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The Capitalist | The business of water in India

The Capitalist | The business of water in India
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First Published: Wed, Jul 15 2009. 10 09 PM IST

Vital resource: With high stakes in the pricing and supply of water, it is imperative that the government works out pricing policies. Rajkumar / Mint
Vital resource: With high stakes in the pricing and supply of water, it is imperative that the government works out pricing policies. Rajkumar / Mint
Updated: Wed, Jul 15 2009. 10 09 PM IST
How much water does a person require every day?
This question has begun bothering India’s policymakers. Most US cities believe that a person needs 670-700 litres of water daily. Water-scarce countries such as Australia put this figure at one-third of that range, believing that on an average a person ought not to consume more than 270 litres.
But The Economist, which bases its research on the findings of the World Bank, says: “Most people drink about two litres of water a day, but consume 3,000 (litres) a day if the water that goes into their food is also taken into account. Rich countries use more, as their consumption of meat, which is far more water-intensive than grain, is higher.”
Most Indian cities have a figure that is much lower, especially in cities where telescopic water tariffs have been introduced. The daily consumption is put at less than 100 litres per person per day, after which the tariffs go up marginally.
Vital resource: With high stakes in the pricing and supply of water, it is imperative that the government works out pricing policies. Rajkumar / Mint
In fact, it is the tariff problem, on the one hand, and the growing awareness about the shortage of water, on the other, that has begun making people look at water as an extremely good business proposition.
Some businessmen such as H. Trivedi, director and general manager, Eimco Water Technologies Ltd, believe that the water business in India could be worth at least $1 billion (around Rs4,870 crore) a year, and that one-third of this would be accounted by water-related equipment.
According to some experts, the cost of water can be recovered with a tariff of Rs45 a month, which in turn would allow each person around 3,000 litres of water a month, or 100 litres a day. This works out to 1.5 paise per litre of water.
But costs can spiral several times depending on the technology used. A desalination plant, for instance, could push up water costs to around 5 paise a litre, according to studies conducted by scientists of the Bhabha Atomic Research Centre. Mumbai’s cost is estimated to be just around 1 paise per litre. However, barely half that amount is collected from its citizens.
In Mumbai, the biggest beneficiaries of free water are often not taxpayers, but a mafia that steals water from the public. Just last month, the city’s municipal commissioner admitted that he would have to do something about the daily leakage of 800 million litres of water! That translates into daily losses of a whopping Rs80 lakh, with a market value much more than 10 times that amount!
This water is invariably stolen by water tanker operators, who collude with the municipal staff and even with the police. That is why you seldom see water tanker drivers being hauled up by the local police, even when they recklessly flout traffic rules.
With such high stakes in the pricing and supply of water, it is bound to become a big business. That is why it is imperative that the government works out pricing policies as guidelines for the entire country. These could become benchmarks for municipalities, on the one hand, and for funding water delivery systems, on the other. Without first working out the eventual cost a customer may have to pay for this vital resource, the entire pricing game for water could become highly exploitative.
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Solar power gets another boost
A few weeks ago, this column had mentioned that the first commercial project for harnessing solar power had finally been given the go ahead. California-based Brightsource Energy Inc. signed the world’s two largest deals to set up 14 solar power plants together supplying 2,600MW, at a cost not expected to be higher than 5 cents a unit. Instead of using the conventional photovoltaic route, the company would use mirrors to focus sunlight to heat up boilers, which in turn would generate steam to turn the turbines. Photovoltaic cells convert sunlight into electricity.
Now a bigger project using a similar technology has just been announced.
On 13 July, 12 companies signed a memorandum of understanding in Munich, Germany, to establish Desertec Industrial Initiative (DII), which will analyse and develop the technical, economic, political, social and ecological framework for carbon-free power generation in the deserts of North Africa.
This project, too, will use mirrors to heat boilers and turn turbines to supply electricity to local regions and much of Europe, using trans-Mediterranean high-voltage, direct current cables.
Signatories to the DII include ABB Ltd, Abengoa Solar SA, Deutsche Bank AG, E-ON AG, HSH Nordbank AG, MAN Solar Millennium GmbH and Siemens AG.
The Indian government’s response to such technologies is still awaited.
Junkets: not for journalists alone
It is not just journalists who get the benefit of junkets. India’s councillors, corporators, ministers and bureaucrats are bigger beneficiaries. More often than not, there are subtle and not-so-subtle means to influence them to take a commercial decision that benefits the one who pays for the junket.
The Times of India’s Goa edition recently reported how the city’s councillors were planning to go on a second junket tour to Okhla in New Delhi.
The primary reason was to visit a garbage treatment plant, managed by IL&FS Ecosmart Ltd, one of the proposed bidders for a similar project at Sonsoddo in that state. The earlier junket involved the chairperson of the Margao Municipal Council.
In fact, one of the councillors is reported to have stated that if the planned trip to Okhla is cancelled for whatever reason, “we won’t allow the garbage treatment plant to be set up”.
That is a great way to mix business with pleasure.
R.N. Bhaskar runs a company with significant interests in distance learning and examination certification and writes on corporate and business policy issues. Comments on this column are welcome at capitalist@livemint.com
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First Published: Wed, Jul 15 2009. 10 09 PM IST