Water Supply Privatisation


Monday, June 09, 2008

what's the big deal?

In response to a posting in a yahoo-group about a failed privatised water supply scheme in Felton, US, Mr M posted a comment reading "Interesting, perhaps inconceivable, that in the bastion of a market economy that a public body would "buy" a civic utility from a private company! May be, the votaries of PPP in our country could study why this happened and learn a few lessons".

In turn, I commented as below:

I don't understand what's the big deal. Felton municipality was not satisfied with the existing water supply system. A few years back, it chose to engage a private 'behemoth' or whatever to take over the service, but without building in adequate checks and balances into the arrangement. It has now realised the mistake, and wants to take it back, paying a high price for it. But, the fact remains that it is ill-equipped to handle the job by itself, which is the case with all the municipalities, as well as the BWSSB's. So, the moral of the story is to re-invent the mechanism so that it's beneficial to all, rather than perpetuate the status quo.

Wednesday, March 26, 2008

harnessing a scarce resource

text of the letter sent to Times of India:

Governor Rameshwar Thakur's call for constituting a 'Water Resources Regulatory Authority', vide the report in your columns on 26th March under the caption 'PPP can be answer to water scarcity', has not come a day too soon. Very much as the Chief Secretary has himself pointed out 'urban water bodies have failed miserably in supplying adequate water to citizens, and hence the need for PPP models'.

As long as the water resources are in the control of a duly constituted regulatory authority, the Socialists cannot raise the bogey of privatisation. And, as for water supply, it is too vital an infrastructure area not to have the benefits of competence and expertise that the organised sector players alone can garner.

Tuesday, January 23, 2007

counter to Medha Patkar's call (Oct '05)

letter sent to the press, and posted on 'Hasiru Usiru' web-site:

Municipal water supply, the country over, is in a shambles. In such a scenario, when the bottling industry comes forward to make good quality water available right through the country, and at reasonable prices, it is fulfilling a desperate need. What is there if you have to pay for it? Would you rather pay the doctor's bills? As such, Ms Medha Patkar's call for boycott of bottled water (reported in your columns on the 25th Oct while reporting on the Seminar on Privatisation of water in the Senate Hall, Bangalore) is rather misplaced. I have, however, no serious issue with her call for boycott of the Cola's.

The problem clearly lies with indiscriminate over exploitation of the water resources. It is this activity that needs to be properly regulated, and that's what Ms Patkar should be demanding. That apart, water is too precious a resource for us to afford the inefficiencies of government organisations in its processing and distribution. This activity could very well switch to the private sector.

Ms Patkar has a definite role to play in this world of plunderers. One only wishes she gets her focus right.

counter to NAPM call

Counter to the Call by NAPM (National Alliance of People’s Movements) to boycott ‘Bottled Water’ from 2nd Oct, ’05 (Gandhi Jayanthi day)

The government was likewise supposed to provide basic food items (through PDS), education, healthcare, electricity, public transport, telephony, etc etc. During Indira Gandhi's times, the role further got enlarged to include airline services, hotels, banking, cars, indeed the works. What we got was shoddy products and services. Eventually, everything came crashing down, like in Soviet Russia. Socialism can only be preached, not practised.

With privatisation, we now have world - class telephone, airline, banking, insurance, courier, healthcare services, and all at much cheaper costs.

Water bottling industry has made good quality water available right through the country, which no municipal supply can ever hope to match. What is there if you have to pay for it? Would you rather pay the doctor's bills? While, admittedly, there should be governmental regulation on exploitation of a scarce natural resource like water, we certainly cannot afford the inefficiencies of government organisations in processing and distribution. It should totally switch to the private sector.

On this Gandhi Jayanti, let's all demand that. Gandhiji would have been the first to dump our PSU's.

Monday, November 13, 2006

Mr L disagrees

Exchange with Mr L (through Bangalore-based ‘Hasiru Usiru’ Yahoo Group), 1st week Nov, ‘06

Muralidhar Hi

I was not at the talk, but was happy to note from your report (as cited below) a good account of what probably happened.

I am no great admirer of an inefficient State. In fact, I would argue that BWSSB is the wrong kind of State organisation to manage a critical resource as water. It is to me an almost evil enterprise, where the State arrogates to itself the right of delivery of a life sustaining resource. That when we consider that in the evolution of societies and the State as an enterprise, which are asymmetrical evolutions, one factor that has remained constant is people have to have access to life sustaining resources. Interfere too fundamentally with this, and you have a revolt.

Agencies such as BWSSB were created in the Emergency era of India, when our blessed Mrs. Gandhi went on to take control of urban resources, such as provision of water, by way of parastatal agencies such as BWSSB. Clearly unaccountable to anyone but the Cabinet, the genesis and subsequent delivery of services by this agency was mired in controversy. If in the eighties it was the controversy surrounding pipeline contracts to Khodays, the nineties saw the controversy unfolding on the securing of loans from JBIC. This decade it is about how the water has to be better managed through privatisation.

Clearly, in all these decisions relating to how we finally get our water, the constant absence has been of the people. Parastatal agencies are a key reason why local administration of resources fails; because such agencies aren't local at all they do not have the mechanism of understanding local demand-supply problems and thus end up taking decisions on the basis of cultivated opinions (normally serving the needs of well off neighbourhoods). Parastatal agencies are pretentious locals, not absolute ones.

Contrast this with how water was delivered in the past: not just in the 20th century, but in centuries before. It was largely community controlled. It had its problems, especially in a f_____ up society like ours, where feudal and caste structures sidestepped (even rode over) the very logic of equal access to all. As a result, glorious philosophies and remarkable saints notwithstanding, a fairly large section of our society found itself so near yet so far from a water source simply because they were not quite the humans per Manu. However, over millenniums we managed to keep our water resources unpolluted, and even developed one of the most ingenious methods of getting water on demand: by harvesting rain in tanks.

Contrast this to the 20th century in the Bangalore region: not one tank built to harvest rain. Yet most tanks destroyed or polluted. Much of the destruction took place following the creation of parastatal agencies such as: BDA, BWSSB, etc. If there has been a conservation movement that has been supported, it is the local governments that have responded more than these parastatal agencies. The latest example of this is the manner in which BDA has created the R-CDP, with little consultation, and thus completely snuffing out major watershed zones around Blore.

I am not suggesting that merely by harvesting rain all our water problems would be resolved. But what is important to learn from this is that such agencies distanced the importance of how water is to be managed, as it took the local citizens' body out of purview in managing a resource that is fundamental to its existence. It demeaned the importance of political and representative decision making relating to a life sustaining resource. It took away the power of review of how water should be harvested, be it by tank or pipeline, and also how distributed. In that sense, parastatal bodies were designed to destroy the possibility of sustainably and equitably using water, and one major reason for this is that it mystified what was otherwise common knowledge.

Parastatal bodies are also agencies in taking away resources from the commons, and granting control over it to a small coterie in the government. An equivalent step would be to privatise. The former considers itself operating in the greater common good, and so would the latter. But a fundamental difference in the case of the latter would be the commodification of the resource. While BWSSB will deliver whether it makes profit or loss, private agencies will pack up and leave if the profits aren't enough or losses too much to bear.

All this considered, I find it problematic that you do not make an argument that water is a resource for all and should be managed by all. What better a means to manage it then by the local elected bodies. 100 corporators will be a very worried lot if thousands of citizens start chasing them with accountability questions on access to water. We have killed this possibility of managing our resources, and we can recreate this possibility for our common good.

Instead I am quite shocked that you feel "(T)he participation of an organization like Janaagraha in setting up and administering the regulatory mechanism" is what will help us tide over the crisis. Since when did Janaagraha represent me? Since when have NGOs gained the legitimacy to be a regulator? Since when have we accepted the State has failed as a regulator that we now have to rely on NGOs as regulators? Take this argument a wee bit forward and you will have Narendra Modi creating a "civil society" organisation to decide how Narmada waters will be distributed! And the beneficiaries are likely to be sugarcane farmers: upper caste, feudal and quite ruthless....

Regards, L

PS: Water isn't the same kind of resource as electricity. For one can live without the latter.

My response

Hi L

So, we are both agreed that BWSSB is not the kind of agency that should be entrusted with the job, but instead a body that is more accountable to the people – something like the BMP. In fact, I believe, that’s currently under discussion along with the proposal for the formation of the Bruhat BMP. Not just water supply, but also power, bus services, METRO, garbage collection / disposal, traffic policing, etc etc. Now, to expect a body like BMP to manage all these by itself, you will agree, is quite unthinkable. And, these functions are all equally critical. You have stated that ‘water isn't the same kind of resource as electricity; for, one can live without the latter’. But, like I have pointed out earlier also, you can have all the water you want if you go to the source – a river, lake, or wherever; but, for it to be made available at the turn of the tap in your home, you need power – to pump it, filter it, etc, etc. And, in Mumbai, Ahmedabad, Surat, Kolkatta, etc, this power has been provided by private players for years together, and most reliably too. When that’s the case, why can’t some meaningful arrangement be entered into with similar companies for water supply also? What is there to be so alarmist about it all? These companies will have as much of a stake as anybody else in the proper development of the city, very much as decided by the elected representatives, giving added meaning to the term ‘stake-holder’.
Further, I had suggested “‘participation’ of (and not take over by) an organization like Janaagraha in setting up and administering the regulatory mechanism” quite like CREAT has been involved in the KERC (Karnataka Energy Regulatory Commission), since Janaagraha undoubtedly provides the widest available platform in the ‘civil society’ space in the city. And, I hope you are not suggesting that the civil society does not have a role to play.

Sometimes, I wonder why I should be bothering myself with all this when I am fairly comfortable with things as they are. When I was talking about the apartment complexes, which get priority water supply from BWSSB, even for their swimming pools, I was indeed referring to the one where I stay, amongst other such complexes. BWSSB is happy supplying us because, with their new found revenue orientation, they find it simpler dealing with large customers paying close to Rs 50,000/- against a single bill, as compared to dealing with some 500 different customers for the same quantum of revenue. And, as far as we are concerned, we have no incentives to try out conservation, rainwater harvesting, or anything like that.

On a comparison, my servant maid, who lives in a hutment cluster a few hundred meters away, has to get up at 4 o’clock every morning to stand in a queue before the community tap to collect two pots of water for her family’s drinking and cooking needs. The water comes for two to three hours daily at best.

So, essentially what is happening presently is that the government is funding the BWSSB to provide water for the extravagant requirements of the upper classes whereas the poorer lot is given a raw deal.

Now, if a private company comes into the picture, complexes like mine will have to pay the actual costs, which may not be much higher given the higher levels of operational efficiencies. And, the government will need to subsidise only the supplies to the community taps, which, even with 24-hr flow, will be much lower, reducing the overall burden on the exchequer to a considerable extent. Also, this will automatically provide the necessary incentives for conservation, rainwater harvesting, etc, etc for complexes like mine. A win-win scenario for everyone concerned.

On the question of ‘commodification’, the following is what I had stated once earlier:

Whatever you may say, when there is a shortage situation (and, there definitely is going to be one, not in the distant future, for water), it is inevitable that you will have pay for whatever is available.

Incidentally, there are fishes naturally breeding in the rivers, lakes and seas. Does catching and selling them not amount to commodification? Also, supposing Reliance sets up this huge power plant in Orissa, and uses the surplus capacity to run a desalination plant drawing water from the sea, and finds buyers for the purified water at Rs 100/- per litre, even as there is a drought in Orissa. It is still commodification? Can you then say that the sea is common property, and therefore, they cannot exploit the situation and charge so high?

Each situation has to be viewed in its context, instead of going by some ‘isms'. If you approach things that way, perhaps we can find some solutions. Otherwise, this inconsequential exercise will go on, and the plunderers will be the only beneficiaries.

Regards, Muralidhar Rao

Thursday, November 02, 2006

A counter to Prof Michael Goldman's presentation

Last Saturday (28th Oct, ’06), I had attended a talk by Prof Michael Goldman, Associate Professor, University of Minnesota, on ‘World Bank and Governance – Water Policy’.

The focus apparently was on the perils of ‘privatization’, which was put very subtly across, without any of the rhetoric normally associated with such Socialistic stances, and consequently, fairly effective. The talk dwelt largely on how the World Bank was changing its approach, and was today directly influencing decision-making right at the grass-root levels. It is only towards the end when the Prof went on to express concern over the circumvention of the authority of the elected representatives, as he saw it, did it become clear to me that he was apprehensive about these developments.

To me, a person from the opposite (liberalist) camp, what appeared note-worthy and indeed a matter of concern, was the preponderance, as alleged by the Prof, of the people from the industry itself dominating the agencies that are supposed to be regulating them. Well, as I have repeatedly stated before, privatization is no panacea to the problems prevailing, and such aspects certainly need to be addressed.

During the inter-action session at the end of the talk, I brought up the parallel in the power distribution scenario, specifically comparing the performance of the government-owned BESCOM in Bangalore, with that of the private players in Mumbai, the Mumbai scenario being any day preferable. The point I was making was that if it was possible in the area of power distribution, there is no reason why it cannot be worked in the area of water distribution also. The problem possibly was that the Indian companies had not entered the picture yet, for some historical reasons, and the foreign players like SUEZ, etc hadn’t got their business plans, for the so-called 3rd world countries, quite right. Because of these reasons, they were either being forced to quit, or were themselves pulling out because of mounting losses. Indeed, the same thing happened in the power generation area in India also, and a number of foreign players like ENRON, COGENTRIX, TRACTABEL, etc, were forced to exit, even as Indian companies like Reliance, TATA’s, GMR, Jindal, etc persisted and eventually have come out on top. So, the answer may be in inviting the Indian Corporates into the arena, with necessary regulatory mechanism put in place in collaboration with reputed, grass-root level NGO’s, like Janaagraha, who were after all the architects of the FBAS accounting system now being adopted by all the progressive municipalities.

As against that, by creating a phobia about the private sector, in general, all that is being achieved is the perpetuation of the status quo, where the man on the street is ending up having to pay Rs 10/- for a litre of potable water, whereas similar quality water is being made available on priority to up-market housing complexes, including for their swimming pools, by the government-owned BWSSB, at the same Rs 10/-, but for 100 times the quantity – 1 KL.

A gentleman, who introduced himself as the convener of the anti-water privatisation platform in Bangalore, chose to intervene to say that the Mumbai power scenario was possibly an isolated one, and generalizations could not be made on that basis. He went on to add that water management was no rocket science, and that BWSSB was capable of managing things itself, even without any managerial or technical inputs from the private sector, or the regulatory / facilitatory role of any NGO. As different from the general tone of Prof Goldman’s talk, this person unfortunately went on to make plain his personal prejudices against Janaagraha, on a public platform.

What I wanted to convey thereafter, but could not get down to, since the moderator had signaled the closure, was that
1) Mumbai’s is not an isolated case of excellent quality power distribution by the private sector players – there are others like Ahmedabad, Surat, Greater Noida, and Kolkatta. And, New Delhi and the cities in the state of Orissa, where power distribution has been privatized a few years back, will be joining them soon, as regards the quality aspects are concerned.
2) The situation is pretty bad, and it is deteriorating rapidly.
3) The government agencies like BWSSB have serious limitations, and the people cannot be made to wait indefinitely while they are trying to get their acts together.
4) The worst affected because of the incapacity of the likes of the BWSSB are invariably the poor, as clearly seen from the earlier cited example.
5) The failure of multi-nationals like SUEZ does not mean that Indian companies cannot handle the problems, as evidenced by their performances in the power, telecom, civil aviation, insurance, banking and other sectors, which are equally critical. In fact, they have shown themselves to be best suited to any job, and are poised to take over all businesses from the earlier players the world over.
6) The participation of an organization like Janaagraha in setting up and administering the regulatory mechanism, will provide the necessary checks against the kind of practices that Prof Goldman had highlighted.
7) What we are facing today is distributed plundering by the likes of the water bottlers, tanker water suppliers, sump-pump-tank suppliers / builders, water purifiers mfg industry, etc, etc, as compared to centralized plundering attempted by the likes of SUEZ, which any way is easier to control.
8) The answer very likely lies in inviting reputed Indian Corporates to take over, with the necessary regulatory mechanism, as stated at 6 above, also put in place simultaneously. I will readily place my bet on the likes of TATA's, who are today moving towards 'Karma capitalism'.