Bangalore is in the throes of a water privatisation debate. But the most critical flaws in a new plan for its suburbs have got missed out. s vsuresh babu decodes

The new plan falls short on tw (Credit: CAWP Bangalore)November 22, 2005, saw the launch of a vocal public campaign against a move by the Karnataka state government to hand over water supply in the suburbs of Bangalore to private operators. Over 40 non-governmental organisations (ngos) and trade unions, working on civic amenities for slum dwellers, called upon the government to abandon its anti-poor policy on water. They announced the creation of a new forum: Campaign Against Water Privatisation (cawp). "Water cannot be commodified under any circumstances," said Y J Rajendra, secretary of Jana Sahayog, a Bangalore ngo, addressing the inaugural cawp meeting at Krishnarajapuram, a suburban municipality.

The protest was against the ambitious Greater Bangalore Water Supply and Sewerage Project (gbwasp), which envisages supply of water from the Cauvery river, and disposal of sewage in seven city municipal councils (cmcs) and one town municipal council (tmc) around Bangalore city (see map).

Things hotted up after people found out details of a May 2005 memorandum of understanding (mou) between the state government and Janaagraha, an ngo working on urban governance. Its objectives include: " introduce privatisation for operation and maintenance (o&m)...".

cawp alleges the ngo and the government are hand in glove with the World Bank and its corporate wing, the International Finance Corporation (ifc). "Janaagraha's role is to ensure that the privatisation takes place smoothly," says Clifton Rozario, a researcher with the ngo Alternate Law Forum. The state's political parties are holding the cards close to the chest. B S Yediyurappa, leader of opposition in the legislative assembly, says, "We do not have any details on gbwasp. The opposition and the public have been kept in the dark."

Ramesh Ramanathan, founder of Janaagraha, rebuts: "We are trying to bring a participatory approach to what is a top-down project." He says he has asked the government for clarifications, which would determine their association. Subhash Chandra, secretary to the state's department of urban development, tries to play it down: "The controversy is due to misinformation. What's wrong in handing over o&m to private players? Anyway, no decision has been taken yet." India's Silicon Valley is eagerly awaiting the decision.

System format
Greater Bangalore, they say, is where the city's future is. But the present paints a sombre picture. "With more it and bpo companies setting up shop in this 285 sq km, population growth and its pressure on basic amenities is severe," says B P Kaniram, director of municipal administration (dma). Population growth in Bangalore suburbs will be an estimated 6.02 per cent in 2021, as compared to 0.6 per cent in the city. The state government estimates a population of about three million by 2011, as against 1.3 million in 2001.

"The pressure is already showing on groundwater and surface water," says Solomon Benjamin, independent urban policy researcher. Most suburban municipalities depend on mini water supply schemes based on groundwater extraction. "Our estimates show these councils maintain about 3,568 tubewells; and then there are individual tubewells," says K V Raju, head of the ecological economics unit the Institute for Social and Economic Change. L Jairam, president of Krishnarajapuram cmc, shares his concerns, "As the tubewell yields are decreasing water supply is restricted to four hours on alternate days." Zaheer Khan, a councillor in Dasarahalli, summarises: "With over 60 per cent of the 600 tubewells drying up in the last five years; groundwater-based schemes are just not economically viable."

Groundwater quality is deteriorating by the day as sewage disposal is nobody's responsibility. Untreated sewage flows from houses into open drains, reaches lakes, and percolates into groundwater. Perfect setting for intervention and investment.

The extension project
Kaniram says the project aims to extend to the suburbs services available in the city, which is serviced by the government utility Bangalore Water Supply and Sewerage Board (bwssb). "The city is supplied Cauvery water for six-eight hours on alternate days, the average supply being 100-110 litres per capita per day (lpcd)," says S Sridhara, bwssb additional chief engineer. This means 810 million litres daily is fetched from the Cauvery, over 100 km and an elevation of half a kilometre. Work has already begun on distribution lines. Water supply will begin by the end of 2006, Sridhara assures. Sewerage is not in the plan for the time being -- it might come by 2008-09.

gbwasp was mooted as a solution to the water problems in all 250 wards of eight suburban municipalities. Talk began in 1998, when the state government directed the bwssb to develop proposals to cover Greater Bangalore. "Although the board prepared a detailed project report jointly with Kirloskar and Water and Power Consultancy Organisation (wapco), the project didn't take off for want of money," says a senior government official.

wapco estimated the cost at Rs 447.5 crore at 2001-02 rates. In 2003, this was revised to Rs 658.65 crore, all-inclusive. "Just water is likely to cost Rs 400 crore; the earlier estimate was Rs 340 crore. If sewerage and roads are included, you are looking at more than Rs 1,000 crore," projects Kaniram.

Adventure capital
The government is being 'innovative' in arranging money for the project. About 35 per cent of the cost (Rs 119 crore) has to come in the form of 'beneficiary capital contribution' (bcc) -- without any assurances of the amount of water supply and the deadline by which it will reach them. The remaining will come from market borrowings and the government.

The state government has also approached the Financial Institutions Reform and Expansion project, a joint programme of usaid, the foreign funding arm of the us government, and the Union ministry of urban development. It aims to develop long-term debt markets for urban infrastructure projects. On usaid advice, the government created a trust to raise money from the capital market by floating tax-free municipal bonds. All the trustees are bureaucrats, with no representation of elected councillors. The 15-year bonds were released on July 1, 2005, raising Rs 100 crore from various banks. All this is just for water supply; it excludes sewerage. The suburban municipalities can't handle big finances, so the Karnataka Urban Infrastructure Development and Finance Corporation (kuidfc) was appointed fund manager.

The Rs 318.10 crore earmarked (at 2003 rates) for sewerage will have to come from the external agencies, says Ashok Jain, kuidfc general manager (urban affairs): "We are negotiating with the Japan Bank of International Cooperation and the World Bank." Why? "Because the Karnataka Municipal Reforms Project, funded by the World Bank, would finance only the underground sewer lines," reveals Sridhara. Just for the sewer lines, Rs 600 crore has been approved by the World Bank. So the cost adds up to much more than the Rs 1,000 crore the government estimated earlier. While the cost of water available in gbwasp is Rs 19 per kilolitre, the true cost would be Rs 40. Will the users bear this debt servicing burden?

Grateful in debt
Vinay Baindur, urban governance expert, on explains the dynamics, "With kuidfc raising funds, the equation changes. The suburban municipalities are already deeply indebted. On the other hand, kuidfc has a lot of funds. So if it comes with a project to the municipalities, they have to agree. This is classic carrot-and-stick approach." He also advises a closer scrutiny of the funding conditionality on the municipalities.

A kuidfc official, in charge of gbwasp, says, " usaid advised we earmark 40 per cent revenue surplus from eight municipalities to maintain an amount equivalent to 1.5 times the annual debt commitments. The state government will maintain a fund of Rs 25.5 crore to meet any shortfall. These are not conditionalities; they are essential for boosting investor confidence."

"What we have is erosion of the powers of cmc s in the name of reform," says Benjamin. "This will be an added burden for cmcs. But then some sacrifices have to be made to attain a larger goal of drinking water supply," says Khan, whose council has ratified gbwasp. "The municipalities are not questioning gbwasp due to the political desperation of bringing Cauvery water," Baindur reckons.

One question has to do with fund allocation among the cmc s. Projections show Rajarajeshwara Nagar would be the most populated in 2011 and 2021, followed by Bommanahalli and Mahadevapura. But the top funding priority is to Mahadevapura, followed by Dasarahalli and Byatarayanpura. The municipality likely to be most populated in 2011 is sixth in the list of eight. So much for a participatory approach.

Privatising participation
The government-Janaagraha partnership began about one year ago. The government was looking for an ngo to create an interface with the users. "We asked the government if it had any project whereby we could demonstrate urban citizens' participation," Ramanathan recollects. kuidfc responded. "But no tenders were invited. On what basis was Janaagraha selected?" questions Rajendra. "The state government doesn't have a clue on participation. They are now 'privatising' public participation. The project has already been finalised. Where's the room for participation?" asks Baindur.

Ramanathan says important issues like o&m are still undecided. The mou requires the ngo to shape up the citizens' committees, at different levels, to play a constructive role in project implementation, like "sign off on ward/ ulb level designs, collect user charges, regulate service quality, reduce illegal consumption etc". But the critical issue of bcc has been decided.

cmcs have to ensure that people 'contribute'. Councillors are facing the heat, both from the dma, which pressures them to collect contributions, and the people who have already paid. "I am accountable for the collections but have no clue when the water will come, or how much will come," complains Jairam. The contributions go to a separate account of bwssb, and cmcs have no control over it. " dma demanded the councils make bcc mandatory to get an no-objection certificate for constructions or sale of land," says Khan.

bcc has already sparked off a series of protests. It was fixed at Rs 8,500 for a domestic property and Rs 17,000 for non-domestic. "We revised it to Rs 2,500 for a 56 sq metre plot and Rs 15,000 for plots larger than 223 sq metres," says Kaniram. A consumer can't sue bwssb on any grounds, even if they do not execute the project. The only assurance from bwssb is that it has begun work, but that has been without fixing a policy for supply to the poor (see box: Water down...). The move seems to have worked. "Of the expected Rs 119 crore through bcc, Rs 55 crore has already been collected and Rs 50 crore has been spent," says a kuidfc official. bcc has become a political tool. Krishnarajapuram municipality's Vibhootipura, a Scheduled Castes locality, pipelines are being laid, but people know nothing about bcc. The local councillor hasn't told them anything. "I haven't informed them yet. Let the pipes be laid first," he explains. Municipal elections are approaching.

Who will operate?
"No questions on privatisation please," Sridhara reacts. The decision on o&m contract will come after the project is implemented. "Privatisation will depend on what citizens decide," Ramanathan says. But ifc's website contradicts him: " bwssb has retained ifc to assist in structuring and implementing a management contract with one or more private sector companies to operate and manage the project."

Bidding would open early 2006. The mou seals the matter thus: "Appointment of appropriate o&m agency shall be made by bwssb." But there is a fig leaf -- service agreements shall be finalised in consultation with the citizen's steering committees, which Janaagraha will form. Kaniram says bwssb is too small an organisation to service Bangalore suburbs. Narasimha Rao, visiting faculty at the Indian Institute of Management, Bangalore, says the private sector is not the solution: "We need to address bwssb's institutional issues as well." But why doesn't the job go to the Karnataka Urban Water Supply and Drainage Board, which is in charge of water supply in other Karnataka towns? Rao cautions in such o&m agreements, the risk should not be borne by the government or consumers alone.

Where's the water?
bwssb calculations are based on a supply of 150 lpcd. While the demand is 180 mld, the board will begin supplying 100-135 mld to the cmcs in 2006. Where will this water come from? B R Nagendra, chief engineer (Cauvery), says the temporary arrangement for 2006 is to draw 100 mld out of the existing Phase I of Cauvery water supply scheme. Which means only 100 mld water will be available in 2006. Divided among 1.3 million people, what we are left with is a miserly 65 lpcd, factoring in a conservative estimate of 15 per cent transmission loss. When people were made to pay bcc , it was implied they will get water at Bangalore city's levels of 100-110 lpcd.

By 2011, gbwasp will be supplied 515 mld from Cauvery Phase IV (stage II). Till that time, a growing population will have to manage within a limited supply. Sridhara accepts this hasn't been planned for: "This is a natural balancing act." The growing population of Bangalore city will compete with the suburbs for the limited water. By the end of 2010, per capita daily water availability in the suburbs will be down to 30 litres. And then there is another catch.

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