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Urban Water Sector
Abhay Kantak
CRISIL Infrastructure Advisory
2.
Presentation Outline
1 Sector Background
2 Investment Trends
3 Sector Performance
4Benchmarking as a tool for performance assessment and
priortising investments
5 Institutional Framework and Sector Performance
6 Summary
3.
Sector Background
• Water is a State Subject
• 74th Constitutional Amendment suggests that the State Governments
transfer the responsibility for service provision to the ULBs
• Service provision is government-dominated but private sector is slowly
emerging on the horizon
• Sector in general suffers from lack of commercial orientation and
inadequate levels of service
• Institutional reforms and not just investments can lead to better sector
performance
4.
Investment Trends
5.
79617
3700
1980-2005 2005-2012
Investment Trends in Urban Infrastructure Pre and Post JnNURM ( UIG + UIDSSMT)
Pre-JNNURM*
* IDSMT, AUWSP,Mega
Cities and URIF
JNNURM*
In Rs. Crs
6.
JNNURM – Accelerating investments in the sector
* Water Supply and Sewerage account for Rs.50,875 crores of projects
approved
7.
Key Messages
• JnNURM has given a fillip to investments in the sector
• Investments have been predominantly for basic services like
water supply and sewerage – 64% of total investments
• Impact of service levels yet to be seen as projects are yet to be
completed
– Only 7 of the 65 cities are achieving 100% recovery of O&M costs
• Investments not supported by cost recovery can deteriorate
municipal finances further
8.
Sector Performance
9.
Indian Water Utility Sector Perfromance Overview*
Performance Indicator Current Status
Coverage 63.5%
Per capita consumption 132 lpcd
Extent of metering 46.5%
NRW 38.9%
Continuity of water 4.5 hours
Cost Recovery 73.4%
Staff per 1000 connections 8.5
*Findings from the Service Level Benchmarking Exercise covering 28 cities conducted by Ministry of Urban
Development in 2009
In the absence of 100% metering, data reliability on NRW is low
10.
Investment Prioritisation Using Benchmarking Data
11.
Coverage
Commercial losses
Target
100%
Current Status
68%
<5% 18%
Daily 1.5-2 hrsalternate days
Duration of water supply
Operating ratio@ <1 2.4
100% 67%
135 lpcd 81 lpcd
Collection efficiency
Per capita water consumption
5.0 4.2Staff / ‘000 connections
<15% 33%Technical losses
100% 1%Metering
Only Bulk
@135 lpcd
68%
18%
1.5-2 hrsalternate days
3.2
67%
135 lpcd
3.9
33%
1%
Only
Distribution
90-95%
5%
Daily
1.3
90-95%
93 lpcd
3.4
15%
1%
Distribution
+Bulk@156 MLD
90-95%
5%
Daily
1.2
90-95%
104 lpcd
3.4
15%
1%
*Simulation for a UIDSSMT approved project
Prioritising Investments
12.
Revenue Gain through Efficiency Improvements
14
36
40
5
12
5
Current
Revenues
Coverage
Increase
NRW
Reduction
Energy Savings Total Potential
Revenues
Total O&M
Expenditure
Deficit = Rs. 4crs
after system
improvements
In R
s C
rore
s
13.
Institutional Framework and Performance
14.
Delhi
Bangalore
Hyderabad
ULBs
State Department
O&M with ULBs and Capital Works with Parastatals
Multiple agencies in capital cities
City level parastatals
Institutional Framework for urban water supply services
15.
City Level Boards
• Have a strong orientation towards O&M cost recovery and
operational efficiency
– HMWSSB and BWSSB – 100% metering and close to 100% cost
recovery
– Capital costs subsidised by State Government
• Delhi Jal Board an exception
– 50% of O&M costs under-written by Delhi Government
• Scope for improvement exists but there exist a relatively strong
commercial orientation
16.
ULB as service providers
• Resource rich ULBs tend to overlook financial sustainability
from water supply operations
– Ahmedabad (53%) and Pimpri-Chinchwad (41%)
– Surat and Nashik - about 90% cost recovery but can go significantly
higher
• Municipal Corporation of Greater Mumbai has a ring fenced
budget and high levels of cost recovery
• Concerns on service delivery remain in many cities but a ring-
fenced budget can improve financial sustainability considerably
• Greater accountability for service provision can improve
service-level orientation
17.
State Government as service provider
• Tend to be financially weak and lack commercial orientation
– Single tariff structure for entire state
• Separation of responsibilities - state for capital works and ULBs
for O&M creates divergence of interests and exposes ULB
incapacity in O&M
– Karnataka
18.
Key Messages
• Service level issues exists across institutional models
• A ring-fenced budget can trigger cities to be financially
sustainable
– Need not mean tariff revisions alone
• Service level orientation rather than just plain infrastructure
creation is essential
19.
No single city presents a picture of overall good performance
20.
No single city in India provides a picture of overall good performance
Service Levels Metering Cost Recovery
Chandigarh Good Good Poor
Mumbai Poor Improving Good
Bangalore Poor Good Good
Kolhapur Poor Good Good
Ahmedabad Poor Poor Poor
21.
Summary
22.
Summary
• Sector performance significantly below benchmarks
• JnNURM has accelerated investments in the sector
• Sectors requires better management expertise and not just
investments
• Benchmarking can be a powerful tool for performance
improvement planning and monitoring
• Ring-fencing of water accounts can improve financial
sustainability and increase accountability
24.
CRISIL Risk and Infrastructure Solutions Limited
A Subsidiary of CRISIL Limited, a Standard & Poor’s company
www.crisil.com
25.
Understanding NRW and Approach for its Reduction
26.
Water Losses
Apparent Losses
Un-authorised consumption
Metering Inaccuracies
Real Losses
Leakage on
Transmission/distribution
mains
Leakages and overflows at
storage reservoirs
Leakages on service
connections
Authorised
Consumption
Billed Authorised
Consumption
Billed metered consumption
Billed un-metered
consumption
Unbilled Authorised
Consumption
Unbilled metered consumption
Unbilled un-metered
consumption
Understanding NRW
NRW
27.
Approach for NRW Reduction
Unbilled
Authorised
Consumption
Policy Changes Investments
Low / NIL High
Apparent Losses –
Unauthorised
Consumption
Apparent Losses –
Metering inaccuracies
Review tariff policy
Identify consumers where free water supply can be curtailed
Simplify new connection application procedure
Reduce new connection fees
Identify and regularise unauthorised consumers
Meter checking programme
Increase accountability
Real Losses –
Leakages/overflows
Real Losses –
Leakages on mains and
consumer connections
Improved monitoring
Network rehabilitation/ replacement
Action Points
