States invite private players to secure safe drinking water

According to a World Bank study, of 27 Asian cities with populations of over 1 million, Chennai and Delhi share the same rank as the worst performers in terms of hours of water availability per day, while Mumbai is ranked as the second worst performer and Kolkata the fourth worst.

The 54th round of the national sample survey (NSS) reported that 59 per cent of the urban household population is sharing a public source of water. The irregularity of water supply is reflected in the fact that 18 per cent households reported using some supplementary source of drinking water and 96 per cent reported storing their drinking water.

According to the Planning Commission, capacity utilisation has been reported to be less than half in 40 per cent of the towns, and less than three-fourths in a further 20 per cent. With old and poorly maintained transmission and distribution networks, physical losses range from 25 to 50 per cent.

In the backdrop of this looming water crisis, the Centre and states are now looking at PPPs to address the issue. In a PPP framework (different from complete privatisation), while the public sector will continue to own, plan and regulate the water sector, private participation will be at the investment and management levels. Thus, this set-up ensures that the government retains ownership of this crucial sector while roping in private expertise and technology for increased efficiencies.

A PPP, of course, needs to be based on several safeguards. This includes requiring private entrepreneurs to fulfill certain regulations related to the quantity, quality, duration and cost of water supply. Even if the tariff increases marginally, it is unlikely to fall heavily upon the poor given the current scenario where due to irregular and inconvenient water supply, slum dwellers have to depend on private water vendors and tankers.

This, in turn, means that the price paid by the poor (approximately Rs 100 for 1,000 litres, or Rs 2- 4 per bucket of water) work out to almost 10 times of those with access to a regular supply of municipal water (approximately Rs 10 for 1,000 litres).

According to Arvind Mayaram, joint secretary (infrastructure) in the Ministry of Finance, private participation in the sector will not necessarily lead to an increase in tariffs. “With PPPs in water, there might be slight or no increase in tariffs. Instead, the private sector will bring in greater expertise, efficiency and technology. This will help in solving the many problems faced by the sector today,” he said.

“Private participation is often opposed by those who believe that it leads to a greater burden on one segment. However, PPPs should not be linked to cross-subsidisation since in the water sector, the tariff structure would be based on realisation of actual costs,” Mayaram said.