Solution Exchange discussion - Study on Business Models for Rural Private Water Supply Operators

A consolidated reply of experiences and examples shared by various members of the Solution Exchange Water Community

From Dara Johnston, United Nations Children's Fund (UNICEF), New Delhi

Posted 18 January 2010

I work with the Water and Environmental Sanitation section of UNICEF New Delhi. The World Bank is initiating an international study to define a set of rural water supply business models that incorporate rural private operators. It will also attempt to identify the circumstances under which these models are the appropriate choice for rural water supply. The study is being conducted given the challenges of rural water supply – increasing coverage and sustainability.

While the current rural water supply situation suggests that community management should not be rejected, there is a need for more business models as well as a criteria for selecting the best model for a given situation. The current problems with the community management model include a lack of capacity, turnover of trained personnel, long periods of inactivity, internal conflicts and corruption, difficulties in raising funds and inability and lack of equipment to handle repairs.

The response has been two-fold – identify a means to improve community management and search for new models using the private sector. Private operators already play a role in several models. In Senegal the government has contracted a private firm to provide preventive maintenance and repair services to village borehole supplies. In Bangladesh , the government makes small rural piped water schemes for private operators and community groups; they pay 10 per cent as the down payment and the rest out of water revenue over 10 years.

This study will synthesize project experiences with rural private operators. It will then distil issues and options that will help the World Bank staff advise clients to select a suitable business model for sustainable rural water supply projects. It will add value through facilitating cross-learning by task managers, and supporting the design of Bank lending operations. You can see more details about the study here: http://www.solutionexchange-un.net.in/environment/cr/res-18011001.pdf (PDF; Size: 63KB)

Thus, it is seeking inputs on projects and initiatives that have used rural private operators on a relatively large scale. Major projects by other donors will be of special interest since they are more likely to be applicable to the Bank’s projects. UNICEF is interested in contributing to the study as a partner.

I therefore request Community members to share the following information on rural private sector water supply operators:

  1. What are the triggers that have led to the selection of a private operator model over, say, community management or management by a public agency?
  2. What are the specific responses to the basic issues of water supply management that have been tried by rural private operators?
  3. Are there contextual factors that explain or influence the success or failure of rural private operators?
  4. What more can be learnt about these private operators in terms of incentives that attract them and the risks that deter them?

The results of the discussion will help the World Bank provide clients better advice about the appropriate business models for sustainable rural water supply, and specifically whether a rural private operator is the preferred option.

 

Responses were received, with thanks, from

1.      Abhishek Mendiratta, Jupiter Knowledge Management and Innovative Concepts Pvt. Ltd., New Delhi

2.      Ramakrishna Nallathiga, Centre for Good Governance, Hyderabad

3.      Anil Lalwani, Well and Water Works, Pune

4.      Shashikant Kumar, Green Eminent Research Centre, Vadodara

5.      Annie George, BEDROC, Nagapattinam, Tamil Nadu (Response 1) (Response 2)

6.      Puneet SrivastavaDeutsche Gesellschaft für Technische Zusammenarbeit (GTZ), Shimla

7.      D Deshpande, National Bank for Agriculture and Rural Development (NABARD), Mumbai

8.      Biswajit MohapatraNorth Eastern Hill University , Shillong

9.      Shruti Singh, Ministry of Food, Agriculture and light Industry, Asian Development Bank, Mongolia

10.  Shrikant D. Limaye, Ground Water Institute, Pune (Response 1) (Response 2)

11.  Rahul Banerjee, Aarohini, Indore

12.  Ventakatesh PSattur, Dharwad

13.  Nitya Jacob, United Nations Children’s Fund (UNICEF), New Delhi

14.  P. Anbazhagan, Tamil Nadu Water and Drainage Board, Chennai

15.  Kashinath Vajpai, Prakriti, A Mountain Environment Group, Dehradoon (Response 1) (Response 2)

16.  Kanupriya Harish, Jal Bhagirathi Foundation, Jodhpur

17.  Jasveen Jairath, Water Sector Professional, Hyderabad (Response 1) (Response 2)

18.  S. V. Govardhan Das, Hydrogeologist, Hyderabad

19.  Anjali Manandhar Sherpa, Water for Asian Cities Programme, UN-Habitat, Kathmandu

20.  Surendra Kumar Yadav, Vikram University , Ujjain

21.  Seema Kulkarni, Society For Promoting Participative Ecosystem Management (SOPPECOM), Pune

22.  Sunderrajan Krishnan, CAREWATER, INREM Foundation, Anand, Gujarat

23.  Jyoti Sharma, Forum for Organised Resource Coordination and Enhancement, New Delhi

24.  Arunabha Majumder, Jadavpur University , Kolkata

25.  Ajit Seshadri, The Vigyan Vijay Foundation, New Delhi

26.  Neelkanth Mishra, Freshwater Action Network South Asia , Secunderabad

27.  Jyotsna Bapat, Water Professional, New Delhi

28.  Saurabh Singh, Innervoice Foundation, Ballia

29.  Gaurav DwivediManthan Adhyayan Kendra, Badwani, Madhya Pradesh

30.  Hemant Kulkarni, Council for Scientific and Industrial Research, New Delhi *

31.  Safa Fanaian, Secretariat for the promotion of a Discourse on Science, Religion and Development, New Delhi *

* Offline contributions

 

Further contributions are welcome!

 

Summary of Responses

Comparative Experiences

Related Resources

Responses in Full

 

Summary of Responses

Private water supply has been a contentious topic in many countries, more so in developing countries where people’s capacity to pay for water varies widely. Water is seen as a basic right or entitlement and not a commodity. Or as Maude Barlow, advisor to the President of the 63rd Session of the United Nations General Assembly has said, water is seen as a globally managed commons that cannot be denied to anybody on the basis of their inability to pay.

From the discussion, it emerged that for decades, the government has been the sole water supplier both in rural and urban India . It has created the infrastructure and in many cases handed it over to panchayats to manage. The results have been mixed. The cost of maintenance is often too high for panchayats, who also lack the technical knowhow to manage such schemes. Thus, when a pump breaks down or the main storage tank gets damaged, local people fall back on the government to fix it as they do not have the money or skills to do so. This creates a gap, and often private operators step in.

The point is, these ‘community-managed’ schemes fail when the government abandons its back-stopping role, said members. Merely constructing and handing over the hardware is not enough to ensure rural water supply. It is important to provide on-going technical support and respond to breakdowns promptly. If the government department charged with water supply can take care of this, local people can run the system themselves – ensure water is supplied regularly, wastage is minimized and charges are collected. There are a few instances where people have completely taken charge of their water supply.

For example, near Pune, Maharashtra the people of Gujjarwadi village set up their own tube-well based water system around 15-20 years ago. Several other villages have followed their example in the region, supported by the Jankidevi Bajaj Gramvikas Sanstha. The villagers either maintain the system themselves, or pay somebody to do it for them. The latter is one example of private participation in rural water supply – a private agency repairs and maintains the system for a charge but the villagers run it.

In Orissa, Gram Vikas has developed a system of piped community water supply that covers 200 villages in Behrampur district. Villagers cover the full cost of the works and maintenance. The project begins only after unanimity among the villagers and the NGO helps in setting it up. Once done, the NGO hands over the project to the villagers to run. This model has also worked well for several decades in a relatively poor part of India .

Thus, one of the triggers for the entry of private water supply operators is the gap left by the state in water supply. Another is the local people’s unwillingness to pay for water, and take charge of the infrastructure created. It seems to be rooted in the attitude of ‘the government will provide free water’. Members said this is because of the way government schemes have been created without any inputs – money or knowledge – from the community and therefore is no sense of ownership. These provide water free of charge, but erratically and of varying quality. In turn, they impose a coping cost on users that they meet either in kind (by walking for water) or in cash (by paying tankers).

Linked to this is the rising demand for better and more water from large parts of rural India . Public agencies and community organizations have stuck to organizational aspects and ignored quality, service and cost, that have led to their decline.

Another reason is the affluence and size of the village, said members. Larger villages tend to be richer and there are fewer people with the time or inclination for voluntary community service. Voluntarism is critical to run any community water supply system; without it, the system quickly falls apart. Private water supply operators see a business proposition in such habitations and step in to fill the gap left by the volunteers. Larger, richer habitations are also viable business propositions because most have a working pipeline system through which a private operator can supply water. They also need more water than smaller or poorer habitations. In other words, the decline of a community management system opens up a space for private rural water supply operators. Alternatively, the volunteers adopt a commercial format for providing water in the same location in the guise of sustainability.

Specific responses

However, despite these reasons, people have been wary of private water suppliers. The refrain from anecdotal data in the responses, seems to be that the poor cannot afford their water and continue to rely on traditional sources – these may be springs or ponds several hours’ walk away. Private water operators supply water only to those who can pay while households who cannot pay monthly charges are left out. Private water suppliers exclude the poor and marginalized. There are also India-specific issues like caste that also hamper access to improved water supplies.

Private rural water supply operators may not be guided by equity principles in access to water, but instead by the principle of full cost recovery. There are also concerns about source sustainability that these operators may not be concerned about. Other concerns, voiced by civil society members, deal with charging for water, when drinking water is seen as a basic right in some discourses. They say people have the right to water, especially for drinking, irrespective of their ability to pay. By extension, this means poor people must get water even if they cannot pay. A private water supplier will charge, regardless of a person’s ability to pay and in the process the poor may be left out. This violates their right to water. The willingness to pay is different from the ability to pay.

Private suppliers do not consult communities when planning their water supply systems. This adds to the perception of a one-sided exploitative approach. Members feel encouraging private supplies can be a way to weed out under-performing initiatives and reallocate economic resources from less to more profitable activities.

Opinion is divided over the extent of ‘exploitation’ by private rural water suppliers. The opposing argument is, these suppliers have to take into account their clients’ ability to pay without which they will not be viable as an economic activity. Therefore, there is a limit to how much they can exploit. In such a situation, the private operators can bring in better financial and technical management to provide water at a cost, as against erratic supply by a government scheme.

There have been instances where local people have opposed the entry of a private company as it has reduced water quantity and quality. In Plachimada, Kerala, the panchayat denied permission to a leading soft drink bottler to run a factory that was extracting several million litres of water a day. As a result wells had gone dry while waste from the plant had destroyed the surrounding farm land. In Andhra Pradesh, farmers in Anantapur district persuaded a local water bottler to close his plant after the water level in their wells dropped. They convinced him it was unethical to profit from water, a common property resource.

Contextual factors

In developing countries, rural communities are small and remote, with low purchasing power. Water supply schemes are capital-intensive and have to be designed in consultation with users. Water supply is a monopolistic activity and a private operator can hike charges at will. Community mobilization and awareness is an important factor that determines the success or failure of any water supply scheme, private or public. Even in villages where government water supply schemes work, people get less than the prescribed norms of water if the community does not demand better service or fails to manage it efficiently.

There are no regulatory mechanisms for private rural water suppliers that fix service levels and charges or redress disputes. In their absence, contractors exploit loopholes in the existing system. They inflate project costs, use the excess amount to pay for the community contribution of 10 per cent of the total cost and get the contract from the government (that provides the other 90 per cent of the cost). They hands the completed project over to the communities. The schemes fall apart soon as the people have no idea of managing them, and ask for tanker supply. The contractors are back in business. Additionally, members said tanker operators enjoy political patronage.

On the other hand, factors that aid the success of private suppliers are prompt service, demand responsiveness and smooth operations. There is also a limit to which they can raise their rates without going out of business.

Risks and incentives

The biggest risk is the high capital cost of water supply schemes, said members. Other reasons, already dealt with, include exclusion of the poor and denial of the right to water to others who cannot pay or access water supplied by private operators, that can lead to a backlash against the operator. Source sustainability is another issue especially as ground water levels have declined sharply in many parts of India, and is also often contaminated, necessitating costly treatment that a private operator may not provide.

The incentives are the possibility of making profits from a ‘free’ resource and the absence of any working regulatory mechanism.

Other models

Members said there are many instances of ‘community business models’ in India that can be considered as alternative to private operators. Promoted by an NGO or benefactor, these entail creating an assured water supply system, especially for drinking based on the recovery of running costs.

For example, the Jal Bhagirathi Foundation has pioneered a community-owned small water enterprise model in Rajasthan. In this, it set up a reverse osmosis (RO) plant as to provide safe water. A private company set up and maintains the plant. The government provides raw water while the panchayat provided the buildings. The users pay for the water and this covers the cost of installation, operation and maintenance. The Naandi Foundation has also propagated a similar model in several parts of India through its Community Safe Drinking Water System for bringing safe drinking water to villages. This uses a patented for purifying water. In partnership with panchayats and WaterHealth International, Naandi sets up water treatment plants in the village that supply water at nominal cost. In West Bengal an NGO has implemented a similar model.

Similarly, many villages of Gujarat have set up large RO plants. The first few were set up with donations from non-resident Indians, but later the government stepped in. A trust of the panchayat maintains the plant and people are charged a subsidized rate for water; some very poor households are provided water free during critical times.

The main concerns regarding private water supply operators, especially in rural India , centre on access to water by the poor and Dalits. Additionally, there are many systems that communities and NGOs have promoted that may be subsumed in a private operator-only model. The contention is there are many successful community models, as well as unsuccessful ones, that have not been adequately studied to evolve something that works in an Indian context. Introducing the private model will further muddy the rural water supply waters, the discussion indicated.

 

Comparative Experiences

Gujarat

Public-private Partnership leads to large-scale adoption of Reverse Osmosis Plants (from  Sunderrajan Krishnan, CAREWATER, INREM Foundation, Anand, Gujarat )

Many villages here have adopted large Reverse Osmosis (RO) plants. The initial plants were not subsidized or promoted by any agency or the government. It was mainly through local donations initially from NRIs and later from the local co-operatives. Since the late 1990s the government has been promoting public-private partnerships through the Gram Panchayats. Several NGOs have also joined the initiative. The excess water is now also being sold to nearby villages.

Maharashtra

From  Anil Lalwani, Well & Water Works, Pune

Villagers successfully buid and manage their own water supply systems, Pune

Till the 1980s, the village of Gujjarwadi about 40 km from Pune was isolated, and people had to walk 3-4 kilometres for water. A couple of people bought farmland in the village and mobilized the community. They collected money, identified a good source of water and sunk a borewell. Over the next 2-3 years, the villagers built up their own water supply system with no help from the any agency or the government. They are now self-sufficient in drinking water.

Partnership between Communities and NGOs provides villages water

As many as 17 villages on the Mumbai-Pune expressway used to run short of water during summers. To address this, the Jankidevi Gramvikas Sanstha and Rotary International assisted them financially to dig borewells for their drinking water needs. After the first year, the community handled the maintenance of these borewells themselves. The systems have been working satisfactorily since the 1990s.

Orissa

Gram Vikas ensures Drinking Water Supply in partnership with Local Communities, Berhampur District (from Neelkanth Mishra, Freshwater Action Network South Asia , Secunderabad)

Gram Vikas has partnered with local communities and ensured piped drinking water supply to all households in more than 200 villages. The pilot project involved capacity building and developing partnership with local village institutions to improve management and delivery of services on an equitable basis. There has been no default of payment by the households in the programme villages. Even the operation and maintenance is ensured by the local community. Read more

West Bengal

NGO and Self Help Groups come together to provide Safe Water (from  D Deshpande, National Bank for Agriculture and Rural Development, Mumbai)

Several communities in the Sunderbans have a severe water shortage all year round and have to risk their lives to get even a little fresh water. The South Asian Foundation for the Environment set up a reverse osmosis plant to provide treat available water. The self-help groups get 5-10 paise to supply a litre of water to the households, while the consumers pay 20-25 paise per litre. This small business model is very bankable, and has solved drinking water problems in pockets.

 

Related Resources 

Recommended Documentation

From Nitya Jacob, United Nations Children's Fund (UNICEF), New Delhi

Water, Sanitation and Hygiene: Sustainable Development and Multisectoral Approaches - Private Sector Involvement in Rural Water Supply

Case Studies; by L. Koestler; Water, Engineering and Development Centre, University of Loughborough; United Kingdom; 2009;

Available at http://www.solutionexchange-un.net.in/environment/cr/res-01181002.doc (DOC; Size: 36KB)

Provides case studies from Uganda to illustrate the impacts of private sector involvement in rural water supply schemes versus community managed systems  

Naandi plays the Role of a Social Catalyst

Article; by Naandi Foundation; Chennai;

Available at http://www.solutionexchange-un.net.in/environment/cr/res-01181001.doc (DOC; Size: 32KB)

Describes the collaboration amongst a village, a technology provider and a social engineering organisation responding to safe drinking water needs of communities

From Sunderrajan Krishnan, CAREWATER, INREM Foundation, Anand, Gujarat

Reverse Osmosis Plants for Rural Water Treatment in Gujarat

Report; by Sunderrajan Krishnan, Rajnarayan Indu, Sankalp Bhatt, Falgun Pathak, Ankit Thakkar and Urvish Vadgama; Carewater; Gujarat;

Available at http://www.carewater.org/Gujarat%20RO%20Plants.pdf (PDF; Size: 144KB)

Describes how the Reverse Osmosis (RO) technology is proving to be an important solution for drinking water treatment in rural Gujarat

Fluoride-Free Drinking Water Supply in North Gujarat - The Rise of Reverse Osmosis Plants as a Cottage Industry: An Exploratory Study

Report; by Rajnarayan Indu. International Water Management Institute; Gujarat; 2002;

Available at http://www.carewater.org/North%20Gujarat%20RO%20Plants.pdf (PDF; Size: 344KB)

Describes the large number of ‘cottage’ type Reverse Osmosis (RO) plants that are supplying good and safe water to the consumers in North Gujarat

 

Recommended Organizations and Programmes

Andhra Pradesh Farmer Managed Groundwater Systems (APFAMGS), Andhra Pradesh(from S. V. Govardhan Das, Hydrogeologist, Hyderabad)

Block No. A-2(C), First Floor, Huda Commercial Complex, Tarnaka Hyderabad 500007 Andhra Pradesh; Tel: 91-40-27014730; Fax: 91-40-27014937; plapfamgs@sify.com;

http://www.apfamgs.org/Default.aspx; Contact K. A. S. Mani; Project Leader; Tel: 91-40-27014730; info@apfamgs.org

Launched in July 2003, the APFAMGS project is a partnership with farmers for implementing demand side groundwater management concept

Swajaldhara, New Delhi (from Gaurav DwivediManthan Adhyayan Kendra, Badwani, Madhya Pradesh)

9th Floor, Paryavarn Bhawan, CGO Complex, Lodhi Road , New Delhi 110003; Tel: 91-11-24361043; Fax: 91-11-24364113; jstm@water.nic.inhttp://ddws.nic.in/swajaldhara.htm

Programme focuses on decentralised implementation of rural drinking water supply, involving the participation of panchayats and communities

Water and Sanitation Management Organisation (WASMO), Gujarat (from Saurabh Singh, Innervoice Foundation, Ballia)

3rd Floor, Jalsewa Bhavan, Sector 10-A, Gandhinagar 382010 Gujarat; Tel: 91-79-23247170; Fax: 91-79-23247485; wasmo@wasmo.orghttp://www.wasmo.org/cms.aspx?content_id=15

Focuses on community-managed drinking water supply, with the involvement of panchayats, coordinates the activities of the Village Water and Sanitation Committees

World Bank, New Delhi (from Anil Lalwani, Well and Water Works, Pune)

70 Lodi Estate, New Delhi 110003; Tel: 91-11-24617241; Fax: 91-11-24619393;

smozumder@worldbank.orghttp://www.worldbank.org.in/WBSITE/EXTERNAL/COUNTRIES/

Source of financial assistance to developing countries, including India and has evolved participatory approaches for water management in both rural and urban areas

Department of Drinking Water Supply, New Delhi (from Puneet Srivastava, GTZ, Shimla)

Ministry of Rural Development, Government of India, 9th Floor, Paryavarn Bhawan, CGO Complex, Lodhi Road, New Delhi 110003; Tel: 91-11-24361043; Fax: 91-11-24364113; jstm@water.nic.inhttp://ddws.gov.in/handwash/

Central government department responsible for providing drinking water and sanitation services and has developed IEC materials to promote hand washing

National Bank for Agriculture and Rural Developments, Maharashtra (from D Deshpande, National Bank for Agriculture and Rural Development (NABARD), Mumbai)

Plot No C-24, G Block, Bandra-Kurla Complex, P.B. No 8121, Mumbai 400051, Maharashtra ; Tel: 91-22-26525068; Fax: 91-22-26530050; contact@nabard.org;

http://www.nabard.org/majoractivities.asp

Promotes participatory watershed development in rural areas for enhancing productivity and profitability of rainfed agriculture in a sustainable manner

From Kanupriya Harish, Jal Bhagirathi Foundation, Jodhpur

Jal Bhagirathi Foundation, Rajasthan

D-66 (B), Sawai Madho Singh Road , Jaipur 302016, Rajasthan; Tel: 91-141-2280964; Fax: 91-141-4025119 jal@jalbhagirathi.org;

http://www.jalbhagirathi.org/Structures_of_Self_Reliance/Community_Initiatives.php

Advocates community ownership in water resource management and is exploring possibilities of integrating business models and private players in water management

United Nations Development Programme, New Delhi

55 Lodhi Estate, New Delhi 110003; Tel: 91-11-46532333; Fax: 91-11-24627612; webadmin.in@undp.org;http://www.undp.org.in/index.php?option=com_content&view=article&id=19&Itemid=256

Working on the project on community management of water which supports social mobilization efforts and strengthens peoples organizations

Italian Development Corporation, New Delhi

50 E Chandragupta Marg, New Delhi 110021; Tel: 91-11-26114355; Fax: 91-11-26873889; http://www.ambnewdelhi.esteri.it/Ambasciata_NewDelhi/Menu/I_rapporti_bilaterali/Cooperazione_allo_sviluppo/Attività/

Supports the project-Vulnerability Reduction through Community Management and Control of Water in the Drought- Prone Areas of the Marwar Region, Rajasthan

Naandi Foundation, Andhra Pradesh (from Nitya Jacob, United Nations Children’s Fund (UNICEF), New Delhi )

502, Trendset Towers, Road No 2, Banjara Hills, Hyderabad 500034, Andhra Pradesh; Tel: 91-40-23556491/92; Fax: 91-40-23556537; info@naandi.orgwww.naandi.org; Contact Manoj Kumar; Chief Executive Officer

Naandi Foundation has set up RO plants to meet the drinking water needs of rural communities in four states on a cost-sharing basis with local people

Gram Vikas, Orissa (from Neelkanth Mishra, Freshwater Action Network South Asia , Secunderabad)

Mohuda Village, Berhampur 760 002, Ganjam, Orissa; Tel: 91-680-2261866; Fax: 91-680-2261862; info@gramvikas.orghttp://www.gramvikas.org/

Works to bring improvement in the quality of life of marginalized rural communities and has initiated several projects on drinking water, sanitation and disaster proof housing

Byrraju Foundation, Andhra Pradesh (from Safa Fanaian, Secretariat for the promotion of a Discourse on Science, Religion and Development, New Delhi)

Byrraju Foundation, Satyam Enclave, 2-74, Jeedimetla Village, NH-7, Hyderabad-500 055  
Andhra Pradesh; Tel 
91-40-23191725, 23193881/82; Fax: 91-40-23191726; mail@byrrajufoundation.org;http://www.byrrajufoundation.org/  

The Foundation seeks to build rural communities by providing services in healthcare, environment, sanitation, primary education, adult literacy and skills development

 

Recommended Portals and Information Bases

Ground Water Network for Best Practices in Ground Water Management in Low Income Countries, UNESCO, Maharashtra (from Shrikant D. Limaye, Ground Water Institute, Pune; response 2 )

http://www.igcp-grownet.org/; Contact Shrikant D. Limaye; Project Leader; Tel: 91-20-24331262; limaye@vsnl.com

Online resource centre documenting best practices in augmenting the sustainable development and management of groundwater in low-income countries

Intellecap, Maharashtra (from Hemant Kulkarni, Council for Scientific and Industrial Research, New Delhi )

http://www.intellecap.com/; 512, Palm Spring, Beside D-Mart, Link Road, Malad (West), Mumbai – 400064, India; Tel: +91 22 4035 9222; info@intellecap.com

Intellecap is a social-sector advisory firm serving corporates, non-profits, development agencies, and governments working in developing markets

 

Responses in Full 

Abhishek Mendiratta, Jupiter Knowledge Management and Innovative Concepts Pvt. Ltd., New Delhi

The main characteristics of the rural private sector water supply operators are – (a) goals and  targets, (b) quality, (c) geography, (d) funding  mechanisms, (e) prices to  users and (f) management  organization.

The water authority can use various types of operators such as public operators through direct management or through a corporatized public entity, private operators through a PPP contract, as well as regulated private owners, etc. This requires clear targets and appropriate incentives in each case. Whatever its choice, the water authority must be sure that the operators will deliver the expected results. Some projects have shown that results may differ from public expectations when the targets are not clearly stated or when one of the two parties – the authority and the operator – becomes unable to perform its own part of the project or when there is too much interference between political leaders and the management of the operator.

Therefore, it is important to identify the key elements that must be formalized by the authority in order to enable the operator, public or private, to deliver the job. “Contractualisation”, i.e. the establishment of an agreement with clear targets, mutual commitments and clear differentiation of respective roles, duties and responsibilities between the authority and each of its operators, public or private, is suggested by many as a tool that is necessary to get satisfactory results.

However, in many cases the ways these different types of water operators are directed and controlled by the government are not all the same. Different public bodies or regulators are used. This does not facilitate comprehensive policies that aim at delivering good quality services to all. Furthermore, using different regulations for different types of operators prevents comparison of their respective efficiencies and optimization of their overall service to users.

 

Ramakrishna Nallathiga, Centre for Good Governance, Hyderabad

This is an interesting topic and coming up in large parts of the country. Mendiratta pointed to the problems/ issues of formal process of contractualisation i.e., poor specification of outcomes/outputs and non-standardised monitoring/ regulation of water supplies, irrespective of the provider. 

However, Mr. Johnston would like to know more details on (i) triggers of private sector involvement (ii) responses to their involvement (iv) contextual factors influencing (iv) incentives & risk for private players

Triggers:

For a long time, rural water supply - or protected drinking water supply to hamlets - has been delivered by public agencies, primarily public health and engineering departments of state governments, which provided community water supply for domestic use through tapping from source, storing in reservoirs, disinfection and supply to households. 

This model did not get into other aspects of water quality and quantity – whether distribution reaches households, service quality (duration and periodicity of supply), water contamination and problems of background water quality (salinity, minerals, chemical and bacteriological quality etc). It is this failure that led to people look for better alternatives of drinking water.

In a way, the demand for good drinking water would not have led to conflicts between public and non-public supply, but spelt the need for drinking water of better quality and service. This space was quickly occupied or demand was catered to by the private sector, but even that had a time lag due to a lack of standardisation of technology and its transfer.  I think this is the trigger point.  Communities can step-in only when they are well-organised and if they make such moves well in time.

Where community was already involved in drinking water supply, private players made inroads. The reasons are the community began to show decline in organisation, service capacity, lack of professionalisation, lack of financial management e.g., cost recovery and revolving funds. All of them matter in the sustainability of the organisation and service. 

Responses: 

The entry of private water supply operators has made both public (public agencies and local bodies) as well as community managed systems more aggressive and competitive. Even the media has opposed the entry of private operators. But neither is improvement  sought from them nor is the media campaigning for the provision of good quality drinking water.  Much of the campaign is to vilify or accuse private sector for making profits.

The community sector has to show better organization, service orientation and and management (finances, operations etc). At the same time, it should be prepared to understand the challenges and face up to them. This requires these community-driven organisations to come together under a larger umbrella body that performs these functions on behalf of the community organisations.

Contextual factors: 

The decline of public service, as mentioned, earlier would have provided a good context. An equally important context is provided by the rising awareness of having basic needs - at least good drinking water. Public agencies or community organisations have only stuck to organisational aspects and neglected the quality, service and costing aspects, that has led to their decline.

The private sector has also worked out small-medium scale delivery models for franchising among village entrepreneurs and has calculated the costing and delivery carefully. The improved purchasing power, especially when villages are closer to cities, also led to spending on the same; so also realisation of the costs attached with bad water.

Incentives & risks: 

The private sector saw the opportunity of making money/profit at the local level also as the chance to create employment for itself and others. The franchisee model of development is attractive as the private operators only take care of certain aspects of operation and focus more on service and cost recovery. Periodic supervision and training of franchisees makes it simpler and easier to operate and maintain the unit.

The major risks, which are not well projected, are competition from other private players,  community organisations, compromise on service/ quality over time, continuity of the support from private company that franchised and the management issues that matter in sustainability i.e., financial management, operations/service, cost recovery.

 

Anil Lalwani, Well and Water Works, Pune

The problem of who finally bears the cost and the responsibility of the system arises due to the fact that in India , the government in its effort to abolish caste system has only managed to divide the people based on who attracts a greater government support and who does not.

My experience during an technical evaluation of an existing rural  water supply  system in Maharashtra   (documentation for the World Bank and KFW project) in 2001-2002 showed that there was really a total mismanagement of  resources. This was because of the plentiful funding for new projects, but lack of money for maintenance. Moreover, there was no feeling of ownership among the villagers, as the executing body had not taken them in to confidence while executing the work. The whole system was totally controlled by the various government agencies/contractors, who were involved because of the huge profit they were making from it. They did not maintain proper records of surveys, exploration, testing and commissioning.

In areas where government schemes have failed, the private operators were doing well and that to with their own meager resources. In my opinion, it is the government agencies need to be first trained to understand, execute, maintain records and manage the system and also be accountable for failures.

Similarly, if local personnel are informed and trained to maintain the system without any government intervention they surely will learn to manage their resources properly.

Technically, the local people can be easily trained to do certain  regular maintenance jobs on their own. Naturally the whole village first needs to be united under a common cause – the need for water. Once the barriers of cast and economics are broken and the realization sets in that everyone needs water to survive, and that everyone should get the same share of water from the common pool, everyone will ensure that the system is kept operational.

I have helped executed a couple of such systems in remote villages around Pune, where the initiative came from the villagers themselves. They got no government funding or support for the drinking water supply system, and they have been successfully maintaining the system now for nearly 15 years. The difference here was that the village came forward recognized their need to work towards a common goal and then once that was achieved to ensure that it remains that way.

In my opinion available finances is never the problem. Break the caste barrier and half the job is done, this can be done by involving everyone in the decision making process. Get everyone on the platform for getting their equal share of water and the other half will be achieved. Unless this is done, there will be people who will ensure that the system fails.

In all this it is advisable to keep the government agencies totally out of the picture, as they are nodal points of public display, where the masses are divided on the basis of authority and castes. A display of discontent towards the government policies encourages these divisions.

 

Shashikant Kumar, Green Eminent Research Centre, Vadodara

The basic question of supply by the private agencies is twofold:

  1. How feasible (preference) is the supply by private agencies in rural areas?
  2. How rural water supply is managed in rural areas?

The answer lies in the segment where the private parties can play role in supplying water which is presently taken care by the public agencies like water supply boards, as in case of most of Indian states. Scale of operations and management, ownership of water resources and agreement between the parties are essential components. This may not be same in all the situations.

Community based water management has succeeded in the semi-arid state of Gujarat wherein the state makes the capital investment and the system is managed by the local panchayats. The intent is only to supply the water (hygienic) to the people in a desired quantity. People themselves try to manage, by checking the quality (in fluoride-prone areas), maintain the infrastructure (in case of hand pumps) and maintain the supply level (addressing the issue with district level departments). This structure of function of water supply is still in place.

How then does the question of incorporating private players into the water supply system arise? This happens specially in case of (a) cost management and (b) failure of public bodies. There have been protests against experiments with the privatization of water supply on many accounts for urban areas. Even in case of urban areas (large or small towns), we are yet to see sufficient examples of operating systems in country.

The World Bank would be creating a road block to functional development of the rural infrastructure services if the privatization of water supply is pursued beyond its present designated framework.  In case of preference, most people may like private players to come in for ensuring the quality and quantity of supply, but the cost recovery mode of operations may not be feasible unless we have sufficient models for successful implementation in a rural area.

This is shown by some of responses wherein difficulties in managing the water supply at the community level also has problems. Where is the scope for private companies to make money in the sector of rural water supply?

 

Annie GeorgeBEDROC, Nagapattinam, Tamil Nadu (response 1)

Forgive me if I sound like a doomsday prophet, but, the entire study and the reason for the study is worrying. Does not water come under basic rights? If so, isn't this the responsibility of the government? We did dilute this principle by forming rural water supply schemes and transferring this fundamental responsibility to the communities. Now we seem to be carrying this a step further.

Studies have shown than efficiency and cost-effectiveness improves with subsidiarity and devolution of responsibility/ authority upto to the lowest units- village or hamlet level. This was the central theme when micro/ rural water supply systems, owned and operated by the community, were introduced and popularised. However, instead of trying to understand where and what are the barriers to the successful functioning of this model, we are already thinking of moving on to another "model" creation. What happens to the systems that have already been started off by the communities who trusted what we told them 6- 7 years ago when we were trying to roll out the community based model?

Even in the community based models, there were problems of exclusions, worsening of conditions of those so excluded, privatising common property resources like common ponds and wells for the so called community based schemes,  drying of sources etc. Do we really know what are the problems of the old model that we are addressing in the new model and if so how will the new model take into account the above mentioned concerns?

It would be good to hear from the agencies, who have been rolling out the community based model, on this. Also, I, for one, would like to know what is the Government's envisaged role in ensuring drinking water in this scenario.

 

Puneet Srivastava, Deutsche Gesellschaft für Technische Zusammenarbeit (GTZ), Shimla

It is a relevant debate vis-a-vis a rural water supply (RWS) Policy to engage with at this point of time. The new guidelines by Department of Drinking Water Supply, Ministry of Rural Development, Government of India which came in early 2009 have opened the scope of public private partnership in delivery of rural water supply in India . To quote directly from the guidelines.

Scope for Public Private Partnership: In cases where an agency is willing to provide water supply to community on public private partnership basis, adequate support may be provided to PRIs and VWSCs to ensure that such contracts are prepared properly so as to ensure maximum benefit is derived by the community in such schemes. All such contracts should include the performance improvement and operational plan mentioned above  To ensure this all aspects of demand management, supply management ,water budgeting, cost of production of water , cost of investment in terms of socio economic factors needs to be indicated in tripartite agreement.( Para 12.1 , page 26, New Guidelines)

Now, coming back to the query, the responses are as below.

1. Triggers that led to selection of Private Operators. Demand for higher service levels in well off villages (both quality and quantity) can be correlated with differential norms by public agencies for rural and urban settings (40-70 LPCD for rural seating and 135 LPCD for urban setting as the minimum service level). Achieving economies of scale in case of higher individual coping costs in areas of poor service delivery by public agencies by inviting private operator albeit at a low scale and in sparsely populated areas and the absence of public service providers such as in many peri-urban areas striving to urbanise and waiting to be notified, are some other triggers. The other trigger felt was the seasonal water scarcity causing many areas to dip below the minimum service standards set by public agencies, and inviting private tankers to cover the deficit as can be seen in many parts of India .

2. Specific responses to the basic issues of water supply management. These private initiatives led to competition in that area manifested in more proactive public agencies and community based organisations  to expand their coverage and reach in that particular area.  However, it was observed that clearly defined service obligation particularly on water quality was absent in even in case of private supplies.

3. Contextual Factors. Yes, there are many. They vary from terrain and geographic location to high coping costs due to poor service delivery if left alone. It also includes economy of scale in operating water supply, demand and awareness among local population about drinking water quality and the presence or absence of other service providers including public agencies.

4.  Incentives that attract them and the risks that deter them. The private operators need to be supported with relevant policy guidelines by the respective governments both at national and state level to begin with. As the drinking water sector does not have a separate regulation institution (as in case of electricity) there is confect of interest if you assign this role to service delivery organizations such as PHEDs.

 

D Deshpande, National Bank for Agriculture and Rural Development (NABARD), Mumbai

I wish to share a case of drinking water supply scheme on business model implemented by NGO- SAFE (South Asian Foundation for Environment). The information is based on a presentation made by Dr Dipayan De, CEO of the NGO in our office (NABARD, Mumbai).

The project was implemented in the Sunderbans area of West Bengal where the community is suffering from severe drinking water shortage although the area is having sea water around. They have to risk their life at times for a bucket of water.

In this scenario SAFE set up a reverse osmosis unit where the available water is purified, made potable and delivered to households in hamlets by SHGs. The SHG gets a small service charge (5-10 paise per litre) and the final consumer has to pay around 20-25 paise per litre which is very reasonable for them. Thus, the entire project is a sound business model and is bankable.

Dr. De may be able to give more details on the project. We at NABARD have requested him for a bankable project for support under Umbrella Programme for Natural Resource Management (UPNRM)

 

Biswajit MohapatraNorth Eastern Hill University , Shillong

This is with regard to the question of initiating an international study by the World Bank to define a set of rural water supply business models that incorporate rural private operators in the context of rural water supply. The study is being conducted given the challenges of rural water supply, especially issues like increasing coverage and sustainability. These need to be given much more importance than the issue of raising of revenues by way of making the water expensive, thereby enriching private companies at the cost of the marginalized rural poor. My specific responses are given below

What are the triggers that have led to the selection of a private operator model over, say, community management or management by a public agency?

Community management models fail when there is a lack of adequate knowledge and commercial interests take over. In these instances, a successful model does not emerge because communities cannot manage their water resources professionally. One of the major reasons of the failure of community managed, or publicly managed models, is the absence of  commitment from the government as well as a lack of political commitment. Also, there is a lack of proper planning and implementation at the grassroots level. Thus, private operators get an opportunity to enter the sector, but this can cause more problems that it can solve.

What are the specific responses to the basic issues of water supply management that have been tried by rural private operators?

By and large, the responses have been negative as private operators are seen to be making profits at their expense, while not ensuring an adequate supply of water of suitable quality. I feel the experience being observed in the power sector (where supply has been privatised in some cities and private companies are allowed to set up power plants) will be repeated here if proper safeguards are not integrated into the planning process. In many cases, private suppliers have proved to be more inept, incompetent in meeting the challenge of supplying water than community and government managed systems.

Are there contextual factors that explain or influence the success or failure of rural private operators?

The factors like existence of poverty, absence of an appropriate grievance redressal machinery and indifference of government officers towards people's problems will endanger the good goals which are being projected in the context of national economy.

What more can be learnt about these private operators in terms of incentives that attract them and the risks that deter them?

The entry of private operators does not foster competition. Instead, they become monopoly service providers and form cartels to maximize their profits An appropriate business model needs to be worked out for Indian conditions.

 

Shruti Singh, Ministry of Food, Agriculture and light Industry, Asian Development Bank, Mongolia

My general understanding about the issues raised in the discussion is briefly mentioned below.

The triggers that lead to the selection of private water operator over the community and the public management would be prompt service and control over the loss of water wastage. When we talk about the community management of water supply, normally the tendency which could be followed is lack of ownership and responsibility on the part of the community that leads to unsecured management and huge wastage of water.

There wouldn't be any protocol to comply with as it is for the community and anyone is posted for any duties assigned. However, there are drawbacks regarding the functioning of the private operator management on some specific points, such as being demand driven, profit orientation and less sensitivity to the needs of communities.

The contextual factors for the success would be prompt service, timely response to demands and smooth operations. However, the failure will be lack of sensitivity towards the larger arena of community perspectives.

The risk factors would be definitely the huge capital costs of the operation. Thus, private companies will continue to work only if their profit margin is higher than the break-even level. However, if this situation does not obtain, and there are legal hassles, it will result in a setback for private operators. The control which the state government or local governance can apply over them would be more community sensitive and should serve the larger needs of people within the guidelines of water services management. Additionally, a mass awareness campaign is necessary for the success of any private water supply operator.

 

Shrikant D. Limaye, Ground Water Institute, Pune (response 1)

To be very practical, the rural water supply schemes by private operators face following problems:

1.    

Source Problems: The source gives inadequate supply or a supply of deteriorated quality in summer.

2.    

Pump & Pipeline Problems: Pump repairs and pipeline bursting or leakages or tampering.

3.    

Distribution Problem: Insufficient pressure at high level areas

4.    

Revenue Problems: People do not pay because of inadequate, irregular supply AND the supply cannot improve because people do not pay. This is a vicious circle.

5.    

Corruption: At all levels, if the Government department has to pass payment of bill to a private operator.

ALTERNATIVE ONE:

In any scheme in which the villagers have to collect 10 per cent of the contribution and Government pays 90 per cent:

  1. The private operator prepares a water supply scheme, inflating the budget by 30 per cent. He pays 10 per cent from his own pocket as villagers' contribution
  2. He then completes the scheme and hands it over to the village council for O & M. Takes a completion certificate from village chief (giving him some money) and submits the Bill to Government
  3. He gets the payment of his Bill from the Government after following the usual % procedure
  4. Maintenance is only possible if the villager council collects monthly payments from each family. Otherwise the scheme is non-operative after a couple of years and the villagers ask for Tanker water supply

ALTERNATIVE TWO

Private operators are owners of tankers and supply water to scarcity-affected villagers. The tanker Lobby is very strong and has political masters in powerful positions. Bills are prepared for 10 tanker trips per day while actually only 5 to 6 trips are conducted. This is a big financial incentive for the operator and his political master. In spite of thousands of "village water supply bores" drilled in the past 25 years in Maharashtra, the tanker water supply has not diminished appreciably. There is big money in tankers.

I am sorry but this is the practical side of rural water supply.

 

Rahul Banerjee, Aarohini, Indore

Leaving aside the Ganga, Brahmaputra and Mahanadi basins, most parts of India are severely water stressed and especially the dry hard rock regions stretching from the Malwa plateau to the south. In these areas the excessive withdrawals of ground water to satisfy agricultural needs has led to an alarming decrease in the water table. So much so that a large number of handpumps go dry in summer as do borewells even if they may have been sunk to depths of greater than 200 m.

Under the circumstances the biggest operational cost of a piped water supply system in rural areas is not that of distribution but that of sourcing the water. Typically the electricity departments charge at commercial rates for the power supplied for pumping for water supply. Consequently in most cases the public water supply systems are not running properly even after being subsidised by the government and the people have to adopt various coping mechanisms on their own.

Not surprisingly the situation in rural areas is that most people get much less than the prescribed norms of water and at very high costs in terms of money and time spent. Without community mobilisation there is little possibility of any business model succeeding. Thus, instead of cogitating over business models intellectual energy should be expended instead on seeing how community mobilisation can be done to increase artificial recharge, reduce agricultural water use and waste and sustainably source and distribute drinking water. There is at present no culture in villages of sitting down together to think about how to tackle the serious problem of water supply.

 

Ventakatesh PSattur, Dharwad

I do agree with most of what Annie has said. It is the people's right to take decisions with regard to accessibility, affordability of water and its maintenance. There are some unreported models of community-based water works which have been managed by the rural communities themselves. There have been successes as well as failures.

The failed models should be examined for community perspectives and the issue of inclusion. It is essential to examine this aspect as the exclusion of some communities amounts to denial of their basic human rights. Simultaneously, the successful models would not receive adequate encouragement and appreciation. Rather, with the introduction of a business approach, these successes would be sidelined at the cost of providing this vital need.

Just because some community models have failed, it is not reason enough to bring in other models. Instead, their failures need to be examined and corrected. Even cases where existing rural water supply models driven by communities do not seem to work, it is more a matter of people understanding the operation of the model. This takes time, and once it happens, things will fall into place.

This sounds abstract. But I am trying to say, an uncertain business model should not replace what is already there – community based rural water supply models. It this happens, it will be hijacking the opportunity for rural communities.

 

Nitya Jacob, United Nations Children’s Fund (UNICEF), New Delhi

This is an interesting discussion. I feel there are several triggers for the entry of the private sector. A presentation at a conference organized by the Water, Engineering and Development Centre, University of Loughborough , UK , at Addis Ababa , by L Koestler, is quite revealing. The conclusion states the efficacy of community-managed water supply systems is inversely proportional to their state of economic development. Community-managed systems are driven by a spirit of voluntarism. As the community becomes richer, this spirit fades and impacts all the services the community manages. This is one of the triggers for the entry of private water suppliers, either formally (through a metered system) or informally (through tankers).

The paper’s conclusions are:

  • As rural communities move upwards on the ladder of development, the spirit of voluntarism diminishes. This calls for new approaches that do not assume a high amount of voluntary work
  • Private sector involvement represents a viable option that can have positive impacts on sustainability
  • Private sector involvement can be combined with traditional community management structures and create benefits from both approaches in the community
  • The degree of private sector involvement can be linked to the degree of economic development in the community, although other factors also play a role
  • It is important to adapt the nature of private sector involvement to local conditions and needs of the community
  • In poorer communities, including elements and methods of the community management approach can make the operation and maintenance affordable and remedy to some of the constraints set by the rural setting
  • Although many projects have subsequently adopted private sector involvement, ideally the approach should be considered already in the planning and implementation stages of the project
  • It has to be recognised that communities cannot bear the full responsibility for operation and maintenance in the long term and that sufficient resources have to be allocated to provide effective support mechanisms
  • Private sector involvement can reduce the cost of support mechanisms since the element of motivation is provided by payment.

The paper cautions, though, that rural communities in developing countries are small and remote, with low purchasing power, high input costs and no possibility of economies of scale. One of the greatest risks of privatizing rural water supply is that poor neighbourhoods will be left entirely without water as private operators will not see any profit motive there. Water provision is also a monopolistic activity and a private operator can hike charges at will.

On the other hand, there are organizations such as Naandi that are installing community water treatment plants. There are three crucial functions that Naandi plays to make the model work in a sustainable manner. First, we bring to villages whose water sources have above acceptable levels of pathogen contamination, the CSWS concept. We prove to them the risks of continuing to use water from their present untreated water source, and convince the community about the need for a community-owned solution for their water potability problem. Transforming mindsets of the communities both in terms of them accepting that the water they drink is unsafe, and that the CSWS model is well suited for their needs is the first non-negotiable preparatory phase.

You can access the full WEDC document at http://www.solutionexchange-un.net.in/environment/cr/res-01181002.doc

and read about the Naandi experience at http://www.solutionexchange-un.net.in/environment/cr/res-01181001.doc. This is a document taken from their website, Naandi.org.

 

P. Anbazhagan, Tamil Nadu Water and Drainage Board, Chennai

I wish to state that the private operators in rural water supply will take away water from the poor users (Don't call them consumers and make water a commodity).

The case of the Sunderbans, self-help groups run water supply ventures that are looting money from the poor by providing water at Rs 200 per kilo-litre. They make a profit of over Rs 25 per KL which is not at all reasonable by any scale.

First, I would like to insist on the basis of our experience in Tamil Nadu across more than 450 villages (more than 100 gram panchayats) that community management is not the same as management by a committee, and also not outsourced management to a private venture.

If the community is to act as a decision-maker for quantity, distribution timings, water sharing, fixing user cost, etc., and the panchayat functionaries along with the officials of departments are responsible for operation and maintenance, it will ensure equitable distribution and satisfactory service level. This will ultimately lead the community to take more individual connections and pay as per the government norms or as decided by them.

I sincerely express that this type of discussion should not lead to deprivation of the common public to the basic need of water.

 

Kashinath Vajpai, Prakriti, A Mountain Environment Group, Dehradoon (response 1)

I am wondering to know from this discussion what has persuaded us to talk about the need for a business model, at a juncture where rural India is moving in a comparatively better situation in accessing the sustainable and safe water. I am finding it hard to understand that, on one hand we are advocating for constitutional amendments, ways and means for inclusive self governance at lowest appropriate level, and on another, we are exploring the ways and means for exclusive rights on natural resources. On one hand we want water to be considered as a human right, while on the other we see it as a business commodity.

The results of advocating such business models can also be understood from the perspective of the indiscriminate environmental harm being posed by the mega projects in power, mining and industries, among others. In this context one also needs to understand the ecosystem dysfunctions and livelihood losses due to various business interests in rural India , and the efforts and approaches adopted in this direction. Therefore, before testing any such hypothesis we must consider comprehensive social and environmental processes!

In response to the query, I wish to broaden the scope of the discussion on a few imperative and interlinked issues. Is there a way to discuss the idea of ‘Gram Swaraj’ and notion behind re-defining a number of articles in the Indian constitution? Do we also need to critically review the understanding and efforts of developmental agencies in facilitating the; devolution of functions, functionaries and funds in India ’s social development process. Alternatively, can we think about these could be better implemented. Do we essentially need to consider the principle of ‘subsidiarity’, when the results in supplying and managing safe water are not achieved as envisaged? Shouldn’t we consider that, the water sources are the blood vessels of a nation? On a broader frame, can we think about the unrest and damage such initiatives will cause to the ecosystem functions and rural population. 

What will happen to the poor and vulnerable, who can’t afford buying water from a private vendor? In my view, such business models will lead to indiscriminate water withdrawal and storage, control and conflict over water sources. 

The former UN Secretary General Kofi Annan once mentioned that, “the access to safe water is a fundamental human need and therefore a basic human right”.

 

Kanupriya Harish, Jal Bhagirathi Foundation, Jodhpur

It is undoubtedly a timely topic of discussion, when small water enterprises are getting an unprecedented momentum all over the world.  There is indeed a need for more business models while community management cannot be rejected.

Unfortunately, the discussions and search, nevertheless, focused so far on whether to adopt community management or private enterprises. While merits and demerits of each model were discussed extensively, there has been little exploration on the possibility of a viable partnership model harnessing the merits of both ideologies.

We, Jal Bhagirathi Foundation (JBF), while advocating for community ownership in water resource management to ensure equitable access to drinking water, have been exploring possibilities of integrating business models and private players to have sufficient financial resources and incentives for community management. This has resulted in a unique and pioneering model of community owned small water enterprises which is being up scaled to benefit more than 15,000 poor desert people in western Rajasthan.

This intervention strives to make desert villages water secure, while simultaneously providing livelihoods for the poor women. A pilot programme was implemented at Pachpadra village in Barmer district with the support of the UNDP and the Italian Development Cooperation. Pachpadra village has a population of roughly 5,000 people and it relies on just one pond for drinking water purposes. The pond, being an open source is highly prone to biological contamination.

Their dependence on surface water is exacerbated by the saline groundwater present in the area. During months when the pond is dry, water is bought from nearby towns to fill up underground tankas costing Rs 500-600 for a 4,000-litre tanker, while the water often contaminated. Moreover, the water supplied by the government is unfit for drinking, drawn from a nearby ground water well. It has total dissolved solids ranging up to 4,500 ppm, which include chlorides, fluorides and nitrates above the permissible level.

This water crisis, leaving few choices, resulted in people compromising water quality since their priority has been always getting access to water. This resulted in not only high prevalence of water borne diseases but also poor health in general. Undoubtedly, such a condition further constrains livelihood opportunities, which are already sparse.

Given this backdrop, JBF facilitated a micro level water enterprise project under Public-Private-Community Partnership model with an objective of providing safe drinking water to water scarce desert communities as well as exploring alternate livelihood opportunities.

A Reverse Osmosis (RO) Plant was designed as a social business model to operate a water enterprise which provides RO treated safe drinking water at Pachpadra village. Environze Global Limited installed the plant and responsible for its operation, while the government provides raw water source and the Gram Panchayat provided the housing facility. The cost of installation, operation and maintenance is recovered by selling desalinated water to the communities.

While the plant is managed by Jal Sabha (a community based institution) facilitated by Jal Bhagirathi Foundation, the filtered water is marketed by women from SHGs. Four safe drinking water outlets (kind of kiosks) with a capacity of 2,000 litres each were opened by trained women entrepreneurs.  The women entrepreneurs get water for 8 paisa per litre from the Jal Sabha and sell it for 15 paisa per litre, thus earning up to Rs. 4,000 per month. The Jal Sabha sells up to 15,000 liters per day, and with the income they manage, operate and maintain the plant.

Thus, it has become sustainable with sufficient income for operation and maintenance and with attractive incentive for community members to promote the use of safe drinking water. It provides safe drinking water of the quality of bottled water for a very cheap price of 15 paisa per litre, while providing an income source for poor women. It has also resulted in improvement of health of the community with considerable reduction of water borne diseases and thereby increased productive days.

With this experience we would like to highlight the importance of partnership rather than attempting to prioritize between community models or private models. In the given model there is a role for all as follows.

  1. Government makes necessary resource available for community through its existing mechanisms, like raw water
  2. Private company provides machinery, technology and services, and recovers the cost over a period of time
  3. Community manages the resources and controls its distribution and ensures life sustaining water is available equitably and at an economical rate
  4. Women from SHGs make an income out of it, which result in an incentive for promotion of best practices and use of safe drinking water.

We are happy to provide more information.

 

Jasveen Jairath, Water Sector Professional, Hyderabad (response 1)

I am sorry for jumping into the discussion at this late stage and apologies if the following issues have already been covered, but I have a few questions.

1.    

What is meant by a business model - one that works for profit as a must or even those that pay for the cost and may or may not generate a surplus are also considered business models?

2.    

Have the models that have worked successfully (Bal Vikas in Andhra Pradesh or Naandi across some states in India ) as financially self-sustaining been considered as models for scaling up?

3.    

If some models have worked well in pockets – is it efficient to focus on inventing new models or building up on partial successes that have in fact worked at field level and enhancing their functionality? 

4.    

To repeat: Why are ground successes ignored by planning and funding agencies?

5.    

Finally – financial viability of rural water supply (not necessarily “business" models) and being pro-poor are not necessarily inconsistent as models.

 

S. V. Govardhan Das, Hydrogeologist, Hyderabad

I am happy that Mr. Kashinath Vajpai has responded on this issue. Though I do not know who he is, I am in complete agreement with him. The moot point here is whether you consider water as a human right (everybody has right to access it at least for his/her household requirement) or as a commodity. I am a strong supporter of the concept of access to water as human right.

There are many instances where the entry of private companies has affected communities’ access to water. In Plachimada, Kerala, the panchayat went to court and had the soft drink factory closed down. At one location where the Andhra Pradesh Farmers Managed Groundwater System works (Guthi Mandal, Anantapur district, Andhra Pradesh), the community convinced a local entrepreneur to close down his packaged drinking water unit. This plant had affected several wells in the area and people convinced him it was improper to make money from water, a common property resource.

The point I want to make is that water is a basic requirement for human life. If this becomes the subject of business transactions and is commodified, the poor will not be able to pay or will be served, as the prices will be driven by market forces.  The latest example from Andhra Pradesh is the sky-rocketing prices of power that have made groundwater based farming unviable.

 

Anjali Manandhar Sherpa, Water for Asian Cities Programme, UN-Habitat, Kathmandu

Abazhagan’s email has put me in a dilemma. I have never thought about the difference he mentioned between the “community managed” and “management by a committee”. My understanding is that a user/management committee established in a community is responsible for the operation and maintenance of a community managed system. I am now interested to know the difference.

 

Annie George, BEDROC, Nagapattinam (response 2)

It is thanks to this platform that we have even been able to discuss the larger issues than one with a narrow perspective of just hearing of some success stories. The Solutions Exchange platform has been open, neutral and non-judgmental in its approach and the moderators have to be congratulated for the same.

I feel we are being too simplistic in asking for success stories, triggers, etc., about a particular model. Before you know it, these few "success stories" will pave the way for a new approach and all the States/ NGOs will be following a new model.  This is how it has worked so far and I will not shy away from stating upfront that, if we are not careful, the same story will be repeated.

Neither our States nor our communities are in a position to make a success of such private service delivery models while ensuring equity and accessibility to those who cannot "pay" for such services. It would have helped if we had strong social security mechanisms in place or a community strong enough to demand its basic rights. Such being the case, isn't it our role to be the voice of the voiceless and the unheard? These feeble voices tend to get lost in the avalanche of funding support, new world terminologies, the pressures of time and need to perform.

 

Surendra Kumar Yadav, Vikram University , Ujjain

If we think such model for rural settings, then main problem (along with other problems) shall be funding because most of the rural community people cannot invest for water, though many are consuming contaminated water. Other important issues raised by Shruti are very relevant.

 

Seema Kulkarni, Society For Promoting Participative Ecosystem Management (SOPPECOM), Pune

In principle I agree with what Annie George and Rahul Bannerjee have said. In fact that seems the dominant opinion anyways, only worded with a differing emphasis. So in that sense if someone were to consolidate the responses, that is the message that should get conveyed to studies of the nature the World Bank is launching.

As you can see my personal opinion on this is driven by what we believe the water scenario should be like.

Firstly, domestic water should be available to all as a basic human right and the government should see itself as a provider for that. Communities can take over the maintenance of these systems and pay for it on a mutually decided basis. Need for cross subsidies often arises within communities where capacity to pay even for basic requirement may not be there.

Secondly, the assumption that private models come up when community models fail is a myth. Private models thrive not when communities have failed, but when the government mechanisms fail and they see an opportunity for profit. For example, in the rapidly growing Mumbai slums we saw water mafias reaping benefits from the failure of the Brihan Mumbai Municipal Corporation in providing water and sanitation facilities. Leaking pipelines passing through sewage lines forced the slum dwellers to buy water from those with legal water lines. The profit in this case is assured.

The private model has several aspects to it, which need to be unpacked carefully

Model A- Implementation, investment done by government, handed over to the communities but communities have failed to manage it.

Seems like a harmless model where the implementation, investment etc has been done by the government and it is only service provision that would be done by the private suppliers who could be some small time businessman in a village or an urban slum setting or a big time operator providing at a regional scale or in big cities.

This comes across as a harmless model which does not involve contesting people's rights over water which have already been laid out by the government (assuming that welfare of all is taken into consideration) Here the assumptions are

  • Water is not scarce in both surplus and scarcity years and each household has access to assured quantum of water which is also potable and safe
  • Water rates have been mutually decided in the community and all social groups agree to these rates
  • Each household has an equal capacity to pay for that quantum and quality of water, so the messy aspects of cross-subsidisation do not have to be handled by the private service provider who thinks users are users and cannot be separated on the basis of class, caste, gender or any other forms of structural or other inequities
  • Communities are homogenous and benefiting equally from all civic amenities like housing rights, legal water lines that have an implication in accessing water, etc

As people working in the water sector, we simply know that these scenarios just do not exist so even the most apparently harmless model will not work for various obvious reasons.  Servicing poor rural and urban residents with reliable potable water is not an easy business and requires considerable long term investment and also complex organisational arrangements. Profitability is thus not assured in most cases particularly where people do not have the capacity to pay or water access is problematic. Uncomplicated big cities in high income localities are thus seen as worthy of privatisation.

Model B- Private entrepreneur invests in water infrastructure and decides on water allocation

This is a situation where people's rights are at stake, because the private agencies are not suppliers alone but also invest money in implementing the scheme. Here if they have invested in implementing they would like to dictate the price and also who has access to how much water

I would see that private enterprises would be most interested in this model as there is scope for profit. This model becomes a breeding ground for water mafias as we saw in a quick observational study in Mumbai slum last year mentioned earlier. This model therefore should be thrown out if we are concerned about issues of social justice.

Model C- Water scarce context where no scheme exists

Is a scenario in a water scarce context, where drinking water is not easily available unless large scale investments are done? These can be remote tribal villages or urban peri-urban fringes which are mostly populated by lower middle classes. Those who have the money and the associated technology to extract water do so through private borewells, but those who do not have that ,suffer and they are the poor.

In these contexts we have seen tanker markets flourish and these are also private supply models. In Pune, our experience shows that these water markets are thriving and the price people pay per month is as high as Rs 300/ household for tanker water (quantum and quality not assured at all). This is much more than what any of us pay towards domestic water. Certainly this private supplier model cannot be supported.

The private model logic is basically to weed out under-performing companies, initiatives and reallocate economic resources from less to more profitable activities. Privatisation, as it is increasingly being argued is in fact accumulation by dispossession of the poor.

Finally my suggestion for the study would be to understand why community models have failed as they would provide insights into the complexity of the explanations that can be found in State mechanisms, structural inequities, legislation around regulation of water use, public expenditure on water conservation and its sustainable use to name a few. It is not surprising that the Bank is legitimising its rationale for studies such as these through a forum like the SE.

 

Sunderrajan Krishnan, CAREWATER, INREM Foundation, Anand, Gujarat

From the 1990s, many villages of Gujarat have adopted large water treatment Reverse Osmosis (RO) plants. Many of these initial plants were not subsidized or promoted by any agency or the government. It was mainly through local donations initially from NRIs and later from local co-operatives. From the late 1990s and till now, the government has also come into the picture and is promoting a public-private partnership through the Gram Panchayat. Several NGOs have also entered into this arena now.

Strictly, the mode of functioning of these plants cannot be categorized either as totally community based or totally private or as a public good. For example, an NRI would donate a few lakh rupees. This would be supplemented to some extent by the community. Either a local trust or the Panchayat would maintain this plant. Various such combinations exist. The customers are charged a subsidized rate for water and in some cases, below-poverty households are provided water free during critical times. In many cases, excess water is sold off at higher rates to nearby villages/towns.

In south Gujarat - Surat , Navsari area - we estimated around 300 such plants of around 200 lph to 500 lph capacity. A visit to these places would make one open to the variety of institutional models in which these plants are functioning. We have recorded many of these self-organized RO plants in villages across Gujarat that have come as a response to several existing circumstances:

  • Need for a lifestyle change
  • Absence initially of government funds in providing water of good quality
  • Donations available for community from NRIs
  • Local entrepreneurial spirit

You can peruse through our report on this at these links: http://www.carewater.org/Gujarat%20RO%20Plants.pdf
http://www.carewater.org/North%20Gujarat%20RO%20Plants.pdf

We have tried to cover issues of: motivation, management models, equity and reach, sustainability and impact of waste water; within these reports. Hope these comments are within the current discussion topic on this group

 

Jyoti Sharma, Forum for Organised Resource Coordination and Enhancement, New Delhi

I'd like to add to the conclusions presented by Nitya on the basis of our experience / observations of community water management systems in poor urban settlements:

  1. The conclusions below apply to urban poor communities as much as it does to the rural areas.
  2. We have observed that the degree of integrated community living is higher in poorer communities. Volunteer efforts for the benefit of the whole community are more visible in these communities.
  3. The exception however would be less poor but homogeneous communities with a strong sense of self as a political unit.
  4. Volunteer driven community water managed systems seem to be, at best a transitory phase.
  5. Ultimately the volunteers either adopt a commercial format and/or a power centric format. In relatively less poor settlements,     the tendency is for largely commercial management of water distribution systems by the most powerful member in the volunteer group. In the poorer settlements, the focus is more on accumulation of power by the volunteer group / person. 
  6. We have also observed the negative impact of commercial management of water - even as a part of community self-management system. All water supply points are used for supplying water that is paid for. No water is given for community facilities such as community toilets / cleaning of common areas, etc. There is also a strong tendency for a Water Mafia to develop i.e., the suppliers of water actively resist the entry of government water supply facilities in the area. They also resist any attempts to check for quality of water.
  7. Perhaps the best models, especially in the urban context might be:
  1. Commercialisation only at 'Super' tertiary treatment level i.e., supply of safe drinking water
  2. Community 'Monitoring' groups i.e., community vigilance groups which understand the government water distribution systems for their area and constantly align deliverables at both ends to create relative equity in water distribution.

 

Arunabha Majumder, Jadavpur University , Kolkata

The Department of Drinking Water Supply, Ministry of Rural Development, Government of India, has rightly highlighted the following which needs to be considered in the context of business model on rural water supply operators.

The ethics of fulfillment of drinking water needs to all should not be commercialized and denied to those who cannot afford to pay for such services. Willingness to pay under adverse conditions cannot be interpreted as affordability to pay. The commodification of drinking water will shift the focus to profits to be made from the scarce resource rather than human rights to water for livelihood.

Different business models in rural water supply are already in operation in some areas in the country. But these mostly related to water for drinking and cooking. The villagers use contaminated water sources for meeting other demands. A decentralized approach involving PRIs and community organizations with commercial outlook may be appropriate to achieve sustainability of rural water supply.

 

Ajit Seshadri, The Vigyan Vijay Foundation, New Delhi

This has really been an interesting collection of thoughts, inferences and opinions from all corners and varied sections of water-users in the country.

Our emphasis is to say water is our right is very appropriate. And right to seek a good environment is also our right. However most of us forget the basic value of this water at times. We all feel the value of water only when at some circumstances, water is purchased at a cost of say Rs 10 for 1 litre of bottled water or when a society buys water in bulk paying Rs 500 for a 5000 litre tanker when municipal water supply is in short supply.

Even communities in slums buy drinking/ potable water at some cost. Everyone should be equally partaking/taking care of the water resources in their purview, by conserving them it to the utmost. The water being supplied also comes with a price in relation to its quality. Hence all efforts are to be made, to apply the basic mantra, to get the utmost form the available water resource, etc.

Follow the 4 Rs -

Reduce, whenever, wherever water is used, avoid wastage, reduce its volume

Reuse, use the once- used water for lower-end uses

Recycle, once used water, to be processed and used for irrigation and other uses

Recharge, apply Rain-harvesting, and others to create water resources

If this is followed by one and all, there will be more water resources available for all uses. In a similar way, environment also should be protected, and up-grade it in whatever simple ways anyone can. Basic education at school levels should include eco-water literacy for all communities. All water assets regardless of size should be cared for equally.

 

Neelkanth Mishra, Freshwater Action Network South Asia , Secunderabad

Thanks for starting discussion on this issue. I am sharing my view on basis of some academic analysis on New Public Management (NPM) and its linkages with drinking water sector.

NPM emerged during last 30 years to enhance “efficiency” and “effectiveness” of public sector organizations through incorporating management practices of private sector. During the 1990’s NPM spread even in developing countries under influence of structural adjustment programmes. The principles of NPM suggested the replacement of the bureaucracy by private sector management practices to make effective NPM in related reforms. These principles are:

  1. Emphasis on professional management skills
  2. Standards and measures of performance
  3. Shift from input controls to output controls
  4. Disaggregating or decentralization
  5. Competition and term contracts, etc.
  6. Private-sector management practices contracts, corporate plans, performance agreements
  7. Cost-cutting and efficiency

Critics of NPM argue that decentralisation, empowerment, participation and community decision making does not happen efficiently when combined with NPM. This is because NPM is a managerial concept closely linked with control and authority while empowerment aims to dissolve power centric controlling system. This paradox is very visible in the Indian context, as the government tends to withdraw from providing service and adopting a public-private partnership model (PPP) in most of the sectors without trying to augment the capacity of communities. The Planning Commission of India has recommended the government to initiate PPP in social sectors like education, health, drinking water supply, rural development, family welfare etc., in which government will collaborate as funding agency, or as buyer or as coordinator.

The PPP model is supposed to improve efficiency and effectiveness is limited. There is an inherent risk in a long term partnership related to the rise in monopoly by one for-profit partner. NPM advocates criticize this. NPM aims at reform to establish good governance whereas the PPP model is taken as a means for good delivery. In reality, the PPP model also requires good governance for better delivery of services.

In India, the Department of Drinking Water Supply was established in 1972-73 with the initiation of the Accelerated Rural Water Supply Program. Till 1986 this programme aimed at ensuring drinking water in rural areas through the Public health engineering Department (PHED). During 1986-91, the Rural Drinking Water technology mission operated for improved and quality access of drinking water. In 1991-92 this scheme was reintroduced as Rajiv Gandhi National Drinking Water Mission.

In this period, state-specific sector reform projects were introduced with support of the Asian Development Bank (ADB) and the World Bank. ADB proposed a water policy for improved performance and delivery through institutional reform, cost sharing and PPP. The emergence of local user groups, self-help groups and other community based organizations provide opportunities to explore various network and partnership with community and local bodies. For example, the emergence of Panchayati Raj Institutions (PRI) as the village governance unit was a major breakthrough in Indian system. Now the same PRI bodies are been proposed to deliver services, management and maintenance of services at local level. But question is: Is there any effort to improve capacity of local bodies in delivery and management of services?

During last few years, policy perspectives have changed to incorporate different forms of the PPP model and set up new institutional arrangements through decentralization of power. All suggested policy recommendations and action points are closely linked with principals of NPM and promote reform in this sector.

Relation of water sector policy with NPM

World Bank recommendation (2006)

10th Five Yr Plan of the Planning Commission, 2002

New Rajiv Gandhi Drinking Water Guidelines (Department Of Drinking Water Supply, Ministry Of Rural Development, Goi, 2009)

Clarify roles

Strengthen performance incentives

Involve the private sector

The government has responsibility for service delivery of an appropriate level

Expand the role of government programmes to support reform

Transform beneficiaries into customers

Move towards full cost recovery

Develop water and sanitation as industries and consider water as a commodity

Set up a Water Sanitation Commission for programme management

Autonomy to the sector

Encourage private sector participation and explore institutional funding

Shift responsibility to PRIs and local bodies

Facilitate people’s participation and full cost sharing/recovery

System should be demand-driven rather supply driven

Private sector participation in the form of service contracts and management contracts should be attempted in appropriate cases

The Government to play the role of facilitator only

Responsibility shifted to PRIs and local bodies

Model should incorporate cost sharing and recovery

Public-private partnership

Transfer existing drinking water supply systems to communities and PRIs

Reward good performance and achievement of sustainability

 


An analysis of all forms of PPP shows that divestiture offers the maximum potential of benefits given that the private operator has the responsibility for operation, management, maintenance and investment. In this case, legal ownership over asset is given to private operator through a fixed term license. The Build, Operate and Transfer (BOT) arrangement provides for the maximum involvement of private sector. In this arrangement the private agency has the responsibility of fund raising, supervision, operation and management.

Some potential options have not been tried out by public managers e.g., partnerships with a village society, women’s self-help groups or linking a financial institute or infrastructure development group with PRIs. All these approaches are forms of PPP and represents a decentralized governance system.

Gram Vikas (Orissa) has tried a partnership with local communities and ensured piped drinking water supply to all households in more than 200 villages of Berhampur district. The pilot of Gram Vikas provides evidence how capacity building and developing partnership with local village institutions can improve management and delivery of services on equitable basis. Till date, there is no default of payment by any household in program villages. Even the operation and maintenance is ensured by the local community.

Again question arises, when will the state government and the drinking water department scale up such initiatives instead of always looking for new models like a PPP with the involvement of the private sector?

The main purpose of PPP approach is to attract private investments in creating and management of drinking water resources.  However, private investment thus mobilised is dismally low when compared with infrastructure handed over to the private companies by the government.

The onus of Water service delivery has shifted from communities to the government. The government has been pushed to go for a policy reform in favour of private entrepreneurship because of inadequate supply and lack of investment.  Other factors that led to reform were low coverage, poor accessibility, low-level of public participation, low tariff and poor cost recovery. The reform has envisaged increasing the need to regulate and reducing the state influence.

Privatisation and improvement of supply: Water is priced on full cost recovery basis by private actors. For instance, the cost incurred is Rs. 2 to 3 per kilolitre.  The consumer will have to pay Rs.8-10 per kilolitre on a full cost recovery (FCR) basis.  In India almost 170 experiments are being conducted. A majority of these are Built, Operate and Transfer (BOTand the current status is not clear. The experience suggests this model has failed (or landed in trouble) in general and is successful only in specific circumstances. For instance, it is successful in Jamshedpur (in Jharkhand) as it was intended for industrial workers; and is fully operational in Tiruppur (in Tamil Nadu).

Privatisation and national water policy:  The policy has created space for privatisation wherein the government would handover infrastructure created while the company invests into improvement of infrastructure.  As privatisation is going to be a reality, what is probably needed is:

  • Judicious mix  based on the strengths of community, public and private sector
  • Space for Civil Society Organisations in decision making starting from the design of the project to delivery of services
  • Government and Civil Society Organisations should together hold public and private accountable

At this point, I want to facilitate discussion further through asking members to provide their experience on water pricing after involvement of private sector.

 

Jyotsna Bapat, Water Professional, New Delhi

The conclusion that Nitya Jacob has arrived at, seems logical. As the community grows richer their needs for water consumption also increases. So if more water per capita is needed and can be affordable, financially, then higher capital investment in infrastructure is needed for supplying it. This would attract companies who can afford a larger financial investment in putting up the capital investment of rising mains, pumps, storage and filtration plants and whatever else is needed for it; and treat it as a commercial investment to be recovered  over time from consumers, as a profitable infrastructure investment.

This would further support consolidation of demand by promotion of multi-village schemes that become attractive to large water companies. However, I am not convinced about the argument of 'capture' by private companies. After all, they also have to take into account the capacity of their clients to pay without which they will not be viable as an economic activity. Of course, there is always a tendency to 'cry foul' in such ventures as every ones likes freebees whenever possible.

Yet, the need for the poorest of the poor still remains unmet, and there is need for a cross subsidy for subsistence-level water consumptions, no matter what. Just thought would share my thoughts, thanks for listening.

 

Kashinath Vajpai, Prakriti, A Mountain Environment Group, Dehradoon (response 2)

The recently modified National Rural Drinking Water Program Guidelines of the Government of India have specified a particular framework for the implementation (2009-2012) of drinking water in rural India . This intends to provide every rural citizen with adequate water for drinking, cooking and other domestic basic needs on a sustainable basis, while adhering certain minimum water quality standards.

I wish to quote here the basic principles of the document, as it states that:

  1. Water is a public good and every person has the right to demand drinking water.
  2. It is the lifeline activity of the Government to ensure that this basic need of the people is met.
  3. To increase economic productivity and improve public health, there is an urgent need to immediately enhance access to safe and adequate drinking water and Government should give highest priority to the meeting of this basic need for the most vulnerable and deprived groups in the society.
  4. The ethic of fulfillment of drinking water needs to all should not be commercialized and denied to those who cannot afford to pay for such service. Willingness to pay under adverse conditions cannot be interpreted as affordability to pay.
  5. Drinking water supply cannot be left to market forces alone as it does not recognize the importance of providing livelihood supply to all, nor does it ascribe an appropriate value to health of the people. The commodification of drinking water will shift the focus to profits to be made from the scarce resource rather than human rights to water for livelihood.
  6. As, such the emphasis is more on public-public partnerships rather than commercialization of the drinking water supply programme by the private agencies.
  7. Maintenance cost of the water supply system should have an inbuilt component of cross-subsidy to ensure that the economically backward groups are not deprived of this basic minimum needs.

Therefore, from above, there is a very clear message from Government of India on issues like; right to drinking water, water as basic need, drinking water as highest priority, non-commercialization of water, not interpreting willingness to pay as affordability, not leaving water to the market forces, avoiding the commodification of this scarce resource and, emphasise on public-public partnership (so, not Public-private-partnership).

 

Saurabh Singh, Innervoice Foundation, Ballia

It’s very sensitive discussion and for last couple of days I have been closely following it up.

I have noticed in arsenic affected areas of UP & Bihar (Ballia and Bhojpur) that people who continue drinking arsenic laced water often ask why government is not allowing private vendors to supply water if it cannot provide safe drinking water to all. Also it has been found that all endeavours in this regard have not met with any fair amount of success mainly because of the following

  1. No private vendors try to take the active help of the community concerned, leave alone community mobilization and their active participation at planning and execution level.
  2. Private vendors at the most are concerned with their business interests
  3. There are no clearcut guidelines or set of practices regarding the issue at hand and often it results in a one-sided exploitative approach owing to which it often adds to the existing problem rather than solving it
  4. There is no training, motivation and monitoring by the district level agencies. This results in complete disorder that affects communities adversely

In my opinion these are the major areas we need to work upon. Otherwise, specially in rural areas where the drinking water crisis is acute there cannot be any major initiative successful. However, the WASMO experience clearly proves that through community's active participation and help a lot be achieved.

 

Gaurav DwivediManthan Adhyayan Kendra, Badwani, Madhya Pradesh

This is quite an interesting discussion that has been going on for some time. I would like to bring out some of the observations regarding the questions asked, but despite the moderator’s cautions it would also be interesting to note the general contexts that one should look upon before heading in straight away on setting parameters for successful business models in rural water supply. As some of the members have already noted - why do we need to commercialise water, why is there a need to bring private operators in rural water supply, the state responsibility and human rights aspects. It is important to note that after going full throttle for privatising water supply distribution in urban areas, the results of which are really not inspiring, the next target is rural water supply.

The experiences and observations that are drawn upon here are from short studies done in some of the districts of Madhya Pradesh and Rajasthan on the World Bank supported “Swajaldhara” rural water supply scheme, which promotes private/ community participation.

1.       Triggers that led to selection of Private Operators. The triggers that have led to the selection of private operators in villages for water supply as have been observed during field visits have shown that among the other common factors like water scarcity, lack of positive interventions from public agencies, etc. The major factor that has lead to the involvement of private operators (read petty local contractors) in rural water supply schemes in the villages of the above mentioned states is the funding aspect. The Swajaldhara experience shows that involvement of private operators in rural water supply is mostly been driven because of the availability of funds from the Central and the state governments through this World Bank funded scheme. Since the funds were there to be utilised, the proposals were prepared and sent out for approval to the respective agencies. It is an easy way out for village and district level bodies to access funds through this scheme. Even if they do not have the 10% of the funds required to contribute for the project, these bodies simply get a private contractor on board, who pays the money required and consequently owns the system, collects charges from the households, runs the system, decides with the village power holders on who gets water - as long as there are profits to be made, the equipment is working or the resource is yielding water. (It is a good opportunity to own a system with minimum of investment.) As soon as these factors come into play he just abandons the project in whatever shape it is. The village households are then again back to square one, fending for themselves. 

2.       Specific responses to the basic issues of water supply management. The specific responses and subsequent experiences to the basic issues of water supply management by the private operators have been poor as observed in the villages during field visits. The water availability still depends on the resource, although more funds have allowed deeper borewells to be dug, powerful motors to be installed. But with the depleting ground water tables across the country and especially in the water-scarce areas of Rajasthan and Madhya Pradesh these become dysfunctional soon. Private operators do not want to get their hands into promoting recharging of ground water aquifers or more surface water storage. 

The claims in the improvement in quality water supplied also remain ambiguous since there are no treatment facilities constructed, and if done would be very costly in terms of capital and maintenance costs for sparsely located populations. On the other hand most of the villages still have access to water which is very much potable. So in fact the need for high cost purification system negates itself in such conditions.

The affordability issue is a serious concern, since most of the private operators supply water to only those households which are able to pay the monthly charges that are applicable. Those who are not able to pay are simply left out of the distribution system and left to fend for themselves. This means that the poorest of the rural poor are not able to get the advantages of the new/ improved water systems because of lack of paying capacity which means quite a big number is left out. These households then have to revert to those water resources which are very poor in terms of quality, water availability and distance. Since the better ones are already been captured by the better off, aggravating the water situation for such people, like the Dalits, Harijans and other lower castes. There are other issues like caste, class and village politics which hamper the access of such communities to improved water supplies. And these are such factors which no private operator has the ability to resolve. 

3.      Contextual factors that explain or influence the success or failure of rural private operators. The observations show that there are no contextual factors for success or failure of private operators, and even if there are any they should be the secondary concern, unless and until the fundamental issues are dealt with. The questions that need to be asked here should be

  1. Would the private operators be interested in investing in improving the water resources, recharging ground water or improving surface water storage? The answer is no, this would mean costs and if these are done there would not be any need to the private operator since then with abundant water resources and a community would not need a private operator to run the show.
  2. Would the private operator be interested in providing water to all cutting across the boundary of affordability? The answer again would be no, since the private operator is there for a business, for earning profits. It would not be his concern to supply water to poor households. Hence, again in such a case a government agency/ department would have to step in to provide water to these households or worse they are left to find their own resource
  3. Would the private operator keep running the system even if it is not financially sustainable? The answer sadly is again a no, since it would not be a social welfare responsibility of the private operator. It is the responsibility of the state to do so
  4. Would the private operator be interested in repairing the costly equipments without any state or community support? Unless there are huge profits to be made the answer is no again. Since profit margins would be low in rural areas. The private operators are not interested in such investments which also mean a lot of other problems in far off rural areas where spare parts, technical manpower and instruments are not available easily. Hence as soon as such a situation arises the water supply is stopped. If the funds are raised the repairs are done otherwise nobody really bothers.

4.      Incentives that attract them and the risks that deter Private operators – The Swajaldhara experience clearly shows the kind of incentives that are required if the private participation in water supply needs to be promoted. It also delineates the risks that are involved with this model. The incentives are clear – minimum or no investment, guarantee of charges to generate profits, control of water resources, etc. The risks involved are also clear – no water resource risks, no investment risks – capital or O&M and no risks related to revenue generation. If these are taken care by the government the private operators would be more than willing to get into water supply operations in the rural areas. 

Alternatives –

However, if we are ready to look beyond this model we would find many others who are working on specifically community-based approaches and with a lot of success. We would find these successful models in places as far and different like Tarun Bharat Sangh in Rajasthan, People’s Science Institute in Uttarakhand, TWAD Board in Tamil Nadu, in Kutch, Gujarat among others. These approaches show the way through community consultation and participation, low cost technologies, local raw material and local manpower used, community ownership, ease of operation and repairs, etc. To conclude the time is to seriously rethink the private model in whatever terms it may be – financially, socially, and environmentally.

 

Shrikant D. Limaye, Ground Water Institute, Pune (response 2)

When considering the issue of supplying water to the "poorest or the poor", it may be noted that the private operators do not see any "business opportunity" in this and are not interested. It is up to the Government to provide the basic infrastructure and up to the local Village Panchayat to operate and take care. A per capita or per family maintenance charge of Rs.1 per month per person or Rs.5 per month per family could be collected in the Panchayat's Water Fund.

Those interested in knowing why many such schemes do NOT work satisfactorily should visit website of my UNESCO sponsored project www.igcp-grownet.org and then click on “Best Practices" and go to Best Practice no. 17.

 

Jasveen Jairath, Water Sector Professional, Hyderabad

There is a difference between financial viability of a model and commercial models. The two are often confused for each other in the discourse but it is critical to maintain the distinction.

I will also comment on this: “While the current rural water supply situation suggests that community management should not be rejected, there is a need for more business models as well as a criteria for selecting the best model for a given situation. The current problems with the community management model include a lack of capacity, turnover of trained personnel, long periods of inactivity, internal conflicts and corruption, difficulties in raising funds and inability and lack of equipment to handle repairs.”

There are two approaches here:

  1. Seek business models that have not worked anywhere
  2. Or build up - support /refine/develope financially viable models that have worked at the field level

We have to be clear what and why we choose either approach. Secondly - the difficulties noted in case of community-managed systems are largely taken care of in case of "financially viable models" as running models - except raising of initial, that is a one-time capital funds. This can always be considered as investment by the state/through loans or regular funds as the amounts are not very large. As a rough estimate Rs. 10 lakh for a medium sized village. As one-time grant it is not too heavy an amount. Specially if existing public systems that are not functional are also dovetailed into this mix of community + gram panchayat + local government + NGO + private equipment supplier/maintenance input, etc.

Why is above option, that is neither pure community managed nor pure business model not considered for scaling up?Why is there an attempt to present business model as necessarily a superior model when it has not worked effectively on the ground? Why do we disregard existing evidence on ground level success in delivering safe/affordable domestic water in rural areas and are obsessed with promoting "business models" whose efficacy is yet to be established.

Is our objective to solve the water problem in rural areas or how to fit the a priori (perceived) solution ( business model) to the existing problem?

These are alternative strategic approaches and there must be clarity on why and what we choose to promote in the discourse - since every discourse can legitimize policy decisions undertaken on consideration other than stated objectives.

 

Hemant Kulkarni, Council for Scientific and Industrial Research, New Delhi *

The key challenge in ‘Providing safe drinking water at affordable cost, especially to neglected regions and class’ has more to do with ‘scale-up model’ rather than the technology.  If one looks at it only from ‘corporate social responsibility / feel good’ point of view it is unlikely to be sustainable, since there are just not enough grant / philanthropic funds available to create ‘sustainable solutions' to address this issue.  Management (ownership) by local panchayat works until a point of affordability.  Once affordable, private sector proves more efficient and effective.

Paul Polak somewhere has commented (check his video http://intellecap.com/ ) “Commercialisation is path of scale and involves integration of ruthless pursuit of creating affordable transformative technologies combined with radical decentralized private sector supply chain” .  In other words, we must identify low-cost suitable (need based) technology solutions and rope in private sector to provide services.

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Safa Fanaian, Secretariat for the promotion of a Discourse on Science, Religion and Development, New Delhi * 

I have been reading the posting on this track very closely as I had for sometime worked on issues surrounding this in Andhra Pradesh where several of these private bottled water/ packet water plants have come up and this too in small towns and some even in villages.

And also there has been a lot that Nandi Foundation has done in terms of installing community managed treatment plants and then there is also some work of the similar sort of work that was done by Byraju foundation and a few other NGOs. So we as apart of a study to learn of the different water services that are being provided in Andhra Pradesh we also looked at some of the villages where these community-managed treatment plants were set up. And also in the study got to hear about what the community and individuals were going through in terms of getting water from the private water vendors.

According to the different schemes there have been several interventions taking place at one point of the other from Multi-level village schemes to hand pumps. The schemes are not something that i will go into however as to the questions raised in the first place and the conclusion derived from this discussion and from what I have seen on ground  in my limited experience I feel there is a bit of difference.

As the community gets richer from the relatively better developed villages that I have seen the spirit of voluntarism did not seem to diminish. It is true that they had more work etc., and less time to give but instead of volunteering their time they volunteered to pay and hired someone from the village to manage these plants, etc., because anyway they required some level of expertise to treat water.

When we spoke to the people from the villages where Byraju, Naandi and others had worked (whose name I cant remember at preset), we found that they did not just go and put up the plant. The process began with a lot of inputs from the people and they was a lot of ground work where people were informed about the advantages of drinking clean water (especially areas where there was excess fluoride). 

I may be mixing up the different approaches that were take up by the different organizations but on the whole it involved people, if they wanted clean water they had to be involved as a prerequisite laid by the NGOs and this was done so that the initiative be sustainable, for in the end it is the people of the village that will care for what happens in the village. The payment patterns were different between the organizations, in some cases it is a can wise payment in some cases it is a monthly payment. On the whole the people were involved in the entire process they had to form a village core committee, maintenance committees, etc., and more as Nitya has mentioned as well. 

From the villages which I had been to some of them really in a sad state, they paid so much more for water from private vendors because there was no water in the village, the amounts they mentioned were very high and I did not know whether that was made up or real because there are no records to prove it and during summer the rates go higher.

About sustainability, I don't know how that could be achieved with private vendors, because they usually supply through tankers or plants get their water at whatever rate they can from ground water or from large pond (or tanks). Since earning money is their main motive they don't care that much about at what rate they are withdrawing water. They are not usually from the same locality they are not so concerned about depleting the water table of that area.

Rather than “adapt the nature of private sector involvement to local conditions and needs of the community” the local communities should be able to evolve a model that suits the condition of their locality with technical support from outside. What I had learnt when I was working on this issue and from what I have seen in the villages is that when the solutions arise from the communities they have a greater chance of being long-lasting rather than something that has been given to them.

The easy thing to do to bring about bandaid solutions would be to bring in private sector, that would at the beginning reduce costs, etc., but keeping the long run in mind and the sustainability of this in mind for the future, how long is the private sector going to last? For private sector it is more on a profit-loss basis what will happen if they go into loss? The logical answer would be to back out. Their backing out would not matter that much if they were in the cities but we are discussing the rural population. And even in cities of UK the city water management is being taken back into the hands of the government from the private sector.

There is so many more implications which many others have mentioned as well however, this a little of what I wanted do share in this regard and I regret skipping many of the precise details in favor of brevity.

* Offline Contribution

 

Many thanks to all who contributed to this query!

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