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3rd H2O India Conference
Experts question universal thrust on PPP in water
The conference was a milestone in that experts discussed why the government-promoted PPP model has often failed when it comes to the water sector.

A fascinating two-day conference ended in Mumbai on 24 May: The 3rd India H2O Conference’s theme, “Pipelining the nation: How a quantum leap will transform urban and industrial water”, was a trigger for speakers and delegates to identify the need that exists in the high-potential, low-adoption sector—that the quantum leap is yet to take off. While the government has been quick to adopt the Public-Private Partnership (PPP) model in all infrastructure sectors including water, experts at the conference cautioned policymakers about the model.

Global Ambassador of Global Water Partnership and Ex-cabinet minister Suresh Prabhu, a campaigner for sustainable solutions in water, critiqued the current draft of the third National Water Policy. He said that the critical point to be implemented from the Policy in letter and spirit is efficiency, and not blind adoption of PPP.

Interestingly, PPP was a focal point of debate through several sessions of the conference. Its lukewarm performance in the water sector drew criticism. Abhay Kantak of Crisil said that the delivery model of PPP has undergone a “visible change” over the years: Rehabilitation and distribution is now a part of contract as in the Haldia and Naya Raipur water supply projects. However, many flaws in following basic principles in documentation have emerged, as in the cases of Mysoreand Naya Raipur, where the service expectation was 24x7 water supply, but the Detailed Project Reports (DPRs) did not reflect that critical element.

The Latur case study went on to prove that point. Radheshyam Mopalwaar, Member Secretary, Maharashtra Jeevan Pradhikaran, presented the case of a PPP project in that town in Maharashtra, where politicised protests barred the requisite water meters to be installed across the town and eventually, after the contractor failed to fulfill the obligations, O&M was transferred back to the municipal corporation in May 2011. Mopalwaar’s inferences included that “people do not accept water as a commercial commodity”—especially where they do not perceive scarcity. “The PPP model can be successful only if the service provider comes with long term commitment and does not expect windfall profits,” he concluded.

Mahesh Gandhi, whose Singapore-based investment bank AFII represents Israel’s national water company Mekorot in India, said PPP was the way forward for municipalities, but rejected PPP as a model of adoption for small and medium enterprises (SMEs). "It is important that socio-economic effects of each PPP business model are carefully evaluated. Especially where it concerns utilities like water and such other infrastructure projects where the government guarantees annuities, it is imperative that the model be utilised to enable the utility company/government to self-develop the projects, retain the RoI resulting in lower total cost of the project and also lower cost per user."

Israel’s Consul-General Orna Sagiv said India’s potential to manage water was great, given how efficiently her water-starved nation had done pioneering work. She declared that Israel is seeking city partnerships in India in the field of water, partly as a step forward from an agreement that India and Israel signed earlier this year for cooperation in the field of water treatment technologies in urban areas.India is looking for expertise from Israel in desalination and recycling.Israel is a pioneer in advanced desalination systems.

Conference Chair Ramani Iyer of Forbes Marshall applauded India’s efforts in the water sector but lamented that availability and sustainability are still not the mantras. He reiterated that not only industries, but some cities, too, have taken a lead in the water sector.

The total sewage generation from Class-I and Class-II cities together inIndia is about 38 million litres per day, out of which less than 12 MLD, or about 35 per cent, is treated, with a capacity gap of 26,467 MLD (65 per cent). This sewage composed of domestic wastewater and/or industrial discharge, is a major source of water pollution in India, particularly in and around large urban centres. About 80 per cent of domestic water goes out as wastewater. The process of collection, treatment and safe disposal of wastewater without polluting existing freshwater supplies, is the most important challenge that is facing urban government bodies.

The opportunity size of water supply and wastewater management is endless, said Infrastructure Today’s Group Executive Editor Shashidhar Nanjundaiah. He said the conference was framed around the new National Water Policy, whose draft version is already in circulation.

The current draft-which will become the third NWP-provides impetus to PPP model of development. However, a definitive recommendation for PPP is being debated, since the government may be nervous about the viability and profitability of the basic need. There have been only a handful of successful PPP projects in water, mostly in O&M.

Speakers spoke on sustainable solutions, case studies in industrial water and wastewater management, the water-energy relationship, technology trends, and so on. The conference was attended by policymakers, representatives from municipalities, developers, contractors, consultants and financial institutions. The conference was organised by FIRST Infocentre, presented by Infrastructure Today,and supported by AFII and Ernst & Young. A status paper, co-authored by E&Y and Infrastructure Today, was released on the occasion.