Panel calls for halt to water privatisation in Khandwa

Government committee says town municipality committed irregularities to favour private vendor Vishwaa Utilities; pressure builds to cancel contract

By Aparna Pallavi
Published: Tuesday 18 June 2013

A five-member committee asked to look into objections to a proposal to privatise the water supply of Khandwa town in Madhya Pradesh, has found a number of irregularities in the controversial plan. The committee has called for the agreement between the city municipality and the private vendor, Vishwaa Utilities, to be cancelled. Citizens had registered a record 10,334 objections against the proposed Rs 106.72 crore project.

The Narmada Jal Yojana, a public private partnership (PPP) project under the Central government’s Urban Infrastructure Development Scheme for Small and Medium Towns (UIDSSMT) to supply water to the town, was approved in 2007. The project proposed to supply water from the Choti Tawa river to the city. Choti Tawa forms the backwaters of the Indira Sagar Reservoir on the Narmada river over a distance of 52 km.

City’s water in hand

The project came under fire from citizens because under UIDSSMT, the local body is expected to contribute just 10 per cent of the cost of a project while 80 per cent is paid by Central government and 10 per cent by state. By going for a PPP model, Khandwa Municipal Corporation (KMC) is proposing to hand over the entire city’s water supply to the Hyderabad-based vendor Vishwaa Infrastructures and Services for 25 years for a paltry investment of Rs 22 crore.

“Not only is the company getting control over the water supply system and the right to pocket all the water tariff for 25 years (two for construction and 23 years of operation) for a paltry investment of Rs 22 crore,” says former corporator from ruling BJP, Jagannath Mane, “the PPP agreement is in blatant violation of MP government guidelines of May 2006, which clearly state that such an agreement is valid only if the private company in question invests at least 51 per cent of the total cost of the project.”

In the years since it was commissioned, the project earned more public ire due to sub-standard pipelines and delay in completion of work. Following vociferous protests by people, the state government constituted a seven member committee to look into the issue on March 20 this year. The committee, headed by Tarun Kumar Pithode, chief executive officer of Khandwa Jilla Parishad, has pulled up KMC for irregularities in the contract and tendering processes and recommended the constitution of a water supply board instead of privatising water supply. It has also called for cancellation of the PPP contract.

Favours to private vendor

The report of the committee points out that KMC has repeatedly violated rules to benefit the private vendor. While the contract was signed with Vishwaa Infrastructures and Services Private Limited, the work order was issued to Vishwaa Utilities, a different company altogether. The company was not only allowed to get away with paying just Rs 10,000 instead of the required Rs 3.20 lakh as earnest money, but irregularities were also committed in preparing the detailed project report (DPR) and releasing funds to the company for execution of work.
At the implementation level, too, KMC has blatantly bent rules to benefit Vishwaa, says the report. The most serious instance of such violation is that it allowed Vishwaa to replace the cast-iron pipes in the rising main (main pipeline from the intake well at Charkehda village to Khandwa town), specified in the accepted design, with cheaper PVC pipes in its technical bid. This was done by by KMC despite an objection raised by the Madhya Pradesh Vikas Pradhikaran Sangh (MPVPS), the then nodal agency for the project, specifying that the original approved design must be followed. It also points out that the mayor in council (MIC) has blatantly misused its powers by reducing the length of the pipeline from 120 km to 60 km and the number of water tanks from 10 to 9 in an effort to bring down the private vendor’s infrastructural costs.

The report also chides the private vendor for failing to complete construction work even 15 months after the official completion date of March 2012. It states that the vendor is unreliable and cannot be trusted with total control of water supply for 25 years.

Municipal corporation to supervise

In its recommendations, the committee has said that KMC must maintain ownership of water sources, and the private vendor should be allowed only to carry out water distribution work. In case of break in water supply, KMC should use its alternative water sources to provide water to people. Monitoring and supervision work must be carried out by the KMC. The panel has also said that a water board should be constituted to take decisions on water distribution and water tariff.

In view of the fear that installation of water meters will raise the water tariff, the committee has recommended that metering of water should not be made compulsory, but those voluntarily installing meters should be given some concessions in tariff by the board.

Since the report was made public, pressure to cancel the privatisation contract has increased. On June 15, opposition Congress party members burnt an effigy of Vishwaa, and demanded the cancellation of the contract. More such agitations are taking place in the city, demanding implementation of the committee’s recommendations, says Tarun Mandloi of Jal Sangharsh Samiti.

Meanwhile, it has been learnt that the district collector Neeraj Dube has forwarded the report to the municipality for action. Mane said that unless KMC follows the recommendations of the committee, the issue will be taken to court. The district collector could not be contacted for comments.


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