You are on page 1of 43

ENABLING REGULATION FOR INVESTMENT IN WATER SECTOR

NEW DELHI Dt.4.11.2009

PRESENTATION BY A.K.MEHTA JOINT SECRETARY (UD) MINISTRY OF URBAN DEVELOPMENT


1

Preamble
Water Supply is a State Subject as per Article 246 of the Constitution. (Item 17 of the List-II State List under 7th Schedule) States/Urban Local Bodies (ULBs) are responsible for planning, designing, implementation and operation & maintenance of water services Govt. of India formulates policy guidelines, provides financial and technical assistance and facilitates mobilization of external assistance

Urban Scenario in India


Demographic Challenges

Total Population : 1028.7 million (as per Census 2001) Urban Population : 286.11 million (27.8%) (as per Census 2001)
Increase in population: 217 m to 286 m (1991 to 2001)
Increase in number of Cities with Million Plus population : 23 to 35 (1991 to 2001)
Year Towns (No.) Cities/UAs (with million+ population) Total Population Urban Population Urban Population (% of Total) Decennial Growth (Urban) (%)

Size of Urban Population

1951 1961 1971 1981 1991

2250 2365 2590 3378 3768 5161

5 7 9 12 23

361.1 437.2 548.2 683.3 844.3

62.44 78.94 109.11 159.73 217.61

17.29 17.97 19.90 23.31 25.71 36.46 31.41

NA 26.43 38.23 46.14

2001

35

1028.3

286.11

27.81

Indian urban context


2nd largest urban system Urban population - 315 million Urban decadal GR : 25% - 30% GDP contribution: 50% + globally

Urban system

(2005)

Towns (nos.) : 5,161 Million + cities : 35 100,000 + cities: 423

People in slums

: 60 mill +

Urban challenge

Stressed urban infrastructure

Weak municipalities Regulatory issues & Financial constraints

Urban Scenario in India


Spatial Distribution of Major Cities (as per 2001 Census):

1-2 Million
2-5 Million 5 -8 Million + 8 Million

Year

Million Plus Cities

1901 1 1951 5

1991 23
2001 35

Urban Scenario in India


Urban Governance
3 Tier System of Governance ( the Urban Local Bodies are the 3rd tier in the Governance Structure) Urban Local Bodies are part of the system of Local Self Governance (being the level of government closest to and addressing the needs of the citizens directly) Constitution of India empowers the State Governments to transfer the functional and financial powers of all basic services including water supply & sanitation

II

III

{ { {

CENTRAL GOVERNMENT

STATES

STATES

STATES

Urban Local Bodies ( Municipal Government)

Urban Local Bodies (Municipal Government)

Millennium Development Goals


Millennium Development Goals (MDG)
MDG- Goal -4: Reduce Child Mortality

Target

Target -5: Reduce by Two-Thirds, between 1990 and 2015, under five mortality rate ( Diarrhoea is an important issue here, related to water supply) Target -9: Integrate the principles of sustainable development into country policy and programmes and reverse the loss of environmental resources Target -10: Halve, by 2015, the proportion of people without sustainable access to safe drinking water and basic sanitation

MDG-Goal -7: Ensure Environmental Sustainability

Millennium Development Goals - Water and Sanitation Coverage The overall progress so far in Urban Areas across the country The Progress in achieving access to water sources is on target
Population having access to improved Drinking Water Sources (%) Rural 65 77 86 Population having access to improved Drinking Water Sources (%) Urban 85 89 91
Water Supply Coverage

Year 1990 2000 2006

Source: World Health Organisation

The Progress in achieving access to improved sanitation has to be speeded up


Year 1990 2000 2006

Population having Population having access to improved sanitation access to improved sanitation (%) Rural (%) Urban 4 44 13 63 18 63
Source: World Health Organisation

Sanitation Coverage

Jawaharlal Nehru National Urban Renewal Mission - An Overview Mission objectives:


Improve and augment economic and social Infrastructure of Cities

Provide Basic Services to Urban Poor and Security of Tenure


Initiate wide ranging Urban Sector Reforms to eliminate legal, Institutional, Financial Constraints Strengthen Municipal Governments functioning according to the 74th Constitutional Amendment

JNNURM Objective: Universal, Safe and Sustainable Access to Water for Urban Areas:

Need to:
Improve the efficiency of services.
Ensure universal access. Sustainable services

Expected Outcomes of Urban Water Supply under JNNURM


Financially self-sustainable cities. Universal Access to Basic Services. City wide framework for Planning and Governance.

Modern Financial Management Systems.


Transparent & Accountable Government and Service Delivery.

Problems in WatSan sector


Equity
Accessibility Reliable quality

For sewerage/sanitation the issues are Accessibility Meeting environmental effluent norms

12

Even in metropolitan areas, large number of people still do not have access to water networks

23% of households in Delhi & Kolkata, and 55% of households in Chennai are not connected to piped water supply These households thus rely on informal or non-revenue generating sources of water, which may represent a net drain to water providers
Source: World Bank Study, May 2005 13

with large inequalities in availability of water occurring WITHIN cities


LPCD in various parts of Delhi
Cantonment NMDC

509 462 337 277 274 202 201

Karol Bagh
City Civil lines & Rohini West Delhi Pahar Ganj. New & South Delhi 148 Shah Dara 130 NajafGarh/Dwarka 74 Narela 31 Mehrauli 29

Source: Ministry of Environment and Forests and GoNCTD, Planning Department

14

So what is the problem?


Distorted Investment & Lack of Accountability
Utilities are not maintaining their assets or focusing on

service quality OR susutainability:


Inadequate financial resources due to low / no tariffs and limited

central / state support High costs due to operational inefficiencies Lack of autonomy

They are focused on obtaining grants for investment rather than on service provision for which they are not held accountable
15

Investments in WatSan sector


The plan allocations since Independence are given in

the next slide

16

GoI Plan Investments in UWSS


Allocation for Plan Size UWSS Rs.Crore Rs.Crore I Plan(1951-56) 3360 43 II Plan (1956-61) 6750 44 III Plan(1961-66) 8573 89.37 IV Plan(1969-74) 15902 282 V Plan(1974-79) 39303.49 549.44 VI Plan(1980-85) 97500 1766.68 VII Plan(1985-90) 180000 2965.75 VIII Plan(1992-97) 434100 5982.28 IX Plan(1997-2002) 859200 18624

% 1.28 0.65 1.04 1.77 1.4 1.81 1.65 1.38 2.16


17

Investments so far made


The GoI resource investments have been small &

always much less than required


The investments were geared towards more

infrastructure without addressing service delivery & improvement.

18

COVERAGE TARGETS
It is proposed to achieve the following coverage targets by the end of the Eleventh Five Year Plan i.e. 31.3.2012 As per Millennium Development Goals (MDGs), of which India is one of the signatories, the above targets are required to be achieved
.

Urban Water Supply Urban Sewerage and Sanitation

100% population coverage 100% population coverage (which includes 70% population to be provided with sewerage and sewage treatment and 30% population with low cost sanitation, septic tanks etc).

19

XI plan fund requirements


It is estimated to require Rs.1,29,237 crore investment

for water & sanitation for 100% coverage & national norms for quantity alone
Bringing in quality into service delivery is expected to

require more investment especially SOFT infrastructure- managerial approach into the sector

20

Lessons from other sectors


Lessons to be learnt from Electricity & Telecom sectors
Both essentially mean service to Customers Both backed by adequate legislation Cannot be placed under life-line services

Peculiar problems in Water & sanitation Water, an essential need Economic loss due to unsafe, inadequate water & Environmental cost due to bad sanitation not quantifiable easily There is no Central Act on the subject
21

Importance of Benchmarking
In order to bring water & sanitation services under

quantifiable & verifiable service level indicators, Ministry has formulated Standardised Service Level Bench marks (SSLBMs)

22

Benchmarking- WS
Coverage of WS connections (Popln)- 100%
Per capita availability of WS at consumer end- 135 Lpcd Extent of metering of WS connections -100% Extent of Non-Revenue Water -15% Continuity of Water Supply -24x7 Efficiency of redressal of Customer Complaints-80% Quality of Water Supplied -100% Cost recovery of in Water Supply Services- 100% Efficiency in collection of Water Supply Charges- 90% Number of persons receiving less than 70 Lpcd -0
23

Benchmarking-Sewerage
Coverage of Wastewater network services-100%
Collection efficiency of Wastewater network-100% Adequacy of Wastewater treatment capacity-100% Quality of Wastewater treatment-100% Extent of reuse & recycling of treated Wastewater-20% Extent of cost recovery in Wastewater management-100% Efficiency of redressal of Customer Complaints -80%

Efficiency in collection of sewerage charges -90%


Capacity utilization of Wastewater Treatment facility-100% Coverage of Toilets- 100%
24

Benchmarking- MSWM
Household level Coverage of Solid Waste management services-100% Efficiency of Collection of Municipal Solid Waste-100% Extent of segregation of Municipal Solid Waste-100% Extent of Municipal Solid Waste recovered / recycled-80% Extent of scientific disposal of Municipal Solid Waste100% Extent of cost recovery in Solid Waste Managementservices-100% Efficiency of redressal of Customer Complaints-80% Efficiency in collection of user charges-90%

25

Need for paradigm shift


Instead of the old dispensation of more&more

infrastructure, Ministry wants infrastructure development with managerial tools for measurement of quality in service delivery, sustainability of operation, conservation through demand side management etc. Such a model of infrastructure demands separation of functions of policy, operation & regulation, all of which are invested in State institutions at present.
26

Approach to Regulation
With performance standards Competition on tariff setting Removing barriers to competition & monopoly

In an essential service like water supply where provision of service is more sacrosanct than recovery of costs, the Regulation of Investment & rate of return can be extremely slippery

27

Approach to Regulation
There are no regulators in the WatSan sector as on

date similar to TRAI, ERAI Only Maharashtra has adopted an Act on the subject ( Mah Water Resources Regulatory Authority Act 2005) The Maharashtra Water Resources Regulatory Authority is primarily for planning & allocation of State Water Resources & Water Tariff System Being a State sector, legislation has to be made by States.
29

Functions of Regulator
To ensure equity of access of service
Geographical dispersal of services Adherence to SLBMs for quality of service Viable tariff structure Protection of consumer rights

30

Functioning of Regulator
Independent & Autonomous
Accountable to scrutiny by legislature Legally accountable Subject to Judicial review

31

Attributes of Regulator
Coherence in policy- in tariff, subsidies & adequate

returns Credibility & Predictability- credible through legislative backing that Investors will be able to recover their costs Legitimacy & transparency- participatory form of regulation & public disclosure of all costs etc

32

Threats to Regulatory mechanism


Political interference may be inevitable in water &

sanitation sector due to emotive potential Adverse public perception on leasing / transfer of public assets Adverse opinions on what constitutes reasonable return rate The political mine-field of tariff imposition

33

Way Forward
Separation of functions in WatSan sector essential. It

has to be institutionalized by statute Participatory approach to policy making Initial opening of Sewerage & Sewage Treatment sector to private players to generate public goodwill Initial guarantee of investment by State Governments rather than ULBs for financial security of investment

34

Examples of entry of Pvt sector


In Naba Diganta Indl. Township Authority in Salt

Lake, Kolkata, a water & sewerage project under JNNURM is being implemented by JUSCO. The company invests the share of State & ULB ( to the extent of 65% of cap. expdtr + GoI 35%= Rs.39 crore) JUSCO will do O&M for next 30 years after implementation. The State & ULB have laid down fixed tariff structure, raised by 5% every 5th year. Limitation- it serves only commercial areas ( IT hub)of 2.00 Sq.Km 35

WS Dist System in Nagpur


Under JNNURM, Nagpur is going in for 100% service

coverage with PPP with an Spl. Purpose Company NMC will retain ownership of all fixed assets required to provide water supply services in Nagpur City. The SPC will operate, maintain, repair, refurbish and provide for replacing any granted facilities according to committed service levels targets. Operator will be recovering user charges to meet the O&M cost. NMC has proposed to raise its share of 30% through SPC participation(Rs. 116 cr.).GoI will fund50% & St Govt 20%.
36

Pitfalls in bringing PSP


Govt of Maharahstra, MJP & Latur MC had proposed

to improve the citys chronically unreliable WSS with PSP The project took off and much work was done in leakage reduction But revenue collection could not be implemented due to public resistance against metering. It is notable that this is happening in a progressive State like Maharashtra.
37

Investment in Water Sector


Not just for additional infrastructure
Not just for augmenting capacities

But the basic requirement is: Investing in better management Implementing quantifiable services for quantity, quality, duration, redressal etc.

38

Investment in Water Sector


Precedents in Electricity sector
Unbundling of service mechanism Investing in last mile connectivity eg.Telecom sector

39

Investment in Water Sector


Synergy can be developed with Electricity sector for
Metering & meter reading Bill delivery Bill collection

Saving on costs and reducing customer stress

40

Investment in Water Sector


Learning from telecom sector-- Widening customer base Reduce entry barriers Simplify procedures IVRS for complaint redressal Multiple options of bill payment

41

Investment in Water Sector- Eg


Nagpur MC Investing in last mile-upgrading delivery Reliability of water supply with 24x7 Benefits: Water saved by ensuring delivery-measurement-higher tariff on wastages Women & Children rescued from drudgerysocial& economic development

42

Investment in Water SectorThe need is for investments in Service delivery, reliability & measurement for sustainable water supply services PVT & Public sectors can enter with Management contracts Point of delivery operations such as meter reading, bill delivery &collection Take up stand alone components such as WTPs, Pumping Stations, Long distance bulk transfer etc.

43

THANKS

44

You might also like