PRIVATISATION OF DELHI WATER

NO, PUBLIC WONT BE SERVED

Group A-16

Brief Background
In 1998, Delhi Jal Board (DJB) approaches the World Bank for a loan of over Rs100 cr. The
Bank offers Rs7 cr loan for hiring a consultant.
WB is unhappy and demands to know the basis of low marks given to PWC and demands
rejection of the low marks given. DJB obliges.
PWC gets the contract to lay the blue print for privatization.
Shelving of project in 2005 led to DJB implementing the project in form of 3 PPPs- Malviya
Nagar, Vasant Vihar and Nangloi.
Objectives - Reduction in NRW (65% to 15% ) and improvement of uninterrupted water supply.
Our discussion mainly pertains to Malviya Nagar PPP Consultancy contract ( 285 lakh INR)
currently in second phase with submission of DPR by the consultant.
Project Activities- Supply side management, Demand side management and managerial
reforms.
Core activities- Rehabilitation of existing n/w, Expansion and O&M of supply n/w.

Sharply rising tariffs, disconnections, failure to extend services to the poor all
have led to depriving people of the basic, fundamental human right to water.

Forces at Play

Shrinking public revenue : Enormous backlog of investment needs gold plating

Looming costs for long-overdue capital improvements : Abdicating responsibility and defending
failure by pushing it on to private sector
Perception that private operators run more efficiently : Focus only on cost of service and ROI
Mixed consumer responses from other privatization models
Inability of private players to make expected profits amidst of high expectations
Limited leverage to ensure accountability and responsibility as majority of the risk is borne by
publick sector

Where DJB fails : The muddy picture

Unmetered due to unwillingness of DJB to
provide water through pipelines to the vast
majority of residents of the unauthorized, and
resettlement colonies and slums of Delhi
Shortages from high losses ( 40-60%) due to
leakages in the pipelines
WTPs located far away from the areas they are
meant to serve- losses during transportation
( leakage, seepage & pilferage )
DJB does not have any advanced underground
leakage detection system, and acts only when
consumers complain about leakage

Leakage Losses amidst rising populations

Inequitable distribution : Rich prime

beneficiaries of subsidized water

Tariff hikes curb wasteful consumption

Inefficient Management : No elected govt

risks revising tariffs

Case against tradable water entitlements ?

Definition : Change water from being a right to an entitlement that can be purchased
or sold
Constitution of India has delineated access to safe drinking water as part and parcel of
"Right to Life " under art. 21. Being a fundamental right it is the responsibility of the
state
to
beef
up
its
security
and
implementation.
Privatizing water, is essentially privatizing its distribution, billing and operation and
maintenance. Private companies have no incentive to influence city planners to ensure
water conservation measures, or allow for groundwater recharge along river beds and in
open public places the most critical aspect of managing Delhis water supply,
therefore, cannot be privatized.
PPP model can be sought to develop infrastructure like setting pipes , installing pumps,
setting up water ATMs etc. But the supply of water should be managed by a responsible
and accountable authority

Shifting responsibilities is not the way to make things better.

Why water privatization does not address the problem?

Delhis water shortages are not a result
of a lack of availability of sources of
water per se ; The badly managed
infrastructure of the DJB being used as
an excuse to explain away wastage and
theft of water.
A few large private companies will now
get exclusive contracts for operations and
maintenance, metering and construction
works becoming monopolies.
The unequal distribution of water
between the rich and the poor areas of
Delhi is at the root of the problem of
Delhis water supply. It cannot be solved
by more engineering contracts and more
water supply provisioning for Delhi.

Short-Termism of Firms : Escalating tariffs, disconnections

Huge water losses in transmission and distribution A myth

Inadequate distribution system

Flawed logic of increasing efficiency via privatisation

Inadequate infrastructure

Scheme designed to ensure zero risk for foreign operator

Where does privatization fail? (1)

Social responsibility is eliminated as a conscious choice, since it cannot coexist with purely market based
operations.
WHERE DO THE MARGINALISED GO? As with any market, those with limited or no paying capacity
have no space. The poor, who already live on the margins, are likely to be pushed out even from there, and
the middle classes pushed to the margins. There are plans for 24x7 supply for only select colonies, not the
whole city.
WHERE ARE THE PROFITS GOING? Large part of increased tariffs will go into supporting lavish
salaries : The proposed plan in Delhi involved managers in each of the 21 zones. The proposed salary of
each manager was US$ 24,400 (Rs. 11 lakhs) per month.
WHERE IS THE SERVICE LEVEL ? The cost-cutting measures employed by private companies lead to
large-scale retrenchments. The lower the ratio of employee per water distributed is, the more efficient the
company.
WHERE IS THE WATER ? It is important to understand how water losses happen and what the actual
wastage is : If we believe the DJBs explanation, that the shortages are a result of high losses which should
have resulted in flooding, or at least, a massive rise in the water table

Where does privatization fail? (2)

EXPLOTING PUBLIC GUARANTEE OF FUNDS? Private players aim to spread the cost of the work in
disadvantaged areas among customers who are already connected, connected, municipalities,
municipalities, developers, developers, future customers, customers, and any donor institutions, as is the
case with Delhi project.
EFFICIENCY, HUH? Experience all over the world shows that efficiency of operation is not the monopoly
of private sector. What is important is to understand the factors that go into making an operator efficient
or otherwise - these include transparency of operation, accountability, regulation, larger societal demands
etc.

Is it really possible that privatisation and social obligations can co-exist?

Examples from all around the world indicate that privatisation tends to
convert water sector into totally commercial operations bereft of any social
responsibilities which has led to large scale opposition, resistance and unrest.
THE WAY AHEAD: It requires optimal and good governance with a robust regulatory framework which
covers tariff control, checks on quality and environmental issues. While privatization and increased water
rates are erroneously proposed as a means to check wastage, the real need is for better management and
conservation of water, reducing wastage, capping consumption