Vol. XLII No. 31 August 05, 2018

That Hand behind Water Privatisation

R Arun Kumar

MONSOONS in our country give rise to varied emotions. Village dwellers will be looking forward to them eagerly and once they arrive, they greet them with great enthusiasm. On the other hand, city dwellers, look forward to them romantically and once they arrive, go on wishing them away, considering the water logging and related problems. In short, it is the management of water that is determining our attitude to rains. Successive governments have indirectly accepted their failure in ‘managing’ water and hence have decided to outsource their responsibility to private players, bringing us more woes.

According to studies, India, which is home to more than 18 percent of the world’s population, has only 4 percent of world’s renewable water resources. This makes water a precious resource. But the government looks at water as a ‘precious commodity’ that can be used to earn financial ‘resources’ for private corporations. It is estimated that by 2025, business opportunities in water will reach one trillion dollars! The government is facilitating in exploiting these opportunities. There are many examples to validate this point, the recent being the decision of the Coimbatore Municipal Corporation. Media reported in June 2018 that the Coimbatore Municipal Corporation has ‘chosen Suez (a French multinational company entrenched in water business) to manage and operate the water distribution system within the entire city’. The Suez itself gleefully claims that it this is the ‘largest water services contract won’ by it in India. The 26-year project was contracted to Suez for Rs 2,961 crores, wherein it has to ‘improve the quality of water services and ensure permanent access to drinking water, 24 hours a day, seven days a week’ to all the citizens of Coimbatore.

Suez is one of the three biggest water corporates that operate in many countries across the world. In our country, it started its operations in Delhi in 2012 and is also involved in Bengaluru and Kolkata. The company claims that it is supplying ‘5.5 billion litres of drinking water to more than 44 million inhabitants per day’ in our country. Claims apart, the company was castigated by the Comptroller and Auditor General (CAG) in its report for its flawed maintenance of the Chembarambakkam Lake in Chennai, which resulted in one of the worst man-made disasters during the infamous floods in 2015. This notoriety did not stop the government of Tamil Nadu or the Coimbatore Municipal Corporation to reward it with such a lucrative contract.

In fact, Suez is not the only private water company that is being rewarded. There are other major private players involved like the Veolia Water (India) Ltd, Jusco, Vishwa Infrastructure Ltd, MSK Projects (India) Ltd, Orange City Water Private Ltd (OCWL), Radius Water Limited (RWL), etc. Apart from these major players, there are other smaller companies too that are involved in water sector, benefiting from government’s largesse. Manthan Adhyan Kendra, an NGO working on this subject claims that there are more than 300 such projects where the private sector is involved.

The entry of private water companies and their involvement in our country started with the introduction of neo-liberal economic policies. International financial institutions like the IMF and the World Bank dictated their entry and involvement, as part of the conditions they imposed for the loans provided to the Government of India and various states. The World Bank is actively involved in ensuring municipal reforms through the Smart City project, JNNURM, etc., promoted by the union government and in Karnataka Municipal Reform Project, Tamil Nadu Urban Development Project, Andhra Pradesh Urban Reform and Municipal Services Project, Gujarat Urban Development Programme, West Bengal Urban Development Project and in various other states like Punjab. All of these projects prescribe the privatisation of certain services and levy of user-charges.

The World Bank had clearly stated why it wants developing countries to go for water privatisation in a 1992 paper titled ‘Improving Water Resources Management’. Here, the Bank states that the water tariff rates in several developing countries are ‘below the market rate’ and advocates for increasing these rates as they are “necessary to give private companies an incentive and sustainable profit”. This philosophy is reiterated in the Project Appraisal Document (May 2018) when the Indian government took a loan of $450 million for Atal Bhujal Yojana – it prescribes an increase in water tariffs.

The concept of ‘cost recovery’ in provision of municipal services and involvement of private sector in urban infrastructure development started during the period of the Eighth Five Year Plan (1992-97). The drive to privatise water sector accelerated after the adoption of National Water Policy, 2002. This document explicitly states: “Private sector participation should be encouraged in planning, development and management of water resources projects for diverse uses, wherever feasible” and that there is a “need to ensure that the water charges for various uses should be fixed in such a way that they cover at least the operation and maintenance charges of providing the service initially and a part of the capital costs subsequently”. The National Water Policy adopted in 2012 also reiterated the same concepts, in a different language.

It is at the behest of the World Bank that Special Purpose Vehicles (SPVs) are established in various states to ensure that the reforms are implemented irrespective of change in political parties that assume control over the administration, either at the local body level or at the state level. The Karnataka Urban Infrastructure Development and Finance Corporation (KUIDFC) established in 1993 was one of the first such bodies in our country. Now almost all the states have such bodies which are termed as ‘purely administrative and regulatory bodies, which would make project decisions, channel funds, monitor project and reform progress, and be in overall charge of the project’. These SPVs are in no way accountable to the elected municipal councils. They are autonomous bodies, which have now been taken to a higher plane through the Smart City project. According to the project guidelines, these SPVs will be ‘limited companies, established under the Companies Act 2013’. Through the establishment of these SPVs, World Bank wants to ‘depoliticise’ and ‘commercialise’ the functioning of the institutions of governance. It is no wonder that the decision to privatise water supply in Coimbatore was taken by the special officer, without any consultation with the public or their elected representatives (elections to the corporation are due for the last two years).

Indian experience and even world experience shows that privatisation of water supply does not help in providing quality services or ensuring 24x7 water supply. Experiences from Jamshedpur, Mysore, Nagpur and other cities vindicate this fact. People across the world are realising how they are duped by privatisation and therefore, they have forced the ‘remunicipalisation’ of water services in 180 cities and communities in 35 countries in the last 15 years. Even in France, the homeland for water majors like Suez and Veolia, people have fought against privatisation and in 41 cities, State has assumed the supply of water.

Interestingly, even the World Bank in its study (2005) agrees that “there is no statistically significant difference between the efficiency performance of public and private operators in this sector”. In spite of this, the Bank continues to direct the withdrawal of the State and opening up the sector for the benefit of private players.

Taking advantage of the global economic crisis, international finance institutions have renewed their offensive and are pushing for water privatisation. In Greece, Portugal, Italy and Ireland these attempts were met with fierce resistance, forcing them to retreat. These struggles, as do the earlier struggles in Cochambamba in Bolivia, Atlanta in US, all point to the power of resistance and popular struggles. These should inspire us to resist the efforts to privatise water and other services as is being attempted in Coimbatore.