Politicians derailing privatisation process

NEW DELHI, Sept 24: Political opposition threatens to derail India's first private water supply project in Pune. Financial institutions w...

NEW DELHI, Sept 24: Political opposition threatens to derail India8217;s first private water supply project in Pune. Financial institutions who have committed over Rs. 300 crore for the Rs. 750 crore project, are worried over the implications of Maharashtra8217;s Water Supply Minister Anna Dange8217;s order to stop the privatisation process for a review.

While the ICICI has committed Rs. 200 crore for it, the Housing and Urban Development Corporation HUDCO has sanctioned Rs. 100 crore. Another Rs. 90 crore will come from a USAID project. Others like HDFC, ILamp;FS and IDFC will also be involved in the project. These institutions have written to the state Government expressing their apprehensions. Six consortia involving foreign and Indian companies have been shortlisted for competitive bidding based on their technical expertise and experience in private power projects.

Derailing a project without any credible reason would send the wrong signal to foreign investors and put a question mark on India8217;s efforts to invite private sector participation in infrastructure projects.

In a coincidence, the controversy has arisen during the visit of Martin Laing, chairman of British Overseas Trade Board, an industry body which promotes UK8217;s trade links with other countries. Two of the shortlisted consortia include UK utilities Anglian Water and Thames Water.

Yesterday, Dange said the Pune Municipal Corporation PMC should stop the process and take approval of the general body before resuming the tendering process.

Political parties have charged the PMC with inflating the project cost by Rs. 200 crore to suit certain companies. The project processing is currently at an advanced stage. The shortlisted consortia have been issued request for proposals, after which the bids will be evaluated. The project was conceived by the PMC in 1996 after which it issued an ad inviting private sector participation.

The project cost calculated by the PMC at Rs. 750 crore is indicative. The bidders will be expected to compete on two broad parameters. The cost of the project as well as the technology and investment they bring in. Once the bid is awareded the consortium will be involved in the construction, operation, maintenance and tariff collection for the Pune water supply and sewerage project.

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The six consortia which have been shortlisted are Anglian Water, Trafalgar House and Shirkes; Binnie Black amp; Veatch, Thames Water, and Larsen amp; Toubro; Krugger, Generale des Eaux and Shanska; Preussag and Tata Projects; Hyundai and Sundram Chemicals; and Hanjin, Krupp and Zoom Development Group.