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UT rethinks 24/7 water supply project as costs soar

The project aimed at modernising the distribution network, improving service reliability and cutting non-revenue water was originally valued at Rs 412 crore.

3 min readChandigarhNov 26, 2025 12:03 AM IST

Chandigarh water supply project, Chandigarh water supply, water supply project, water supply, Chandigarh, Chandigarh Municipal Corporation, Indian express news, current affairs

The administration is expected to take a final view after the House discusses the status report later this week.

The Chandigarh Administration is reconsidering its pan-city 24×7 water supply project after costs jumped by more than Rs 225 crore, prompting concerns over a steep financial burden on residents. A status report on the project will be tabled in the Municipal Corporation’s General House meeting on November 28.

A senior UT official said growing public resistance and rising costs have forced a rethink. “Several representations have gone to the UT Administrator. People want clean water, not 24-hour water. They fear the entire city will be dug up to lay new pipes and that the pits will never be properly filled. They also worry about the additional financial burden on residents, so the project is being reconsidered. The status report is being placed before the House,” the official said.

Cost escalation and viability concerns

The project aimed at modernising the distribution network, improving service reliability and cutting non-revenue water was originally valued at Rs 412 crore. Loan repayment calculations were based on a six-month EURIBOR (Euro Interbank Offered Rate) of 0.26% and a fixed interest rate of 1.58%, with an effective interest rate of 1.84%. Under those assumptions, the total repayment obligation stood at Rs 471.38 crore.

As of 2025, however, the exchange rate has risen to Rs 102.75 per Euro, pushing the loan value to Rs 493.20 crore. The EURIBOR has also climbed to 2.113%, raising the effective interest rate to 3.673%. “Consequently, the total repayment obligation has increased to Rs 638.08 crore, an escalation of over Rs 166 crore compared to the 2019 projection,” the status report states.

The administration has also cited lessons from the Manimajra pilot and subsequent technical and financial reviews, which flagged the need for a more “realistic and data-driven approach”.

French agency suspends project

On September 17, 2025, AFD, the French development bank funding the project, formally communicated a temporary suspension of all project activities. A reminder email was issued on October 24, asking the Municipal Corporation to provide clarifications and follow-up actions.

Higher tariffs likely

The report warns that residents would face a compounded tariff hike if the project proceeds. Tariffs proposed in 2019 were already more than double the then prevailing rates.

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“With the project cost escalating further, an additional increase in tariffs beyond the 2019 proposal will be required to ensure long-term sustainability,” the report notes. Revised staffing costs and operational overheads would add to the burden. “Without tariff containment or phased implementation, public acceptance of the project may be at risk.”

The MC has now re-evaluated the DPR and suggested focusing instead on continuous improvements in water supply infrastructure and large-scale awareness campaigns on conservation.

Penalty if loan is cancelled

If the loan is cancelled in full or in part, the borrower must pay a 2.5% cancellation indemnity on the cancelled amount. “This amounts to approximately Rs 15.15 crore payable to AFD and EU,” the report says. An additional Rs 4.58 crore is pending as dues claimed by LTTA, taking the total liability to Rs 19.73 crore.

The administration is expected to take a final view after the House discusses the status report later this week.

Hina Rohtaki

Hina Rohtaki is a Special Correspondent at The Indian Express, based in Chandigarh. She is one of the most prominent journalists covering the Chandigarh Administration, civic issues, and the unique political status of the Union Territory. Professional Background Experience: She has been in the field for over a decade and is known for her investigative reporting on administrative waste and urban governance. Awards: She is a recipient of the prestigious Ramnath Goenka Excellence in Journalism Award, which was presented to her by the President of India in January 2020. She was also awarded the Jethmalani prize (The Will of Steel Awards) in 2025 in the Empowerment category for a series of articles that highlighted the struggles of Covid widows. Core Beat: Her primary focus is the Chandigarh administrative structure, the Union Territory's financial management, and urban development projects. Recent Notable Articles (Late 2025) Her recent work highlights a focus on government accountability, administrative expenditures, and civic trends: 1. Investigative & Financial Reporting "Fuelling power: Senior UT IAS officers guzzled petrol worth Rs 30 lakh in 2 yrs" (Dec 14, 2025): An investigative report detailing the high fuel bills of top bureaucrats, including the Finance Secretary and Chief Secretary’s staff. "Admn spends Rs 1.5 crore on dismantling road railings and fixing again after increasing height" (Dec 8, 2025): Highlighting administrative waste on "non-viable" solutions for pedestrian control. "Chandigarh’s finances under ministry’s watch now" (Nov 27, 2025): Reporting on the new requirement for MHA approval for all new projects in the UT. 2. Governance & Constitutional Status "What will it mean for Chandigarh if it is brought under Article 240?" (Nov 24, 2025): An "Explained" piece on the potential constitutional shift that would grant the President more power over the UT's governance. "MP Manish Tewari moves Bill seeking directly elected Mayor with 5-year tenure" (Dec 6, 2025): Covering the legislative push to reform Chandigarh's municipal leadership structure. "No proposal to increase Mayor's term in Chandigarh by 5 years: Centre" (Dec 10, 2025): Reporting on the Union government's response to demands for a longer mayoral term. 3. Urban Infrastructure & Environment "Chandigarh admn cuts power to India's tallest air purifier, asks firm to dismantle it" (Nov 17, 2025): A critical report on the failure of a high-cost environmental project deemed "of no use" by experts. "UT rethinks 24/7 water supply project as costs soar" (Nov 26, 2025): Detailing the financial challenges and delays in modernizing the city's water network. "Centre 'obfuscating, covering up' MC's shifting deadlines for clearing Dadu Majra dump" (Dec 12, 2025): Reporting on the ongoing controversy surrounding the city's major waste dump. 4. Lifestyle & Local Trends "Chandigarh turns into a Thar city as women fuel the surge" (Dec 2, 2025): A feature on a unique automotive trend in the city, with a record 600 registrations by women drivers this year. "After fivefold spike in 2023, EV sales struggle to pick pace in Chandigarh" (Dec 2, 2025): Analyzing the slowdown in electric vehicle adoption despite previous surges. Signature Beat Hina is known for her meticulous tracking of RTI (Right to Information) data to expose administrative inefficiency. Her "Ground Zero" reporting on the Dadu Majra garbage dump and her scrutiny of the Chandigarh Smart City projects have made her a key figure in the city’s civil society discourse. X (Twitter): @HinaRohtaki ... Read More

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