Just one visit to any major city in India will show, without needingstatistical proof that basic municipal services in Indian cities
generally lag behind world standards in both quantity and quality.
In fact, Asia’s widest quantity gaps compared with industrialised
countries are in water and sanitation while the narrowest gap is in
telecommunications (See Table 1). The time is now ripe for Asian
countries, particularly cities in India, during the financial crisis,
to target the investment in basic public infrastructure– most importantly
drinking water, sanitation and wastewater treatment.
We make three points in support of the above arguments:
• Since 1990, the annual growth of the proportion of population with
access to an improved water source in Asia has been a dismal 0.90 per
cent.1 At this rate, Asia will take another half a century to reach the 24-
hour safe drinking water supply of industrialised countries. However,
Asia has credible success stories in Japan, South Korea, and Singapore
from which other countries can learn and scale up.
• The total infrastructure investment required in Asia is estimated at
above 6 per cent of regional gross domestic product (GDP) annually
during 2005–2010 (Table 2). This is almost 30 per cent of global
requirements and is greater than that of other developing regions of
the world, which explains why governments in Asia should accord
a higher priority to infrastructure. However, the annual private
investment in infrastructure in Asia in the last three years accounted
for only 0.7 per cent of the total GDP in Asia, and onlyabout 20 per cent of total infrastructure spending in Asia.
Almost 90 per cent of the total private sector investment in
infrastructure in Asia over the last 20 years was in just six
countries, including the People’s Republic of China (PRC)
and India, and these were limited to telecommunications
and power.
• Surely there is no lack of money in Asia? The Asian
Development Bank’s assessment in 2007 shows that
Asia has built up over US $2 trillion in foreign exchange
reserves and domestic savings. Policy makers need to
consider seriously how these funds can be deployed, at
least in part, to invest back in the region -- especially in
basic municipal infrastructure. Estimates by the Institute
of Water Policy, Lee Kuan Yew School of Public Policy,
Singapore indicate that nearly $500 billion will be invested
in Asia in water over the next 10 years. And policy makers
are listening. For example, in its Eleventh Five Year
Plan, PRC government has prioritised investments in
wastewater treatment plants and recycled water facilities,
with an estimated investment of $44 billion during the
five-year period. India’s Total Sanitation Campaign under
the Tenth Five Year Plan is estimated at $3.35 billion,
and the reform-based Jawaharlal Nehru National Urban
Renewal Mission comprises a massive $11 billion grant
for a seven-year period, 2005-2012.
The big need to boost investments dramatically opens up
an enormous opportunity for private sector participation in
the water, sanitation and wastewater management.
Not with standing the economic crisis, there is reason to
be optimistic that capital will still make its way to finance
water projects. For example, Manila Water, a private water
concessionaire announced last month that its maiden Peso
bonds had been way oversubscribed. It had launched the
bonds on October 13, 2008 for the amount of P3 billion, but
because of the overwhelming demand, particularly from
the retail investors, the company increased the amount to
P4 billion, exercising its over-allotment option. Singapore’s
water agency, PUB, expects to award some 120 tenders
worth about S$1.1 billion before June 2009.
However, there is a vicious cycle of needs and
opportunities for investing in water projects in many Asian
countries, including India. On one hand, local governments
face great challenges in translating the needs of the people
into bankable projects that can attract equity and loans from
commercial and development banks and private sector
players. Often, they also lack the technical and financial
skills to independently develop and operate such projects.
On the other hand, domestic and international investors
with interest in water projects face challenges in identifying
suitable projects in a timely manner because the preliminary
project information is insufficient, or is of poor quality.
Consequently, a lot of good opportunities do not materialize
due to insufficient or unsatisfactory project preparation.
Changing the image of PPPs
Public private partnership or PPP has, in effect, become a
bad word in the water sector signified by Problem for the
government, Pain for the poor and eroded Profits for the
private parties. There is an ongoing heated debate in the
public domain about whether PPP is actually appropriate
in water. The PPP approach envisages that the government
and the private sector work together towards the goal of
service delivery in a fast and cost-effective manner. This
one-on-one relationship between the government and the
private sector has shrouded the role of the civil society in
the equation. This has often left out the question of society’s
acceptance.
Can this change for the better? I believe it can. In support
of this belief, I propose three key recommendations to
political leaders, policy makers, and private investors for
their consideration: (i) change perception about drinking
water and distribute it to all citizens immediately; (ii) deliver
24-hour piped water supply and set tariffs to achieve full
cost recovery; and (iii) prioritise investments in wastewater
treatment to arrest environmental pollution.
1. Distribute drinking water like food or medicine
The first one or two litres of clean water for drinking are
essential for human survival. This water is like food or
medicine. State-run water utilities in India that aim to
distribute 100 or more litres per capita per day lose up to
70 per cent of the water they produce through leakage and
theft. While the water they produce in their treatment plants
is reportedly potable, unfortunately, due to intermittent
supply, the water that reaches the taps in most cities is not.
The Third World Water Forum in Japan in 2003, alerted policy
makers and development partners, pointing to examples
from China and Laos, where municipal governments
successfully make available drinking water to all citizens.
When all the capital and operation and maintenance costs
of producing and distributing water (source development,
production, treatment, packaging, transportation, and
distribution) are taken into account at current prices (without
including profits of private bottlers), a litre of drinking water
supplied in a bottle would cost less than one-tenth of a single
US cent. Per capita supply of two bottles a day would imply
a cost of a cent for five days supply! The total annual per
capita cost is 73 cents and for India’s poor that number 300
million, the annual cost works out to $220 million, which any
government could underwrite for a few years. The essential
point is that small quantities of safe drinking water (at one
to two litres per capita per day) should be made available
as food to all citizens immediately. The distribution systems
used for milk, shampoo, and mobile phone services can ably
support cost effective “drinking water” distribution to all.
2. Deliver 24-hour piped water supply to ensure good
health
Policy makers and leaders are beginning to appreciate
that 24-hour piped supply of safe drinking water is not a
luxury but a necessity. Intermittent water supply poses
health risks. The 2007 Data Book on Indian Water Utilities
coordinated by the Ministry of Urban Development records
that in most cities in India the municipal water supply is
still on average, available for less than four hours.4
Hydraulics dictates that delivering 100 litres per capita
per day over an hour will require larger pipes compared
to providing this over 24 hours. To get 24-hour supply in
the home using the intermittent supply of water by the
utility, a typical household invests in an underground
sump, an overhead tank, a pump, and faucet filter, thus
becoming a mini water utility.5 The household often spends
4 to 10 times the amount that the utility needs to build the
necessary infrastructure for providing 24-hour supply. A
24-hour water supply is essential in capital cities, which
are the primary engines of growth for national economic
success and livelihood—just as uninterrupted electricity
is a requirement for any industry to remain efficient. The
economic costs of bad water services and the negative
implications to the quality of life society are enormous.
Examples from both public and private water utilities show
that if a reliable 24-hour water supply is provided, citizens
willingly pay.
3. Treat wastewater without further delay
In one or two decades, many Indian cities are likely to face
crisis on water quality management that is unprecedented in
history. Rivers, lakes, and oceans in and around urban areas
are now seriously contaminated, because the wastewater
collected from urban areas is mostly not treated or only
partially treated. In fact, in the ‘do-nothing’ scenario, this
problem will only get worse, because several cities are not yet
fully sewered. Indian cities will need to increase wastewater
treatment to around 50–60 per cent of the population in the
next 10 years, about four to five times the present coverage,
which is not an easy challenge.
Policy makers need to recognise that wastewater
treatment is not merely for cleaning the environment.
Treated wastewater can serve the water supply needs of
the population. With the new generation of membranes
and improved management practices, it is now possible
to treat wastewater at US $0.25 per cubic meter.7 Seawater
desalination costs have also come down from US $1.50 to
about US $0.50 per cubic meter during the past decade.
Thus, for people living within 100 kilometers of a coast in the
states of Kerala, Gujarat, Andhra Pradesh and Tamil Nadu,
provision of clean water for domestic, commercial, and
industrial needs will no longer be a physical constraint.
From PPP to GCS
The Asian Water Development Outlook 2007 report affirmed
that government-run water utilities will continue to be
responsible for 80 per cent of all water delivered in Asian
countries for another 20 years.8 Currently, the top three
of the most efficient water service providers in the world,
Singapore, Phnom Penh, and Tokyo, are all in Asia and run
by the government. Efficiency is not determined by whether
the operator is public or private. Private sector water
utilities such as Manila Water have also successfully shown
that it is possible to turn around a totally dilapidated water
service into a profitable business in a short period 10 years
using the existing government staff, and transforming them
through innovative business practices. Finally, civil society
organisations in India have demonstrated how rural water
supply and sanitation can be expeditiously and sustainably
delivered through social mobilization and innovative
partnerships involving private companies.9
There is an emerging consensus for a new paradigm
of enlightened partnerships in which governments can
deliver better water services, proactively engaging with
the private sector and civil society. It is time to coin a new
vocabulary for this water partnership, GCS, comprising
government, corporate, and civil society. In GCS, the role
of the government has changed from service provider to a
regulator that governs. The corporate entity in the GCS can
either be a public or private agency that has the capacity,
autonomy, and accountability to deliver reliable services to
the people.
The third partner, civil society, in GCS, proactively
supports the water provider as a business partner to reach
the water to the poor at affordable prices, monitor the
reliability of the quality of services and most importantly
ensures that people pay the bills promptly.10 Profit is not
a bad word once civil society is convinced that the service
provided is good and reliable.
Officials within the government can apply the GCS
approach to create a level playing field for both public and
private water service providers. Policy makers can play a
critical role by shielding the water service provider from
risks beyond its control. For example, countries can set up
facilities in the domestic financial markets to mobilise longterm
funds through banks, insurance companies, pension
and provident funds, and other financial institutions to
finance to water projects. These facilities will insulate
operators whose revenues are always in local currency
from exchange rate risks, as they can avoid excessive
use of foreign currency denominated debt for financing
water projects.
Notes
1 http://www.un.org/millenniumgoals/environ.shtml
2 The Ministry of Urban Development of India estimated that 63
major cities would require $28 billion for basic infrastructure
services over a seven year period, 2005-2012. However, of the more
than $51 billion private sector investments in infrastructure in India
since 1990, only $2 million has been invested in water supply and
sewerage.
3 The newly formed Asia Infrastructure Project Development (AIPD)
Company in Singapore aims to boost water investments in China to
about US$1 billion in the next five years. www.aipd.com.sg
4 See: http://www.adb.org/Documents/Reports/Benchmarking-
Data-Book-Utilities-in-India/2007-Indian-Water-Utilities-Data-
Book.pdf
5 See: http://www.adb.org/Water/Knowledge-Center/Books/
Helping-India-24x7.pdf
6 Phnom Penh and Singapore PUB are public water utilities, while
Manila Water and Male Water are private concession all of which
deliver 24-hour piped water and recover costs successfully.
7 Singapore’s NEWater meets 15 per cent of the country’s water
needs, which will increase to 30 per cent by 2010.
8 ADB, 2007 http://www.adb.org/Water/Knowledge-Center/AWDO/
default.asp
9 See: http://www.adb.org/Documents/IES/Water/ies_reg_2002_17.
pdf See more contributions of individual champions of water
reforms from developing countries in Asia and the Pacific at http://
www.adb.org/water/champions/topic.asp
10 ADB has released a new toolkit on how civil society can assist
in putting up or implementing piped water projects in http://
www.adb.org/Water/Knowledge-Center/Books/Water-Pipeline
/default.asp
<<<
generally lag behind world standards in both quantity and quality.
In fact, Asia’s widest quantity gaps compared with industrialised
countries are in water and sanitation while the narrowest gap is in
telecommunications (See Table 1). The time is now ripe for Asian
countries, particularly cities in India, during the financial crisis,
to target the investment in basic public infrastructure– most importantly
drinking water, sanitation and wastewater treatment.
We make three points in support of the above arguments:
• Since 1990, the annual growth of the proportion of population with
access to an improved water source in Asia has been a dismal 0.90 per
cent.1 At this rate, Asia will take another half a century to reach the 24-
hour safe drinking water supply of industrialised countries. However,
Asia has credible success stories in Japan, South Korea, and Singapore
from which other countries can learn and scale up.
• The total infrastructure investment required in Asia is estimated at
above 6 per cent of regional gross domestic product (GDP) annually
during 2005–2010 (Table 2). This is almost 30 per cent of global
requirements and is greater than that of other developing regions of
the world, which explains why governments in Asia should accord
a higher priority to infrastructure. However, the annual private
investment in infrastructure in Asia in the last three years accounted
for only 0.7 per cent of the total GDP in Asia, and onlyabout 20 per cent of total infrastructure spending in Asia.
Almost 90 per cent of the total private sector investment in
infrastructure in Asia over the last 20 years was in just six
countries, including the People’s Republic of China (PRC)
and India, and these were limited to telecommunications
and power.
• Surely there is no lack of money in Asia? The Asian
Development Bank’s assessment in 2007 shows that
Asia has built up over US $2 trillion in foreign exchange
reserves and domestic savings. Policy makers need to
consider seriously how these funds can be deployed, at
least in part, to invest back in the region -- especially in
basic municipal infrastructure. Estimates by the Institute
of Water Policy, Lee Kuan Yew School of Public Policy,
Singapore indicate that nearly $500 billion will be invested
in Asia in water over the next 10 years. And policy makers
are listening. For example, in its Eleventh Five Year
Plan, PRC government has prioritised investments in
wastewater treatment plants and recycled water facilities,
with an estimated investment of $44 billion during the
five-year period. India’s Total Sanitation Campaign under
the Tenth Five Year Plan is estimated at $3.35 billion,
and the reform-based Jawaharlal Nehru National Urban
Renewal Mission comprises a massive $11 billion grant
for a seven-year period, 2005-2012.
The big need to boost investments dramatically opens up
an enormous opportunity for private sector participation in
the water, sanitation and wastewater management.
Not with standing the economic crisis, there is reason to
be optimistic that capital will still make its way to finance
water projects. For example, Manila Water, a private water
concessionaire announced last month that its maiden Peso
bonds had been way oversubscribed. It had launched the
bonds on October 13, 2008 for the amount of P3 billion, but
because of the overwhelming demand, particularly from
the retail investors, the company increased the amount to
P4 billion, exercising its over-allotment option. Singapore’s
water agency, PUB, expects to award some 120 tenders
worth about S$1.1 billion before June 2009.
However, there is a vicious cycle of needs and
opportunities for investing in water projects in many Asian
countries, including India. On one hand, local governments
face great challenges in translating the needs of the people
into bankable projects that can attract equity and loans from
commercial and development banks and private sector
players. Often, they also lack the technical and financial
skills to independently develop and operate such projects.
On the other hand, domestic and international investors
with interest in water projects face challenges in identifying
suitable projects in a timely manner because the preliminary
project information is insufficient, or is of poor quality.
Consequently, a lot of good opportunities do not materialize
due to insufficient or unsatisfactory project preparation.
Changing the image of PPPs
Public private partnership or PPP has, in effect, become a
bad word in the water sector signified by Problem for the
government, Pain for the poor and eroded Profits for the
private parties. There is an ongoing heated debate in the
public domain about whether PPP is actually appropriate
in water. The PPP approach envisages that the government
and the private sector work together towards the goal of
service delivery in a fast and cost-effective manner. This
one-on-one relationship between the government and the
private sector has shrouded the role of the civil society in
the equation. This has often left out the question of society’s
acceptance.
Can this change for the better? I believe it can. In support
of this belief, I propose three key recommendations to
political leaders, policy makers, and private investors for
their consideration: (i) change perception about drinking
water and distribute it to all citizens immediately; (ii) deliver
24-hour piped water supply and set tariffs to achieve full
cost recovery; and (iii) prioritise investments in wastewater
treatment to arrest environmental pollution.
1. Distribute drinking water like food or medicine
The first one or two litres of clean water for drinking are
essential for human survival. This water is like food or
medicine. State-run water utilities in India that aim to
distribute 100 or more litres per capita per day lose up to
70 per cent of the water they produce through leakage and
theft. While the water they produce in their treatment plants
is reportedly potable, unfortunately, due to intermittent
supply, the water that reaches the taps in most cities is not.
The Third World Water Forum in Japan in 2003, alerted policy
makers and development partners, pointing to examples
from China and Laos, where municipal governments
successfully make available drinking water to all citizens.
When all the capital and operation and maintenance costs
of producing and distributing water (source development,
production, treatment, packaging, transportation, and
distribution) are taken into account at current prices (without
including profits of private bottlers), a litre of drinking water
supplied in a bottle would cost less than one-tenth of a single
US cent. Per capita supply of two bottles a day would imply
a cost of a cent for five days supply! The total annual per
capita cost is 73 cents and for India’s poor that number 300
million, the annual cost works out to $220 million, which any
government could underwrite for a few years. The essential
point is that small quantities of safe drinking water (at one
to two litres per capita per day) should be made available
as food to all citizens immediately. The distribution systems
used for milk, shampoo, and mobile phone services can ably
support cost effective “drinking water” distribution to all.
2. Deliver 24-hour piped water supply to ensure good
health
Policy makers and leaders are beginning to appreciate
that 24-hour piped supply of safe drinking water is not a
luxury but a necessity. Intermittent water supply poses
health risks. The 2007 Data Book on Indian Water Utilities
coordinated by the Ministry of Urban Development records
that in most cities in India the municipal water supply is
still on average, available for less than four hours.4
Hydraulics dictates that delivering 100 litres per capita
per day over an hour will require larger pipes compared
to providing this over 24 hours. To get 24-hour supply in
the home using the intermittent supply of water by the
utility, a typical household invests in an underground
sump, an overhead tank, a pump, and faucet filter, thus
becoming a mini water utility.5 The household often spends
4 to 10 times the amount that the utility needs to build the
necessary infrastructure for providing 24-hour supply. A
24-hour water supply is essential in capital cities, which
are the primary engines of growth for national economic
success and livelihood—just as uninterrupted electricity
is a requirement for any industry to remain efficient. The
economic costs of bad water services and the negative
implications to the quality of life society are enormous.
Examples from both public and private water utilities show
that if a reliable 24-hour water supply is provided, citizens
willingly pay.
3. Treat wastewater without further delay
In one or two decades, many Indian cities are likely to face
crisis on water quality management that is unprecedented in
history. Rivers, lakes, and oceans in and around urban areas
are now seriously contaminated, because the wastewater
collected from urban areas is mostly not treated or only
partially treated. In fact, in the ‘do-nothing’ scenario, this
problem will only get worse, because several cities are not yet
fully sewered. Indian cities will need to increase wastewater
treatment to around 50–60 per cent of the population in the
next 10 years, about four to five times the present coverage,
which is not an easy challenge.
Policy makers need to recognise that wastewater
treatment is not merely for cleaning the environment.
Treated wastewater can serve the water supply needs of
the population. With the new generation of membranes
and improved management practices, it is now possible
to treat wastewater at US $0.25 per cubic meter.7 Seawater
desalination costs have also come down from US $1.50 to
about US $0.50 per cubic meter during the past decade.
Thus, for people living within 100 kilometers of a coast in the
states of Kerala, Gujarat, Andhra Pradesh and Tamil Nadu,
provision of clean water for domestic, commercial, and
industrial needs will no longer be a physical constraint.
From PPP to GCS
The Asian Water Development Outlook 2007 report affirmed
that government-run water utilities will continue to be
responsible for 80 per cent of all water delivered in Asian
countries for another 20 years.8 Currently, the top three
of the most efficient water service providers in the world,
Singapore, Phnom Penh, and Tokyo, are all in Asia and run
by the government. Efficiency is not determined by whether
the operator is public or private. Private sector water
utilities such as Manila Water have also successfully shown
that it is possible to turn around a totally dilapidated water
service into a profitable business in a short period 10 years
using the existing government staff, and transforming them
through innovative business practices. Finally, civil society
organisations in India have demonstrated how rural water
supply and sanitation can be expeditiously and sustainably
delivered through social mobilization and innovative
partnerships involving private companies.9
There is an emerging consensus for a new paradigm
of enlightened partnerships in which governments can
deliver better water services, proactively engaging with
the private sector and civil society. It is time to coin a new
vocabulary for this water partnership, GCS, comprising
government, corporate, and civil society. In GCS, the role
of the government has changed from service provider to a
regulator that governs. The corporate entity in the GCS can
either be a public or private agency that has the capacity,
autonomy, and accountability to deliver reliable services to
the people.
The third partner, civil society, in GCS, proactively
supports the water provider as a business partner to reach
the water to the poor at affordable prices, monitor the
reliability of the quality of services and most importantly
ensures that people pay the bills promptly.10 Profit is not
a bad word once civil society is convinced that the service
provided is good and reliable.
Officials within the government can apply the GCS
approach to create a level playing field for both public and
private water service providers. Policy makers can play a
critical role by shielding the water service provider from
risks beyond its control. For example, countries can set up
facilities in the domestic financial markets to mobilise longterm
funds through banks, insurance companies, pension
and provident funds, and other financial institutions to
finance to water projects. These facilities will insulate
operators whose revenues are always in local currency
from exchange rate risks, as they can avoid excessive
use of foreign currency denominated debt for financing
water projects.
Notes
1 http://www.un.org/millenniumgoals/environ.shtml
2 The Ministry of Urban Development of India estimated that 63
major cities would require $28 billion for basic infrastructure
services over a seven year period, 2005-2012. However, of the more
than $51 billion private sector investments in infrastructure in India
since 1990, only $2 million has been invested in water supply and
sewerage.
3 The newly formed Asia Infrastructure Project Development (AIPD)
Company in Singapore aims to boost water investments in China to
about US$1 billion in the next five years. www.aipd.com.sg
4 See: http://www.adb.org/Documents/Reports/Benchmarking-
Data-Book-Utilities-in-India/2007-Indian-Water-Utilities-Data-
Book.pdf
5 See: http://www.adb.org/Water/Knowledge-Center/Books/
Helping-India-24x7.pdf
6 Phnom Penh and Singapore PUB are public water utilities, while
Manila Water and Male Water are private concession all of which
deliver 24-hour piped water and recover costs successfully.
7 Singapore’s NEWater meets 15 per cent of the country’s water
needs, which will increase to 30 per cent by 2010.
8 ADB, 2007 http://www.adb.org/Water/Knowledge-Center/AWDO/
default.asp
9 See: http://www.adb.org/Documents/IES/Water/ies_reg_2002_17.
pdf See more contributions of individual champions of water
reforms from developing countries in Asia and the Pacific at http://
www.adb.org/water/champions/topic.asp
10 ADB has released a new toolkit on how civil society can assist
in putting up or implementing piped water projects in http://
www.adb.org/Water/Knowledge-Center/Books/Water-Pipeline
/default.asp
<<<
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