After the success of the OCW Project (Nagpur), Arun Lakhani, CMD, Vishvaraj Infrastructure, says he is more keen on water supply, reuse as well as sewage treatment projects across India.
How do you see the water sector, compared with other sectors from an investor viewpoint?
It is yet to emerge as an organised sector in comparison to the other sectors where you have model concession agreements. The bankers are also very familiar with terms and conditions. The new hybrid annuity model in roads is quite good and attracting attention from both developers and bankers. However, water projects are only starting. We are pioneers as we have done projects in both distribution (Nagpur 24x7) and reuse (sewage treatment of 200 million litres per day). We are keen to continue such projects, particularly for water reuse. Fortunately, with the Ganga Authority also announcing a hybrid annuity model for the Ganga programme, it will open up a fairly large opportunity.
Water remains a political issue. Are you doing other projects? What is your experience?
We are doing five more towns in the state of Karnataka, although the model is different. However, these are also 24x7 projects. In Karnataka, we do see large infra companies bidding for these projects. It isn´t as if they are all averse to such projects, and this is apart from the international players also. For instance, there were 16 bidders in Nagpur and eight or ten of them submitted their bids. I think it is an area that people are keen and recently, the Tatas also took up the river cleaning in Jaipur on a Swiss Challenge model. I think all groups are keen to come into water projects, but yes, it is true that this is a subject of the ULB. When you talk about the willingness to pay or willingness to charge, I think willingness to pay is not a challenge as long as you are transparent and communicate correctly and clearly. I call this the 4-P model where the fourth P stands for people. If we are sensitive to them and communicate the benefits to them, we do not see a problem in willingness to pay.
The willingness to charge from the political side is always there. However, in Nagpur, we disconnected the fees and the tariff. Hence, what the customer is paying is not connected to our fees. There is a cross-subsidisation and there is a telescopic tariff. The minimum lifeline support of 150 litres is given at a minimum highly subsidised rate. However, more usage of water, like in electricity, goes up. Cross-subsidisation is also supported with high tariffs by commercial and industrial users. I think that telescopic tariff plus metering is the key to get the issue sorted out.
Does this mean that such projects will do better in the bigger towns and cities?
Well, I think ultimately, we have to provide healthy, safe drinking water. We cannot avoid this responsibility for too long. Even politically, although charging for water is a sensitive subject, making safe water available will become much more sensitive. To get this, we have to pay a price. We have to invest in infrastructure, its maintenance and a 24x7 pressurised water system that does not allow any contamination in the pipes, which is the most important thing.
I think charging for water will become secondary to making water available.
What is the level of interest you are seeing among civic authorities to tackle their problems with the help of professional expertise?
Every state has its own policy. Karnataka has gone on to replace their pipeline 100 per cent with ADB funding. They are looking at 24x7 water projects in many of their towns. In Rajasthan, we are doing a sewage treatment project on a Swiss Challenge model for 125 million litres of water per day. This water will be sold to industries and the fresh water they are using can instead be supplied to the towns as drinking water. Other projects are there hand-in-hand (both drinking water and sewage treatment). It all depends on the various state governments´ initiatives. There is a definite awareness for water conservation, leading to a focus on metering and 24x7 water supply projects.
Do you see an adequate emphasis being placed at the macro level by this government on this issue?
In the Smart Cities programme, the government has defined water and sanitation. I would like to add the sewage aspect to it as well. It is equally important because sewage is contaminating all our fresh water resources. It is creating havoc in terms of diseases of which 21 per cent are all water borne. We must use sewage that is available within the four walls of the city, as a resource. If we treat the sewage, we can get almost 60-70 units of water out of 100 units of sewage. This can be comfortably used for any commercial purpose by industry, for gardening, etc. Unless we give this equal importance, it will be very difficult to continue with this one-way street of only taking water, using and throwing it any which way we want. Sustainability is not just a word. It has become a necessity if we have to look at the future without water scarcity. I think this government is realising this and from the importance it is giving to water and sanitation in various projects, there seems to be a thought about these issues.
Don´t you think the progress is too slow for the kind of importance the issue holds?
We have a three-tier governance system. After Article 45, we have certain issues which are totally ULB issues and no one can really interfere there. The land belongs to the state as well as the right of way; sewage belongs to the ULB and the funds are probably with the Central government. So, it will take some time to figure out a proper way to go about it. I think because of our three-tier system of democracy, we need to find out a way but I am sure there is going to be a way out.