Private water, public misery

Print edition : April 21, 2006

THE BARRAGE ON the Sheonath river, built by Radius Water Limited, has left the stretch after it with little water. - AKHILESH KUMAR

Privatisation of water is taking root in India, often aided by political and bureaucratic corruption. Alongside, resistance to this is also building up.

Sheonath's sorrow By Aman Sethi in Durg, Chhattisgarh

THE Sheonath River Project is turning out to be Chhattisgarh's worst inheritance from undivided Madhya Pradesh. The project, India's first river privatisation experiment, was handed over to Radius Water Limited (RWL) by the Madhya Pradesh government, pleading a lack of sufficient funds.

The Rs.9-crore project was formalised on October 5, 1998, between Madhya Pradesh Audyogik Kendra Vikas Nigam (MPAKVN) and RWL on a build, own, operate and transfer (BOOT) basis for the construction of a barrage on the Sheonath to supply up to 30 million litres of water per day (MLD) to the Borai Industrial Growth Centre in Durg district. The barrage construction was completed in two years and operations began in January 2001.

"We got to know about the privatisation of the river only when RWL began harassing villagers near the river and held self-laudatory press conferences in Delhi," says Lalit Surjan, Editor of Deshbandhu, a local newspaper. "We then began an investigation and were shocked by the findings."

The agreement, which was inherited by the Chhattisgarh State Industrial Corporation (CSIDC) when the State was carved out of Madhya Pradesh in 2000, categorically gave RWL exclusive access to a 23.6-kilometre stretch of the river for a period of 22 years (including two years for project construction). RWL secured monopoly rights over the supply of water to all sectors and phases of the Borai Industrial Centre, and the CSIDC was obliged to provide all land for the project free of cost. The CSIDC was expected to purchase water from RWL and sell it to the industrial units in Borai.

The contract states: "It is clearly understood by both parties that the Project Company has nothing to do with the actual users of the water, i.e. various Industries/Units/Companies ... ." The contract further required a "minimum guaranteed purchase of 4 MLD water quantity by the Corporation... in case the demand reduces below 4 MLD, the payable bill shall be for 4 MLD from the applicable first tier of tariff." Early termination of the agreement was possible only by "reimbursing all outstanding loans and credits of the Project [estimated at a minimum of Rs.6.5 crores] ... [and] by compensating the likely profit that the project company is expected to earn in the balance concession period." The exit penalty could be as high as Rs.400 crores.

Thus, for the last five years, the corporation has been trying to ensure the profitability of RWL irrespective of its own losses.

"It is true that the Sheonath River Project is a loss-making enterprise for the Chhattisgarh government," admits CSIDC Chairman Rajinderpal Singh Bhatia.

A major problem is the lack of sufficient demand. Borai has only two large and medium-scale industries, and their combined water requirements is between 1 and 1.5 MLD - while the CSIDC pays for 4 MLD as per the contract.

The government claims to be pushing hard to attract more industry, but that, paradoxically, might force the CSIDC deeper into debt. "We purchase the water at Rs.15.02 a kilolitre (1,000 litres). However, we sell it to industry at only Rs.12 a kilolitre," explains a senior official in the Accounts Department of the CSIDC. Thus, the CSIDC makes a loss of 20 per cent on every unit of water sold, and an increase in demand will simply mean increased losses. To make matters worse, Hindustan Electro Graphite (HEG), which buys 90 per cent of the CSIDC's total water sales, has refused to pay its dues.

"HEG is a special case," remarks the official. HEG was required to buy a minimum of 3.6 MLD and pay for 90 per cent of the agreed amount in case it did not require the entire amount. But HEG reneged on its contract; moreover, it filed a case against the government in the Chhattisgarh High Court. The court, which has issued a stay order, directed HEG to pay at half the agreed amount - that is, at Rs.6 a kilolitre!

In March alone, the Chhattisgarh government suffered a loss of Rs.12 lakhs. "You could say we have lost Rs.6 crores in the last five years," concludes the official.

The Sheonath River Project illustrates the tremendous risks involved in the privatisation of common property resources, especially water. Apart from the ethical issues involved, the high installation cost of water infrastructure and the relatively low price of water per unit make it unviable for private capital. Companies like RWL can only succeed in markets heavily distorted in their favour, where a compliant state offers them the luxuries of perfect monopoly, minimum purchase guarantees, tax holidays, generous exit clauses and complete protection from people's protests.

Unfortunately, the Sheonath project is not the only such project in Chhattisgarh. In a working paper on Chhattisgarh's water sector, environmental activist Gautam Bandhopadhyay lists four other projects - on the Kelo and Khurkutt rivers in Raigarh, on the Mand in Jagjir, on the Kharoon in Raipur, and the Savri in Dantewada - where water rights to rivers have been handed over to private consortia on the pretext of attracting industry to the State. As with the Sheonath, the terms of the agreement are being jealously guarded.

While the people of Durg fight to regain their rights to a river that has sustained them for generations, the Government of Chhattisgarh finds itself financing a private water supplier and subsidising a private water consumer on the basis of an agreement that it never signed.

Flawed policy By Prafulla Das in Bhubaneswar

A dried-up canal of the Panasjhar minor irrigation project in Khurda district in Orissa.-ASHOKE CHAKRABARTY

ORISSA has 4 per cent of India's population, but possesses 11 per cent of the country's water resources. Yet, water is scarce in the State and the situation does not seem set to improve, with a growing population, rising demands in agriculture and industry and the absence of a comprehensive water policy.

Chief Minister Naveen Patnaik recently made an ambitious announcement that irrigation facilities would be provided for at least 35 per cent of the cultivable land in all blocks of the State in the next five years. An official report reveals that irrigation coverage extends to less than 35 per cent of the cultivable land in about 200 blocks. Patnaik's promise to reverse this in five years has few takers.

It is the absence of a comprehensive water policy that seems to be in the way of any improvement in the situation. The State formulated a water policy in 1994, based on the national water policy of 1987. When a revised national water policy was adopted in 2002, Orissa decided to review and update its own policy. The process of working it out is still on. "The revised draft policy was submitted to the State government a few months ago by the Water Resource Department. A few changes have been suggested. We are working on the new policy again and it will be submitted soon," U.P. Singh, Secretary of the Water Resource Department, told Frontline.

Some voluntary organisations have alleged that the State government is planning to treat water as a tradable commodity and that the new policy would allow private participation in water management. U.P. Singh said the allegations were "baseless". "Water will continue to be treated as a valuable natural resource and there is nothing in it to conclude that water is being privatised," he said.

However, the final draft of the State Water Plan, drawn up by the Orissa Water Planning Organisation in September 2004, advocates privatisation of water. "The Government of Orissa, in particular, has very limited budgetary resources and cannot find money for new development. There are not even any funds for maintenance of already existing works. Thus, the water service sector is in an unsatisfactory state," the draft says.

The latest report of the Comptroller and Auditor-General also points to the losses suffered by the major and medium irrigation projects of Orissa. In 2003-04, the 52 major and medium irrigation projects incurred a loss of Rs.193.66 crores. Six of 11 major irrigation projects incurred losses of above Rs.10 crores each.

The State Water Plan says that the answer to the problem lies in seeking private participation in the development and management of water resources. However, it also sounds a word of caution, saying that private participation in all spheres of water management would not be wise. "Only surplus water should be allowed to be exploited commercially and only for production of commercial goods," it suggests.

The Plan also floats the idea of introducing volumetric pricing of water. "A gradual changeover is recommended - the sooner, the better. Immediately, the micro systems may be converted to the volumetric system. Supply to pani panchayats [water users' associations] may be made on volumetric basis," it says.

All this seems to indicate there is some truth in the allegation that the government's much-hyped pani panchayat scheme is a veiled attempt to privatise water in the name of farmers' participation in irrigation management.

The government aims to hand over all irrigation projects to pani panchayats in a phased manner, under the scheme started in 2002. So far, 8.01 lakh hectares of land has been handed over to the 13,284 pani panchayats registered under the Registration of Societies Act, 1860.

The government claims that this participatory irrigation management programme allows farmers to take decisions regarding the distribution and management of water resources in irrigated farmlands. In reality, the programme seems to have created a divide between big farmers on the one hand and small farmers and landless peasants on the other. With the virtual withdrawal of the state from the scene, big farmers exercise more influence.

Landless peasants are not even able to become members of the pani panchayats. "The rich families of our village, who own vast areas of agricultural land, run the pani panchayat. We are just cultivating their land and paying them 50 per cent of the paddy we produce during the kharif season and 25 per cent of the produce during the rabi season," said Musa Badhai, a tribal farmer of Nuapada village of Khurda district who has no land of his own. The Panasjhar minor irrigation project in his village is now being managed by a pani panchayat.

The Orissa government plans to develop 11 river basins, with help from international banks. But the State is not prepared to meet the serious deficit that is bound to arise with growth. A government survey shows that the demand for water will rise from 54,895 million cubic metres (mcum) in 2001 to 83,538 mcum in 2050, a rise of 52 per cent against the total water availability of 91,000 mcum, which will remain unchanged. The study was made in 2004, and the actual demand in 2050 could be far higher because there are many industrial projects that were not taken into account in 2004.

Experts say that the 50-odd steel and aluminium units planned so far are expected to consume a huge volume of water. But the authorities insist that this increased demand will not affect the supply of water for drinking and domestic use.

Public money worth crores has been pumped into irrigation projects, but the State has not been able to manage its water resources efficiently. International aid agencies and foreign banks are now keen to give loans for the management of water. But with water management slowly falling into private hands, it remains to be seen how much the people benefit.

Fiasco in Delhi By Aman Sethi

In New Delhi, families queue up for water, which has become scarce owing to the non-commissioning of the Sonia Vihar water treatment plant. A file picture.-

"PRIVATISATION makes a team. The people are on the team, working in new jobs and buying shares in their own future. Investors are on theteam, risking everything they own and betting that we can succeed.Government is on the team, the referee who keeps everything fair, the old man we can trust."

While the lyrics from Ubinafsishaj (privatisation) - a Tanzanian pop song produced by ,the Adam Smith International, (an international development consultancy group), spear-headed a World Bank funded privatisation agenda in Tanzania, theirthe citizens of Delhi were left to find their own tunes. No agency - neither government nor private, thought it necessary to inform them of a proposal to privatize the city's water distribution. The truth behind the "Delhi Water Supply and Sewage Project", better known as the 24X7 Project, only emerged as a corollary to intense public scrutiny of the Sonia Vihar Water Treatment Plant.

The summer of 2005 was a watershed period for privatization experiments in the national capital. The intense heat and the failure of the Delhi Government to supply both - electricity and water, in sufficient amounts, made for a rather agitated citizenry. The privatisation of power distribution had failed to live up to expectations and a shortage of raw water had meant that, in spite of its early completion, the Sonia Vihar Water Treatment Plant was dysfunctional. The period saw members of residential colonies stop traffic, stage dharnas and call for the dismissal of the Government on basis of its failure to provide basic infrastructural services.

Victims of repeated hikes in electricity tariffs, post-privatisation, without an accompanying increase in quality, Delhi's citizens had finally woken up to the fact that monopolistic private operators were as inefficient as public operators - at twice the price. Thus, the public was understandably wary of any further "sectoral reforms".

Built at an inflated cost of Rs 880 crore - a figure that invited a- investigation - the Sonia Vihar WTP was designed to process approximately 140 million gallons per day (MGD); a lion's share of which was allocated to zones to S-II and S-III in South Delhi, where a pilot privatisation project had been initiated. While the plant itself did not lie in the ambit of the privatisation project, it's role in supplying the water made it crucial to the success of the project. Eventually, news of the privatization only emerged when Parivartan, an NGO working on transparency and infrastructure, filed under the Right to Information Act on the basis of a report in a national daily.

The privatisation of Delhi's water supply was scheduled to follow the well-trodden path of "unbundling", where the first step would have involved the disaggregation of the Delhi Jal Board into a number of smaller entities individually charged with tasks like water treatment, supply and distribution. Once unbundled, the tasks of water treatment and supply to localized operating zones was to be held by publicly-owned companies, while the distribution of water within these operating zones was to be handed over to "experienced private operators." Each private operator was to be held responsible for supplying water to an assigned zone 24 hours a day, seven days a week.

While the contract incorporated significant escape clauses for the private operators, it held the Jal Board responsible for a continuous supply of water to the mouth of each localized operating zones. While World Bank literature suggests that pressure-controlled water supply within a localized operating zone is a complex and technical process - essential for proper metering and leak detection, DJB officials privately admitted that local distribution was the easiest of processes and that most leakages in the system occurred outside localized operating zones. The contract further called for a "rationalization of prices" and a gradual move towards "full cost recovery"- euphemisms for steep increases in user tariffs.

Parivartan also alleged that the World Bank had micro-managed the consultancy tendering process to the point of outright favouring of Price Waterhouse Coopers - an accusation that the World Bank denied.

Parivartan's findings were soon made public, and sustained media coverage and citizen pressure resulted in furious back-peddling on the part of the state government, the Delhi Jal Board, and the World Bank. In a public statement, Michael Carter, India Country Director, World Bank, stated, "Neither under the proposed project nor in any advisory work is the Bank proposing privatisation of any part of DJB nor is there is a timetable for any privatisation. As a matter of fact, at this time, the World Bank would definitely not recommend privatisation." However, water activists feel that handing over control of distribution networks from a public entity to private operators is, in fact, privatisation.

"At present the project has been put on hold," says Sudip Mozumder, a media information official at the World Bank. However, neither Mozumder, nor any DJB officials commented on why it was so.

With the summer coming around once more, Delhites have braced themselves for another dry season. In a desperate attempt to improve Delhi's water security, Chief Minister, Sheila Dixit has threatened to sue the Uttar Pradesh if it refuses to release 300 cusecs of water as per an agreement signed at the time of the construction of Tehri dam and the Sonia Vihar Plant. But for now, with municipal elections around the corner, no-one in the government dares mention "privatisation

Not for the poor By Dionne Bunsha in Chandrapur

IN CHANDRAPUR TOWN of Maharashtra, both young and old take turns at the Community pipes to collect water in view of the erratic supply.-RANJIT DESHMUKH

"WHOM should I ask today?" This thought plays on Swarta Shende's mind soon after she wakes up. It is a bright morning and her main concern is about finding the 20 pots of water that her family needs for the day. She does it every day. So do many other women in Chandrapur, the first town in Maharashtra to privatise its water supply.

"The public tap has water for only two hours a day. And, with so many women scrambling for their share, I get only three pots from here," says Swarta. "Then I go to other people's homes - those who have their own taps or wells, asking if they will let me fill a few pots." Swarta tries not to go too often to the same place, for they may get irritated. "Two hours of my day is spent just collecting water," she says.

It was not always this bad. "Earlier, we got water from 1 p.m. to 6 p.m. That was enough for everyone. But a year back, they cut it down to two hours, so now we have to borrow from others," says Swarta. Why the cut in water supply? She has no idea, but others point to the privatisation of the town's water distribution in March 2004. Of course, Swarta does not know that the Chandrapur Municipal Council (CMC) handed over the task of water supply to a contractor. She is only struggling to cope with its after-effects.

The privatisation of water supply in Chandrapur was an attempt to `improve efficiency and investment'. The CMC wanted to cut the `losses' it was incurring on the water supply scheme. Sheikh Maqsood, city engineer of the CMC, who was one of the officials involved in the tendering process, told Frontline: "We aimed to recover at least Rs.1.46 crores as water tax, but we were able to recover only half that amount. Our expenses were Rs.3 crores every year and we were making huge losses. So we decided that it was better to hand it over to a private company, since the Maharashtra government has allowed privatisation schemes."

At the hand pumps to collect water.-RANJIT DESHMUKH

The deal: the CMC gets Rs.1.59 crores (over a period of 10 years) and a Rs.75-lakh bank guarantee for handing over water distribution to Gurukripa Associates. The CMC retains ownership of the network but the private company takes over the distribution, maintenance and water tax collection for 10 years. The contractor has to build only 1 km of new pipeline every year. Any improvement and investment in the network is the CMC's responsibility.

The privatisation may cut the CMC's losses, but has efficiency of water supply gone up? Has investment increased? As we travelled through this grimy industrial town, people in different neighbourhoods - from the `VIP areas' to the slums - said the water supply situation had only worsened. There was no response to their complaints as well.

Ratnamala Nagarkar from Vadgaon, Sai Baba ward, said water supply had reduced to a trickle. "We used to get water twice a day. Now we get it only in the afternoon for three hours," she said. "The flow in our public tap is very weak now and it takes longer to fill. Often, there's no water for two or three days, so we have to be careful and always keep aside some pots in case there is no water the next day." Ratnamala and many like her do not know that they are guinea pigs in Chandrapur's water privatisation experiment.

Supply to many public taps has been stopped and the government has issued a notification that no new public standposts should be built. It says that efforts should be made to have group connections so that people share the water bill. The worst hit by these measures are the poor, who are wholly dependent on public taps for their water needs.

"Four taps in our area are not functioning. They refuse to repair it. We can't afford to have our own water taps. Only one in six houses has its own connection," said Prahlad Kamte, a resident of Indira Nagar in Mela ward.

Girish Chandak, director of Gurukripa Associates, told Frontline: "Every few days, the public taps get stolen and water flows out of the pipes and is wasted. So, instead, we are trying to get people to pay for group connections. It's the government's policy. If you give water free, people don't value it."

Many who have water supply at home have got fed up and let the company disconnect their connection. "We haven't got tap water for almost two years. So we let them stop our supply. It doesn't make any difference to us," said D.S. Khanke, a retired Forest Department employee. "We dug our own borewell so that we don't have to rely on them."

"This is a man-made shortage. There's enough drinking water for the entire city from the Irai dam nearby, but there's no network to supply it to residents," says Sanjay Vaidya, Municipal Councillor. Chandrapur's water network has not been expanded since the mid-1960s. As the town has grown, several new neighbourhoods that have come up over the years do not have municipal water supply. The residents rely on their own borewells.

While Sanjay Vaidya estimates that 60 per cent of Chandrapur's three-lakh population is not covered by the water pipeline network, Sheikh Maqsood puts the figure at 30 per cent. The water table is falling as more borewells are dug, most of them without permission from the CMC. The CMC has decided not to dig any more borewells, but it keeps no check on the proliferation of private wells. Plans to enhance the distribution network have been stalled because the CMC does not have the funds to guarantee the loans granted for the project.

Said Girish Chandak of Gurukripa Associates: "We have tried to balance out water supply so that places that didn't get water are now getting it and those areas which had five hours of water, or even 24 hours, now receive less. The people you met must have been getting water for longer, that's why they were complaining."

Refuting complaints that services were worse because the company did not spend on maintenance, he said: "We have put in Rs.3 crores to streamline the whole system. There was no proper maintenance or records earlier, and there was a lot of corruption and delay in repair works. There are regular leakages because the pipelines near the coal mines often burst owing to blasting. We repair them within six hours, while the CMC would have taken six days."

Girish Chandak added that the municipality used to get 150 complaints a day, while his company gets just five. He said that five years ago the CMC had 24,000 connections, which dropped to 17,000 in 2004 when the company took over the distribution. "Today it is 19,000. That is enough proof. If there was no proper water supply, people would not take a new connection," he said.

Questions have also been raised about Gurukripa's track record. It is alleged that it was formed only to bid for the tender and that it had no experience in water management. Its partners are powerful traders in the city - oil merchants, builders, medicine distributors and even liquor barons. The nexus perhaps became clear when Frontline met the city engineer. He invited us to the house of the head of the planning committee, a Councillor, for the interview. It was apparent that the engineer knew which places Frontline had visited. While the interview was going on, he sent word to Girish Chandak, who showed up immediately though we were supposed to meet him at his office later.

The people of Chandrapur were not given a choice between public or private irregularities. They can now only decide every day who they will borrow water from.

Costly alliance By V. Sridhar in Tirupur

COLLECTING water from a broken pipe in the heart of Tirupur. This is a common site in the town.-M. BALAJI

HARD-SELLING the idea of water as a privately owned saleable commodity was never going to be easy, particularly in water-starved Tirupur in Tamil Nadu. A way had to be found to get around popular opposition to the sale of an increasingly scarce natural resource.

The result was a public-private partnership for supplying water to industries, villages and the Tirupur Municipality. Launched in February 2006, the New Tirupur Area Development Corporation Limited (NTADCL) project, costing about Rs.1,023 crores, was expected to provide a "final solution" to the water problem. The project is meant to supply water to the 700 dyeing and bleaching units in and around Tirupur and to domestic consumers in the Tirupur Local Planning Area (TLPA), comprising the Tirupur Municipality, 16 village panchayats and two other municipalities.

Those supporting the project hailed it as a "model" worthy of emulation in the rest of the country. But people in Tirupur are already paying 50 per cent more for the water supplied by the municipality. There is also apprehension that the private-public partnership is dividing the town with a population of about six lakhs into haves and have-nots in terms of water.

The unique structure of the project makes it possible for the state to vacate the space it held hitherto as a provider of a basic public utility. The Tamil Nadu Water Investment Company, promoted by the Tamil Nadu government and the Infrastructure Leasing and Financial Services, was among the main equity holders. Others included the Tirupur Exporters' Association and Mahindra Water Utilities Ltd., which maintains and operates the service on behalf of the consortium.

The build-own-operate-and-transfer model of ownership enables the company to draw 185 million litres of water a day (mld) from the Bhavani river at a point about 60 km from Tirupur. Of this, up to 115 mld is for industries; the remaining quantity is meant for users in Tirupur and its surrounding areas. The concession granted to the company runs for a period of 30 years. The initial agreement between the company and industrial users priced the water at Rs.45 a kilolitre (1,000 litres). While the municipality was to pay Rs.5 a KL, wayside village panchayats were to pay Rs.3.50 a KL. The pricing of water thus had an inbuilt element of cross-subsidisation; industrial users would pay more so that domestic users could pay a more "reasonable" price. The scheme, backed by the United States Agency for International Development (USAID) and the World Bank, provided for some kind of indexation, which implied an annual price escalation reported to range between 6.5 per cent and 8 per cent.

The cross-subsidisation scheme is in danger of unravelling. Industrial units have already refused to pay the originally agreed rate of Rs.45 a KL for water supplied by NTADCL. N. Kandasamy, president of the Dyers' Association of Tirupur, said that industries could get water for about Rs.30 a KL in tankers from villages near Tirupur. He said: "It is true that we had committed to pay Rs.45 a KL, but we now find this rate too high." Apparently, NTADCL is considering a reduction in the industrial water tariff from Rs.45 a KL to about Rs.37 a KL in order to increase the offtake by industrial users.

The two existing schemes, implemented by the government prior to the NTADCL project, supplied Tirupur about 26.5 mld. The NTADCL project is now providing about 15 mld to the town, which can increase up to a maximum of 50 mld over the lifetime of the project.

Even before the project commenced delivery of water, the Tirupur Municipality decided to increase the rate at which it supplied water to users in Tirupur. While rates for domestic users were increased from Rs.4 to Rs.6 a KL, the rates for commercial establishments in the town were hiked from Rs.6 to Rs.10 a KL. The Chairman of the Tirupur Municipality, M.N. Palanisamy, justifies the increase in user charges. He points out that while the municipality pays NTADCL Rs.5 a KL, it actually incurs a cost of Rs.7 a KL in supplying water to residents. The town of about six lakhs has a mere 44,000 water connections and about 650 public taps. There have been 10,000 fresh applications for water connections, about 6,000 of which are from applicants living in "approved" residential areas of the town.

Palanisamy rules out any water connections for those living in the "unapproved" parts of the town. It is estimated that between one-third to one half of the population in this booming town lives in its "unapproved" parts. Palanisamy said that the State government had prohibited the installation of new street-end common water taps. "These are a nuisance and cause wastage of water," he said. Most people who depend on street-end water taps for collecting water would lose access to water if Palanisamy has his way.

Palanisamy claims that Tirupur residents with water connections at home get water once in three days for about two hours. However, Bommidurai, a municipal councillor, points out that in his locality even those with a water connection get water once in eight to 12 days. He said that the quantity of water supplied has not increased since the NTADCL water started flowing into Tirupur. Piped supply of water caters to only a fraction of the town's population. In Thennampalayam in Tirupur, Angathal, wife of a manual worker, said she paid Rs.0.50 a kodam (pot) of water to her neighbour who had a water connection. She collects water once in eight to 10 days. Most people complain about the poor quality of the water. Palanisamy agrees, but says that people will "soon get used to it".

Palanisamy says that the municipality has been incurring huge losses by supplying water at below-cost rates. The municipality incurred a loss of Rs.7.11 crores during 2004-05. This, he said, ruled out the possibility of supplying subsidised water to people in the town. It is obvious that the bustling town can do much better in mobilising revenues, which would enable it to provide better public services. For instance, the municipality collects about Rs.12 crores as property tax, which is minuscule in comparison to the hosiery industry's turnover of nearly Rs.9,000 crores. A contribution of 1 per cent of the industry's turnover would enable the municipality to provide water at reasonable rates to people in the town. But these choices are not acceptable to the powerful.

C. Govindasamy, Coimbatore district (east) secretary of the Communist Party of India (Marxist), who has opposed the project from its inception, points out that while people in nearby Coimbatore are getting water at Rs.3.50 a KL, people in Tirupur are being asked to pay Rs.6 a KL. He asks: "How can that be fair?"

It appears that the State government is pursuing a strategy that applies pressure on consumers to access water from NTADCL instead of other sources. In other words, state policy is deliberately attempting to steer the project towards viability by closing other options. Industry sources told Frontline that the revenue authorities had threatened action if they drew ground water. In Tirupur itself the strategy of forced exclusion of large sections of the people appears to be aimed at creating a viable market for high-cost water supplied by NTADCL. NTADCL, which is now pumping about 75 mld a day, is currently supplying a little more than half the contracted quantities to the village panchayats in the TLPA. Since there are no other projects being planned in the foreseeable future, the rural panchayats may be forced to buy the high-cost water.

In an article written on the occasion of World Water Day in The Hindu (March 22), U.S. Ambassador to India David C. Mulford cited the Tirupur project "as a great example of how private sector involvement" can "dramatically improve access to water and sanitation".

The evidence certainly does not back his assertion that the involvement of the private sector actually results in lower costs and better services. Water is not only substantially more expensive as a result of the scheme, but large sections have been excluded from a service that was once the duty of the government to provide.

In strategic terms the public-private partnership model has enabled the government to lease an important water source to a private company. In hindsight, there are many advantages to the private owners, which would not have been possible if the project was a full-blown private enterprise. First, state involvement has blunted the edge of popular outrage that would have arisen from the handing over of a common property resource to a private entity. Second, the institutional backing of the state ensures that the private entity's access to the common property resource is more secure. Third, there are the hidden subsidies that are available to the private owners in terms of subsidised land and other similar benefits. The sweetener in the deal is the promise to supply water to the domestic users in Tirupur and its surrounding areas. This assurance was critical because it successfully blunted the opposition of rural people to the deal.

It is no wonder that Tirupur is being touted as a great example to be emulated. Institutions which were traditionally geared to serve an essential human necessity have been bent beyond shape. This will make it difficult for the government to change course later. That is the most significant consequence of the great Tirupur experiment. Govindasamy, who is contesting the coming Assembly elections from Tirupur, said that it might not be possible for the scheme to be "dismantled" even if a Dravida Munnetra Kazhagam-led government comes to power. He said that it would be difficult for any government to abrogate the agreement with the private parties.

He said: "We can at best effect changes in the way water is delivered to people. Maybe the government can compensate the private parties and send them packing. I do not know whether a new government headed by the DMK will have the will to do this. But we will put pressure."

Vigil continues By R. Krishnakumar in Thiruvananthapuram

A protest in Kochi against the Kerala High Court verdict allowing Coca-Cola to draw groundwater from Plachimada. A file picture-VIPIN CHANDRAN

The Periyar, the biggest river in Kerala, has long lost its pristine glory. It flows through two central districts of the State, Idukki and Ernakulam, and caters to the domestic, industrial and commercial needs of nearly 50 local bodies. Six power plants and a large number of industrial units depend on it. But by the time the Periyar flows into the industrial belt in Ernakulam district, just before joining the Arabian Sea, its nature is altered by indiscriminate sand mining and its supply heavily utilised. Since its mouth is below sea level, salt water intrudes far into the river during the summer months and at other times when there is reduced flow in the river. Industries depending on its water are shut down periodically and domestic water supply downstream is affected by pollution and increased salinity.

Yet, a grand scheme proposed by the Congress-led United Democratic Front government soon after it came to power in 2001 was to allow private investors to draw 200 million litres a day (MLD) of water from the Periyar and purify and distribute it exclusively to industries, commercial establishments and other bulk consumers in the Greater Cochin Area. The proposed beneficiaries included private and public sector industries, super-speciality hospitals, universities and industrial parks. The Rs.330-crore scheme would have given the investor company exclusive rights, initially for 20 years, to draw its share of water from a location upstream of the government water supply plants and to build check dams as "long-term steps to improve the flow rate in the river". Other details of the scheme were never disclosed.

The government also announced plans to let private investors, among them foreign companies, run a similar scheme (estimated at Rs.1,351 crores) to supply water to the Kanjikode industrial belt and the Pudusseri industrial area in drought-hit Palakkad district. The investor company, it proposed, could draw an assured supply of water from the Malampuzha irrigation system (the source of drinking water to Palakkad town and six panchayats in the district) and groundwater sources and even utilise rainwater harvesting to draw and sell water to a number of industrial customers, among them Pepsi, several breweries and bottling units.

At least three similar schemes, for the temple town of Guruvayoor and the tourist resorts at Kumarakom and Kovalam, were offered to investors, who could utilise water from major rivers, dams and groundwater sources.

But an avalanche of questions about the implications of the schemes for local communities, protests in the project areas and media criticism saw the government, which had just then launched its flagship event, the Global Investors Meet in Kochi, beat a hasty retreat. For the first time, and nearly a year after Coca-Cola and Pepsi quietly set up their bottling units, Kerala was jolted out of its complacency by the government's brazen attempts to privatise community water resources. The proposals were declared withdrawn, albeit temporarily.

But if they were never revived, it was not because the administration was convinced about the concerns raised (Ministers continued to describe the schemes as a grand opportunity sabotaged by unrealistic protesters), but because another battle took the centre-stage. At Plachimada in Palakkad district, the small local community took on the soft-drink giant Coca-Cola in what was to become a symbol of the struggles worldwide for the people's right to public resources.

Aided by a combination of factors, including support from a variety of sources, it has succeeded in being a nagging, tenacious presence against the multinational giant that had been sucking their neighbourhoods dry. The struggle crossed its fourth year in April. The residents' staying power brought them support from the world over and helped them connect with similar struggles against corporate theft of the world's most valuable resource.

Coca-Cola (and the government) arrogantly ignored the demands of the motley crowd of villagers and tribal people who gathered at the factory gates in April 2002 - denying the accusations of acute water shortage and pollution caused by the company, and influencing the government and its agencies. But within a year, both the company and the State administration, along with all the mainstream political parties, were forced to acknowledge the struggle and address their simple but serious questions.

Within a few months of launching their agitation, the protesters forced the panchayat to act on their behalf. The panchayat, acting at their behest, refused to renew the company's licence and when the State government intervened for the multinational, went to court. Eventually, when the issue reached the Supreme Court, the State government and its agencies were compelled to argue the case against the company and from the side of the protestors.

Coca-Cola was made to shut down its plant by March 2004, supply drinking water in tanker lorries to the people of the affected villages and take remedial measures to contain pollution. And despite the supreme confidence of the company's officials about winning the court battles very soon, Coca-Cola's efforts to reopen the unit has been frustrated by the protesters, the panchayat and, albeit reluctantly, the government machinery.

At certain stages, even when the panchayat was ordered by courts to renew the company's licence, the local body imposed conditions that Coca-Cola could not comply with. The latest one in a list of 12 simply said: "The company shall not use groundwater from Perumatty panchayat for industrial purposes, or for producing soft drinks, aerated carbonate beverages or fruit juice." It was exercising the priority rights of the local community and acting against the over-exploitation of groundwater in a manner that could lead to scarcity of the resource.

The court battle is, for the first time in India, laying bare for debate the crucial issues involved when commercial interests are entrusted with the exploitation of scarce public resources. Among the issues are the complex nature of ownership of public assets, the rights of local communities, the powers of governments to intervene, and the real danger of loss of public control over such vital, fast-depleting assets.

In November 2005, the company said in a letter to the government that, as a last resort, it was willing to "relocate" its bottling plant to the Kanjikode industrial estate if other "options" failed and if the government could ensure that it had "water and electricity" and a trouble-free environment. The industrial estate is about 50 km from Plachimada, and a similar unit of Pepsi located there is facing less trouble as its source of water is within the industrial area.

The new offer came even as Coca-Cola launched its battle to stay on at Plachimada in the apex court and made the several special leave petitions filed before the Supreme Court by the panchayat, the State government and the State Pollution Control Board against the judgments of the Kerala High Court favouring the company, critical to the cause of the history-makers at Plachimada.

The protesters continue to sit at the gates of the factory - for more than 1,500 days now - seeking justice, and in the process ensuring that no government in Kerala would dare launch another mega project that lets commercial interests make a roaring business out of dwindling water resources. Those who derided it as a hopeless struggle of a few villagers against a behemoth corporation or as a misguided campaign against the State's economic development eventually had to recognise its true worth.

The real strength of the people of Plachimada may, after all, be in the David-Goliath symbolism of their historic struggle.

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