Alternative World Water Forum

In August 2016, the Karnataka government gave Abu Dhabi-based businessman B.R. Shetty permission to privatise the iconic Jog Falls to make it a perennial waterfall and to develop it into a tourism hotspot. As per the newspaper report, Shetty is to invest Rs 450 crore towards the project and charge visitors a “minimal” fee.

Privatising natural water bodies is not new in the country with Madhya Pradesh (now Chattisgarh) setting the trend 17 years ago by selling the rights of the Shivnath river, that extends to about 23.5 km, to a private company, Radius Water Limited (RWL). Not just RWL, there are many private companies working in different parts of India in the water sector like Veolia Water India Limited (VWIL), Jamshedpur Utilities and Services Company Limited (JUSCO), Vishwa Infrastructure Limited (VIL), MSK projects India Limited (MIL), Orange City Water Private Ltd (OCWL), etc. The state governments and Urban Local Bodies (ULBs) encourage private parties to come forward and participate in the water and sanitation sector by opening up several opportunities like Jawaharlal Nehru National Urban Renewal Mission (JNNURM) and Urban Infrastructure Development Scheme for Small and Medium Towns (UIDSSMT) under Public Private Partnerships (PPPs) for them.

This is surprising considering the privatisation of the Shivnath river was a big blooper on the government’s part. Though the shortage of government funds to supply water to the industries was cited as the reason for the privatisation of the river water, it didn’t really work out that way. In fact, it not only affected the livelihoods of thousands of people around the river with RWL restricting the villagers from using the water by fencing it, the arrangement also resulted in huge financial loss for the government.

The government and the industries had initially believed that privatising the Shivnath river will solve the water woes of the industries at Borai. The plan was to build a barrage on the Shivnath to supply up to 30 million litres per day (MLD) to the Borai industrial centre near Durg in Chhattisgarh on BOOT (build, own, operate and transfer) basis.

“Though there was a lack of sufficient demand for water, the then managing director of Madhya Pradesh Audyogik Kendra Vikas Nigam Ltd (MPAKVN ), G.S. Mishra signed the agreement with RWL. Back then, Borai had two large and medium scale industries, and their combined water requirement was between 1.14 and 2.5 MLD, while the Chhattisgarh State Industrial Development Corporation (CSIDC) had to compulsorily shell out money for 4 MLD. Adding to this financial loss, CSIDC purchased water at Rs 15/ cubic metre from RWL. It sold water to industries at Rs 12/ cubic metre, incurring a loss of 20% on every unit of water it sold. Increase in both supply or demand would mean higher losses. Adding to the loss was Hindustan Electro Graphite (HEG) that was to buy almost 90% of the CSIDC’s water sales but reneged on its agreement,” says a Tehelka report.

Till date, RWL has not transferred the ownership of land to the government. Neither has the government taken any visible action against RWL for the financial loss to the state exchequer.

Why privatise water resources?

Water privatisation refers to the transfer of ownership of water resources from the public sector to the private sector. Since 1990, the government, through its reforms, has encouraged private sector projects in the water sector in the hope that transferring the responsibility of water to private companies will bring more transparency and accountability to the process.

The drive to privatise the water sector in India accelerated after the year 2000 when the government of India adopted various reforms suggested by international financial institutions like the World Bank and the Asian Development Bank.

In 2002, the government implemented National Water Policy. As per the policy, “Private sector participation should be encouraged in planning, development and management of water resources projects for diverse use, wherever feasible. Private sector participation may help in introducing innovative ideas, generating financial resources and introducing corporate management and improving service efficiency and accountability to users. Depending upon the specific situations, various combinations of private sector participation, in building, owning, operating, leasing and transferring of water resources facilities, may be considered.”

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