Time to turn the tap off

http://www.businessworld.in/news/corporate/time-to-turn-the-tap-off/1434986/page-2.html

PPP intervention in water supply and management can happen at various points of the supply-chain using multiple mechanisms.

PPP mechanisms in water are  relatively recent an the PPP initiatives in Johannesburg and Nepal are considered to be success stories whereas the initiative of providing success linked payments to water utility employees in Kampala in Uganda also is considered to be a success story.

There are a complex set of issues that constrains us from charging a competitive rate for water. The issues range from absence of a culture to pay for water to inability to pay for lifeline water which then pushes the argument of charging for water being against the tenets of welfare state. Overall, it’s a issue of political leadership to push through the necessary reforms that would ensure a sustainable supply of water.

Given that upgradation of water supply systems is a capital intensive initiative, and the fact that a majority of existing public sector organizations that are responsible for water supply have become fossilized, bringing in private participation would help in attracting the required capital as well as bringing in the state of art water supply management perspectives. Clearly, privatization is definitely a feasible option. However, the option has to be exercised on a case to case basis. It is not a panacea for this sector.

Sarvajal is an excellent for-profit initiative. Since it is for profit, it is scalable and financially sustainable. The only issue is that in many of the cases, the funding organizations use CSR funding for provding the water solutions from Sarvajal. Perhaps with introduction of section 135 in the New Companies act, there would be a greater availability of CSR funding that would see sarvajal being adopted in a larger number of communities.

Private sector can be attracted to this sector by making the sector financially viable. Financial viability can be brought in by either (a) increasing the water charges or (b) providing viability gap funding for once time capital or (c) providing viability gap funding for operations or a combination of the above three. Given that water is a sensitive issue, any mechanism adopted, has to be crafted with care and due diligence, with active participation of relevant stakeholders and also perhaps by including the stakeholders in the final solution by making them co-responsible for the water supply.