Our cities will need a combination of centralised and decentralised wastewater treatment systems especially in urban pockets and smaller towns where formal sewerage system and treatment will be too expensive, write B Rajesh and Neerad Swaroop.
Nearly 590 million people are expected to live in Indian cities by the year 2030. As per the 2011 census, decadal growth of urban population was 31 per cent, compared to 12 per cent for rural population. The issues faced today in the urban water management relate to unclear institutional arrangements, weak financial and managerial capacity of Urban Local Bodies (ULBs), poorly defined tariffs, unreliable service delivery and high level of Non-Revenue Water. Wastewater management has remained an even bigger challenge with only about 50 per cent coverage in big cities and even lesser coverage in small and medium cities. The situation is aggravated by poorly targeted subsidies, large capital requirements and inadequate cost recovery.
The power of five
Reform in urban water management requires a long term perspective. Five areas require immediate and concurrent action. The measures cover financing, institutions and policy, Public-Private Partnerships (PPPs), resource sustainability and capacity building. These measures have close synergy with one another and so lack of movement on any one of them will soon become a bottleneck for other areas.
1. Better fund allocation:Addressing the financing issue requires greater devolution of grants to the third tier of government under a predictable framework and expanding funding options for the sector. Utilities have traditionally been underfunded because of insufficient internal accruals to finance capital investments. The 13th Finance Commission has recommended provision for automatic transfer of funds based on a percentage of divisible pool of taxes to ULBs. This will link the resource base of ULBs to buoyant sources like the proposed Goods Service Tax (GST) and minimise distortions that may arise due to local taxation. Further, debt market needs to take off with necessary limited guarantees by state government. Better targeting of subsidies is important and an effective way would be through direct transfer of subsidy and letting all consumers face tariffs, which reflect actual costs.
2. Make delivery count:Getting our institutions right is important and this requires creating an accountable, performance-driven approach and clear contractual arrangement for service delivery. Actual service could be delivered by the local body, state level agency or a PPP operator provided there are clear benchmarks to be adhered to and payment is made based on standards achieved. An important step in this direction would be to separate the roles of policymaking, tariff regulation and service delivery. Ring-fencing water supply operation is necessary and this could be done through transparently setting tariffs and ensuring that subsidies for water supply are pre-determined. Having an incentive-based regulatory framework that provides graduated level of incentives to ULBs for agreeing to be part of a regulatory framework needs to be explored.
3. Determine delivery mode: Creating an enabling environment for PPPs requires focusing on first principles to assess whether a project should be done under PPP or not. The financial impact of a project on the ULB should be clearly assessed and payment to private operators should be linked to achievement of performance standards. We need to temper our expectations from PPP. Unlike in road sector, PPPs may not fund bulk of the capital cost in water but could definitely play a huge role in improving service delivery through performance based management contracts. Further, we have to move away from the idea of having one model contract document. Instead, contract principles should be developed for 4-5 variations in the sector with broad risk sharing framework.
4. Reduce the redundant: Better resource sustainability can be achieved by instituting a long term programme for Non-Revenue Water (NRW) reduction, appropriate regulation of ground water and suitable incentives for industries to use alternative water sources such as seawater and recycled water. In doing so it must be ensured that price of recycled water is lower than fresh water to promote usage. Incentives should be given to industries that use recycled water. This will require that sewerage system is constructed in sync with expansion of water supply network to be able to collect and recycle the wastewater.
5. Increase efficiency: Capacity building in the sector is necessary for achieving the goal of providing continuous water supply and total sanitation in our cities. For this, our ULBs need to be managed by efficient and well motivated urban managers. Separate cadre for urban management should be created.
Brewing wastewater demand
A recent study conducted by PwC on the Indian water and wastewater sector estimates that the cities with population of one million or more will alone need capital investment of between $1.7-2 billion over the next 10 years to cover the existing backlog in sewage treatment and to meet additional demand. While priority investments have been targeted to increase the water coverage in cities, wastewater management has been neglected. A Central Pollution Control Board (CPCB) report on 'Status of sewage treatment (2009)', states that out of 38,000 MLD of sewage generated, treatment capacity exists for only about 12,000 MLD. Nearly 39 per cent plants do not conform to the general standards prescribed under the Environmental (Protection) Rules for discharge into streams. The status of waste management immediately offers a huge scope for newer technology in wastewater management in the country. Market estimates pegged the water/wastewater equipment business at more than $1 billion in 2010 with CAGR of 10-12 per cent over the next six years.
STPs need revised technical norms: The existing sewage treatment plants (STPs) in our country are designed to treat sewage up to secondary level with Biochemical Oxygen Demand (BOD) and suspended solid (SS) as the effluent quality parameters. The Central Public Health and Environmental Engineering Organisation (CPHEEO) manual (2012, final draft), prescribes stricter standards for disposal than the existing standards provided by the Environment Protection Rule 1986. It suggests that faecal coliform, a cause of water borne diseases, should also be controlled in effluent discharging into surface water. Some of the progressive utilities have embarked on recycling and reuse of wastewater for non-potable purposes such as landscaping, horticulture and supply to industries. These initiatives will require advanced wastewater treatment to tertiary level.
However, land is extremely difficult to obtain in urban areas for setting up additional treatment plants. Large water utilities like the Nagpur Corporation and Delhi Jal Board are exploring Least Lifecycle Cost (LLC) approach in their turnkey management contracts. The LLC approach will reduce requirements of land, energy, manpower and chemicals over the longer term thereby providing savings for the corporations. New technologies and energy saving equipment that conserve resources will be in demand. Some of the new technologies being adopted include Membrane Filtration, Membrane Bioreactor and Sequential Batch Reactor (SBR). For example, the SBR is capable of producing five times better quality effluent than conventional treatment with 40-50 per cent less land and energy requirement. Wastewater recycling has an important role for industries that will reduce their operating cost with payback period being five years or lesser. This is especially true for large consumers like thermal power plants and growth industries like food and beverage, textiles, steel, automobiles and pharmaceutical. Stricter environmental standards like Zero Liquid Discharge will mandate recycling and reuse of water.
Towards DEWATS: In India, we have traditionally constructed centralised wastewater systems. The system does not work where per capita water supply is less than 135 lpcd and population density is low. Brazil which faces similar sanitation conditions uses the in-block sewers. These are simplified tertiary sewers that are laid within the private properties, can have minimum diameter of 100 mm, are laid at shallow depths and do not require expensive deep manholes. Such low cost sanitation systems for our small and medium towns will help in reducing capital investment and reduce maintenance requirements. Our cities will need a combination of centralised and decentralised wastewater treatment systems (DEWATS). The commonly provided septic tanks system has failed in most cities and led to pollution of ground from poorly designed soak pits and when connected to the storm water drains have led to surface water pollution. We need to invest in on-site sanitation systems that will collect and treat the wastewater locally and even use the effluent for purposes like gardening, landscaping and flushing.
Bundling O&M: The sewerage networks will continue to be publicly funded. Construction and Operation and Maintenance (O&M) can be done through private sector participation on suitable performance-based management contracts. The contracts should have built in incentives and penalty clauses. STP can be developed on PPP models such as BOT or DBO through annuity payments. Such contracts which have bundled O&M will provide the incentives and penalty mecha¡nism to private firms who will remain liable during the O&M term. On the other hand, suitable provisions should safeguard the contractors from delays in commissioning on part of the public utilities. Recycling and reuse of wastewater is an area which has good potential for PPP as it has revenue stream of user fee from sale of treated wastewater.
Water policies need to be prepared by the states which prioritise wastewater management and recycling. The National Water Policy (draft) 2012 requires at least 20 per cent recycling by the state public water agencies. Water use efficiency should be inculcated by the ULBs and industries which include water and energy audits and use of energy and water efficient devices. Sustainable use of water resources with rain water harvesting and controlled aquifer recharge to replenish groundwater should be accorded priority. Financing the capital investments will need to have a combination of budgetary resources, private sector financing, institutional finance including multinational/bilateral agencies and bond market. States should work towards urban focussed infrastructure funds which will pool resources from various means.
The fund should be governed by a central committee that will decide debt and equity participation for selected projects. This fund will also be used to provide cost of project development. Some projects will be revenue earning and can channel earnings back into the fund.
Source: Report on India Urban Infrastructure and Services - High Powered Expert Committee (HPEC 2011)