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Water reforms in Delhi fraught with corruption

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Posted By : Anonymous (not verified)

Authors:AfsarJafriandSANaqvi
TheDelhigovernment,underCMSheilaDikshit,whoisalsotheChairpersonoftheDelhiJalBoard(DJB),hasmade
severalaemptsinthepasttobringintheWorldBankprivazaonmodelinthewaterulityinDelhi.In2005the
DJBhadseverelytarnisheditsreputaonbysuccumbingtotheWorldBank'spressuretogranttheconsultancyto
suggestwaterreformsinDelhitoPriceWaterhouseCoopers(PWC),themulnaonalconsultancyrmwhichhad
repeatedlyfailedtobeshortlistedforthisproject.Quitepredictably,PWCsuggestedprivazaonandhandingover
ofall21waterzonestoforeignoperatorssuchasDegremont(Suez),ManilaWater(Bechtel),SAURandVeolia
throughmanagementcontracts'.Thoughthemovetowardwaterprivazaonwasstalledduetopublicoutcryin
2005,mulplesmallcontractshavebeengiventoprivateoperatorsthroughWorldBanksupportedoutsourcing'
modelofprivazaonintheformofoperaonandmaintenanceofwatertreatmentplants(WTP),installaonand
maintenanceofwatermeters,outsourcingwatersupplythroughtankers,etc.Earlythisyear,theDelhigovernment
organisedahighlevelmeenginManesar(Haryana)todiscussthestrategytoprivasethewatersupplysystemin
thenaonalcapital.InApril2011,theDJBlaunchedasurveytogaugepublicopinion,toascertainwhether
consumersarereadytoacceptaswitchfrompublictoprivatewaterulityinDelhi.InMay,immediatelyaera
meengwiththePlanningCommissionDeputyChairpersonMontekSinghAhluwalia,SheilaDikshitsetupahigh
poweredcommiee,headedbyChiefSecretaryPKTripathi,toformulatearoadmapforwaterprivazaonandto
bringreforminmanagementanddistribuonofwaterinthecity,inaddiontorestructuringtheDJB.
Recently the DJB was accused by the CFWD and Water, Sewer and Sewerage Disposal Employees Union
(WSSDEU) of corrupon in outsourcing Water Tanker Distribuon Service in South and Southwest Delhi. The
Union accused the DJB of rigging the bidding process to grant the water tanker contract to a blacklisted and
debarred rm called SPML for seven years. Further, on 24 May 2011, the WSSDEU exposed another big scam of
morethanRs.200croresinthebiddingprocessforprivazaonofDJB'sBhagirathiwatertreatmentplant(WTP)in
EastDelhi.Thisisanopencaseoffraudinbiddingandtheawardofcontracts,whichhasbecomeahotspotfor
grand corrupon in the water sector. Corrupt procurement can take many forms, including tailoring project
specicaons to a bidder, providing insider informaon, liming bid adversing, shortening bid periods and
breachingcondenalityandthecurrentexposeisatypicalexampleofacorruptprocurementprocessintheDJB.It
alsoexposesthefactthatapowerfulnexusofcorruptocials,lobbyist,consultantsandtheagents(mainlyrered
DJB engineers on the pay roll of the private rms) are very acve inside the DJB to facilitate Delhi government's
movetoprivazewaterinthemegacity.

WhentheSoniaViharWTPwasfullyoperaonalisedtosupplywatertoSouthDelhi,theDJBiniatedthemoveto
refurbishitsBhagirathiWTP,whichearliersuppliedwatertoEastandSouthDelhi,byreplacinghighcapacitymotors
andpumpswithlowcapacitymotorsandpumpsandsomeelectricalandmechanical(E&M)equipmentinorderto
reduce the fuel and electricity load. The DJB had also approved development of a pilot Supervisory Control and
DataAcquision(SCADA)systematBhagirathiWTPanditsconnectedUndergroundReservoirandBoosterPump
Staon(UGR/BPS)includingoperaonandmaintenance(O&M)ofplantforaperiodof10yearsaereecnga
oneyeardefectliabilityperiod(DLP).Tocompletethebiddingprocessandawardthecontract,DJBhiredtheJapan
InternaonalCooperaonAgency(JICA)asaconsultantwhichesmatedthatthetotalprojectwouldcostonlyRs.
120.75crorefortheWTPanddistribuonarea,includingRs.30.33croreascapitalcost(Rs.29.63croreforE&M
plusinstrumentaonworkandRs.70lakhforcivilwork)andtherestRs.90.42croreforO&M.Thisesmatewas
approvedbytheDJBinits97thmeengon23February2010eventhoughtherehabilitaonoftheBhagirathiWTP
wasnotintendedtoaugmenttheproduconcapacity,whichispresentlyat100milliongallonperday(MGD).
Againstthis,onlytwoforeign'mulnaonalrmsparcipatedinbidprocesswhileallIndianrmsweredebarred
from bidding. Larsen and Toubro Ltd. (L&T) bid for Rs. 284.10 crore, including Rs. 184.72 crore capital cost (Rs.
121.54croreforE&MplusinstrumentaonandRs.63.18croreforcivilwork)andRs.99.38croreforO&M.While
the VaTech Wabag Ltd. (WABAG) bid was for Rs. 298.20 crore, including Rs. 191.76 crore capital cost (Rs. 128.74
croreforE&MplusinstrumentaonworkandRs.63.02croreforcivilwork)andRs.106.44croreforO&M.Both
theseforeignrmsquotedmuchaboveJICAesmate,90mesmoreforthecivilworkandfourmesmoreforthe
E&M plus instrumentaon work. Strangely, during the bidding process, DJB hired another consultant STUP
ConsultantsPVT.Ltd.,atanexorbitantprice,tomonitorthetenderingprogressandtoworkoutasuggestedcost,
which turned out to be much more than what esmated by JICA. STUPs suggesve cost was Rs. 259.45 crore,
includingRs.118.85croreascapitalcost(Rs.88.63croreforE&MplusinstrumentaoncostandRs.30.22crorefor
civilwork)andRs.140.60forO&M.
Despite this huge dierence and very high variaon in capital cost proposed by the two consultants, as well as
betweenthequotedpriceofbiddersandconsultants(seeboxbelow),thisprojectgotclearedatalllevels.L&Twas
chosenasthewinnerandthelewasputupforthenalclearancebytheDelhiJalBoardatitsmeeng,earlier
scheduled for 27 May, but postponed to 30 May 2011 due to the outcry within the DJB caused by the WSSDEU
leer to the CEO exposing the scam. On 30 May, the Board, under the chairpersonship of Mrs Sheila Dikshit,
decidedtoconstuteaCommieetoreexaminethetenderandinvesgatetheallegedfraud.

COMPARATIVESTATEMENT(AmountinCroreRupees)
Item

JICAEsmate

STUPSuggesvecost

L&T

WABAG

BhagirthiWTP

SCADASystem

2.30

85.33

120.04

125.57

InstrumentaonWork

1.61

MechanicalWork

15.52

ElectricalWork

6.52

CivilWork

0.70

30.22

63.18

63.02

DistribuonArea

SCADASystem

2.60

3.30

1.5

3.17

InstrumentaonWork

1.08

TotalCapitalCost

30.33

118.85

184.72

191.76

O&M

90.42

140.60

99.38

106.44

TotalCost

120.75

259.45

284.10

298.20

ThetenderingprocessfortheprivazaonoftheBhagirathiWTPrearmsourbeliefthattheverystructureof
privazaon,frombiddingonacontracttodeliveringwater,isfraughtwithcorrupon.Checksandbalancesthat
couldpreventcorrupon,suchasaccountabilityandtransparency,aremissingateverystepoftheprocess.
AccordingtoMr.SANaqviofCizensFrontforWaterDemocracy,theconstruconofanewtreatmentplantasper
theinternaonalnormswiththesamecapacityof100MGDwouldcostmuchlessthanwhathasbeenquotedby
L&TandWABAGforareplacementandrehabilitaonworkattheBhagirathiWTP.
Since the beginning, it was known to the DJB that the rehabilitaon of the Bhagirathi WTP is not intended to
augmenttheproduconcapacitywhichwouldremainat100MGDandalsothattheSCADAsystemisnotatoolto
improvequalityorquantyofwateranditcannoteitherprovidehelpinlocangorreducingnonrevenuewater
butitcanonlyfacilitateinthefunconingoftheplantmainlythroughdataacquisionandsupervisorycontrolsaid
MrNaqvi.
Despitetheseknownfacts,theDJBundertooktheexercisetohandovertheBhagirathiWTPtoaforeignprivate
operator at an exorbitantly high cost to the public exchequer. Shockingly, the planning cell of the DJB, which is
responsibleforcheckingesmatesandpreparingjuscaonofratesforeachproject,completelyfailedtoidenfy
the exaggerated projected cost, the wide discrepancy between the consultants' esmates and bidder rates. They
cleared the bid document. This was the criminal negligence by the planning cell that needs to be thoroughly
invesgated.
TheDJBanditsplanningcellalsooverlookedthefactthattheprojecthasanoperaonandmaintenancecostfor10
years even though the Bhagirathi plant employs 331 sta at the establishment cost of Rs.70 to Rs. 80 lakhs per
month,whichwouldcostaroundRs.95croreinthenext10years.HadtheWSSDEUnotexposedthisscam,theDJB
wouldbemakingadoubleexpenditureforO&Mofthesameplantandwouldhaveobviouslyledtohugelosstothe
publicexchequer.
Anotherinteresngandnovelfraudwhichgothighlightedduetothisexposeisthelegalizingoffreebiesandforeign
tripsbyintegrangthecostinthebidpriceitself.Asperthetenderdocument,thesuccessfulbidderwouldhave
beenprovided:i.Twonewaircondionedfourwheeldrivevehicleswithdriverforthecontractperiod(10years);
ii. Four laptops of latest conguraon as per approval of the engineerincharge; iii. Cost of providing training to
DJB'stwopersonalintheoperaonandmaintenanceofastateoftheartfullyautomatedwatertreatmentplant
intheinternaonalarena.
When most of the engineers/ocers of the DJB are provided with the facilies like personal laptops and
departmentalfourwheeldrivewithdriverandtheyalsogettrainedforvariousprojectsintheinternaonalarena,
thisprovisionwasaclearcaseoflegalizingcorrupontobenetthehigherupswiththesefreebies.Thisrequiresa
legalacontobeiniatedagainsttheocialsmakingthebiddocument.
These events clearly underline the fact that the race for water privazaon in Delhi has led to administrave
deterioraonandcompletecollapseofnancialaccountabilityonthepartoftheDJBocials.Privazaoninduced
corruponintheDJBisweakeningthepubliculitybyengenderingwrongchoicesandencouragingcompeonin
scams and scandals rather than providing quality service to the cizens of Delhi at an aordable price. The
consumersinDelhihavealreadysueredseveralhikesinwatertariinlastveyears,therecentonein2010,to
meettheillegimatedemandsofcorrupondrivenreformsforwaterprivazaon.Whentheworldiswitnessing
theremunicipalisaonofpublicservices,itisthemetheDelhigovernmentshouldstopyieldingtothepressureof
externalagenciesincludingtheWorldBankandforeignconsultantstoprivasepubliculies,andinsteadworked
towardsstrengtheningtheDelhiJalBoard.

In2012,theCizensFrontforWaterDemocracy(CFWD)ledawritpeon(WP(C)2935/2012)intheDelhiHigh
CourtagainsttheDelhiJalBoardwithregardtotheawardoftenderstoM/sLarsen&TubroLtdfortheworkof
design/ construcon/ maintenance of SCADA System at Bhagirathi Water Treatment Plant in Delhi. The CFWD
contendedthattheawardoftenderwasdonearbitrarily,illegallyandagainstthepublicinterestandinviolaonof
allthenormswhichhasresultedinsubstanallosstothepublicexchequer.Thereforetheydemandforcancellingof
theawardofWorkfortheDevelopmentofSCADASystematBhagirathiWaterTreatmentPlantanditsmajorBPSs
andUGRs,bytheDelhiJalBoard.TheDelhiHighCourtinitshearingon27.02.2013admiedthewritandthecase
isundertrial.
AfsarJafriisaResearchAssociatewithFocusontheGlobalSouthIndia,apolicyresearchorganizaon.Hecanbe
reachedata.jafri@focusweb.org(mailto:a.jafri@focusweb.org).
SANaqvi,isthefoundermemberandconveneroftheCizensFrontforWaterDemocracy,anallianceofvarious
organisaonstocampaignagainstwaterprivazaon.Hecanbereachedatsanaqvi@sify.com
(mailto:sanaqvi@sify.com).

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