Residents of Khandwa in Madhya Pradesh, resist public private partnership in their water supply project- A press release by Manthan Adhyayan Kendra

The bad track record of the public sector to provide water has increasingly led to private sector participation in water supply system. The proponents of privatization state that private sector would increase efficiency, bring adequate finance and help build the infrastructure that is required to run the utilities properly in an effective manner. The anti privatisation lobby argue that the price of water will increase, will undermine the socio-cultural aspects of water and also there will be water quality issues. While these two contending models have their own strengths and weaknesses theoretically, in practice there are numerous examples which showcase how privatisation has consistently failed.

The institutions that promote privatisation have acknowledged the importance of public utilities in water supply and they have started advocating a new model where public and private come together in the system of providing water. This comes under the rubric of Public Private Partnership (PPP).

The recent times has also witnessed a shift in the way private sector participation is pushed and promoted. From big cities the focus of attention is gradually shifting to small cities. The first in this category are Belgaum, Hubli-Dharwad and Gulbarga districts in north Karnataka.

While major Indian cities continue to opt for the catchy “twenty four hour water” supply scheme under different rubrics of water privatisation, resistance has been shown by citizens and organisations against this move. Once such example is the active role played by Manthan Adhyan Kendra in Madhya Pradesh, which has been actively engaged in monitoring, analysing and carrying out research on water privatisation issues in India. Recently, with the state’s move towards 24 hour water supply scheme in Khandwa, Manthan has brought into light that the Consumer Forum of Khandwa has ordered Khandwa Municipal Corporation (KMC) on 31st December 2012, to address all the objections on the notification related to handing over of water services to a private company. The next date of hearing has been fixed on 22nd January 2013. 

Khandwa, a small town in Madhya Pradesh, has acquired significant attention for it first ever project in water privatisation that aims to have the entire water supply system in the town under public private partnership. The project being executed under a flagship scheme of the Union Ministry of Urban Development, the Urban Infrastructure Development Scheme for Small and Medium Towns (UIDSSMT). To read about the background of the project click here. The intial hiccups of the project has been in the form of people's apprehensions about hike in water tarfiifs, non-availability of water for economically poorer section of society.

The water supply is handed over to a private company. The usual teething troubles has just started with petitions been given to the consumer forum. The Khandwa Municipal Corporation has published a notification in this regard on 3rd Dec. 2012. In reaction to this local people have been actively campaigning against this move the government. More than 10,000 residents in Khandwa have submitted their complaints against PPP, privatisation and 24/7 water supply till 2nd January 2013.

By the end December the Consumer Forum of Khandwa accepted a petition by a consumer of the private company, Shri Laxmi Narayan Bhargav. For this case the KMC Commissioner Shri Shobharam Sholanki argued before the forum that the applicant is not a consumer as he pays water tax and not water charges. To counter this Shri Tarun Mandaloi, representing the applicant by drawing a reference to the Rakesh K. Dhawan v/s Union of India, held the Municipal Corporation guilty for not resolving the problem of rainwater stagnation and responsible for lack of service. Therefore the services provided by a Municipal Corporation, come within the purview of Consumer Protection Act, 1986. Coupled with this he also stated the difference between tax and charges. Tax is that amount which is recovered by the government from the people to fulfill its general objectives and the charges are recovered for providing specific services.

The Commissioner, KMC also contended that the scheme has not yet been implemented, so at present there is no question of lack of service. Shri Shailendra Shukla, the learned Justice of the Consumer Forum along with Forum members Ms. Maya Rathore and Shri Nirmal Bajaj cited section 2(G) of Consumer Protection Act, 1986 and maintained that any person claiming responsibility for providing a specific service, however, even if it seems that there is any irregularity, lack or inadequacy in service provision by him, it could be treated as lack of service.

The applicant also mentioned several errors in the notification which could possibly hurt consumer interests urged the Forum to stay the notification till the consumer complaints are redressed. In this regard the Commissioner, KMC stated that a proposal has been sent to the Government of Madhya Pradesh to redress the objections received till 30th December 2012. The notification will be published only after redressing these objections.

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