The Hindu : New Delhi News : Delhi Jal Board seeks steep hike in water charges

Online edition of India's National Newspaper
Tuesday, Jun 29, 2004

New Delhi

New Delhi

Delhi Jal Board seeks steep hike in water charges

By Lalit K. Jha

NEW DELHI, JUNE 28. A steep increase in water tariff has become "imminent" in the Capital in the wake of the recent 10 per cent hike in power rates which is said to have put a financial burden of a whopping Rs. 27 crores on the cash-strapped Delhi Jal Board.

Following the power tariff increase, senior Jal Board officials are understood to have briefed the Chief Minister, Sheila Dikshit, on its financial implications for the water utility and made out a strong case for increasing the water rates, which have not been revised since 1998. Arguing that there has been just one increase in the water tariff in the past 12 years, during which period the electricity rates, cost of treatment of water, besides salary to employees have increased manifold. The Jal Board has pleaded for a 300 to 400 per cent increase in water tariff. "An increase in water tariff is logical as the DJB is increasingly becoming financially unviable," it is believed to have argued.

Statistics reveal that operation and maintenance alone cost the DJB Rs. 560 crores, while the revenue generated is Rs. 263 crores per annum. Further, the DJB electricity bill per year comes to around Rs. 270 crores. After the recent increase in power tariff it would now touch Rs. 300 crore, a top DJB official said. "Things have now come to such a pass that our revenue collection is less than our annual electricity bills," he said. Further, the DJB has an outstanding loan of more than Rs. 5,000 crores and requires Rs. 500 to 600 crores to pay the interest on its debt, it is stated.

However, given that water is a sensitive issue and there can be a political fall-out of such an increase, the Chief Minister, who is the DJB Chairman, is "unlikely" to take the "bold step" of effecting a water tariff hike immediately and thus continue with its policy of giving indirect subsidy to the water utility through loans.

In fact, this is for the third time in a year that the DJB has approached the Delhi Government with a proposal to increase the water tariff. It was delayed last year due to the Delhi Assembly elections. The DJB again made a fresh proposal in January, a decision on which was postponed because of the Lok Sabha polls. The Delhi Cabinet had then asked the DJB to improve its functioning and quality of water supply, adding that only then its proposal would be considered.

Before July 1, 2002, when the power distribution system in the Capital was privatised, the DJB rarely paid its electricity bills. "But after privatisation, the situation has changed and now we have to pay our bills in time, otherwise the power distribution companies disconnect our electric supply. Consequently, it has become very difficult to survive with the present tariff," a senior water utility official said.

Referring to the existing tariff, officials said it was not only heavily subsidised, but there was also a strong element of cross-subsidy. The domestic consumers, who account for 93 per cent of the total water connections and consume 87 per cent of water supplied, account for just 48 per cent of the total revenue of the DJB. "The domestic rates are nowhere near the cost of treatment of water," said an official in the office of the DJB Member (Water).

The commercial category accounting for 6 per cent of the total connections and 9 per cent of the total consumption account for 35 per cent of the revenue, while the industrial units with 1 per cent connections and 4 per cent consumption alone account for 17 per cent of the DJB revenue.

Arguing that Delhi had the lowest water tariff in the country, a senior DJB official said: "We are suffering because it requires a political decision, unlike in the case of the power sector where the regulator takes such a decision."

Printer friendly page
Send this article to Friends by E-Mail

New Delhi