The Hindu : Drinking water schemes may be privatised

Online edition of India's National Newspaper
Sunday, Aug 24, 2003

Southern States

Southern States - Kerala-Thiruvananthapuram

Drinking water schemes may be privatised

By G. Mahadevan

THIRUVANANTHAPURAM Aug. 23. The proposal to sign a memorandum of understanding (MoU) between the Kerala Water Authority (KWA) and the State Government could perhaps open up rural and urban drinking water schemes in the State to private agencies.

There is also mounting concern in the KWA that the MoU could lead to the KWA getting reduced to a consultancy firm. Officials of the State Government, when contacted, dismissed such fears as `alarmist'.

However, it is pointed out that the proposal comes at a time when there is an ongoing debate on whether or not to allow private agencies to commercially exploit the State's water resources.

The proposal assumes special significance in view of the fact that a two-year-old Government decision to transfer the control of 1,050 existing drinking water schemes from the KWA to panchayats and municipalities has failed to take off with most of the local bodies pleading ``inadequate funds and expertise''.

Sources in the KWA say that the Authority had already prepared the ground for the entry of private operators into drinking water schemes through its resolution 5920, August 27, 2001.

The resolution, which pertains to the handing over of the 1,050 selected drinking water schemes to local bodies, says, ``in case the panchayats are not coming forward to take up these schemes, the O(operation) and M(maintenance) of those schemes may be entrusted to private agencies through an auction''.

One of the major provisions of the proposed MoU is that the KWA will henceforth deal only with drinking water schemes with an installed capacity of more than 25 million litres a day (mld). The draft copy of the proposed MoU, available with The Hindu, says the KWA, ``by 2007 shall deal only with `bulk' drinking water schemes, `bulk' supply of drinking water, implementation and maintenance of underground sewerage systems and provide consultancy for local self-governments and other agencies engaged in water supply and sanitation''.

The draft copy also says, ``all single-panchayat schemes shall be transferred to the local self-governments, that all comprehensive rural water schemes shall be transferred to local self-governments in a phased manner by the end of the Tenth Plan and that the KWA shall transfer distribution responsibilities of water supply schemes to urban local self-governments in a phased manner by 2007''.

According to sources, while the KWA wants the cut-off limit of future schemes to be pegged at 5 mld, the Government is reportedly insisting on a figure of 25 mld, the figure suggested in a State Planning Board report on the KWA, brought out on June 19, 2002. If the Government view prevails, the KWA will be left with only a handful of projects State-wide. There could then be calls for downsizing the 8,739-strong KWA staff, the KWA sources say.

The proposed MoU will, however, be beneficial to the KWA on some counts. As per the draft MoU, the finances of the KWA will start on a `clean slate' by the beginning of 2004-05. While loans pending shall be converted into grants, all interest due, shall be waived.

The KWA would be authorised to levy a `sewerage surcharge' to cover maintenance costs of sewerage schemes. The draft MoU also proposes the issuance of bonds by the KWA to retire high cost loans from the LIC and the Hudco.

The draft MoU also enjoins the KWA to initiate time-bound action to check unauthorised water connections and to replace defective water meters so that the income from water charges in urban areas doubles from the 2001-02 figure of Rs. 51.84 crores in three years. It also calls for introduction of bimonthly meter reading by 2003-04, reduction of energy charges by 10 per cent by 2004-05, computerisation and centralisation of payment of salary, pension and provident fund by 2003-04 and a transparent promotion policy.

The draft MoU also speaks of a possible increase in water charges in 2003-04.

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