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Privatising water

Print edition : Sep 12, 2003 T+T-

The move towards the privatisation of water across India, notably in Delhi, portends the dangerous trend of selling basic natural assets of the country to global corporations.

in New Delhi

IN a surreptitious manner, several State governments are entering into contracts with multinationals, the World Bank and the Asian Development Bank (ADB) for privatisation of water. But, even as the business of privatisation goes on in more than 19 cities, the Union government continues to swear in Parliament that it is not making any such move.

The privatisation spree is nowhere more apparent than in Delhi where the French company, Ondeo Degremont (a subsidiary of the water giant Suez Lyonnaise), has been awarded the project of treating the Ganga water to be supplied to posh South and East Delhi colonies. But in Parliament, Minister of State for Water Resources Bijoya Chakravarty said: "I want to say that there is no move to privatise the Ganga in any way. This is my categorical statement."

Meanwhile, Suez continues with its twin projects - a water treatment plant at Sonia Vihar and a sewage treatment plant at Rithala. In Sonia Vihar, Degremont has been awarded a Rs.2-billion contract for the design, building and operation (for 10 years) of a production plant that will yield 635 million litres of drinking water a day.

Both these projects are undertaken by Suez in partnership with the city's water and waste management committee, the Delhi Jal Board (DJB). The latter is tight-lipped about the details of the project document. Vandana Shiva of the Research Foundation for Science, Technology and Ecology said: "The terms of the contract have not been made public. On several occasions we have asked for project details from the Jal Board but it has not supplied them to us. Its response is that the project document is a global tender. Even Enron was a global tender."

Besides the question of privatising the Ganga, a holy river for the Hindus, making it a corporate commodity through the Sonia Vihar water treatment plant has angered the public. Degremont has been permitted to take water from the Upper Ganga canal of the Tehri Dam project, near Muradnagar, Uttar Pradesh, and supply it to South and East Delhi. The water, which will be consumed by three million inhabitants of the city, will actually be weaned away from the villages, which have been putting it to irrigational use.

Work on the pipeline has attracted strong protests from farmer groups. Farmers from 12 villages from both sides of the Upper Ganga canal, that is, from Hardwar to Muradnagar, are up in arms against the laying of the pipelines. The diversion of water to Delhi will adversely affect their crop yields in lean seasons. Several farmer groups gathered in Sonia Vihar on August 9 and gave the call to Degremont to quit India. Said Satpal Choudhury, vice-president of Dehat Morcha: "After channelisation, only 30 per cent of the water will be available to us for agricultural purposes." Last year a protest rally was held at Bhanera in U.P.

The religious objection to privatising the Ganga is also strong. Said Anshul Sri Kunj of Jagriti Mishan Nyas of Hardwar: "Mother Ganga is not for sale. It is deplorable that the Ganga is running dry from Har-ki-paudi because of this project. This has never happened before."

The protests have fallen on deaf ears, with the project masters having completed 60 per cent of the work. Clearly, Suez is not willing to go back on its projects, given their lucrative nature. The Sonia Vihar treatment plant is being developed on a BOT (Build-Operate-Transfer) basis for a fixed period of 10 years, and profit from it has been guaranteed to Suez by the government. This guarantee will ultimately be backed by public money. While Suez is getting the raw water for free, the amount it will get as fee for treating the water will be much in excess of what the DJB will charge the consumers when selling the water. The DJB is also providing Suez with land, electricity and treatment cost. At the same time, Suez has been kept free from transmission losses and revenue collection. The total project cost of around Rs.200 crores has been given by the government. Suez has been assured the purchase of treated water and also productivity incentives once the plant begins operations. From all aspects, Suez is in a win-win situation.

The plant is expected to commence operations in January next year. A ten-fold rise in water tariff seems likely then. Said Puneet Goel, Secretary, DJB, and World Bank Project cell chief: "We have not yet worked out the modalities of the tariff plan. There is a possibility that a regulator will decide the tariff." DJB apparently has no proposal regarding giving concessions to the poor.

But the larger question is why Delhi needs to privatise water. The city requires 3,324 million litres of water a day (MLD) while what it gets is 2,634 MLD. This gap can be bridged by rejuvenating the Yamuna and reviving local water sources. But clearly, the government is not interested in these options.

Instead, it seems convinced by the World Bank's dictum for privatisation. The World Bank has castigated the municipal bodies for being top-heavy and employing too many people. Cost-saving measures remain a top priority for multinational corporations like Suez, which believe in large-scale retrenchments. At the same time, they blatantly ignore even minimum safety norms. In June, a worker at the Rithala plant died owing to negligence and unsafe working conditions. The Rithala plant, which was inaugurated in October 2002, treats 80 million gallons per day (MGD) of sewage. Said Sanjay Sharma, union leader of the DJB: "This is the fourth incident in six months. The conditions of work are hazardous and not even minimum safety measures are being met." The workers' union has now approached the National Human Rights Commission (NHRC). An inquiry has been set up by the DJB into the matter.

IN the last 10-12 years, there have been several developments that aided the privatisation of water. Bottled water became easily available in local markets. But an expose by a non-governmental organisation showed bottled water defaulting on the requisite quality standards, thus bringing into the open the darker side of privatisation.

The entry of global corporations brought a fundamental shift in the nature of water privatisation. The players are mainly multinational corporations who have the backing of the World Bank, which in turn wields enormous influence over governments and policy-makers. The private players are therefore in a position to control whole cities and whole sections of the rivers.

This was the case in Chhattisgarh where the Madhya Pradesh government had leased out in 1998 a 23.6-km stretch of the Sheonath river near Durg town, to Kailash Soni, a businessman, on a 22-year renewable contract. Soni prohibited local people and fishermen in the area from using that stretch of the river in order to supply water to his big clients - the water-intensive industries in the region. Given the manner in which the contract was formulated, Soni could get away by saying that he had not privatised the river but was providing a service to the people. (The Ajit Jogi government however, decided in April this year to cancel the contract with Soni's Radius Water Company, following protests by NGOs and Left parties.) Cases like this are not limited to India.

Nowhere has water privatisation led to rights abuse as in Cochabamba in Bolivia where a subsidiary of the American corporation Bechtel, after taking over the water supply in September 1999, increased the rates of water manifold and disconnected the supply lines of all those who could not pay up. This soon led to violent demonstrations by the people of the city, prompting the government to declare martial law. Bechtel was ultimately forced to leave Cochabamba in April 2000.

Since water is a basic need of life, its privatisation leads to problems that are more serious than in the case of the privatisation of the energy or telecommunications sector. Hence any attempt at privatisation of water should be done in a transparent manner, and a strong regulatory body should be constituted to ensure its delivery to the poor and disadvantaged sections.

Officially, 19 water privatisation projects are in different stages of implementation in India at present but unofficial accounts put the figure at 40. The 19 projects under implementation are in Tamil Nadu, Maharashtra, Karnataka, Kerala, Himachal Pradesh, Manipur, Rajasthan, West Bengal, Andhra Pradesh and Sikkim. While eight of them are being run by French corporations, the others are by Japanese and Australian concerns. The Indian market is estimated to be worth over $2,000 million. Major global corporations including the top three global water giants Suez and Vivendi of France and RWE-AG of Germany, have shown interest in the Indian market. These three corporations control over 70 per cent of the water systems in Europe and North America. Vivendi has operations in 90 countries around the world, and Suez in 120. Together these water corporations are targeting four areas within the water sector: water and waste water services, water treatment, water-related construction and engineering, and innovative technologies.

Said Himanshu Thakkar, an activist with the South Asia Network on Dams, Rivers and People: "That there are only 19 projects is suspect. Where there is pressure on State governments against privatisation, privatisation is being done in a roundabout way. They are given contracts of service and management, which makes it possible for them not to be directly accountable to the people." An obvious case is Rajasthan where water will be supplied to the towns of Jaipur and Ajmer from the Bisalpur dam. The ADB, which is involved in the project, has absolved itself of all responsibility by telling the affected communities living near the dam site that it is not funding the dam but only taking the water and supplying it to the cities. While the ADB encourages full cost recovery and managerial efficiency for water resources, experts in developing countries warn of the consequences for the poor, who are already squeezed by the vagaries of an inflationary economy.

Much of this privatisation spree has been facilitated by the Urban Development Ministry, which released a set of guidelines for the State governments encouraging them to move towards "private partnerships". These guidelines are in tune with half a dozen reports produced by State governments and the World Bank that outline the blueprint for privatising the country's water.