The Hindu : New Delhi News : Massive rise in water tariff feared

Online edition of India's National Newspaper
Thursday, Jul 14, 2005

New Delhi

New Delhi

Massive rise in water tariff feared

Sujay Mehdudia

Suggestion to set up water regulator for cost recovery "It is a big farce being played on the people of Delhi. Under the garb of privatisation, assets of the Jal Board are being virtually sold out''

NEW DELHI: While the Delhi Jal Board continues to toe the road map drawn up by the World Bank and private consultants for privatisation of its assets and services, an alarming situation could arise if water tariffs and the consequent financial burden on the poor and the middle class are increased substantially. The consultants have suggested a phasing out of subsidies and cross-subsidies and setting up of a water regulator to determine tariffs on the principles of full cost recovery.

According to analysts, if the suggestions made in the reports submitted by the consultants are eventually implemented, the monthly water bill of an average middle class family in the Capital now paying Rs.192 would go up immediately to Rs. 990 and that of a family living in a slum cluster and paying Rs. 52 at present would increase to Rs. 200. And this increase has been calculated at the present levels of operating expenses. While operating expenses are likely to increase sharply under private water companies, the actual rise in tariffs would be far higher.

"It is a big farce being played on the people of Delhi. Under the garb of privatisation, assets of the Jal Board are being virtually sold out when everything could be turned around by just some fine management and proper use of the present resources,'' says Arvind Kejriwal of Parivartan, an NGO that has done extensive study on the privatisation of water in Delhi and other parts of the world.

In their voluminous report on privatisation of the water utility in Delhi, the consultants themselves have suggested a sharp increase in domestic tariffs. The Delhi Government has already more than obliged them recently by increasing tariffs by over 250 per cent. However, experts fear that the future increases in tariffs would be much more steep because the cost of operations and maintenance under private water companies are expected to rise sharply, which would be passed on to the consumers.

Internationally, water charges have skyrocketed wherever water utilities were handed over to the private water companies. In Manila, water prices went up by 700 per cent within three years of privatisation, when the companies had promised no increase in tariffs for the first ten years. In Bolivia, water prices shot up by 200 per cent within a few weeks after the water utility was handed over to private water companies.

The water charges increased manifold in every country wherever water was handed over to the private water companies. The poor could not afford these rates. Their connections were cut off. This led to massive social unrest in these countries.

"It is a wrong assertion that privatisation is the solution for every problem. The Government must first make the system efficient and then look for solutions. We are against privatisation of water as it is a basic commodity and part of the social obligation of any government. In Delhi, water privatisation could go the same way as the power privatisation that has failed miserably.

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