of water will result in huge benefits to the Multinationals at the cost of survival of consumers.
(vii) Privatisation of water will lead to the corruption.
(viii) Privatisation of water will cause the retrenchment of the employees.
(xi) The water is privatized; it is difficult for the Government take control over the water again.
(x) Privatisation of water will result in number of diseases due to poor quality of water.

Privatization Of Ganga


In response to a request from the United States government for the purchase of land from indigenous people for colonists who were arriving thick and fast from Europe and further east, Chief Seattle in 1852 wrote a moving piece of prose, so poetic and metaphoric of rivers and worth quoting. Chief Seattle wrote:

The shining water that moves in the streams and rivers is not just water, but the blood of our ancestors. Each ghostly reflection in the clear waters of the lakes tells of events and memories in the life of my people. The water’s murmur is the voice of my father’s father. The rivers are our brothers. They quench our thirst. They carry our canoes and feed our children. So you must give to the rivers the kindness you would give any brother (Davies and Day, 1998).

The words of Chief Seattle are relevant for any river of India, be it Ganga or Brahmaputra. The words also convey the agony, anguish and the loss of livelihood, if the rivers are privatised or if their waters are diverted for sale for profit, at the behest of thirsty corporate houses and MNCs.

Suez: Privatising the Ganges to create water markets in Delhi


On 9 August 2002, on the eve of the Quit India Day, more than 5,000 farmers of Muradnagar and adjoining areas of Western Uttar Pradesh gathered in a rally at village Bhanera to protest the laying of a giant 3.25 metre-diameter pipeline to supply the water from the river Ganga to the Sonia Vihar water Plant in Delhi. The project, which has been contracted to SuezOndeo Degremont of France by the Government of Delhi, will deprive the richest farmlands of India of irrigation water.

The foundation stone of the Sonia Vihar water treatment plant was laid down on 21 June 2002 by the Chief Minister of Delhi, is designed for a capacity of 635 million litres a day on a 10 year BOT (Build, Operate and Transfer) basis, at a cost of 1.8 billion rupees (approximately 50 million dollars). The contract between Delhi Jal Board (the Water Supply Department of the Delhi Government) and the French company Ondeo Degremont (subsidiary of Suez Lyonnaise des Eaux Water Division – the water giant of the world) is supposed to provide safe drinking water for the city.

The water for the Suez-Degremont plant in Delhi will come from Tehri Dam through the Upper Ganga Canal up to Muradnagar in Western Uttar Pradesh and then through the giant pipeline to Delhi. The Upper Ganga Canal, which starts at Haridwar and carries the holy water of Ganga up to Kanpur via Muradnagar, is the main source of irrigation for this region.

The rally at Bhanera village on 9 August 2002 was the culmination of the 300 kilometrelong mobilization drive along the Ganga by the farmers of Garhwal and inhabitants of the devastated city of Tehri to liberate the river from being privatised. The rally was launched from Haridwar – one of the oldest and holiest cities of India built on the banks of Ganga – where hundreds of farmers, together with priests, citizens and worshippers of Ganga announced that “Ganga is not for sale,” and vowed to defend the freedom of this holy river. Thousands of farmers and others in villages along the route joined the rally to declare that they would never allow Suez to take over Ganga waters.

More than 300 people from across the country, representing over a hundred grassroots groups, intellectuals, writers and lawyers joined the rallyists, at the three-day Convention on Earth Democracy – People’s Rights to Natural Resources, organized by Navdanya from 10 to 12 August 2002, at Indian Social Institute, New Delhi. The Convention sought to provide evidence of the state’s violent appropriation of people’s land, water and biodiversity, and evolve common action plans and strategies to defend collective community rights to resources.

“There is only one struggle left - the struggle for the right to life,” said Magsaysay Award winning writer Maheshwata Devi. Eminent author Arundhati Roy and Dr. Vandana Shiva stressed the urgent need to take collective united action to defend people’s rights to land, water and biodiversity.

Mother Ganga is not for saleAs discussed in chapter 13 “Water Crisis in Delhi”, the Sonia Vihar plant is being developed on a basis of BOT contract for a fixed period of ten years, the profit of the Sonia Vihar Treatment Plant is guaranteed by the government during the period. In an interview to a national magazine, a senior manager with Degremont said, “right now, we are happy with a profit of Rs. 10 crores per annum. Other companies may be content with managing and operating existing plants owned by individual civic bodies. But we don’t want to dabble in that. We have very strict quality control and would like to maintain our image as quality providers to our clients” (Joshi, 2003).

However, the Multinationals like Suez-Degremont are notorious to build poor infrastructure with no compliance to safety norms. On 25 June 2003, five people including one engineer died at the Rithala Sewage Treatment Plant (STP) in Delhi, which is managed by Suez-Degremont (Hindustan Times and Indian Express, New Delhi, 26 June 2003). According to Sanjay Sharma, union leader of Delhi Jal Board (DJB), this is the fourth incident in six months killing a total of eleven persons. Workers at the site are not provided with even the basic safety gear. There are no gloves, workers are never given gas masks or oxygen cylinders despite the air around the flotation units being foul; they have just rope.

The Rithala plant treats 80 million gallons per day (MGD) of sewage. DJB manages half of the sewage and the other half by Degremont. The Degremont, plant had been inaugurated by the Chief Minister Ms. Sheila Dikshit in October 2002.

With such a poor record of safety and maintenance, the Suez-Degremont Sonia Vihar Plant has no legitimacy or justification.(Shiva and Jalees 2003)

The pipeline of Suez Degremont to supply water from Upper Ganga Canal (near Muradnagar) to Delhi has been laid through the following villages in Ghaziabad district.

1. Kushalya
2. Masoori
3. Nahal
4. Kallu Garhi
5. Dasna
6. Qazipura
7. Mehrauli
8. Vijaynagar
9. Duraheda
10. Chhajarsi
11. Makanpur
12. Gazipur

After great agitation, the farmers whose land has been acquired are offered meagre amount of Rs.47,000 to Rs.61,000 per bigha, that too in several instalments.

Who is paying for Corporate Profit?


Privatisation of water has been justified on the ground that full cost must be paid when water giants get water markets, whereas with water privatisation they demand a full price from the people. As the case of the Delhi Water Plant shows, the corporate giants get the water for free without paying for full social and environmental cost to those rural communities from whom the water is taken.

The country has got into huge debt for the loans taken from World Bank for the Ganga Canal. At the same time, the giant 3.25 meter-diameter pipe is being built through public finances. In effect, the public pays the price while transnational companies make the profit.

Delhi Jal Board claims that they have no intention of raising the water rates for the time being. However, as has been seen in the case of Enron with electricity, the Orissa Lift Irrigation Corporation in Orissa, and other cases, privatisation leads very quickly to a steep rise in the price of water and electricity. With regards to concession to the poor, DJB said there would be no such proposal. DJB will continue to deliver the water to Delhites and maintain infrastructure, i.e., burst water pipes, billing, etc. Thus, the people of Delhi will not just be paying Suez and the Jal Board for the water directly, they will be paying through taxes to maintain the infrastructure, thus freeing the corporation of any expenses, which might detract from their profits. (Shiva and Jalees 2003).

Water Requirement and Source of Water in Delhi


Delhi is experiencing increasing pressure to meet demand for its water resources. Growing urbanization, improvements in living standards, exploding population are just some of the contributing factors. The population of Delhi has crossed 15 million by the end of 2003. The city, at the moment, requires 3,324 million litres of water a day (MLD) while what it gets stands closer to 2,634 MLD. Average water consumption in Delhi is estimated at being 240 litres per capita per day (lpcd), the highest in the country. The large-scale extraction of ground water is a result of this widening gap between the demand and supply of water. And still worse, serious doubts are being raised about both the quality and quantity of groundwater, which has gone down by about eight metres in the last 20 years due to unsustainable demand and use.

Delhi’s Water and Wastewater Management is controlled by the Delhi Jal Board, which has signed the contract with Suez Degremont. With the demand-supply gap projections for water set to increase in the next ten years, DJB has identified new raw water sources including Tehri, Renukal, and Kishau Lahawar dams. Plans also centre on the construction of new and existing sewage treatment plants (STPs), which will enable an increase in treatment capacity. Rainwater harvesting is another option that DJB is considering. (Shiva and Jalees 2003)

Corruption related to Delhi Jal Board’s Suez Degremont Plant


The process for allotment of contract for the Sonia Vihar Plant to Ondeo Degremont has not been without controversy and objections by senior DJB members. Of the three companies that bid for the tender, Ondeo Degremont was chosen despite being higher in cost than the two other contenders, and allegedly an inferior technology. It was also known that Ondeo Degremont had already experienced problems with previous contracts in Surat and Delhi (Okhla) where they were slow in the projects by two years.

Jagdish Anand, a member of the opposition party, has accused senior politicians of trying to bribe him into silence. He said: “Earlier also I had exposed the irregularities committed by the Jal Board and its officials with regard to the allotment of Sonia Vihar 140 MGD plant. They approached me on more than one occasion. They independently requested me not to expose the working of the Delhi Jal Board… They also tried to tempt me with suitable reward and my adjustment in lieu of my not exposing the irregularities being committed by Delhi Jal Board (Hindu 2002)

Yet another accusation against the politicians and senior DJB members was of pushing through a contract to Larsen and Toubro for laying of water pipeline in Sonia Vihar at a cost that was approximately more by Rs.30 crores than the justified amount. The clear water transmission mains will supply water from Sonia Vihar Water Treatment Plant to different parts of Trans-Yamuna Delhi.

Former Mayors of Delhi Yog Dhyan Ahuja and Shakuntala Arya (both members of DJB) said that though the appropriate amount for laying the 33.948 km long water pipeline within Delhi was about Rs.85 crores, the contract has been awarded for Rs.111.31 crores.

Out of the four firms that were short-listed, two did not even submit their tenders and the lowest tender bid was as high as Rs.148 crores. Though Larsen and Toubro made a final offer of Rs.111.31 crores only on 27 February 2001, the technical committee had already given its approval a month earlier. (Shiva and Jalees, 2003)

A Public Full Cost Recovery Campaign: The Debt Suez Owes The People Of India


Privatisation is based on the logic of full cost recovery. This means the introduction of fees for the service of the end-user, which the state can subsidise if it can afford to, and liberalization of markets, removing trade barriers and tariffs, and invariably resulting in increased privatisation (SNDRP 2003 a). This also means that they should recover full cost invested in the infrastructure, payment of the salaries to the staff, costs involved in the maintenance and the huge profits. These corporates are never tired of preaching the principle of “full cost recovery” over the investment. These corporates should search their conscience before preaching the poor customers to pay the full cost of their investment. (Shiva and Jalees 2003)

“The Ganga, which is our mother, has become our graveyard,” laments the people. Privatisation of water denies local communities their water rights and access to water in two ways. Firstly, the scarce and limited water resources are diverted, from the poor to the rich, from the countryside to towns, from agriculture to industry leaving water famines where people have no purchasing power, and providing water to those who have destroyed their own water resources through waste and pollution. Secondly, the state itself shifts from its function in providing welfare to the needy and most marginalized communities to the new function of providing public subsidies for private profits. Scarce and limited public finances are diverted to MNCs like Suez and corporations like JP, which is building the Tehri dam. Small-decentralized rural schemes are starved of both water resources and financial resources. (Shiva and Jalees 2003)

The citizens of India are paying Suez either through high prices or through government guarantees. Suez owes the people of India a financial debt and a social debt. The financial debt owed by Suez to the Indian people includes the public investment in the Tehri dam and the Upper Ganga Canal of which Suez will become the sole beneficiary if the privatisation of Ganga water takes place. Suez would also owe the compensation to the farmers for annual production losses they will suffer. (Shiva and Jalees 2003)

In addition, the privatisation will cost social and ecological destruction whose costs are impossible to quantify and hence the social and ecological debt is unpayable.

As said earlier, the 635 million litres per day (MLD) of Ganga water will be diverted from the Upper Ganga Canal to Delhi, which would affect the agriculture potential of the canal and the food security of the region where the canal had been irrigating since last 150 years.

Suez is not bringing in private foreign investment. It is appropriating public financial investment. Public-private partnerships are in effect private appropriation of public investment. But the financial costs are not the only cost; there are other social and ecological costs as well.(Shiva and Jalees 2003)

Suez-Degremont should pay Rs.158,149.31 crores non-recurring money (one time amount) and should pay about Rs.70,425 crores as non-recurring amount for the guaranteed period of ten years to the farmers and other affected persons, as illustrated below:

A. Non-recurring Cost i. Cost of constructing Upper Ganga Canal in 2004 (as explained in chapter IV)
= Rs. 147,456 crores

ii. Suez Degremont is the direct beneficiary of Tehri dam. Therefore, Suez Degremont owes the responsibility to pay the full cost invested in the construction of Tehri dam as well as the rehabilitation cost of displaced persons. Suez Degremont should pay Rs.10,582 crores to the people of Tehri as explained below:
Cost of constructing Tehri Dam = Rs.10,000 crores
Rehabilitation Cost of the people displaced by Tehri Dam
= Rs.582 crores TOTAL (ii) = Rs.10,582 crores

iii. The cost of laying pipelines from Muradnagar to Sonia Vihar (to be borne by the Public) = Rs.111.31 crores Total non-recurring cost (A) = i + ii + iii = i.e., Rs.147,456 + 10,582 + 111.31 = Rs.158,149.31 crores

B. Recurring Cost
i. Upper Ganga Canal irrigates 924,000 hectares in 13 districts in western UP. As one hectare is 12.5 bighas, it irrigates 924,000 x 12.5 = 11,550,000 bighas. At an estimate the per bigha income per year = Rs.3,500 So the total agricultural income from Upper Ganga Canal = 11,550,000 x 3500 = 40,425,000,000 = 4,042.5 crores per year

ii. In the rural areas the farmers, particularly marginal, small and medium farmers also do cattle rearing which is closely linked with the agriculture development. In all 13 districts where the land is irrigated by Upper Ganga Canal, the earning from the cattle rearing is around 2,000 crores per annum.

iii. Besides, there are a large number of people like Blacksmiths, Carpenters and others, whose survival depends upon agricultural activities. There is also large number of landless labourers employed or hired by the farmers. It can be safely assumed that the total earning of these people is around 1,000 crores per annum. Total recurring cost, i.e., annual income from agriculture, cattle rearing, by artisans and landless labourers (i + ii + iii) =
i.e., 4,042.5 + 2,000 + 1,000 = 7,042.5 crores
For the guaranteed period of ten years the amount is Rs.7,042.5 crores x 10 =
= 70,425 crores

This is the basis of the full public cost recovery campaign by the people of India against the privatisation of Ganga by Suez. (Shiva and Jalees, 2003)

An Alternative to Privatization: Public-Public Partnership: A Dialogue Between Citizen and Government


Water crisis in Delhi has been increasing every year. The scenario in metropolitan cities like Delhi may assume threatening proportions if immediate steps are not taken to avert the situation.

To discuss the problem a seminar “Public Public Partnership”. A dialogue between citizens and Government was held at India International Centre in New Delhi on 8th Sep, 2004, which was organized by Research Foundation for Science, Technology and Ecology (RFSTE). Water Workers Alliance, Pani Morcha, Resident Welfare Association (RWAs). The employees of Delhi Jal Board (DJB) also shared their experience.

Dr Vandana Shiva Chairperson of RFSTE cautioned the government if Tehri water is diverted to Sonia Vihar in Delhi through Upper Ganga Canal, it may cause great environmental and social implication, besides increasing the land slides in the fragile Himalayas. This will also cause political conflict between UP, Poorvanchal and Delhi. We have already witnessed similar conflict between Haryana and Punjab over SYL. Tehri is the highest dam in the world of 280 metre height, if unfortunately it burst, water may reach up to Calcutta, playing havoc with the lives, and properties of the people.

The Financial institutions, like World Bank and Asian Development Bank promote and support the privatization which they call as Public Private Partnership. But we have formed the alliance to promote Public Public partnership i.e how public and government can find the solution of the water crisis. There are various ways and alternatives to the privatization.

Mr Gautam Rao, an engineering student in Delhi College of Engineering and an intern for a short term with RFSTE, made the vivid presentation. In Delhi, unaccounted water i.e leakage on pipelines, illegal connection, non-metre connection, faulty metres is estimated to be around 40% i.e about 1200 Mega Litres Daily ( MGD), which is almost twice the water which will be made available to Sonia Vihar through diversion of water from Tehri. Avidance of unaccounted water will lead to greater benefits to consumers as well as DJB in terms of revenue, postponement of large expenditure and other environmental benefits.

According to Mr Rao, Unaccounted water may also be termed as Non-Revenue Water, since it consists of water which though produced in treatment plants at significant cost to DJB, is not associated with any cost recovery through billing. It is thus a direct financial loss to the utility. Further an increase in delivery through reduction of leakages implies a postponement or even obviation of planned failure investment in large. projects to increase water supply.

Delhi has 9000 km of pipeline network, 13.47-lakh connection, lack of data, lack of sufficiently trained manpower and low profile of maintenance. Through Public Public Partnership DJB may control, the unaccounted water. Project should be implemented at colony level or group of colonies under the supervision of Resident Welfare Association (RWAs). DJB may appoint one technical advisor to RWAs.

Shri S.D Sinha of Pani Morcha suggested some conventional mean, which will have greater potential to conserve the water and therefore reduce the water crisis. We should maintain adequate flow in Yamuna, as river flow recharge the ground water. Delhi has the possibility of big reservoir, so we should build such reservoir near Najafgarh and Sainik Farm. Colony wise, rain water harvesting must be promoted. Small rain water harvesting may be done at home.

Smt Amarjeet Kaur, a well known trade union leader talked about the negligency of the government official, they do not work till the court intervene. Bureaucrats sit in the air condition room and never care for the poor like us. They are totally indifferent to our problems. Even the water from the Sonia Vihar will be supplied to the residents in posh colony who can afford Bisleri.

To pressurize the government officials we should involve Trade Union & leaders of the area they are first to interact with people.

Mr S.A Naqvi of DJB highlighted the ever increasing level of pollution in Yamuna. When Yamuna enters Delhi, the water of Yamuna is reported of ‘B’ grade however when it leaves Delhi after traveling a strech of 48 km the quality of water deteriorates to “E” grade Municipal Corporation of Delhi (MCD) is responsible. for 85% of water pollution to Yamuna. Besides three power plants in Delhi, Badarpur, Indraprastha and Rajghat discharge about an estimated 302 tonnes of fly as a everyday, which contaminate the ground as well as surface water due to bleaching of heavy metals present in the ash.

Mr S.A Naqvi of DJB discussed about the potential for using ‘grey water’. Water from clothes washers, bath tubs, shower or bathroom sink may be called grey water. As much as 235 MGD of water can be saved in Delhi, if all the residents start using recycled ‘grey water’ for non drinking purpose. Grey water is the most effective as supplemental irrigation source, and car washing.

“By using grey water, we reduce the need to pump ground water and reuse it as a resource and protect putable water for future. Grey water can also save money on water bill. A family of five generates about 70 gallon of grey water per day. That is a lot of water going down the drain that has already paid for and that can be reused” said Mr Naqvi.

Shri Sanjay Sharma of DJB discussed in detail about the financial sustainability of DJB through Public Public Partnerships. The only problem is the loan liablities of about Rs 4000 crores, which infact is the legacy of parent organization Delhi Water Supply & Sewerage Board. The initial amount was only Rs 1200 crores, which over the time has increased. It is an usual practice that whenever the government creates a new Department/Board/Organization, the loan liabilities are waived off.

According to Mr. Sanjay Sharma Delhi Jal Board was constituted by Delhi Jal Board Act 1998 (Delhi Act no 4 of 1998) to discharge the functions of water supply, sewerage and sewage disposal and drainage within the National Capital Territory region of Delhi Accordingly it is responsible for Supply of Water, sewage disposal and collection of revenue for the services provided within the jurisdiction of MCD area and also supply water in Bulk to the New Delhi Municipal Council (NDMC) and Delhi Cantonment Board (DCB) and respective agencies further distribute water in their corresponding areas. Similarly, Sewage generated from NDMC and DCB areas is collected by respective agency and taken up by DJB for its disposal.

Presently there are about 1.5 million water connections and around 2996 MLD (Million Liters per day) of water produced at its six water treatment plants is distributed among the 1.5 million consumers. Delhi Jal Board DJB collects and treats 2337 MLD of sewage at its 17- wastewater treatment plants.

DJB was able to recover only 249.77 crore revenue from its all sources in 2003-04. The scenario of revenue collection always remains more or less same. The main recovery of revenue comes from water charges that contributes 98% of the total recovery rest 2% comes from other sources like bio gas charges and bio fertilizer. During the year 2003-2004, when DJB recover its highest ever revenue 249.77 crores, only 35 lacs contributed from bio gas charges.

Delhi Jal board has following type of consumers:

1. New Delhi Municipal Council and Delhi Cantonment board
2. Bulk consumers
3. Domestic consumers categories
4. Commercial consumers categories
5. Industrial consumers categories

There are total number of around 14.98 million water consumers in Delhi utilizing DJB’s water and allied services. Out of it 93% percent of consumers are domestic, 6% are commercial and only 1% are industrial consumers.

In terms of consumption of water, 93% domestic consumers consume 86% of water, commercial consumers those are just 6% consume 10% of water and 1% industrial consume 4% of water i.e 660 MGD or 2996 MLD.

Delhi Jal Board is in debt trap, the organization which total revenue recovery has yet to cross Rs 250 crores and spent 370 crore per year to provide water and sanitation services to the citizens will one day will certainly sink if the situation is not addressed and taken care of. Its accumulated debt will cross Rs. 4000 crore in next few months.

There are some options available to the problem in which Government has to play a role.

Option A: Government may waive off the loan on Delhi Jal Board in one stretch as a social liability of it.

Option B: Government may waive off the loan on Delhi Jal Board in one stretch with the condition that Jal Board has to raise it’s own financial resources in future and will not opt for loans. An assistant package may be considered for DJB.

Option C: Government may waive off interest on Delhi Jal Board and take liability of interest on it. And may consider yearly financial assistant package for DJB as a social liability of it.

Option D: If Government decline to take responsibility of fiscal deficit, than public funding may be answer.

According to Mr. Sanjay Sharma, the steps need to be taken with Public-Public Partnership are the following: -

❖ Reducing leakage or non-revenue water.
❖ DJB’s Bottled Water, ‘Jal’.
❖ Utilization of sewage by products.
❖ Installation of Water connection by DJB (presently license plumbers do the work).
❖ Horticulture work (DJB has large vacant land)
❖ Water consultancy to other organization.
❖ Deputing DJB staff on Tubewells/ Waterwells (Presently run by contractors)
❖ Saving from optium dose of Alum, Poly Aluminium Chloride and Chlorine.
❖ Water assurence Programme.
❖ Recycling of Water.
❖ Saving on Energy.
❖ Internal reforms.

The reform is not daytime schedule. It takes time to achieve the targets and studies are required to check the results. The above scheme and alternative for the financial sustainability is summarized as: -

1. Development charges from uregulairsed/ unauthorized water connection = Rs 2131 Crore (in phase manner)
2. Increasing revenue = Rs 499 Crore.
3. Alternate source of income = 75 Crore.
4. Internal Financial reforms = 47 Crore.

Total: 621 Crore extras + 2131 crore (onetime)

“The suggestion are based mainly on the experience gained from Public Public Partnership of ground one globe” concluded Mr Sharma”.

Thus according to Mr Sanjay Sharma through Public Public Partnership DJB cannot only sustain but it can also earn the profits of Rs 621 crores per year without any staff retrenchment, no water privatization and no need to enhance the tariff.

Shri Radhey Shayam Sharma, General Secretary of Yamuna Vihar Resident Welfare Association made some suggestion to improve the water availability in Delhi. According to Mr Radhey Shayam Sharma. We should not divert drinking water for irrigation. We should immediately inform about the leakage of water to DJB. We must conserve water by using it prudently. Inter linking of rivers will need astronomical amount of money and very long gestation period, however reservoir can be made with little amount and in very less time.

Mr Radhey Shayam Sharma added, “We should also not create panic. In the public by creating an alarm. There is a need to think positively to avert the crisis”.

In November 2004, the government of Delhi announced a steep tariff increase. It put out aggressive advertisement campaign on the need for citizens to pay more for water.

On 22nd November, women activists had a major protest against waater privatization and increase in water tariff. Women are committed to keeping control over water in women’s hands.