Workshop on Water Sector Reforms and Water Regulatory Commission in Bhopal (MP).

Please click on the following document for further details on the background note and finalised schedule of the workshop.

Invitation and Backgrounder

The Rs. 1023 crore Tiruppur Water Supply and Sewarage Project located near Coimbatore in Tamil Nadu is the country’s biggest Public Private Partnership (PPP) project in the water sector. As it is a project of public importance, Manthan Adhyayan Kendra has been studying it as a part of its study of privatisation in the water sector. For this study, Manthan requested information from the Project under the Right to Information Act including details of the equity and debt structure of the project. The project authorities refused to give it, saying that they were not a public project. This is in spite of the considerable financial contribution and other support by the Government of Tamil Nadu.

Manthan therefore moved the Tamil Nadu Information Commission challenging this refusal, and the Commission heard the matter on 14 March 2008. In its Order (approved 24 March 2008), the Commission unequivocally rejected the plea of the company and accepted Manthan’s contention that the project be treated as Public Authority. It ruled that the project should provide us with the information sought within 15 days.

The text of the Order is given at the end and a scanned copy order can be downloaded by clicking the icon.

We believe that this Order is of considerable broader importance as both, State and Central Governments are rushing to push large number of Public Private Partnership projects in many sectors including water. As the PPP projects are in areas that will affect Public interest, it is important that they be transparent to the public. The private companies would want to take recourse to the argument of commercial secrecy to deny information. Hence, this Order becomes important.

We are still awaiting the information from Tiruppur Project in compliance of the order. Manthan was represented by Advocate Ravi Chandran in Chennai.

For the report of the study of the Tiruppur Project by Manthan, please Click Here.

Rehmat and Gaurav Dwivedi

17 April 2008

TEXT OF THE ORDER

TAMIL NADU INFORMATION COMMISSION

Case No:31422/enquiry/2006

Date of hearing on 14.3.08

Present:

Thiru G. Ramakrishnan IAS (retd). State Information Commissioner

Petitioner: Thiru Rehmat / Gaurav Dwivedi Manthan Adhyayan Kendra, Dashera Maidan Road , Badwani (MP) 451551 Public Authority: The Public Information Officers/Chief Financial Officer New Tiruppur Area Development Corp Ltd, No 15 Murray’s Gate Road, Alwarpet, Chennai 600 018

The Petitioner was represented by an Advocate Thiru Ravi Chandran. The representative of the Public Authorities viz. the Chief Financial Officer, New Tiruppur Area Development Corp Ltd, Chennai argued that their organisation is not a "Public Authority" as defined under the Act and he filed a report also in support of his argument. The arguments were carefully considered and the commission comes to the unmistakable conclusion that their organisation is a Public Authority as defined under Section 2 (h) (d) of the Act in view of the public funding and government control involved. Hence the Public Authority is directed to supply the information within 15 days from the date of the receipt of the orders and report compliance.

STATE INFORMATION COMMISSION

Orders approved days the 24th March, 2008.

Unravelling Bhakra is now available in Hindi. The Hindi edition is a abridged version of the original English and is published by Books for Change under the title ‘Bhakra - Parat Dar Parat Ek Padtal.’

Copies available from BFC or Manthan. Click on the icon for details of ordering. Pdf version or soft version is not available.

The following brief update, in Hindi, on the Reforms processes being implemented in the state, specifically brings out the schemes and programs undertaken by the ADB and the World Bank to commercialise and privatise the urban and irrigation services in the water sector. Click on the following PDF document to read the full report......................

How the Bank uses Flawed Processes to Generate Unsound Knowledge for Promoting Disastrous Policies

Shripad Dharmadhikary, Manthan

The Knowledge Bank

In 1996, James Wolfensohn, then President of the World Bank, called for the World Bank to become a Knowledge Bank. The World Bank has always been engaged in producing knowledge. This knowledge has been produced and used to design, justify, plan and support policies, programs and projects all over the world. Wolfensohn formally recognised this ‘other’ side of the Bank to be as important as its financial side.

In India, the latest country assistance strategy (CAS) that defines the Bank’s approach to lending for the three years 2005-08, says:

“Three Strategic Principles will underpin the Bank Group’s work: (i) focusing on outcomes… (ii) applying selectivity…and (iii) expanding the Bank Group role as a politically realistic knowledge provider and generator.”

Creation of Intellectual Support for Privatisation and Globalisation

Why is the Bank giving so much important to the creation and provision of knowledge? Ostensibly, it is to better tackle the challenges of global poverty eradication and improving people’s lives. However, there appear to be other reasons.

It is an open secret that the World Bank directly intervenes in the policy making processes of the countries to which it lends money. In the last 15 years or so, the Bank has been consistently pressurising Governments along the path of Liberalisation, Privatisation and Globalisation (LPG), forcing open more and more sectors of the economy to global private capital. Simultaneously, it has been pushing for the ‘commercialisation’ of these sectors, that is, the operation of these sectors along commercial lines, as a market, so as to create an enabling environment for privatisation.

All over the world, there has been massive resistance to these polices, and tremendous accumulating evidence that the policies are harming the poor and destroying the environment. The Bank is therefore increasingly being called upon to present justification for these policies. One of the most important ways in which this is done is through the use of knowledge. In effect, this is the creation of the ‘intellectual’ support to build up the rationale and justification of privatisation and globalisation.

Unfortunately, the knowledge created by the Bank has several serious flaws. The process of generating this knowledge is exclusionary: it excludes common people, it excludes their traditional expertise and knowledge. The knowledge is created mostly by highly paid consultants, often international consultants, who have little knowledge of local conditions. The knowledge creation is mostly directed towards arriving at a pre-determined set of policies – the LPG package. Most importantly, this knowledge creation is often selective, in that information, evidence or experiences that do not support these pre-determined outcomes are ignored. All this makes the policy influence of the Bank’s knowledge activities a serious cause for concern.

Where is the Knowledge Produced

The Bank is recognised as the biggest research institution working on developmental issues. It generates two kinds of knowledge: one, what it calls research. This is work that has broad applicability over countries and sectors. This is more academic in nature. The other is the economic and sectoral work that is more of applied knowledge.

The Development Economics Vice Presidency (DEC), is the main centre for research, with around 100 research staff. The Bank budget for research is about US$ 25 million, and an additional US$ 20 million spent on statistical capacity building.

Research is also produced at the 6 Regions and the various Networks within the Bank. Research output is in the form of journal articles, books, Policy Research Working Papers, Data Products, Special Flagship Reports, the World Development Review and annual conferences. In addition, the World Bank publishes two peer-reviewed research journals, the World Bank Research Observer, and the World Bank Economic Review.

Bank researchers and their consultants produced nearly 4,000 papers, books, and reports between 1998 and 2005 including more than 2,000 articles in peer-reviewed journals.

The Bank also brings out a large number of data –products, most important one being the World Development Indicators, which aggregates economic, environmental, and social data on over 150 countries.

In addition to research, the Bank produces enormous amounts of knowledge in its economic and sectoral work, technical assistance, country level assessments, project preparation studies, project evaluations, capacity building work and so on. Indeed, in terms of influencing policies and outcomes, this part of the Bank’s knowledge is probably far more important than the ‘research’ part. Considering that in 2004, the Bank was involved in about 1500 active projects we can see the extent of the project related knowledge generated by the Bank.

The Bank’s Knowledge Networks

As important as the Bank’s in-house system are the many and extensive linkages and networks that the Bank has created with external researchers, research institutes, professionals and others.

Some – like the Consultative Group on International Agricultural Research (CGIAR) with its 15 research stations – predate the Knowledge Bank. Others, like the Global Development Learning Network (GDLN), a partnership of over 120 learning centres (GDLN Affiliates) in nearly 80 countries around the world, are more recent.

The World Bank Institute (WBI), founded by the Bank in 1955, is one of the Bank’s capacity development instruments. WBI delivered more than 700 learning activities to some 75,000 clients, and awarded 211 scholarships in fiscal year 2007. WBI has representation in the field in Burkina Faso, China, Egypt, Ethiopia, France (Marseilles, Paris), Ghana, India, Nigeria, Senegal, Tanzania and Turkey.

These networks work not only to produce knowledge, but also to disseminate it, and equally important – to accord legitimacy to this knowledge.

They are also a means to building long lasting institutions that will replicate and perpetuate Bank style research, ultimately leading to internalisation of such methods and such knowledge.

The Knowledge Producer in India

In India, the Bank produces knowledge in the form of short pieces of sector work to formal pieces of analytical and advisory work, technical assistance, conferences and workshops. Apart from these, knowledge is also being created in the form of project preparation studies, studies undertaken as part of project implementation and assessment on project completion.

In terms of policy impact, by far the most important are the thematic and sectoral studies, called AAA – Analytical and Advisory Activities – in Bank parlance. For the years 2005-08, the Bank planned 15 major studies to be undertaken. These include studies like Land Issues for Growth, Strategic Issues in India’s Water Sector, Agricultural Marketing and Value Chain Development etc. While 10 of these have been completed, another seven studies have now been added to the earlier fifteen.

These studies involve many consultants and “several of the main reports recently completed have been prepared through joint work with Indian policy and economic research institutions and think tanks.”

Technical assistance (TA) is another important knowledge generation method, used mainly to promote LPG type reforms. Examples include analytical and lending support to PPPs, advisory and lending support to agricultural, TA projects in agribusiness, regulatory reforms for private sector development in Orissa, joint work with GoI to provide technical assistance on resettlement and land acquisition policies etc.

A significant part of the knowledge generation work is carried out by the Bank in collaboration with other multi-lateral or bilateral aid agencies like the Asian Development Bank (ADB), UK Government’s aid agency Department for International Development (DFID) etc. Moreover, the Bank also manages some of the multi-donor funding agencies (agencies which are created by several donor organisations coming together) like the Water and Sanitation Program (WSP) and the Public Private Infrastructure Advisory Facility (PPIAF). Most of these, like the Bank, promote LPG policies.

Knowledge is being actively used to promote the policies of LPG both at the centre and in the states.

At the central level, the focus of the Bank is to create an environment conducive to reforms. It says, in its CAS 2005-08:

“At the Center, the Bank could selectively use investment lending, coupled with AAA to foster competitiveness. … The Bank could also offer its AAA to provide knowledge support to build consensus for key reforms, such as trade and tariff reforms, FDI regulations, improving corporate restructuring and bankruptcy procedures, SOE [State Owned Enterprise] reform, and competition policy. IFC [could] support implementation of reforms aimed at improving the investment climate for foreign and domestic investors.”

With the states, the strategy earlier seemed to be to focus on ‘willing’ states, but now this has changed to proactively pushing reforms in states which may be reluctant to undertake such reforms. This is being done through the mechanisms of ‘policy dialogue’ and technical assistance – essentially knowledge activities. As per the mid-term review of the CAS:

“The Bank and the Asian Development Bank (ADB) have engaged in dialogue on cross-cutting reforms in … 12 states, the latter focusing on Assam, Madhya Pradesh, and West Bengal. The Bank has intensified its ongoing dialogue with Andhra Pradesh, Bihar, Karnataka, Orissa, Rajasthan, and Tamil Nadu, ranging from increased analytical and advisory activities to enhanced lending.

“The Bank’s approach to engagement with the four poorest states has been based on dialogue leading, in three of the four cases, to preparation of a comprehensive state economic report to analyze the major reform areas.”

The Bank organises large number of conferences, seminar and training workshops and at least one key Bank document (the Development Policy Report) is being used in training senior IAS officers.

Thus, the Bank has a vast array of knowledge producing activities in India, and the knowledge generated is being put to active use to push LPG policies.

We now look at two examples of how this knowledge is highly flawed. (The main study has several more examples).

Example I: Water Sector Review 1998 and Tradable Water Entitlements

In 1996 the World Bank initiated a comprehensive and wide-ranging review of India’s water sector. (We shall refer to this as the Water Sector Review 1998). The Water Sector Review 1998 was a “sector-wide program undertaken in partnership between the Government of India and the World Bank, also with contributions from the Governments of U.K., Denmark and the Netherlands.” The purpose was “collectively assessing and establishing a Reform Agenda and Action plan for India’s Water Sector.”

While the process was called a “partnership” effort of the World Bank and Government of India, in reality, it was an initiative of the World Bank, led and controlled by it.

The World Bank team, with inputs from the Government of India, and many consultants, finalised five specialists’ reports, dealing with

(1) Intersectoral Water Allocation, Planning and Management (2) Groundwater Regulation and Management (3) Irrigation (4) Rural Water Supply and Sanitation (5) Urban Water Supply and Sanitation

A sixth report, synthesising all the above was also prepared. These were first published as World Bank reports in 1998.

One of the far reaching recommendations made by the World Bank in the Water Sector Review 1998 – under the head of Inter-sectoral Allocations - was the introduction of tradable water rights or water entitlements. The idea is this – that all (or at least some) people have a defined water entitlement. There is also a market in which these entitlements can be sold or bartered. The economic logic is that this trading will ensure that water is allocated to the highest value user – thus ensuring efficiency of use. The World Bank also justifies this as “politically attractive and practical” way of inter-sectoral allocations.

In practise, this could mean urban municipalities buying off the water rights of farmers, who would find it more profitable to sell off the water than to cultivate crops. (An example of Chennai is given as a possibility).

To justify this, the Bank presented the experience of other parts of the World. One of the key examples described in detail is that of Chile where, the Bank says, such a system of tradable water rights has been established in 1981 producing substantial economic gains, and have proved to be “effective as a means of allocating water resources to their most productive use…”. No negative impacts are given.

Thus, in line with its Knowledge provider role, the Bank brings in this international experience and knowledge to advocate and justify the tradable water rights policy.

However, we find that very serious adverse impacts have been concealed while making this recommendation.

We find, in a totally different report, though from the same series of the Water Sector Review 1998, the following:

“Recent reports indicate, however, that the [Chile] model encountered problems as well as successes…. Although benefits have accrued, significant negative impacts have been felt by farmers unfamiliar with legal processes or lacking the money to participate in markets for water (the poor). Significant conflicts have also emerged between different groups of users, and many social and environmental externalities have yet to be addressed….”

And

“The main disadvantage, or risk, of the new system is monopolisation of water rights. A couple of power companies and a single individual have been accused of accumulating some 70% of all water rights in Chile”

Thus, the Report which deals with inter-sectoral allocations and which advocates tradable waters rights as an important mechanism is totally silent on any negative impacts of the model. The Bank could argue that the negative impacts have not been concealed but have been given in another report in the same series. However, this is not good enough. It is important for both, the negative and positive impacts to be given at the point where the Chile experience is being used as an example to recommend a particular model.

We should keep in mind that the five reports have been prepared separately by separate teams and would often be read in isolation and not necessarily as a whole. Clearly then, the team that prepared the Inter-sectoral Allocation Report – the report that recommends trading in water entitlements, and the report most relevant to this issue – has ignored the serious negative impacts of trading in water rights in Chile. Is this because with the inclusion of the negative impacts, the justification of the same policy in India would be very difficult?

Example II: Undisclosed Studies Justify Large Dams

The 1980s and 1990s saw the evolution and growth of a large number of intense struggles against large dams all over the world. The World Bank, as the largest single financier of large dams, was a prime target of these movements. The World Bank came under severe pressure and its lending for large dams fell sharply. Alarmed by this, the Bank, along with IUCN, initiated the World Commission on Dams (WCD) in 1998 to review the development effectiveness of the large dams. The WCD report (released October 2000) was a strong indictment of large dams and upheld many of the issues being raised by those challenging large dams.

Fearfully that this could further impact the construction of large dams, there was strong reaction to the WCD report from the Governments, especially those countries with significant large dams program. Simultaneously, these countries started pushing for renewed World Bank support for large dams. The World Bank too did not accept the report and was ready to revive support to large dams, as its support for large dams had declined only due to pressure. However, the Bank did need to provide some justification for this new and increased assistance, especially in view of the report of the WCD. Here again, Knowledge Creation was one of the important means used by the Bank.

A part of the Bank’s Action Plan initiated as a follow up to the WCD was the commissioning of studies of four dam projects in the world under the name of “Multiplier Effects of Large Dams”. The study was to explicitly bring out the indirect economic impacts and “purposes not apparent from a traditional CBA”. The topic chosen – to show that total impact of dams was much bigger than the visible, direct impact, and the dams chosen – dams which have a larger than life image, clearly indicated that the effort was to ensure that dams came out looking good.

One of the dams selected was Bhakra Nangal project in India. (Another was Aswan in Egypt). The Bhakra Nangal project has become a legend in India. It is credited, variously, with solving India’s food problem, making India self-sufficient in foodgrains production, making Punjab and Haryana highly prosperous and surplus states and so on. India’s first Prime Minister Nehru had called it the secular temple of modern India.

In India, when an important political figure has to fight a crucial election – an election that he or she cannot afford to lose – then a ‘safe’ constituency is selected. It is in the same manner that the Bank chose this project. If it was looking for a big dam project where there was greatest assurance that the findings would be positive for dams, this was probably the project.

Not surprisingly, the results of the Bhakra study, carried out by Ramesh Bhatia and Ravinder Malik extolled the great benefits from the project. This study was then used by the Bank in India as a justification to go in for more dam building.

In 2005, the Bank’s New Delhi office brought out an extensive study on “Strategic Issues in India’s Water Sector” which later came to be known by a somewhat more catchy name “India’s Water Economy: Bracing for a Turbulent Future”. It recommended dramatic increase in building large dams in the country. Using the Bhakra study to justify this, it said:

“A recent, major study by Ramesh Bhatia and Ravinder Malik … to make a … assessment of the impact of the Bhakra Dam, … found that the direct benefits were higher than anticipated when the dam was built and that the dam did, indeed, serve to transform this region of India.”

And, the study

“… shows that the rural poor have benefited hugely from the project.

“..shows that it was the indirect effects which had the major impact on urban areas (and therefore on urban poverty reduction).”

In general, the Bank concludes the section by saying that:

“… the record is overwhelmingly clear – investments in water infrastructure in India have resulted in massive reductions in poverty, and it is actually the poor and landless who have been the biggest beneficiaries.”

Large part of this conclusion is based on the Bhatia-Malik study of the Bhakra dam. Thus, the Bhatia-Malik study of the Bhakra dam is a key Knowledge item produced by the Bank to show that large dams bring massive benefits and that the poor are the biggest beneficiaries. This is used to argue for and justify a big increase in building large dams in the country.

It is interesting, then, that a study which is key to so many of the Bank’s conclusions and arguments, is still not in the public domain! The study has not yet been published, and preliminary publications of the study available in public domain merely give the findings, not the detailed methodology, data and assumptions. The Bank wants everyone to take the findings of the study as a matter of faith.

The Bhatia-Malik study is not published as of the time this is being written – August 2007, that is, a full two years after the Bank made many claims based on it. Claims which peers, public, policy makers have had to take on face value as they have not been able to examine the data, assumptions and methods used by the study.

Producing and using Knowledge to justify and push big dams – but not allowing anyone to examine this knowledge; is this not tantamount to saying “Big Dams are Good, Because I Say So?”

An Independent Evaluation

The examples discussed earlier are not merely anecdotal. Rather, they are typical of the way knowledge is produced and used by the Bank.

Recently, the Bank commissioned an Independent Evaluation of the its Research. The evaluation, published in September 2006 was carried out by a panel consisting of Angus Deaton (Chair), Princeton University; Kenneth Rogoff, Harvard University; Abhijit Banerjee, M.I.T.; and Nora Lustig, Director of the Poverty Group at UNDP.

Some of the important points made by it include:

“Much of what we read was of very high quality, was directed toward issues that are of great importance to the Bank, and was executed to the highest standards of the profession. … Its research has had a major effect on the way that development issues are discussed by practitioners, policymakers, and academics.

“At the same time, we found a number of deficiencies. Alongside the excellent work, there is a great deal of research that is undistinguished and not well-directed either to academic or policy concerns.

“A small fraction of prominent Bank research is technically flawed and in some cases strong policy positions have been supported by such (non) evidence…..and the panel believes that, in some cases, the Bank proselytized selected new work in major policy speeches and publications, without appropriate caveats on its reliability.

“There is remarkably little work co-authored by non-Bank researchers from developing countries.

“One criticism that was made repeatedly is that research tended to jump to policy conclusions that were not well-supported by the evidence.”

Importantly, according to the Evaluation, “the area with the most widespread and troubling issues” was:

“Enormous problems can occur when not-very-robust research results are sold as irrefutable truths to the countries in the form of policy advice, technical assistance or as part of the conditionality of the lending programs…. Even when the underlying research is valid, the Bank’s desire to get out a message through external communications can give the impression of crisp black and white results, with too many important nuances lost.”

It should be kept in mind that all the above is in the context of the Bank’s research (as against the economic, sectoral and thematic work). Given that research is subjected to more rigorous reviews than the other analytical work, we should find that these problems would be even more widespread in the latter case.

Moreover, these other Knowledge products are used more directly for policy advice and justification, and we find all the problems of selective use, not-very-robust results being sold as irrefutable truths, and jumping to (pre-desired) conclusions not warranted by the evidence.

An important evidence of this with direct relevance to India comes from an internal memo of the Bank. This memo, from the Senior Water Adviser based in New Delhi, dated December 11, 2001, talking about the Bank’s knowledge work in the water sector, is self-explanatory:

“THE BANK’S ROLE IN KNOWLEDGE: The Bank has done a lot of sector work on water in India, including, in recent years, the largest single piece of sector work in the Bank. [This refers to the Water Sector Review 1998]… But the analytic work has had serious flaws. A first important shortcoming is that there has been little critical assessment of the Bank’s own (considerable) role. The Bank’s role is (conveniently) not analysed in any depth, but rather, "new approaches" are proclaimed as solutions (and past shortcomings not assessed).” (Emphasis added)

Legitimacy and Dominance of Bank’s Knowledge

The Bank was strongly pushing for privatisation of the water supply all through the 1990s. In September 2004, John Briscoe, Senior Water Adviser, made a presentation on behalf of the Bank to the International Water Association’s World Congress at Marrakech. Among other things, lamenting the lack of adequate investment in water infrastructure in the previous decade, he said that “The last decade has been a lost decade [partly] due to the naïve view that the private sector will take care of the infrastructure.”

A decade lost here, a decade lost there, trauma for millions – yet, the policy advice of the World Bank, and the knowledge on which this policy advice is based, still holds sway. Why? And how?

Clearly, the financial muscle of the Bank is a crucial factor. The Bank’s financial muscle is not limited to the money that it itself distributes. There is strong interlinking and coordination between the world’s multilateral and bilateral donor agencies and the sources of private capital.

Moreover, the huge interests of global capital, big businesses and corporate multinational houses are strongly linked to the Bank’s lending and knowledge dealings. Lending by the Bank generates contracts and consultancies worth billions of dollars every year for them. Not only that, the kind of projects and programs that the Bank promotes on the basis of its knowledge and analysis generates orders worth many times more.

Part of the reason for the domination and hegemony of the Bank’s knowledge is the vast networks it has created for generating and disseminating knowledge - networks that draw in people from research institutions, academia, professionals, NGOs and bureaucracy in many countries, helping it penetrate national knowledge production systems. A related phenomenon here is the so-called ‘revolving door’ wherein middle or high ranking bureaucrats are offered deputation or short / medium term assignment with the World Bank.

For those who are a part of the Bank’s developmental networks, or part of the revolving doors, generating knowledge that goes against the grain of the Bank’s thinking is not likely to be very profitable.

Challenges

One of the key functions of the Bank’s knowledge has been to create the TINA myth – There Is No Alternative. No alternative to these policies, no alternative to the knowledge created by the Bank. Therefore, it is a challenge for the citizens of this country to break the hegemony of the Bank on knowledge production, to liberate the process from the control of the elite.

To do that, the first thing is to realise that the Bank is only one of the players. The lines between research institutes, academia, think tanks, governments and corporate profit interests are getting blurred, whether it is the latest Indo-US Knowledge Initiative on Agriculture or the more conventional consultancies in water sector.

The second important thing is to democratise not only the creation of knowledge but also the process of determining its objectives.

When we make this suggestion, we do not want to romanticise ‘local and traditional knowledge’. We need to understand its strengths as well as limitations. We also need to do the same for the ‘expert’ knowledge. Equally important, the process of knowledge creation needs to be detached from the interests of excessive profits, and needs to be reformed to address issues of common good, equity, justice, environmental sustainability.

Ultimately, it is about controlling our development process. Control is the key reason why the World Bank is placing so much importance on being a Knowledge Bank. As the external Evaluation of the Bank’s Research states:

“As is well known, there is an on-going effort to reposition the World Bank as the ‘Knowledge Bank,’ with lending operations playing a reduced role, and the Bank playing a more important role as a source of policy knowledge. In many ways this is responding to the changing demand for the Bank’s services. We already see that a number of middle income countries like Mexico, or even countries approaching middle income, like India, either do not really need the Bank as a lender or are moving in that direction.”

The Bank is preparing for the future. Are we?

Shripad Dharmadhikary, Manthan Adhyayan Kendra, Dashera Maidan Road, Badwani (M.P.) India 451551

Ph: 07290-222857, 094259-81403

Email: manthan_b@sancharnet.in, shripad@narmada.org

Web: www.manthan-india.org

Research Support: Gaurav Dwivedi, Shirish Khare (Manthan)

This paper is based on a detailed work analysing the World Bank as a Knowledge Creator forthcoming from Manthan Adhyayan Kendra. Work-in-progress copies for comments are available on request.

Unravelling Bhakra is now available in Hindi. The Hindi edition is a abridged version of the original English and is published by Books for Change under the title Bhakra - Parat Dar Parat Ek Padtal.

Bhakra Hindi Ordering Information

Copies available from BFC or Manthan. Click on the icon for details of ordering. Pdf version or soft version is not available.

World Bank, through the PPIAF, is funding a study to design a pilot project for privatisation of water supply in the K East ward of Mumbai. If successful, it will be replicated in the rest of the city. On 2nd and 3rd June 2007, the consultants - Castalia - who are designing the project, held a stakeholders meeting. Click the icon for the report of the meeting by Afsar Jafri of Focus on the Global South.

Second Stakeholder Meeting Report

Afsar Jafri can be reached at a.jafri@focusweb.org

This note on Tiruppur Water Supply and Sewerage Project attempts to provide basic on the ground information on India’s largest Public Private Partnership in water supply.

This note has been prepared as part of an ongoing study and a short field visit to Tiruppur and Chennai by the Manthan team. This is a preliminary report and a more detailed assessment of the project will be brought out on the completion of the study.

Tiruppur Report May 2007

Public Accounts Committee of Chattisgadh Assembly Calls for Immediate Cancellation of Privatised Sheonath Water Supply Project and Initiation of Criminal Proceedings Against Officials Responsible for the Contract

The Public Accounts Committee (2006-07) of the Chattisgadh Assembly, in its 64th Report, tabled on 16th March 2007 has recommended that the Agreement and Lease Deed between Madhya Pradesh Audhyogik Kendra Vikas Nigam Limited (MPAKVN or MP Industrial Centre Development Corporation Ltd, now Chattisgadh Rajya Audhyogik Vikas Nigam CRAVN) and Radius Water Limited for the Sheonath Water Supply BOT project must be cancelled within one week of tabling of the Report and that all the assets and the ownership of the water supply project must be taken back by CRAVN.

It has also recommended registration of a First Information Report (FIR) and initiation of criminal proceedings against the then Managing Directors of MPAKVN (Raipur) and Madhya Pradesh State Industrial Development Corporation Limited (MPSIDC) and the Chief Engineer of MPSIDC for conspiracy to damage the interests of the Government and transferring to a private agency Government properties through manipulation and unlawful forgery of documents. It has also recommended registration of an offence against the main post-holder of Radius Water Limited for participation in this above criminal conspiracy and gaining profit by causing harm to government properties.

So far, there is no reaction from the Chattisgadh Government.

Background

It may be recollected that in 2001, Radius Water Limited, a local private company was given a concession to build a dam across Sheonath river, for supplying water to the industrial estate of Borai, near Durg city in Chattisgadh on Build-Own-Operate basis. Once the contract was signed, the owner asserted his rights to the 23.6 km water reservoir, banned the locals from using the waters, and was supported by the state in this. The villagers who used to fish in the river, who used the river ghats for bathing, who took water from the river for growing vegetables and small crops and depended on the river for other needs lost access to the river. Intense local struggles, supported by nation-wide campaigns challenged this.

The project was also criticised widely for its extremely skewed terms unduly favouring the private party. Among others, its take-or-pay clause, that required the Chattisgadh Government to pay for 4 MLD of water regardless that demand was less than this, was seen as causing severe losses to the Government since the inception of the project till date as the demand for water has been far lower.

It was the wide criticism of the project in the media during December 2002 that prompted the Public Accounts Committee, headed in 2005-6 by Dr. Ramchandra Singhdeo and in 2006-07 by Shri Ravindra Choube to take cognisance of the matter, and in its meeting of 6 January 2003, it decided to look into the project. It submitted a note to the Speaker of the House on 9 January 2007 requesting permission to examine the matter. It proceeded with the enquiry on getting permission from the Speaker.

Findings and Recommendations

Some of the key Findings and Recommendations of the Public Accounts Committee Report are given below. These are summarised and translated from the original Hindi. The original Hindi Findings and Recommendations (Pages 56–63 of the Report) can be found at http://www.manthan-india.org/article24.html

1. The Committee deems it appropriate to mention that the department did not take any interest in making available to it relevant documents during the process of the inquiry. On repeatedly asking, incomplete and differing documents were made available to the Committee.

2. From the reports and evidence presented to the Committee, it is the opinion of the committee that the original objectives and rationale based on which it had been decided to start a water supply project as a joint venture (with HEG), were sidelined and the Managing Directors of MPSIDC and MPAKVN (Raipur), through a deliberate and well thought-out strategy forced HEG out of the picture for furthering their personal interests.

3. Committee wishes to mention that the biggest consumer of water in the industrial estate was HEG and that is why it was interested in the project. The original agreement with HEG was also relatively favourable to the Government. In spite of this, by not finalizing the beneficial project with HEG but rather reaching an agreement on unfavourable terms with a private agency with no previous experience of water supply projects, in violation of rules completely destroyed the objectives and rationale of the project. As a result, the Government had to bear losses from day one of the project.

4. The MPAKVN (Raipur) did not have authority to hand over to a private company such an important responsibility as water supply. Further, to hand over to the private company assets worth over Rs. 5 crores (50 million) on the token rate of Rs. 1 (Rs. One!) without the permission of the State Government was, in the opinion of the Committee, a well thought-out conspiracy to cause loss to the Government.

5. How did a completely different company come into the picture in place of the earlier tendering company within a span of 24 hours? The Government failed to explain this to the Committee. The Committee considers this highly objectionable and considers it a criminal act leading to undesirable profits in violation of procedure.

6. The then Managing Director of MPAKVN, Shri G. S. Mishra, who signed the agreement with Radius Water Limited on behalf of MPAVKN overlooking all facts and keeping the Government in the dark has committed a criminal act.

7. The Agreement assures Radius Water Limited payment for minimum of 4 Million Litres water per day. It may be mentioned here that the demand of 4 MLD did not exist on the day of the agreement also and hence it was inappropriate to guarantee payments for a minimum of 4 MLD. According to the facts presented in the Assembly in relation to Questions, the minimum demand was 1.14 MLD and the maximum demand was 2.4 MLD. Moreover, in case Radius Water Limited was not able to supply the minimum 4 MLD, then it was to be charged a penalty of Rs. 3000 per MLD deficit or Rs. 3 per 1000 Litres. However the rate that was being paid to the company was Rs. 12.60 per 1000 litres.

8. The Committee found that the MPAKVN (Raipur) has handed over completely for 20 years a natural resource of the villagers, namely the Sheonath river and land worth crores of rupees.

Note Prepared by

Manthan Adhyayan Kendra
April 3, 2007

For more information, you may also contact: Gautam Bandopadhyaya, Nadi Ghati Morcha at Raipur on 09826171304 or at nadi_ghati@yahoo.com

The Public Accounts Committee (2006-07) of the Chattisgadh Assembly, in its 64th Report, tabled on 16th March 2007 has recommended that the Agreement and Lease Deed between Madhya Pradesh Audhyogik Kendra Vikas Nigam Limited (MPAKVN or MP Industrial Centre Development Corporation Ltd, now Chattisgadh Rajya Audhyogik Vikas Nigam CRAVN) and Radius Water Limited for the Sheonath Water Supply BOT project must be cancelled within one week of tabling of the Report and that all the assets and the ownership of the water supply project must be taken back by CRAVN.

Findings and Recommendations PAC - Hindi

The original Findings and Recommendations (Pages 56–63 of the Report) in Hindi are placed here in pdf format.

Brief Background

It may be recollected that in 2001, Radius Water Limited, a local private company was given a concession to build a dam across Sheonath river, for supplying water to the industrial estate of Borai, near Durg city in Chattisgadh on Build-Own-Operate basis. Once the contract was signed, the owner asserted his rights to the 23.6 km water reservoir, banned the locals from using the waters, and was supported by the state in this. The villagers who used to fish in the river, who used the river ghats for bathing, who took water from the river for growing vegetables and small crops and depended on the river for other needs lost access to the river. Intense local struggles, supported by nation-wide campaigns challenged this.

The project was also criticised widely for its extremely skewed terms unduly favouring the private party. Among others, its take-or-pay clause, that required the Chattisgadh Government to pay for 4 MLD of water regardless that demand was less than this, was seen as causing severe losses to the Government since the inception of the project till date as the demand for water has been far lower.

It was the wide criticism of the project in the media during December 2002 that prompted the Public Accounts Committee, headed in 2005-6 by Dr. Ramchandra Singhdeo and in 2006-07 by Shri Ravindra Choube to take cognisance of the matter, and in its meeting of 6 January 2003, it decided to look into the project. It submitted a note to the Speaker of the House on 9 January 2007 requesting permission to examine the matter. It proceeded with the enquiry on getting permission from the Speaker.

For detailed note in English, Click Here