Tanker economics

Sign of things gone horribly wrong

Published: Friday 31 December 2004

Tanker economics

-- The water tanker has come to symbolise Chennai's water crisis. From January to October this year, Chennai Metro Water hired private agricultural wells and engaged lorries to supply water as its sources ran dry. "We were supplying water only through lorries (not pipes)," says S Ranganathan, engineering director of Metro Water. The lorries were discontinued only after water arrived through the New Veeranam project in November.

Metro Water paid the farmers Rs 40 for every 10,000 litres and transport and delivery costs came to Rs 80 per kilolitre. The farmers are not amused. V Samantham, a farmer in Kannigaiperu village in the well field area, calculates his costs: "Selling water to Chennai doesn't earn me as much as cultivation. If I sell 15 tankers of water per day for three months, I get Rs 72,000. If I grow paddy on my 2.6 hectares, I earn Rs 1,30,000." So why does he sell the water? Because Metro Water officials came to him and begged to quench Chennai's thirst -- the utility's borewells had gone dry. But a majority of farmers have smaller landholdings with lower incomes, and it actually makes better sense for them to sell the water.

In turn, Metro Water charged Rs 650 for a 9,000 litre tanker. Payments had to made only through demand drafts, which most customers found bothersome. For piped water supply, Metro Water charges a flat rate of Rs 50 per month -- meters don't work given the lack of pressure in the pipelines. This is regardless of availability.

Metro Water used around 1,200 lorries of 9,000 litres and 6,000 litres. Each made 10-13 trips daily. In addition, about 2,000 lorries with a 10,000 litre or 20,000 litre capacity ferried water from distant sources. "We incurred an additional cost every day of Rs 1 crore during the peak of the drought this year," Ranganathan informed.

With absolutely no water being supplied by Metro Water through the pipeline for nine months, private tanker operators became big players. At the peak of the crisis, about one-fifth of Chennai's demands were met by private operators, who have become an influential lot. Even the Chennai Metropolitan Area Groundwater (Regulation) Act was relaxed for them this year. "We approached the revenue minister in July 2004. The matter went up to the chief minister. We pointed out that as there's a demand, we have to provide water," says G Raja, secretary of the Tamil Nadu Drinking Water Lorry Owners' Association, which owns 600 lorries.

One of the worst affected areas was the Anna University, whose Centre for Water Resources (cwr) is in the forefront of research on water related issues. cwr director K Karunakaran says, "This summer most of the borewells on the campus dried up. For a period of six months, the university was completely dependent on water tankers -- the university purchased 22 tankers per day." This worked out to an astronomical monthly cost of Rs 4,95,000. Residents realised that a quick payment to the driver was essential to get a tanker in time. Says Rekkha S of Radhakrishna Salai: "I live in an independent house a little away from the main road. I had to pay Rs 200 extra for each tanker." Being a tanker driver is an enviable job. Ashirvatham B hails from Poondamalee. Eight months ago, he quit being a taxi driver and jumped on to the tanker bandwagon: "It is a seasonal job. But we make good money during the season. This summer, a lot of us have switched to tankers. At least 50 of us are from my area." He ferried as many as 10 loads a day from Poondamalee when the water shortage was at its worst.

Tanker operators built contacts in areas such as Poonnamallee, Kundrathur, Medavakam and paid the farmers Rs 100 for every 12,000 litres (Metro Water paid Rs 60 for the same). "There were nearly 1,000 private lorry operators on Chennai's roads during the peak of the crisis. Now there are around 200. Many had come from outside Chennai and were outside our control," informs Raja. The average number of daily trips of tankers have come down from five to three.

Bottled water
Besides water tankers, another common sight in the city is tempos carrying cans of drinking water. Wayside stores stock small pouches of water that people sip while on the move. The 200 millilitre pouches cost Re 1 each.

Saravana and Selvarathinam Stores in T Nagar is the neighbourhood store for milk and packaged water. A litre of milk sells for Rs 12.50, a 12-litre can of water costs Rs 50. Water sales are higher. The can is also delivered to the doorstep. "It is a growing market and only 10 per cent of it has been captured so far," says M Suresh Kumar of Sabols, a packaged drinking water chain. What needs to be built up, he insists, "is the awareness of water quality." He claims his manufacturing units in Sriperumbadur and Coimbatore -- their raw material is groundwater -- are the first in the country to be accredited by the South Asian Drinking Water Association. He sells 3,000 bottles of 20 litres every day. "During the peak of summer, it crossed 5,000. Groundwater is treated through reverse osmosis."

Waterman Water Products has found a good location. The small factory is on the Koratallaiyar riverbed. It claims to sell ozonised water. During high season, it was selling 1,000 cans of 25 litres each. Bottled water units are sprinkled across the neighbourhood promising purified, treated water. But almost all draw groundwater and package it without treatment. Vinayak Murthy, general secretary of the Tamil Nadu Packaged Drinking Water Association, says there are 340 packaged water operators in Tamil Nadu, 270 of them in Chennai. Production average in these plants is said to be 34,000 litres per hour.

The long haul
Production cost of water from various sources as compared to the selling price

Cost (Rs Per kilolitre)

Red hills


Telugu Ganga ( Krishna water project )




Reverse Osmosis


Domestic Borewell


Private tanker


Metro Water’s selling price 2.5
Source: Chennai Metro Water

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