KOCHI: The loan agreement signed between the Asian Development Bank (ADB) and the Union Government for the financial assistance to five Corporations in the State suggests that the State should formulate a policy for the conversion of stand posts (public taps) to individual metered house service connections or metering of water supplied through the public taps.

The agreement was signed on Friday in New Delhi.

The metering of stand posts was proposed "for the purpose of efficient demand side management and reduction of Non-Revenue Water," the agreement said.

The deadline for the formulation of such a policy has been suggested as "not later than March 2007."

The proposal to phase out public taps and reduce the use of non-revenue water had earlier invited the wrath of a section of political parties and social activists who argued that water cannot be treated as a revenue-generating commodity.

Road map

"The State shall develop a road map on the role of the Kerala Water Authority and relevant statutory authorities and urban local bodies for water supply in the areas covered by the project to ensure empowering these with related services and cost recovery," the agreement said.

According to another clause in the agreement, "the State shall ensure that all the municipal corporations will prepare and implement a Financial Improvement Action Plan to introduce a sewerage charge, introduce solid waste management charge and improve collection efficiency by no later that one year after the related sub-projects completion."

Regarding the introduction of service tax, the agreement said that all the "municipal corporations shall pass a resolution by March 2008 to introduce service tax and/or other revenue mobilisation measures in each municipal corporation to meet the shortfall of revenue to fund the operation and maintenance of the expanded water supply.

The State shall ensure that the plinth-area-based tax and increased tax based as suggested by the Second Finance Commission is implemented starting from fiscal year 2006/07, according to the agreement.

Provisions have also been made for the payment of commitment charges to the tune of .75 per cent to the ADB if the municipal corporations fail to utilise the money allotted to them. This provision had also invited the wrath of social and political activists earlier.

The State Government signed a project agreement with the ADB on Friday. A Government order was issued early last week designating the Resident Commissioner of the Kerala House, New Delhi, to sign the project agreement with the bank.

The Rs.1,000-crore ADB aid for the municipal corporations was intended for urban infrastructure and services improvement, urban community upgrading through interventions in infrastructure improvement and livelihood enhancement. The projects are expected to be completed by 31 December, 2011.

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