[Urbanstudy] Privatising India’s Water Is a Bad Idea

[Vinay Baindur]

http://thewire.in/73597/water-privatisation/


*Privatising India’s Water Is a Bad Idea*
BY MAKARAND PUROHIT <http://thewire.in/author/makarand-purohit/> ON
17/10/2016 <http://thewire.in/73597/water-privatisation/> • LEAVE A COMMENT
<http://thewire.in/73597/water-privatisation/#disqus_thread>
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Water privatisation has a history of failure in India. Why are we still
engaging private operators to manage our waters?
[image: NMC employees union and residents of Nagpur protest water
privatisation]
<http://i1.wp.com/thewire.in/wp-content/uploads/2016/10/6.jpg>

NMC employees union and residents of Nagpur protest water privatisation

In August 2016, the Karnataka government gave Abu Dhabi-based businessman
B.R. Shetty permission to privatise the iconic Jog Falls to make it a
perennial waterfall and to develop it into a tourism hotspot. As per the
newspaper report
<http://timesofindia.indiatimes.com/city/bengaluru/Govt-allows-making-Jog-a-perennial-fall/articleshow/53748836.cms>,
Shetty is to invest Rs 450 crore towards the project and charge visitors a
“minimal” fee.

Privatising natural water bodies is not new in the country with Madhya
Pradesh (now Chattisgarh) setting the trend 17 years ago by selling the
rights of the Shivnath river, that extends to about 23.5 km, to a private
company, Radius Water Limited
<http://www.tehelka.com/2011/01/the-water-wars/> (RWL). Not just RWL, there
are many private companies working in different parts of India in the water
sector like Veolia Water India Limited (VWIL), Jamshedpur Utilities and
Services Company Limited (JUSCO), Vishwa Infrastructure Limited (VIL), MSK
projects India Limited (MIL), Orange City Water Private Ltd (OCWL), etc.
The state governments and Urban Local Bodies (ULBs) encourage private
parties to come forward and participate in the water and sanitation sector
by opening up several opportunities like Jawaharlal Nehru National Urban
Renewal Mission (JNNURM
<https://data.gov.in/catalog/investments-under-jnnurm-water-and-sanitation>)
and Urban Infrastructure Development Scheme for Small and Medium Towns (
UIDSSMT
<https://data.gov.in/catalog/investments-under-jnnurm-water-and-sanitation>)
under Public Private Partnerships (PPPs) for them.

This is surprising considering the privatisation of the Shivnath river was
a big blooper on the government’s part. Though the shortage of government
funds to supply water to the industries was cited as the reason for the
privatisation of the river water, it didn’t really work out that way. In
fact, it not only affected the livelihoods of thousands of people around
the river with RWL restricting the villagers from using the water by
fencing it, the arrangement also resulted in huge financial loss for the
government.

The government and the industries had initially believed that privatising
the Shivnath river will solve the water woes of the industries at Borai.
The plan was to build a barrage on the Shivnath to supply up to 30 million
litres per day (MLD) to the Borai industrial centre near Durg in
Chhattisgarh on BOOT (build, own, operate and transfer) basis.

“Though there was a lack of sufficient demand for water, the then managing
director of Madhya Pradesh Audyogik Kendra Vikas Nigam Ltd (MPAKVN ), G.S.
Mishra signed the agreement with RWL. Back then, Borai had two large and
medium scale industries, and their combined water requirement was between
1.14 and 2.5 MLD, while the Chhattisgarh State Industrial Development
Corporation (CSIDC) had to compulsorily shell out money for 4 MLD. Adding
to this financial loss, CSIDC purchased water at Rs 15/ cubic metre from
RWL. It sold water to industries at Rs 12/ cubic metre, incurring a loss of
20% on every unit of water it sold. Increase in both supply or demand would
mean higher losses. Adding to the loss was Hindustan Electro Graphite (HEG)
that was to buy almost 90% of the CSIDC’s water sales but reneged on its
agreement,” says a *Tehelka* report
<http://www.tehelka.com/2011/01/the-water-wars/>.

Till date, RWL has not transferred the ownership of land
<http://www.indiawaterportal.org/articles/15-year-old-battle-shivnath-river-still-rages>
to
the government. Neither has the government taken any visible action against
RWL for the financial loss to the state exchequer.

*Why privatise water resources?*

Water privatisation refers to the transfer of ownership of water resources
from the public sector to the private sector. Since 1990, the government,
through its reforms, has encouraged private sector projects in the water
sector in the hope that transferring the responsibility of water to private
companies will bring more transparency and accountability to the process.

The drive to privatise the water sector in India accelerated after the year
2000 when the government of India adopted various reforms suggested by
international financial institutions like the World Bank and the Asian
Development Bank.

In 2002, the government implemented National Water Policy
<http://wrmin.nic.in/writereaddata/NationalWaterPolicy/nwp20025617515534.pdf>.
As per the policy, “Private sector participation should be encouraged in
planning, development and management of water resources projects for
diverse use, wherever feasible. Private sector participation may help in
introducing innovative ideas, generating financial resources and
introducing corporate management and improving service efficiency and
accountability to users. Depending upon the specific situations, various
combinations of private sector participation, in building, owning,
operating, leasing and transferring of water resources facilities, may be
considered.”

*The saga of failure*

Within a decade, however, the private sector participation projects in the
water sector shot up to more than 300. As per the database
<http://www.manthan-india.org/wp-content/uploads/2015/04/DatabasePSP-March-2013.pdf>
maintained
by Manthan Adhyan Kendra <http://www.manthan-india.org/>, a centre set up
to research, analyse and monitor water and energy issues, Maharashtra has
the maximum number (48 projects) of privatised water followed by Karnataka
(26 projects), Tamil Nadu (25 projects), Delhi (20 projects), Rajasthan (17
projects) and Andhra Pradesh (15 projects). More than 70 percent of the
projects are under various stages of implementation and still need to be
evaluated. As per a study titled Water: The market of the future
<https://www.robeco.com/images/RobecoSAM_Water_Study.pdf> by RobecoSAM AG,
the global business opportunities related to the water sector are expected
to reach one trillion US dollars by 2025.

“The unlimited access to water resources by the governments to the private
companies has given rise to well developed water markets,” says a study
<http://www.manthan-india.org/wp-content/uploads/2015/04/Water-Pvt-Ltd-New.pdf>
conducted
by Manthan Adhyayan Kendra. Privatisation or private sector participation
in the water sector involves hydropower, industrial and domestic water
supply, and even irrigation.

Even after opening several fronts for the private companies, the companies
have failed to improve water services. The Manthan Adhyan Kendra database
on private sector participation in the water and sanitation sector in India
shows that there are more than 20 private sector participation projects
that are facing problems in implementation.

For example, JUSCO, the flagship company of the Tata group, was formed in
2004. Even prior to JUSCO, Tata Steel has been managing the water
distribution network as well as the operation and maintenance work for
Jamshedpur since 1941. In the last two decades, JUSCO has expanded its
water operations to Mysore, Bhopal, Gwalior, Kolkata, Haladia, Muzzafurpur
and Chennai and has become the largest water supply developer
<http://www.juscoltd.com/water-haldia1.asp> and operator in the country.
The operations of JUSCO in India have not only failed to deliver services
in Jamshedpur, but it has also failed to provide its services in Mysore
<http://www.inmysore.com/jusco-s-lapse-fined-rs-7-cr>, Kolkata and other
cities. The Mysore City Corporation has imposed a penalty of Rs 7 crore
<http://www.inmysore.com/jusco-s-lapse-fined-rs-7-cr> in 2013 on JUSCO for
various lapses in the 24×7 water supply project.

This is not an isolated case of failure of water privatisation in India. In
June 2007, the Nagpur Municipal Corporation (NMC) handed over the operation
and management of water services of the Dharampeth area of Nagpur to
private operator VWIL on a pilot basis. The key project objectives
<http://www.pppinindia.com/cpp_pdf_files/nagpur.pdf> were to provide 24×7
water supply at the desired pressure, 100 percent meterisation, to optimise
the Unaccounted For Water (UFW) losses, create efficient billing
mechanisms, reduce consumer complaints and ensure sufficient supply. They
also had to manage the entire water supply cycle including procurement,
treatment, storage and distribution.

Without properly assessing
<https://sandrp.wordpress.com/2014/07/25/nagpur-24x7-water-supply-at-the-cost-of-irrigation-potential/>
the
project outcomes, NMC extended the project to the entire city in November
2011. It signed a concession agreement with the OCWL which is a joint
venture of Vishwaraj Environment Private and VWIL. The total cost of the
project increased from Rs 387.86 crore to Rs 566.09
<http://timesofindia.indiatimes.com/city/nagpur/24X7-project-begins-to-run-into-rough-waters/articleshow/31556491.cms>
crore
before handing over the water work to OCW.

“The privatisation of drinking water services in Nagpur is a complete
failure model. The tariff of water has increased to four times and the
losses to NMC after privatisation is 180 crores annually. The privatisation
process neither bring the water leakages down nor could the private company
ensure sufficient supply of water to the residents,” says Jammu Anand,
president of NMC employees union. In January 2016, the NMC Employees Union
<http://www.indiawaterportal.org/articles/water-profit-experiences-america-and-india>
and
the residents of Nagpur protested the privatisation of water services in
the city.

“The public-private partnerships in India have so far failed to improve
water services in the country, and there is no private sector regulation
act and rules to regulate the functioning of the private sector,” says
water law expert Pradeep Purandare.

What’s wrong with water privatisation?

Following are the global trends
<http://www.citizen.org/documents/Top10-ReasonsToOpposeWaterPrivatization.pdf>
observed
when water is privatised:

   - It leads to increase in the water tariffs.
   - It undermines water quality.
   - Private companies are not accountable to consumers.
   - It fosters corruption.
   - Privatisation reduces local control and public rights.
   - Private financing cost more than government funding.
   - It leads to job losses.
   - Privatisation is hard to reverse.
   - The poor could be left with no access to clean water.
   - Privatisation would open the door for bulk water exports.

Recently, several individuals from different universities and non-profit
organisations
<http://www.stopcorporateabuse.org/sites/default/files/resources/letter_to_dr.kim_with_signatories_full_final.pdf>
from
all over the world, under the banner of Corporate Accountability
International <http://www.stopcorporateabuse.org/about-us>, wrote an open
letter to World Bank group president Jim Yong Kim and appealed him to end
all sorts of advisory and financial support to the private companies due to
the adverse impact of water privatisation on the humanity. You can read the
full letter and organisations and individual details here
<http://www.stopcorporateabuse.org/sites/default/files/resources/letter_to_dr.kim_with_signatories_full_final.pdf>
.

*A way forward*

Food and Water Watch <http://2010.pdf/>, a champion for healthy food and
clean water for all, reviewed 18 communities across the US that reclaimed
public management of water or sewer services and found that public
operation was an average of one-fifth cheaper than private operation. The
study concluded that a municipality typically saves 21 cents on every
dollar by returning their water systems to public hands.

A report <https://www.tni.org/files/download/heretostay-en.pdf> by the
Transnational Institute (TNI
<https://www.tni.org/en/transnational-institute>), Public Services
International Research Unit <http://www.psiru.org/> (PSRU) and the
Multinational
Observatory <http://multinationales.org/?lang=en>, a prime international
research and advocacy organisation working on international water and other
social development issues suggests that 180 cities and communities in 35
countries across the globe have “remunicipalised” their water systems in
the last 15 years. Remunicipalisation
<http://rights4water.net/en/8-news/63-italian-team> is defined as the
transfer of water services from private companies to municipal authorities.
It is a way to show that the public sector can outperform the private
sector and can be an efficient water provider anywhere in the world.

*This article originally appeared
<http://www.indiawaterportal.org/articles/water-not-profit> on* India Water
Portal.
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