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Water Tariff Increase: Rushing Towards Water Privatisation


The Delhi Governments announcement of a seven to tenfold increase in water tariffs overnight is meant to facilitate privatization in violation of every democratic norm and human rights principle.

The increase has been announced to ease the way for privatization. The World Bank in its “toolkit” on private sector participation has clearly stated:

“Management contracts can be a good first step toward more full fledged private sector involvement where conditions make it difficult for the government to commit to a long term arrangement or to induce the private sector to undertake capital investment or accept commercial or political risk. A management contract might be chosen, for example, where:

Tariffs are too low to support a commercial operation, and the government needs time to increase tariffs or develop a system of public subsidies compatible with private sector participation.

The regulatory framework has defects that need to be remedied before a long-term private sector arrangement can be secured.

The country lacks a good track record in public private partnership.

The government faces difficulties in getting key stakeholders to agree to long-term involvement of the private sector.”

A tariff hike after privatization clearly has higher political costs than before privatization because an MNC like Suez clearly increases tariffs for profits while the Delhi Jal Board can pretend it is merely a step in “rationalization”. The tariff increase is preparing the ground for Suez and other MNC’s to harvest high profits at the cost of Delhi citizens. Suez Degremont already has the contract for the Sonia Vihar plant which will get Ganga water from U.P, diverting the water of the Ganga canal at the cost of farmers of Western U.P.

The imperative to increase tariffs comes from the need to hand over to Suez an operation and maintenance system that is highly profitable. The increased tariff will not be used to make DJB financially viable. It will be used to dismantle the role of DJB in water supply. The public utility will continue to exist only as a conduit for public subsidies for private profit.

The Delhi Government is following the World Bank instructions to the dot. However, in a democracy, it is the will of the people, the rights of the people which should guide decisions on vital issues such as access to water. The Delhi Government has announced the tariff increase in spite of protests by the public, and protests within the legislature. The pressure comes from the World Bank and from streamlining the way for Suez to collect super profits, once the Sonia Vihar plant is under operation.

While the main justification for increasing water tariffs is increasing costs of operation, there are many ways to reduce costs.

One of the reasons for cost increase is increasing power bills. Since 1997-98 the power bill for DJB has gone up from 91.7 crore to Rs. 267.8 crore. This three-fold increase is a direct result of electricity privatization. Instead of multiplying the burden on consumers because of increased electricity bills the government should have ensured that electricity supply for water is maintained at low prices as an essential service.

The cost is also being increased because after spending twice as much to get the Sonia Vihar plant built by Suez, the government has committed itself to provide free electricity and water. While Suez will be getting free power and water, it will be collecting ten fold higher tariffs through the Delhi Jal Board.

Privatisation and tariff increase is repeatedly justified as being necessary for “full cost recovery”. However, the private sector, in this case Suez, will be receiving everything for free. It is the citizens who pay extra so our public utilities can spend more on the private sector to increase their profit margin.

The World Bank driven tariff increase is a major subsidy to water corporations as well as to industry. While even he poor are being made to pay more, the burden on industrial users is being reduced.

For domestic users the tariff will go up from Rs. 74.35 crores to Rs. 222.223 crores while for industrial users it will go up from Rs. 25.230 crore to Rs. 65.405 crore. As the DJB report states “rising tariff beyond a certain level can prove to be counter productive”.

There is an alternative to privatization – public-public partnership. With the participation of citizens, and cooperation between the water utility workers and residents, it is possible to reduce costs and waste. While maintaining affordable water rates public-public partnership can guarantee water for all. The road to privatization will ensure burden for all, water for some, super profits for Suez. The logic that the tariff increase is a conservation measure to reduce water waste is totally false. Given the levels of wealth and income inequality in the city, increased tariffs will exacerbate water inequalities and create a hydro apartheid. The rich will feel no pinch in paying a few hundred rupees extra to wash their Mercedes worth crores and flood Delhi’s roads with precious Ganga Jal, while the poor mother in a jhuggi jhopri or JJ cluster for whom even Rs. 30/- is a burden, will be unable to pay Rs. 75/- per month with an additional increase of 10% annually.

The new tariff structure is in fact an invitation to the rich to waste more water, while diverting the scarce incomes of the poor to quench their thirst instead of sending their children to school and provide themselves health and nutrition.

While the rhetoric for the tariff restructuring is pro-poor the content is infact anti-poor since it is transforming the public good and public service into a privatized marketised commodity to which access will be proportional to ability to pay. In other words the rich can have more access to water because they can spend more and the poor will be denied access to water since they cannot afford the additional burden.

While under the present system jhuggi jhopris, JJ colonies and rural areas have access to free water from public taps and public sources, the new tariff structure imposes a tariff even on the poorest. All citizens no matter what their economic status are to be dragged into the net of water privatization. As the DJB report states, “DJB shall strive to undertake metered supplies in all such colonies and rural areas. However, till such time that this is achieved, the colonies and rural area consumers shall pay the access charge fixed for domestic consumption and an additional amount of volumetric consumption, based on an assumption of 10 KL consumption”. In other words the poor will be paying Rs. 40/- even without access. This is totally unjust and unjustified.

The intention of the new tariff structure is not improving the water supply in Delhi but an attempt to get the Delhi citizens to view water as a commodity and not as a public good. That is why piaos, destitute homes, homes for physically challenged, orphanages, religious premises, dharamshalas, cremation grounds for which any decent society should provide free water as part of a service to society have also been brought into the sphere of having to pay for water. If piaos have to buy water how can they practice the giving of water, which is the very essence of the culture of the piaos. Water temples will become water markets.

The new tariff structure is therefore an assault on our culture, on equity, on human rights and on sustainability. It will promote inequitable and non-sustainable use.

There is only one way water conservation can be ensured through equitable access and sharing a scarce and precious resource. For this a limit needs to be set on water use, and certain wasteful useful must be banned. Public taps must continue to provide free access to the poor. Water democracy is an imperative for water conservation. Without people’s partnership, water waste will grow and increased water tariffs will be a license to waste for these who can spend in lakhs and crores.

It is people’s participation that Delhi needs to solve its water woes, not “private sector participation” a.la. World Bank recipe.

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