Pipe Dreams and the Larger Pool

There is a reason to hope. A World Bank-funded three-town pilot project called the Karnataka Urban Water Sector Improvement Project (KUWSIP) was launched in the demo-zones of Hubli-Dharwad, Belagavi and Gulbarga in 2004. Over the last decade, this project has indicated that setting a volumetric tariff and metering households have helped in flat-lining demand at about 100 lpcd in Hubli, and 80-90 lpcd in Gulbarga, lower than the 135 lpcd benchmarks. Losses through leakages and unauthorized connections have come down from 50 to 7% and there has been ~ 80% operational cost recovery from revenues. Interestingly, because these zones were getting 24*7 water supply, it’s possible to examine demand rates here as real-time feedback on how much water needs to be supplied to the system.

What was the zone impact?

“Contrary to popular belief and bureaucratic idiosyncrasies, 24*7 water supply schemes don’t translate into more consumption or higher tariffs,” says Bhargava. In fact, the project report shows how “about 20% of the customers in Hubli and Belgaum, 24% in Dharwad, and 21% in Gulbarga were paying the lifeline tariff of Rs 48 ($0.70) per month”, while the rest paid as per the volumes they consumed. The project claims to have particularly benefited the poor who are now getting a 24*7 supply with better quality and lower prices.

Granted these are Shimla-like zones of impact, limited in number and diversity. But “it’s a demonstration of how tariffs can be designed and implemented in a way that conserves demand,” says Ramanujam.

“Consumers in these areas have capped their demand at 10kl a month and pay less than before. We can infer that potentially, the poor who are capping their demand are using that money and time to fulfill other essential needs.”

CAPEX Components

S.R. RAMANUJAM

In 2015, the DJB reported a spike in revenue by Rs 178 crore (~$26 million) despite announcing an incremental block tariff for water charges the year before. The DJB itself largely attributed this to increased metering units and the ease of bill payment. It also promised a 7-year guarantee on faulty meters and focused on regulating unauthorized connections and bringing them into the tariff net by reducing the cost of regularising a connection.

This isn’t to say that urban water improvement projects are without their Capex component. However, these projects are trying to move in a direction where laying pipework for supply is accompanied by a substantial investment towards the utility’s functions, creating a culture of consistent billing and payment, and untangling water from the accounting web to determine real-time costs and revenues.

“It also helps that in a public-private partnership, the revenue of the private operator depends on their billing efficiency,” says Bhargava. A company like SUEZ knows that they only get paid when they focus on proper metering and billing, which, in turn, can impact the level of consumption and manage demand in the long run. The current slew of 24*7 water supply projects in India is beginning to see the benefits of this nuts-and-bolts approach.

The sting in the tail is that setting tariffs will remain a political punching bag between parties, and private involvement in water projects will carry with it a whiff of good Soviet-era hand-wringing. Inefficiencies in these projects also creep in when utility staff refuses to train under a private operator. For instance, the Malviya Nagar Water Service’s Google page is riddled with grievances left hanging in the air. Malviya Nagar in Delhi was one of the project zones where the foundation for 24*7 quality water supply was laid in 2014. SUEZ was an implementing partner and in-charge of metering, billing and setting up grievance redressal mechanisms.

The DJB officials refused to train under the private operator. They opposed any kind of privatization of services,” says an indignant Bhargava, who was the chief engineer for the project. The backlash against private management of water has been global and has led to ‘remunicipalisation’ (‘wrestling’ back control of water services from private players to public authorities) in cities like La-Paz, Buenos Aires, Budapest, Kuala Lumpur and Bogota, with complaints of stiff tariffs, corruption, low-quality supply and hurting the interests of the poor.

 

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