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Testing the waters for privatisation

Meena Menon

Mumbai has proposed its first-ever pilot project for privatising water distribution.



UNEVEN DISTRIBUTION: Waiting for water in south Mumbai. Photo: Vivek Bendre

Water is one issue that provokes the Mumbaikar to take to the streets. People have blocked traffic, taken part in marches against the shortage of water. Even with a supply of 3,000 million litres a day, parts of the city have severe problems. Now, Mumbai has proposed its first-ever pilot model for private sector participation in water distribution in its most populous ward.

K East ward with one million resident will be under the spotlight. The Municipal Corporation of Greater Mumbai (MCGM) will, in consultation with the World Bank, appoint an international consultant to design that model. The Public Private Infrastructure Advisory Facility (PPIAF), a multi-donor facility, will provide a grant of about Rs.3 crore to engage this consultant.

Expressions of Interest were invited in January and the process of short-listing them will be completed soon. Once appointed, the consultant will report to a committee to be chaired by the MCGM and will help it design and develop a pilot private sector (PSP) model for water supply services for this ward.

Planning & development

The World Bank has already funded the three stages of the Bhatsa water supply project to the city and clearly has an interest in water distribution. The MCGM has been toying with the idea of private partnership since 1999. Furthermore, the National Water Policy 2002 also encourages private sector participation in planning, development and management of water resources. The MCGM feels public private partnerships are the need of the hour as public bodies face a lot of political constraints and cannot raise rates. It also feels the charges are abysmally low at a rate of Rs.3.50 per 1,000 litres.

The MCGM believes that Mumbai receives enough water, in excess of the demand. By 2010, it will receive an additional 500 million litres a day once the Rs.1,600-crore Middle Vaitarna project, which has received environmental clearance, is completed. However, a recent study by Abdul Shaban of the Tata Institute of Social Sciences (TISS) points to a 26 per cent shortfall in supply. There is also a gap between what an average Mumbaikar living in a flat consumes, about 200 litres a day, and a slum dweller uses, about 80-130 litres a day.

With water charges so low, the Corporation feels it is unviable to operate water supply schemes. Privatisation is often offered as a solution for better efficiency and supply and addressing water wastage — about 20 per cent of water in the city is wasted. However, the experience of people the world over is that they have had to pay higher rates for water managed by private parties. In the Bolivian city of Cochabamba for instance, a consortium of private water suppliers charged people 25 per cent of their salary as the monthly water bill. The consortium was eventually shown the door. With privatisation, the process is rarely a consultative one. While the MCGM agrees that people's participation is necessary, its attempts to involve people have not been very successful.

The people of K East ward have been holding meetings to discuss the implications of privatisation with non-governmental organisations (NGOs) such as Action For Good Governance and Networking in India (AGNI) taking the lead. Not too many people are even aware of the pilot project, but those who are, demand to know what it is all about. Many feel that instead of paying such high fees to a foreign consultant to prepare a scheme, there are cheaper solutions available. To begin with, the MCGM could plug water leakages and make the supply more evenly distributed. Another suggestion is that water should be properly metered so that everyone pays according to use.

Citizens also make one thing clear — that they and not some private company should have a say in what goes on in their ward. Janak Daftary, a rainwater-harvesting consultant, points out the inherent contradictions in the privatisation of water.

When the MCGM says the water supply is in excess of demand and about 90 per cent pay their bills, what is the need for going for a private network, he asks. By repairing leakages, the Corporation can save 300 million litres a day. The issue here is not just privatising water. On the one hand, the city is talking of rainwater harvesting and conserving water. On the other, it is cutting thousands of trees for the Middle Vaitarna project.

The solutions to water have to be holistic and not profit-oriented and people definitely have to be a part of it.

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