Kolkata weakest on ‘working ratio’ in performance of water utilities followed by Jaipur and Delhi, highlights EY report

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Delhi/Kolkata, 23 May 2012: Reforms in water policy and pricing, sustainability in industrial water use, improvement in performance of utilities and mobilization of the private sector have the potential to address water-related challenges, highlight EY’s report titled ‘Riding the Wave’. The same was released by Mr. Suresh Prabhu, Global Ambassador of Global Water Partnership at ASAPP media’s H2O conferenceheld in Mumbai today.

Key highlights

  1. Some major cities including the country capital Delhi show a poor ‘working ratio’ – an indicator that assesses the performance of water utilities in terms of operational efficiencies, financial health and stability. However, cities like Mumbai, Chennai and Bengaluru have healthier ‘working ratios’ indicating better performance of water utilities
  2. More than 60% of the households in major Indian cities are water-deficient
  3. Industrial water consumption to increase fourfold by 2050
  4. Distribution losses due to leakage in water supply are as high as 35%–50%
  5. Arresting distribution leakage losses by an average of 10% across India will reduce the production cost of equivalent water supply by INR5.5 billion
  6. New projects based on 24x7 water-supply offer opportunities to improve operational efficiencies in water supply. For eg., Jamshedpur Utilities & Services Company India Limited (JUSCO) was able to bring down its non-revenue water losses from 31% to 8% within a year of implementing a 24x7 pilot program in Jamshedpur in 2008. 

India’s total demand for water is expected to cross 1400 billion cubic meters (bcm) by 2050, with a 50% increase in the need for irrigation water, a 100% increase for drinking water and a 400% rise for water for industrial use, as indicated by the Sub-Committee of the Ministry of Water Resources (MoWR). At this point of time, demand has already outstripped supply and India’s continued growth is not sustainable without the implementation of effective measures to cut down on usage of water and augment its supply.

India’s growing population, coupled with service inefficiencies on the supply side, has resulted in a steady decline in per capita availability of water in the country, which is currently estimated to be in the water-stressed range. It is projected that this will drop by more than 50% to water scarcity by 2050. Additionally, the quality of water in many parts of the country indicates high level of organic and bacterial contamination in surface water and of pollutants such as fluoride, nitrate and arsenic in ground water. The above factors spell the urgent need of an effective water management system that will not just solve our current water problems but also have a solution for the fulfillment of future demand.

Says Chaitanya Kalia, Partner - Advisory Services (Climate Change & Sustainability), EY Pvt. Ltd., “One of the factors responsible for water scarcity in major Indian cities is the absence of sewage treatment capacities, which are as low as 30% of the total waste-water generated. This significantly increases the quantity of non-utilizable water. To effectively address water scarcity issues in India, stakeholders need to shift to and drive new paradigms of sustainable water resource management.”

He further added that, “The Central Water Commission of the Government of India indicates that the total annual utilizable water available in India is 1,123 bcm. There is clearly a need for supply-demand balance across economic corridors. While there have been policy-level interventions, e.g. India’s National Water Policy and National Water Mission, to address such issues, the concerted effort of all stakeholders is imperative for effective implementation and achievement of the goals stated in these policies.”

Critical findings and recommendations

Water Management Strategy: The development of an effective water management strategy requires an understanding of the challenges faced by the sector today. This includes geographically inequitable water distribution, practices driving consumption patterns and affecting its future availability, as well as the existing institutional mechanisms that govern water supply, pricing and allocation.

With India facing increasing water scarcity issues and challenges today, there is a need to adopt water management approaches that are specific to the regional context and inclusive of all stakeholders, i.e., approaches that are based on the principles of Integrated Water Resource Management (IWRM).

Reforms in water policy and pricing: The National Water Policy of India recognizes the need to treat water as an economic necessity. This calls for bringing about reforms in water pricing with the aim to maximize the efficiency of water usage. Such reforms require a shift towards market-based instruments such as water trading, recycled water certificates and designing of effective water tariffs.

Sustainable water management: Taking positive steps toward sustainable water management and stewardship is the need of the hour for the Indian industry. It is essential for businesses, since it leads them to identify their water-related risks, and is also critical for the well-being of the local communities and eco-system. Industries can achieve sustainability in their water usage through a combination of several approaches such as:

Water demand assessment – It looks at the current and future water needs of a business with respect to the capacity of current and future resources to meet these needs

Supply management – This approach looks at water as a shared resource between the domestic, agricultural and industrial sectors, and recognizes priority in availability of water for the local community as a basic human right.

Efficiency enhancement - An efficiency enhancement strategy can be formulated by undertaking exercises such as “identify, benchmark and monitor.” Such exercises can help companies to identify water-efficiency measures on the lines of principles such as reduce, re-use, recycle and innovate. They establish performance benchmarks for identified efficiency measures and increase the accountability of water management systems through continuous monitoring.

Private sector participation: The private sector is critical for the transformation of water usage in a country. Therefore, while developing a plan for transformation, both regulatory frameworks and financing should be evolved to mobilize the private sector to become an active stakeholder in the reform process. In India, there has been a thrust at the policy level to encourage private sector participation as a means to improve performance delivered by publicly owned utilities. The National Water Policy of 2002, the National Water Policy Draft — 2012, as well the Planning Commission’s Five Year Plans explicitly encourage private sector participation in the water sector. Furthermore, the flagship urban development programs of the Government, such as the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), and the Urban Infrastructure Development Scheme for Small & Medium Towns (UIDSSMT), encourage institutional reform in a publicly owned sector through private sector capital and capabilities.

Role of utilities: Water service providers (urban local bodies or utilities) can achieve improvements in their water service delivery by implementing a number of measures that are aimed at influencing and managing demand, augmentation and equitable distribution of water supply and bringing about self-sustenance in their operations through improved financial and technical practices.

Planning and forecasting: Based on identification of measures to manage demand, supply and efficiency of service delivery, utilities must engage in long-term planning and forecasting. Such long-term development needs to encompass prioritization of sectors, observance of equity in inter-regional resource allocation, provision of compensation to regions that provide water resources to other regions and improved efficiency of systems through financial sustenance.


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