Two Tales of Cities.

Indian Express runs an episodic column by Isher Judge Ahluwalia, who is chairperson of Indian Council for Research on International Economic Relations. The avowed purpose of her column is best described in her own words: ^^This column typically highlights the best and the brightest practices in the cities and towns of India. The examples relate to the delivery of basic public services such as drinking water, solid waste management, traffic safety, public transport, waste water treatment, drainage through storm water drains, etc. They show how, in the midst of urban chaos and abysmal state of public service delivery, there are some truly inspiring stories of service turnaround^^.
Her columns often sing paeans of Public-Private-Partnership [PPP]. PPP has attracted severe scrutiny from others and also well deserved infamy because while the private entity corners profits, the public is made to hold all the costs. Below is a sampling from Mrs Judge Ahluwalia’s Express Columns.
Urban India produces an average of 1,20,000 metric tonnes of garbage daily. With a population of over 12 million, Mumbai alone generates garbage of 6,500 tonnes per day. Municipalities in India spend between 10 to 50 per cent of their budget on solid waste management (SWM), but most of this is consumed in the salaries of sanitation workers and transport of waste, while a minuscule proportion is spent on its scientific disposal…..Thanks to an innovative public-private partnership led by the Municipal Corporation of Greater Mumbai (MCGM), the scientific closure of the dumpsite at Gorai has transformed this waste, accumulated over several decades, into wealth. Sanitary landfills are large and deep underground pits into which the residual waste is put in between scientifically layered geo-textile material and high density polyethylene sheets to ensure complete and airtight closure. The onsite conversion of methane gas is carried out using flaring systems, and the area is developed so as to provide a green cover over the dumpsite….MCGM earns carbon credits for the capture and combustion of methane (landfill gas) from Gorai, and the transaction is one of the largest carbon advance transactions in the Clean Development Mechanism (CDM). A tonne of methane is equivalent to 21 tonnes of carbon in its global warming potential. The leachate is collected and transported off-site to Versova where the municipal corporation operates a sewerage treatment plant. Gorai is the first dumpsite closure project in India to be registered at the United Nations Framework Convention on Climate Change (UNFCCC). MCGM has already received a carbon advance of Rs. 25 crore against future delivery of carbon credits from the Asian Development Bank, and the total carbon credit earnings are expected to be about Rs 72 crore (higher than the total capital cost of the project). It is estimated to reduce greenhouse gases by 1.2 million tonnes of carbon dioxide over a 10 year crediting period. MCGM is in discussions with a leading energy company to set up a 2 MW power plant at the site to convert the methane to energy, further enhancing the revenue capability of the project….At Gorai, the project has been completed in 24 months and commissioned in February, 2010 at a total capital cost of Rs 50 crore. After competitive bidding, IL&FS was selected as the project developer and environmental consultants to MCGM and the contract for construction was awarded to a consortium led by United Phosphorus Limited and M/s Van Der Weil Strotgas BV for a period of 15 years. The operations and maintenance of the site will be done by the consortium for a period of 15 years at an agreed cost of Rs. 12 crore.
A major initiative of the [Nagpur Municipal] corporation was the pilot 24×7 water supply project, which has attracted much attention. A performance-based management contract of the project in the demo zone was awarded to Veolia Water at a cost of Rs 27 crore (including rehabilitation). No capital investment was made by the private party for the pilot project. Of the distribution network, 70 per cent of the assets were retained and 30 per cent replaced. All legal connections were metered, while slum connections were not metered. Close to 10,000 connections now have access to 24×7 water supply. Another 5,000 connections will be activated by December 2010…..Despite the initial setbacks on raising the water tariff, NMC has launched an ambitious programme of universalising the 24×7 norm across the city. A special purpose company, Nagpur Environmental Services Ltd (NESL), was set up in 2009, wholly owned by the the NMC, with a view to separate the water account from the municipal accounts. The company was empowered to focus on all aspects of the development and management of the city’s water operations. To ensure financial sustainability, the NMC has now revised the tariff structure for O&M for partial capital cost recovery. The tariff has an inbuilt provision to pass on the increase in input cost for raw water and energy directly to the consumer. NESL has used a public-private partnership to address the challenges of integrated management of the water economy of Nagpur. The NMC received the second prize in PPP Initiatives in the 2009 “national urban water awards” from the ministry of urban development on August 13, 2009. In February 2009, the city-wide 24×7 water project was approved under the JNNURM. In November, 2010, the NMC awarded the contract to Veolia Water (India) Pvt Ltd and Vishwaraj Environment Pvt Ltd at a price Rs 7.90 per thousand litre sold and received from the customer. The private operator will bring 30 per cent of the sanctioned capital cost and any cost escalations that may arise. As Dinesh Rathi, the consultant to NMC on the project, explained: “This project will provide much-needed professional approach to urban water management.”


In June 2008, Kanpur Nagar Nigam gave a BOOT (build, own, operate, transfer) contract for processing and disposing of solid waste to A2Z Infrastructure, a private company, which was selected through a process of competitive bidding. Land (46 acres) was given free on a long lease of 30 years for the project. The plant to process 1500 tonnes per day capacity of solid waste was set up with a tipping platform, a pre-segregation unit, a composting unit, an RDF (Refuse Derived Fuel) unit, a plastic segregating unit, a briquette manufacturing unit, and a secured landfill in place. Of the total project cost of Rs 110 crore, Rs 56.6 crore came from JNNURM and the rest from the private partner. Subsequently, the contract for collection and transportation was given to the same company, once again through a competitive bidding process. This created conditions in which the waste collection and transportation activities could be integrated with waste processing and its scientific disposal, with possibilities for revenue generation. Door-to-door collection of garbage is being done in bins attached to rickshaws by safai mitras using hand gloves and protective masks. The garbage is directly unloaded into refuse compactor trucks of varying capacity, which can typically take the load of 40 to 50 bins. This way the garbage is compressed while being transported and more of it can be accommodated in the vehicle. There are still a few dumpsites on the streets, but they are on their way out. Each transport vehicle is equipped with GPS and every incidence of the compactor halt to collect garbage is monitored and recorded. This minimises the scope for deception and discourages fuel theft. Monthly user charges have been set by KNN in the range of Rs 30-50 for households, Rs 1000-6000 for industry and Rs 15 for the urban poor. These are collected by A2Z on behalf of KNN, and the monthly collection at present is Rs 0.75 crore. To sensitise people to the benefits of door-to-door collection, there was no charge in the first three months. As Vikram Singh, former municipal commissioner of Kanpur and the promoter of this partnership put it, “there is scope to recover up to Rs 1.5 crore from user charge collection”
Mumbai, Nagpur, Kanpur; three different cities hundreds of kilometres apart, but each one with the same message of how PPP’s are transforming the creaking urban infrastructure. Sunita Narain, in her Down to Earth magazine takes a look at same PPP [Public Private Prank] in urban India and comes to radically opposite conclusions.   
It is hoping that with pushy announcements foreign and Indian investment will miraculously start pouring in and infrastructure will be the name of the game once again. But this assumption ignores one crucial detail: currently, public-private partnerships (PPPs) in infrastructure are on the cusp of disaster….But in reality little private money comes. Worse, the private player is unable to run the public asset—be it water supply, public transport or a swanky airport—without substantial recurring funds. So the private sector’s interest is to make profit by building the infrastructure and then stay clear of the responsibility of making the system work. In this way PPP stands for public investment and private profit….The High Powered Expert Urban Infrastructure Committee, set up by the Union Ministry of Urban Development and headed by economist Isher Judge Ahluwalia, came up with a mouth-watering estimate for this sector. According to its estimate, building water, sewage and drainage infrastructure requires Rs 5,70,000 crore over the next few decades….The recently opened bids for water distribution in certain pockets of Delhi is a case in point. All bids had one common Indian player—Subhash Projects—with combinations of foreign players. But once such projects get off the ground, they are unfeasible, hence negotiations begin. Private concessionaires ask for changes in the awarded contract. One by one all the original conditions are done away with in this mother of all scams. Read the Comptroller and Auditor General of India’s report on the implementation of PPP in the case of Indira Gandhi International Airport to know the game….In Shivpuri where Doshion-Veolia and in Khandwa where Vishwa Infrastructure have been awarded projects to ensure 24×7 water supply, 90 per cent of the investment is public. In return for the 10 per cent capital investment, high tariffs have been fixed in this relatively poor region. The catch is that the operator must recover money from operation and maintenance. Given that the state of supply is unreliable and full of holes, the meters faulty and collection difficult, it is near impossible to break even in the business of supply. Everybody, including the concessionaire, knows this. The profit, therefore, is in building the project—in the cement, steel and pipes. It is not in the water that is to be supplied.
Did you notice something? The two names mentioned by Ms Narain in case of Shivpuri and Khandwa are the very same companies that Mrs Judge Ahluwalia mentions in case of Nagpur. If this second tale is seen as  a case of habitual carping by NGOs, then one should look for experience outside India. Right? The Veolia India’s parent is Veolia AMI- France. This is what Guardian has to say about privatisation of drinking water in UK.
It is not about Veolia alone. It is about all the companies operating in UK. And it is a race to the bottom in water wastage.
Over three billion litres of water leaks from our water companies every day according to data obtained by the Guardian showing that over half of water companies are not required to reduce their leakages before 2015.
Despite the wettest April on record, millions of people across the UK are facing a hosepipe ban for the rest of the year and drought has been declared in southern and central England. Damian Carrington writes:
Ofwat and the water industry highlight a one-third reduction in leakages since privatisation, but over the past 12 years, year-on-year leakages have increased as often as they have fallen, suggesting no long-term downward trend.
The average annual customer bill for water has risen by £64 since 2001 and is now £376, while the companies collectively made £2bn in pre-tax profits and paid £1.5bn in dividends to shareholders in 2010-11.The average annual customer bill for water has risen by £64 since 2001 and is now £376, while the companies collectively made £2bn in pre-tax profits and paid £1.5bn in dividends to shareholders in 2010-11.


One turns to private sector for better management practices, as Dinesh Rathi, consultant to Nagpur Municipal Corporation, is approvingly quoted by Mrs Judge Ahluwalia, says. But aren’t those private management practices supposed to deliver efficient and effective use of scarce resources? Is that what has happened in a developed country like U.K., whose urban infrastructure would be envy of most of rest of the world? A country whose bureaucracy and regulatory authorities are expected to be corruption free. What would then be happening in a country like India, whose corrupt practices are legendary. Whom would you believe? Isher Judge Ahluwalia or Sunita Narain?
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One Response to “Two Tales of Cities.”

  1. merlen hogg Says:

    Hi Sadanand,I loved reading this piece! Well written!Merlen Hoggekspansjonsfuger

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