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Water Supply and Wastewater Services in Bombay

Projects' Framework

1. The purpose of this study is to determine the impact of the Bank's interventions in the provision of urban water supply and wastewater services in Bombay. The study covers the First, Second, and Third Bombay Water Supply and Sewerage Projects (BWSSP-I, Cr. 390; BWSSP- II, Cr. 842; and BWSSP-III, Ln. 2769/Cr. 1750). These projects supported the sector development program of the Municipal Corporation of Greater Bombay (MCGB) which began in 1973. Elements of other Bank-financed infrastructure projects in the Bombay area are considered in this evaluation to the extent that they had an impact on the program.

The Setting

2. Water Supply. At the onset of the MCGB program, about 80 percent of Bombay's 6.5 million people received public water service, but many relied upon unsatisfactory public standpipes. Water was chlorinated but only six percent was fully treated. Because of excessive leakage and wasteful practices the gross supply of more than 200 liters per person was only adequate to provide the average resident less than six hours of service a day.

3. Sewerage and Sanitation. In 1972, sewer service was limited to central Bombay and a small portion of the suburbs, with septic tanks and privies used elsewhere. Sewer systems were overloaded and during heavy rains sewage and stormwater flooded streets. Septic tanks overflowed and nightsoil was tipped into local watercourses. Industrial wastes were discharged directly into drains and creeks.

4. Institutions. A Water Supply and Sewerage Department (WSSD) was created in 1971, prior to which responsibilities for Bombay's water and sewerage planning, development and operations were divided among several government entities. Responsibilities for other sanitation services such as garbage collection and storm drainage fell to other governmental units. Water resources management and development in Maharashtra was shared by several government agencies and poorly coordinated.

The Projects

5. Objectives. The objectives of MCGB's program were to improve living conditions of Bombay's population by alleviating water shortages, doubling the hours of supply and mitigating dangerous and offensive sanitary conditions. The program was divided into phases, with BWSSP-I (1973) financing the first phase which was primarily for water supply system improvements. Subsequent phases covered sewerage as well as water supply.

6. The physical objectives of BWSSP-I were to fully utilize available water sources, improve the quality of supply and the efficiency of the distribution system and, to a lesser degree, rehabilitate and expand the sewerage system. The institutional objectives were to develop WSSD's capacity to carry out the development program and operate its systems; to ensure WSSD's financial viability; and to consolidate the management of State-wide water resources.

7. BWSSP-II (1978) continued WSSD's institutional development and assumed the same physical objectives because BWSSP-I, due to cost overruns, did not achieve them. BWSSP-III (1986, now nearing completion) provided institutional support for WSSD and sought to expand water supply and wastewater facilities to keep pace with the increasing demands. BWSSP-III also planned to expand earlier efforts to provide sanitation and water services to the poor.

8. The Bank's Performance Audit Reports (PAR) for BWSSP-I (1985) and BWSSP-II (1990)1/ credited WSSD with a sound financial position but cited areas for improvement, including reducing reliance on the water/sewer benefit tax, reducing accounts receivable, and giving meaningful attention to revenue losses through unaccounted-for water. The outcome of BWSSP-I was rated as satisfactory, and that of BWSSP-II as unsatisfactory.

Economic and Social Impacts

9. This study reviews the technical results of the MCGB program and their impacts on economic, social, institutional, health, and environmental conditions. The evaluation covers the 22-year period, 1972 to 1994, when a social survey was carried out as part of the study.

10. Technical Results. MCGB's original water supply objectives have not been fully achieved. While there has been a 65 percent increase in the gross supply of water, the population increased by about the same level, leaving the per capita availability unchanged. Connections increased by 84 percent, standpipes by 800 percent, and 75 percent of the connections are metered but many meters do not work. Water service is still discontinuous at two to eight hours a day in most areas. The quality of water meets international standards when it enters the distribution system but is subjected to recontamination at the consumer level because of low and negative pressures.

11. Wastewater objectives have not been met primarily because of implementation delays, population growth and sewage quantity increases. Achievements include a 20 percent increase in the number of dwellings connected to the sewerage system, a 20 percent expansion of the area served by the sewer system, and the completion of collection, treatment and disposal works for the harbor area. Important shortfalls include the failure to complete the two wastewater treatment plants and the two marine outfalls partially constructed under BWSSP II. At 170 persons per latrine, the slum population is grossly underserved with sanitation. One third of the 35,000 latrines are out of service and consumers complain of poor designs and maintenance.

12. Economic Impacts. The benefits of the program clearly exceeded the costs. Seasonal water shortages, interrupted service and a polluted urban environment, which cause serious economic disruption and personal hardship, would be far worse in the absence of the program. Gross water supply per person would be 60 percent of the present level and uncollected sewage would flow in the streets.

13. But was this indispensable program the least cost solution? The answer is a qualified yes. The technical solutions and their sequencing generally appear to be least cost. However, true costs were higher than anticipated and benefits were postponed, in part because of severe delays in procurement and construction. Unsatisfactorily designed facilities, such as the underutilized public latrines and the partially completed submarine outfalls, posed substantial and unexpected costs without commensurate benefits.

14. Although the projects included components for system rehabilitation there was a clear bias for major construction and, as a consequence, important benefits which could have accrued from relatively low cost rehabilitation were not achieved. Possibly the least cost initial intervention would better have been a system rehabilitation effort of modest cost.

15. The level and structure of water supply and sewerage tariffs are matters of economic and social importance, for they impact upon economic viability, equity among consumer groups, and the ability to manage demand. For most consumers water and sewerage prices, however, fall far short of meeting either the full financial cost of water or the incremental economic costs. Consequently, consumers are not signaled true costs, waste is encouraged and a false message is given that large capacity expansions are required.

16. The tariff structure favors domestic over commercial and industrial consumers. This policy of subsidizing domestic consumption encourages waste of water which could be put to economic use by others. It also prompts industrial consumers to resort to costly recycling and other measures to avoid the high tariff of WSSD water.

17. Social Impacts. A survey carried out as part of this study compared conditions at the time of the survey with those of IO years earlier. The results indicate that for water supply, coverage with house connections increased significantly; standpipe use remained constant; access to 24-hour supply decreased; and. more households now rely on partial-day service than in 1984. Respondents complained that water often reaches them in the early morning hours causing familial hardships, and some 80 percent do not trust the safety of the supply. It is the poor, who cannot afford booster pumps and mostlv water storage facilities, and women, the principal water haulers, who bear the greater burdens in terms of access and convenience. T@e survey data indicates that other than an increase in house connections, little progress has been made in key indicators for consumer satisfaction.

18. In non-slum areas almost all the households are served by toilet facilities, in large part because of the program. But many slum dwellers complain of inappropriate designs, numerical inadequacy and poor maintenance of latrines. In the poorer wards, more than half of the children use open field defecation.

Institutional and Financial Impacts

19. The audits' views on institutional performance are consistent with the findings of the PARS. Staffing for the water supply function at 96 per thousand connections is grossly excessive. Unaccounted-for water is 40 percent to 60 percent on a 24-hour supply basis against the BWSSP-I target of 25 percent. Metering is only 15 percent effective. Accounts receivable are excessive and more than 30 percent of the customers claim to pay nothing for water. Improvements in these areas are essential if sound economic and financial policies are to be pursued. Contracting is often beset by delays and monitoring indicators called for under BWSSP-III were not prepared. Monitoring indicators are now being prepared for BSDP, however, there is a need to reexamine them as they do not provide a full spectrum of management data.

20. Daily service interruptions are a key impediment to a rational use of water in several y ways. First, much water is wasted through pipe flushing and households discarding "old" stored water when "fresh" water is supplied; second, pressure interruptions make metering unreliable; and@third, poor service quality makes tariff adjustments less acceptable to the public. Finally, long interruptions make it indispensable for customers to invest in individual storage tanks; a solution which cost millions of dollars more than the recourse to large scale storage by the MCGB.

21. Since the start of the program the Bank has urged officials of Maharashtra State to develop and manage water resources in a comprehensive, multi-sectoral way. As an important step in this direction, a State-level water resources authority with membership from water-using sectors was created in 1995.

22. Water and sewerage taxes and tariffs at the onset of the program were inadequate in level and structure. As the program progressed, the revenue targets were generally met. WSSD's contribution to capital expenditures, in part due to rate hikes and in part due to postponed works, exceeded 40 percent.

23. The financial strength of the WSSD is one of the brightest results of the program. However, WSSD's finances are heavily reliant on a narrow and shrinking revenue base provided by industrial and commercial consumers, on taxes and on the fact that the growing foreign exchange losses associated with its borrowing are borne by the Government of India. It appears that the level of the subsidy is not essential to ensure that domestic consumers can afford water. The poorest nine percent of households earning less than Rs 900 a month in 1995 are estimated to spend less than one percent of income on their water and sewerage bill and water which is purchased privately from tanker trucks costs up to 50 times the price charged to them by WSSD.

Health and Environmental Impacts

24. The intervention model held that the incidence of water-related diseases would decline if supply hours and standpipes were increased in the slums through distribution of fully treated water. Although full treatment was implemented and the number of standpipes expanded by 800 percent, a health, survey in 1992 failed to detect significant reductions in water-related diseases. This may be due in part to the intermittent water service and the poor quality of sanitation services. Changes in health status are also affected by interventions in health care and education, and are often linked to incomes-factors external to the program and beyond the scope of this impact evaluation.

25. The sewerage components were to provide the primary environmental benefits of the program. Some sewerage systems have been expanded and two marine outfalls are in use, thereby relieving street-level and near shore pollution in the areas served. However, about 75 percent of all sewage is untreated and discharged to local waterways and coastal waters, causing extensive environmental hazards.

Recommendations for Sustainability

26. The present institution and cost recovery policies are not sufficiently strong to ensure that the present level of service can be sustained, let alone improve in the future. Costs are unnecessarily high, procurement procedures are cumbersome, construction lead-times are long and unaccounted-for water is high. Metering, billing, and collection performance is poor. In the past, capacity expansions and tariff increases were used to cover operating shortcomings but fresh approaches are now required to expand the revenue base, rationalize the use of services and improve service levels.

27. WSSD should next undertake a major rehabilitation effort with the objective of providing consumers with 24-hour, uninterrupted water service. With distribution system improvements, the present gross supply of 240 liters per capita per day (lcd) is adequate to provide an average of 135 lcd over 24 hours, equivalent to WSSD's estimate of consumption by apartment dwellers. This effort would help to (i) ensure that the water remains potable; (ii) improve consumer convenience; (iii) eliminate expenditures for private water storage; and (iv) lower WSSD's management and labor costs. Issues remain on how to go about this (because, for example, there is insufficient storage capacity), therefore a pilot project would be appropriate to uncover the constraints and work out the details. The effort should be holistic, and include reducing leakage, improving metering, billing, and collection, and raising domestic tariffs while providing a life-line tariff block for the poor.

28. There is a parallel need to provide improved sanitation services for the disadvantaged, both in terms of quality and number of facilities. The BSDP contains a slum sanitation component. It has a better chance of success because it actively involves the community in design and maintenance of new facilities.

Conclusions

29. Water supply and sewerage planning, construction and operations in Bombay posed daunting challenges to those who planned and implemented the investment program. At the outset, there was a huge backlog of unmet demand because of underinvestment. Population and economic growth accelerated in the following decades and the proportion of the poor increased as did the slums which they occupied.

30. The intended impacts of the program have not been realized. Shortcomings include that water is not safe to drink; water service, especially to the poor, is difficult to access and is provided at inconvenient hours of the day; industrial water needs are not fully met; sanitary facilities are too few in number and often unusable; and urban drains, creeks and coastal waters are polluted with sanitary and industrial wastes.

31. This study confirms the PAR ratings for BWSSP - I and II (para. 8). For BWSSP - III, current findings support assessments shown in the latest supervision reports. In particular, the sustainability of program benefits is rated as uncertain due to weaknesses in WSSD's cost recovery policies and its performance in the operation and rehabilitation of the water system.

32. The findings were discussed at the workshop and a near-term action plan was developed. These actions, endorsed by MCGB in a letter to OED, dated May 17, 1996 (See Attachment), are:

- water supply activities would be focused on rehabilitation, with emphasis on leak reduction and effective metering;

- a pilot program would be undertaken to test the issues which confront the provision of 24- hour supply;

- latrines would be built and restored to provide better sanitary service to the poor; and

- water and sewerage tariffs would be restructured to reflect the full cost of service, while providing a life-line block for the poor.

1/ Performance Audit Reports on Bombay Water Supply and sewerage Project I, Report No. 5875, dated October 1, 1985 and Bombay Water Supply and Sewerage Project II, Report No. 9265, dated December 31, 1990.



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