The Centre has initiated work on a model framework for reforming the management and supply of water in urban areas. The move, which seeks to attract private players in the provisioning of water, would be a significant reform. Today, there isn’t any urban water authority offering continuous water supply. According to a 2014 World Bank report, water is available for just four hours on an average in urban centres, with many cities actually getting supply every alternate day. The water utilities epitomise all that’s wrong with public provisioning of basic services. Apart from irregular supply — the huge dependence on private water tankers is proof of this — these utilities are ridden with inefficiencies and leakages. For instance, only about 20 per cent of connections are metered, while no revenue is collected on over 40 per cent of water supplied in most cities. Getting private promoters is likely to bring down non-metered connections and revenue leakages, as seen with privatised power distribution companies.
But the aim of water supply delivery through PPPs should go beyond that. The ultimate objective should be to improve service quality and offer the benefits of competition to consumers, as in the case of telecom. This aim will not be met simply by replacing inefficient public-sector monopolies with private-sector ones. The latter would deny consumers the chance to choose between service providers — an option available in telecom but not in power distribution. Entrusting the job of fixing tariffs or ensuring service quality to regulators is, at best, a poor substitute for competition based on free consumer choice. In the case of urban water supply, the experience from reforms has been less than encouraging: A 2014 study by the Transnational Institute shows that more than 180 cities in 35 countries have taken back control of their water services in the last 15 years.
For the latest reform exercise to succeed, the government must first make a correct assessment of the investment required in any PPP water supply project. In the past, inadequacy of such data has upset the calculations of private players and reduced their incentive to participate. Second, agreements between stakeholders should be designed to ensure clear accountability for non-performance. Ideally, there should be more than one service provider in any given area, which can be done by enforcing infrastructure-sharing or even spinning off backbone pipelines into separate entities. Last, the reforms need to be backed with effective articulation of the benefits, especially to consumers and civil society groups, without whose support the project may lose out.
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