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Madhu Bhaduri

1 November 2005

The Delhi Right to Water Campaign received a letter last week from the National Advisory Council headed by Sonia Gandhi saying that the Delhi state government is yet to take a decision on seeking a World Bank loan for privatisation of the capital’s water supply. The letter said that “for a thorough examination of the recommendations on the reforms, the Government of NCT of Delhi are (sic) understood to have sought expert advice and the DJB have (sic) taken up an in-house exercise to examine the recommendations”.

The NAC’s letter, signed by Director Jayanti Ravi (IAS), added that the Delhi Jal Board (DJB) was consulting with The Energy Research Institute (TERI), Administrative Staff College of India (ASCI) Hyderabad, and NCAER on the reforms. “Pending a full appraisal of the recommendations, the DJB are understood to have approached the Government of NCT of Delhi that the processing of the loan be kept pending. Therefore, a decision on seeking World Bank loan is yet to be taken.”

The letter from the NAC is in response to a letter written by more than 20 eminent citizens to Sonia Gandhi in September expressing serious reservations about the 24/7 water supply project of the Delhi government. The signatories included Muchkund Dubey (former Foreign Secretary), Bipan Chandra (eminent historian), Romila Thapar (eminent historian), Deepak Nayyar (former VC, Delhi University), Padma Bhushan G P Talwar, G S Bhalla (Former member, Planning Commission), Chitra Mudgal (former Chairperson of Prasar Bharati), Prabhash Joshi (eminent journalist) and Aruna Roy (Member, NAC).

In their letter, they had drawn the attention of Sonia Gandhi to the stiff conditions attached to the World Bank loan, which they said would give full powers to the Bank to have a final say on all matters by over-ruling even the decisions of the elected government and DJB. “The Bank has the powers to impose a consultant/contractor of their choice on DJB by giving the Bank sweeping powers to intervene at technical stages of the bidding process, thus rendering the entire bidding process irrelevant,” they wrote.

The signatories had also raised other objections. “This project will influence the lives of millions of people in Delhi. However, the terms and conditions give the World Bank the last say in all matters to the total exclusion of Government, elected representatives and the people. The terms and conditions appear to grossly undermine all norms of democratic decision-making in India, and raise issues of sovereignty”.

Asking whether the Delhi Government really needed this amount of loan, they had noted that the government invests close to Rs 1000 crores every year in DJB for capital expenditure and subsidy to meet revenue shortfalls. The amount available under the World Bank loan was about Rs 120 crores per annum for six years, at a commercial rate of interest. “After taking foreign-exchange fluctuations, commitment charges, etc into account, it could cost more than 8% to DJB. This is certainly a very high cost to pay for an infrastructure loan with sovereign guarantee. At a more reasonable rate of interest, we are sure, that this amount could be easily raised from the domestic capital market, if the government really needs it,” wrote the eminent citizens.

The signatories had also raised serious concerns about the impact of this project on the people of Delhi. They warned that rather than improving the performance of DJB, their implementation would lead to a situation much worse than the existing situation. “Tariffs would rise very high and could take water out of the reach of a number of people. Water would become inaccessible to the poor.” The signatories doubted the state government’s claims about improvement in services and continuous water supply, stating that the claims were not supported by documents. “On the contrary, the services are likely to deteriorate under the water companies. The project simply ensures guaranteed and unjustifiably high profits for the multi-national water companies. Salaries of about $ 25,000 per month have been recommended for the employees of water companies. All this would be passed on to Delhi’s citizens in the form of higher tariffs,” they said.

The citizens also brought to the notice of Sonia Gandhi that in several other parts of the World, where similar measures were undertaken, water companies made huge and unjustifiable profits at the expense of local citizens. “Water tariffs skyrocketed, water quality deteriorated, water was diverted from residential areas to amusement parks and hotels and supply to the poor was cut off as they could not afford water. In some places, riots broke out for water. People stopped paying bills to the water companies. The companies had to flee from some countries. The companies made profits even while leaving these countries. They filed multi million dollar compensation suits against the governments”.

Stressing that such developments must be avoided in Delhi, the eminent citizens had demanded that the loan application to the World Bank be withdrawn.

Madhu Bhaduri
1 Nov 2005

Madhu Bhaduri is Convener, Right to Water campaign, A-12, IFS Apartments, Mayur Vihar - Phase-1, New Delhi.

Citizen Direct is India Together's channel for publishing reports from citizens who have detailed information about specific civil society concerns and matters, by virtue of their participation, association, or independent observation. These reports are therefore as witnessed and understood by the authors themselves; India Together accepts no liability or responsibility for them.   More

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