At the base of Chamundi Hills in Mysore, a tourist favourite and the site of the city’s famous Dasara celebrations, lies Gundu Rao Nagar where one of India’s biggest experiments in urban water supply has come to fruition. Unlike people across the country, residents of this colony receive water for 24 hours everyday, seven days a week.

“Not worrying about water is such a relief," says Annapoorna Mahadeswamy, a housewife in her mid-thirties. Hailing from a village where availability of water was always an issue, the luxury of merely turning the tap to get water and not having to invest in a storage tank or a motor pump was no small thing.

This became possible for Gundu Rao Nagar’s residents because of a 164 crore project under the Union government’s Jawaharlal Nehru National Urban Renewal Mission to replace Mysore’s century-old water system.

But the four-year-old project to supply water 24x7 across Mysore has reached only a fraction of the city’s 900,000 residents. Bapu Satyanarayana, who lives close to Mysore University, says the water supply system has deteriorated so much, the city would have been better off without it. “We used to get water for at least 3-4 hours under the old system, but now we get water for 2 hours every other day," says Satyanarayana, a retired official from the Union ministry of surface transport.

In the summer of 2012, the combination of a drinking water crisis, poor progress in the modernization project and higher water bills resulted in a series of protests, prompting the minister in charge of Mysore district, S.A. Ramdas, to threaten the contractor, Jamshedpur Utilities and Services Co. Ltd (Jusco), with a contract cancellation. “We will hold them accountable if they do not take steps to ensure water supply is scaled up soon," Ramdas said.

By Jusco’s own admission, the project is way behind schedule. When the deadline for the project’s rehabilitation phase passed in January, it was less than halfway to completion and was stuck over financing issues and data discrepancies. In an email, Jusco’s deputy managing director Suresh Sharma, in charge of the Mysore project, said only 61,000 of 117,000 households in the city had been connected to the new system. And out of them, only 13,000 households are receiving water 24x7.

Model project

When it was conceived, the Mysore project was supposed to show the rest of India how to fix its creaky water infrastructure and provide consumers piped supply 24x7 by enlisting private companies. But, like so many other well-intentioned civic infrastructure projects in India, the plan to modernize Mysore’s water supply system has come up short of its billing.

The project was awarded in November 2008 to Jusco, a firm carved out of the utilities division of Tata Steel Ltd in Jamshedpur. It gave rise to a sense of hope and relief among policymakers that they had cracked the conundrum of enlisting the private sector in a politically sensitive sector such as water supply.

Since the 2000s, the urgency of upgrading water systems in cities has attracted the attention of policymakers. The Planning Commission’s Working Group on Urban and Industrial Water Supply, in a report last year, said the situation was getting out of hand. “The country is on a deadly spiral—on the one hand, water scarcity is growing and, on the other, water is getting increasingly polluted, which is further increasing the cost of treatment or leading to increasing deaths and illnesses," it said.

Existing water supply systems suffer from enormous inefficiencies, with some cities estimating losses of 40-50% during distribution because of leakages and bad management. Cities also receive revenue only from a fraction of the water that is sourced—in Nagpur, money is collected only on 30%, or 200 million litres per day (mld) of the 765 mld that is sourced, according to the report.

All Indian cities, barring towns such as Jamshedpur and Tirupur that have industry-designed water systems, have systems water 2-3 hours a day or over wider intervals, requiring households connected to the networks to store water in tanks.

The problem with intermittent systems is that significant investments have to be made by the households, and contamination of water is prevalent as the lack of pressure in the supply system leads to seepage of untreated water into the pipes.

Ramesh Ramanathan, co-founder of Janaagraha, a Bangalore-based non-profit that works on urban issues, says 24x7 water networks are a must in Indian cities. “The evidence is quite compelling whether you look at it from economics, water conservation, or even from a health point of view", he says.

The contract

After Jusco won the contract in an open bidding, the Karnataka government, the Karnataka Urban Water Supply and Drainage Board and Jusco signed an agreement to rehabilitate Mysore’s water supply system and oversee its operation and maintenance.

Under the rehabilitation phase of the project, the distribution mains, house service connections and sewage lines were to be upgraded to deliver 24x7 service. Worn-out pipes were to be replaced and pumps installed to maintain sufficient water pressure. Through the use of software algorithms, the system would be able to modify supply based on demand patterns to conserve water.

Jusco is working on a few other water supply projects in other parts of the country, but none as big as the one in Mysore. Jusco won the contract for 164 crore over six years. The project was divided into three phases: preparatory (1 year), rehabilitation (3 years), and operation and maintenance (2 years). Performance clauses were stipulated on the basis of which the company would be paid bonuses.

What went wrong

First, Jusco found problems with the scope of the work defined in the project agreement. When the tripartite agreement was signed, the work was for laying a network of pipelines over 910km with 117,000 connections.

“During the initial survey done by Jusco, the length of the pipeline network that needs to be rehabilitated was found to be 1,910km with 1.74 lakh connections... The discrepancy has put challenges in the project execution and its performance," said Jusco’s Sharma.

With changes in the scope of the work, the estimated cost of the project shot up, and renegotiating became messy.

“The government does not have money to increase the cost of the project, and even if they did, it would lead to litigation," said a state government official, who spoke on condition of anonymity because he is not authorized to speak to the media.

Jusco is in talks with the government to resolve the discrepancies in the initial surveys. “The plan is under discussion for approval as per the available budget for the project," said Sharma.

The Planning Commission working group conceded in its report that the risk of data gaps is high and that guaranteeing performance is difficult if a project design is flawed. On the Mysore project, it says: “If the cost is not revised, the work will be half done and results will be poor. The aim of the investment will be negated."

For Jusco, this meant delays in meeting the targets, and thus losing on bonuses. According to government officials, the company has forfeited nearly 24 crore of performance bonuses alone. Jusco declined to comment on this.

Another point of contention was the lack of cooperation between Jusco and the city’s existing water works department, Vani Vilas Water Works. Employees of Vani Vilas, which has been serving Mysore for several decades, were deputed to work under Jusco, but reports of conflicts emerged as the project began to stall.

Getting the model right

The project was structured in a way that didn’t require Jusco to invest in it. Instead, it was assigned as a management contract under which Jusco would be paid for performing defined jobs. This is where the problems began.

To a large extent, people in the government and on the ground blame the model for the failures of the project.

An adviser to the state’s water department, who declined to be identified, said the basic issue was to find a balance between getting private companies to participate and ensuring sufficient safeguards in the contract to protect citizens.

“In the case of Mysore, the contract was structured in a manner in which Jusco had to make no investments. But this hasn’t worked out for Jusco either. If this was a PPP (public-private-partnership) project, the private partner could increase their investment and recovered dues from the consumers," this official said.

Getting the model right for private participation in water projects is tricky. Ramanathan feels private ownership of public assets such as water will not work.

“The experience of private ownership has been mixed around the world. Moreover, it is also a cultural issue, and, in India, where water has traditionally been a public good, private ownership will not work," he says. “That said, we can have private sector participation where we can have the benefits of private sector without the pitfalls of private ownership."

There has been other criticism too—civil society groups such as the Citizens Committee’s Coordination Forum have claimed that a private operator was brought in to get the city’s poor to pay.

Ravi B., a member of the forum, said some poor communities had been provided with free water by the Mysore maharaja for parting with their lands when the city expanded. “Now these communities are being forced to pay for water through various drives initiated by the corporation," he said.

Ramanathan says deployment of modern water supply systems has also led to vigorous debate such as on pricing. “Pricing must be equitable. Poor households must receive water up to a certain quantity for free or for a very low sum. Addressing this in a transparent manner is extremely important before embarking on such projects," he says.

Jusco officials say the Mysore City Corporation and the Karnataka government are responsible for the more politically sensitive functions—pricing and disconnection of illegal water connections. Jusco collects revenue from citizens and hands over the money to the civic body.

Silver linings

Despite its flaws, the Mysore water project has shown some improvements, such as in revenue collection, which improved from about 16 crore in 2008-09, when Jusco took over billing, to about 25 crore in 2011-12. In the current financial year, revenue is already on course to surpass that, having reached 23 crore in January.

Jusco also surveyed and prepared a map of illegal connections in the city, which were then presented to the Mysore City Corporation for regularization. The surveys identified around 70,000 illegal connections. While Jusco has no powers to disconnect these households, the municipal corporation has regularized around 19,000 of them.

And policymakers have begun applying lessons learnt from the mistakes made in Mysore water project.

In other towns and cities, the Union government is pushing for the adoption of a PPP model, ensuring that private companies are investing their money in water systems and generating accurate data to avoid discrepancies in defining the job to be done.

Nagpur, the second city after Mysore to go for a city-wide 24x7 water network, has opted for a PPP model, handing over the city’s distribution system to Orange City Water Ltd for a period of 25 years. Aurangabad, Patna and Ranchi are also adopting similar systems.

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