Are PPPs here to stay

The first part of this article focussed on the recent initiatives by the government to involve big and established private players for municipal water supply. The argument behind the privatisation moves is that private players need to be brought in to recover costs and bring in  improved efficiency and service in urban water supply.

But, what of the indigenous variety of the PPP that always existed in cities of India? These small time water suppliers provide precisely the same service – but with a difference – they provide the service to those who are not connected to the formal system. They also double up to supplement the water supply of the better off when the municipal water supply falls short. Yet, they are reviled as “the water mafia” and are held responsible for the depleting groundwater levels in cities. They extract water from where they can and sell at prices that they set. The poor end up buying water at rates that are more than 700 times what the better off citizens pay.

Who is to blame – the informal water providers or the government, whose systems do not provide water to more than 50% of urban population?What exactly is the role of these informal water providers? Should they be squashed and wiped out by the process of “reforms” in water supply? Or is there another way out by bringing them within the ambit of the formal system?

Read on
Kaun Banega Crorepati

In Delhi, and probably in many other cities of India, a thriving informal and illegal water market functions under the very nose of the municipal corporations and the water supply boards. Yes, you can make up to Rs. 40,000 a day just by selling 20 litre-bottles of untreated ground water. Informal conversations with water vendors show that on an average, a water vendor’s annual income is about a crore . In Delhi alone, annual turnover of informal water supply business could be anywhere between Rs. 350 and 400 crore .

Compare this with the state of finances of the Delhi Jal Board (DJB). The Delhi government’s website provides details of DJB’s annual income from its water supply operations and annual budgetary deficits:
 

(Rs. crore)	Expenditure				Budget estimates
Income	2004-05	2005-06	2006-07	2007-08	2008-09	2009-10
Water charges (MCD Area)	181.56	385.45	341.36	333.82	334.52	350.00
NDMC	22.45	24.79	26.32	25.05	29.94	28.20
MES	6.70	7.18	7.79	7.22	8.64	8.14
Infrastructure charges	34.19	14.75	11.42	13.27	23.50	24.00
Water charges from employees and contractors	6.72	3.91	2.53	2.49	2.43	2.60
Water charges through tankers	0.00	0.00	0.08	0.03	0.02	0.03
Water charges through sale of  water bottles and others	0.00	0.00	0.86	0.33	3.98	5.41
Total	251.63	436.08	390.36	382.20	403.03	418.37

 

(Rs.crore)	Expenditure				Budget estimates
Deficit	2004-05	2005-06	2006-07	2007-08	2008-09	2009-10
Gross deficit	-336.10	-484.38	-731.68	-780.46	-1024.29	-1273.35
Net deficit after deducting repayment of loan and depreciation	-39.59	-55.86	-74.31	40.56	-0.96	0.35
Source :Schemewise Plan Outlay and Expenditure 2007-08 to 2011-12, Delhi government website

One can see that the annual illegal income from the water business is equal to DJB’sannual income from its entire water supply operations. It is clear that DJB can kill not two, but several birds with one stone, with some minimal policy and operational improvements.

The current state of affairs is that DJB’s piped water supply operations are focussed on thesmaller segment of the population that lives in planned colonies.
 

Source: Urban water crisis in Delhi. Stakeholders responses and potential scenarios of evolution, A. Maria, IDDRi – Ideas pur le debat No 6.2008. Data extrapolated to 2011 population Percentage of population under different categories sourced from DUEIIP, Status Report for Delhi 21, GOI & MoE & F, January 2001, Page 1, Chapter 7

Water supply for the non-planned areas: DJB is also mandated to supply water to the non-planned sections of the city, comprising JJ clusters, urban or rural villages, regularised or non-regularised unauthorised colonies and resettlement colonies. But although more than 50% of the population lives in the non-planned sectors, the expenditure on water supply and sewerage for these sectors is less than 20% of the total outlay of DJB. 

Source: Schemewise Plan Outlay and Expenditure 2007-08 to 2011-12, Delhi government website

The reality is that water supply to the unplanned colonies is not a priority. In colony after colony CSE staff found that informal water suppliers hold complete sway. CSE staff undertook a survey of JJ clusters or unauthorised colonies across the city. We found that the main source of water for these citizens is groundwater and a large number of informal water vendors undertake the water supply at exorbitant rates of Rs. 15/- for 20 litres or Rs. 750 for 1 KL of water.

Inequity in water supply: The Delhi Jal Board has adopted the following norms based on CPHEEO norms:

Category of settlement	LPCD
J.J. Clusters, designated slums, unauthorised colonies	70
Resettlement colonies, rural villages	150
Regularized unauthorised colonies, urban villages	168
Planned colonies	200

 
But according to the State of Environment Report for Delhi, 2010, actual water supply is somewhat different. Slums and unauthorised colonies barely get 9lpcd while planned colonies are provided, on an average, 270 lpcd.

So where and how do Delhi’s 10 million-odd people who are not recognised by the state, get their daily dose of water?

Water supply in non-planned areas: CSE staff undertook surveys and spoke to residents of jhuggi-jhompri or unauthorised colonies in Tigri, Sangam Vihar, Okhla, Kalyanpuri, Trilokpuri, New Seemapuri, Sundernagari, Kusumpur pahari and Bawana. The survey showed that there are between 5 to 20 vendors in each colony using groundwater. In South Delhi colonies such as Sangam Vihar, there are about 3 - 5 vendors per colony. In East and South-East Delhi colonies there are upto 20 vendors per colony, whose business sometimes comes from more than one colony.

These local service providers provide water in a variety of ways. For instance in South, North and some parts of East Delhi water is stored in 15-20 litres plastic cans, 15 litre bottles and jugs and sold at Rs. 15 to 20 per bottle/can. Colonies in East Delhi and some parts of South Delhi get their water supply in plastic pouches (200ml) or 1 litre bottles. In Seemapuri and Sundernagari JJ clusters, the daily production of water pouches (200ml) in each factory is between Rs. 10000 - 20000 and there are 3 factories. These pouches are filled with groundwater and sold at Re. 0.70 each.

Close to 500-600 families of south Delhi’s Sangam Vihar receive water through private pipe lines that get water from borewells. There are 14 such pipe lines in Sangam Vihar area. Each installation cost Rs. 5 lakh and the vendor hires local boys at Rs 4000-5000 per month to supply water at doorsteps. Each consumer is charged Rs. 1000 to 2000 for a new installation and a monthly charge of Rs. 300 to 400 is levied.

Private tankers are not used much by the poorer people but rather are used to supply legally connected colonies in summers. The tankers are filled through private borewells free of cost and supply charges vary from Re. 0.60 -75/litre depending on distance, area and the economic profile of the customers.

Quality of service: Across the city, be it unauthorised colonies or planned ones, JJ slums, urban or rural villages, these informal suppliers are valued by the people for their service. People feel that the quality of water is better than the DJB water and the “water mafia” is perceived to be extremely regular and dependable. “DJB does not provide us piped water even though I am ready to bear the cost. The local MLA sent a water tanker that provided water free of cost, but its quality was not reliable. So, I buy 2-3 (30 to 45 litres) cans of water in a day at a cost of Rs.  30.00. But water eats up almost a fifth of my income” says Zakir Ahmed in Abul Fazl colony, Okhla.

Damayanti, living in Trilokpuri says, “I had to wake up at 3 am everyday to get some water from standposts in nearby areas. There used to be frequent fights with the local residents because they thought we were stealing their water. DJB did supply water through a water tanker but the water was not enough. At times some families bribed the tanker driver allowing them take water first. Now I am paying a water vendor Rs. 400 to provide water twice in a week. The service provider confirms with us if we have filled all our utensils, pots, buckets and tanks, only then he turns off the supply. This is much better than before.” 

 

Diary of water vendor Mohd Salim, Abul Fazal Enclave, Okhla (Name changed to protect identity) “I started this kaam two years back when I carried drinking water from 4 kilometres to my colony. At that time I was very disappointed because every morning I had to buy vegetables and fruits to sell in the day and at night I had to fetch water for myself. My earnings were very limited (Rs 100-150 a day).  When I used hand-pump water, I used to frequently fall ill. Then my friend, who was already engaged in this business, advised me to sell canned water. I began work with a local service provider. He was extracting ground water through a 140 ft deep submersible and after chlorination we filled them into 20 litres cans and sold them for Rs 15 rupees each. On an average, vendors were filling 500 to 600 cans in a day and I managed to sell 80 to 100 cans. My earnings increased as I got 5 rupees commission on each sale. I decided to concentrate on this business. I invested in a 500 litres filter, a submersible pump and 2 storage tanks of 1000 litre capacity.  I installed a filling point in my own house at a cost of Rs. 1.10 lakh. Now I have fixed customers and supply about 140-160 cans in a day. Therefore, my income is about Rs.2000/day. The total strength of the colony is 22000-25000 households. Last year, in summers I supplied 270 to 300 cans in a day. The competition was less and market was good. Today, there are more than 200 suppliersin the colony.” Ram Singh from Sangam Vihar says, “I installed two 350-375 ft deep borewells that run on 10 HP motors. This is connected through pipes to at least 400- 500 households directly and I supply for 8 to 10 days in a month.  My initial investment was Rs. 10 lakh and I charge Rs. 300 to 400/month to each consumer. The charge for a new connection ranges from Rs. 1000 – 2000. I have also hired few local boys on Rs 4000-5000 per month to supply water at doorstep.  I do not have any system to purify water”. Vignettes from settlements Tigri: “There was pipe line 10 years back and we used to get at-least 2 or 3 buckets water in a day in summer season, it was a private pipe line which was connected with Government bore well  but since 2006 it is defunct. At that time we paid Rs. 1000 as a connection charges and Rs. 300 as monthly charges. Now we pay Rs. 200 rupees for 500 litres. Our children and men walk 2-3 kilometre everyday just to get a bucket of water”. A citizen Sangam Vihar: “The cost of a private piped scheme (for 400 families) used to be about Rs.  2.5-3.00 lakh, but now the cost has increased, as the water level has declined to 350 to 400 feet. If we cover 300 families then we earn roughly Rs. 75000 in a month. The net profit after subtracting electricity, labour and maintenance cost is about Rs. 40000. However, at times, there are also losses”. A supplier. “We used to wake-up in the night and rush to join the queue to collect water but now we got sufficient water for our daily life. However, we have to pay 1/10 part of our monthly income”, A citizen. Trilokpuri and Kalyanpuri: “People have to travel to other areas for water and most of them purchase packed and bottle-jug water at Rs. 15-40 for 20 litters”. Jug water usually comes from Lakshmi Nagar and Mayur Vihar area. New Seemapuri and SunderNagri: “Local illegal factories produce 200ml water pouches. The daily production of water pouches is 10000-20000 packets in each factory”. A social worker. Kusumpur Pahari: “DJB supplies water through tanker in dry season but the tanker driver charges money for water and he fills the tank or buckets of those who pay him.” A citizen.      How the government helps to deplete the aquifers: Today, Delhi’s overall groundwater development is at 170% and parts of Delhi are at 240%. The only lever in the hands of the government to prevent over extractionis the ban order by the Central Ground Water Authority on digging of new borewells. This rule was further amended to allow for the digging of borewells for drinking water. Therefore, in actual terms, there is no effective deterrent mechanism in place. DJB officials say that the task of regulation and monitoring of illegal groundwater extraction is a joint responsibility between the DJB, the police and the revenue department. Although, the Delhi government proposed to amend the Delhi Water Board Act, a draft bill drawn up for that purpose has not been passed till date. As a result, water levels have dipped by more than 5m and up to 10 m in the last decade alone in Delhi. Social costs of insecurity in water supply: As water is fundamental for survival, water scarcity entails huge social costs. More than one member of each household has to spend time to collect, carry and store the water. When there is no way to spare the time , people tend to end up buying water, even if the price is beyond what they can afford. Often children are pulled out of their school time in order to collect water. Scarce water supply frequently leads to water conflicts, particularly in summers. For the poor, social security is in the form of neighbours and friends and conflicts have a larger bearing on the social security that goes beyond water security. Poor water quality affects the poor in more ways than one: it forces them to spend time away from work, necessitates spending of money for health care, and is a source of emotional stress. Way forward: Even as the Delhi government is going in for “reforms”, a nice word for commercialising water supply in favour of mega private players, there is an opportunity for the government to use the existing informal water service providers to provide water to the unreached and marginalised in a cost-effective manner. At the same time, this also affords the opportunity to regulate illegal borewells which are the sole means of water supply to the non-planned areas. The water mafia should be transformed into water service providers by bringing them into the ambit of formal water supply. The DJB should close down or formalise and regulate the use of tubewells in these areas and ensure that water is either supplied in bulk to registered water suppliers in each of these colonies/JJ clusters/villages.

i. Based on informal conversations with water vendors in about 10 colonies across the city
ii. Based on informal conversations with water vendors in about 10 colonies across the city
iii. http://www.delhi.gov.in/wps/wcm/connect/DOIT_DJB/djb/home/right+to+information+act/11.manuals accessed on 22February 2012
iv. Schemewise Plan Outlay and Expenditure 2007-08 to 2011-12, accessed from http://www.delhi.gov.in/wps/wcm/connect/doit_planning/Planning/Home/Plan+Outlay+and+Expenditure
v. Anon, State of Environment for Delhi, 2010, Department of Environment and Forests, Government of NCT of Delhi
vi. Anon, Groundwater Year Book, National Capital Territory, Delhi, Central Ground Water Board, State Unit Office, New Delhi September 2006, Page 31