Saturday, October 25, 2014

ADB’s Loan to improve Rajasthan water and sewerage services: Less Loan, More Politics?

Half of ADB’s 500 Million USD Loan to Rajasthan Water and Sewerage upgrades to go for formation of corporate-style state body.  Only half to be utilised in improving real services.  A latest release from ADB informs this.

The Asian Development Bank (ADB) on 24th October 2014 informed, in a press release, that it has approved two loans worth half a billion dollars to help the government in India’s largest state of Rajasthan to better manage essential urban services and finance water and sewerage upgrades.

This, according to ADB’s Director of the South Asia Urban and Water Division Fei Yue, is for the first time in India that they have coupled a policy loan to support urban sector reforms with a project loan for infrastructure development.  The loan is meant for improvements to urban services like water and wastewater maintenance over the long term.  ADB claims that reliable urban services will improve health, the quality of life and, ultimately, support economic growth in India’s towns and cities. 

ADB informs that the $250 million policy loan will be used to help the Government of Rajasthan finance the creation of a new corporate-style state body to oversee urban services development and an independent utility in Jaipur to oversee water and wastewater operations in the state capital.  Such reforms include delegating water and sewerage operations from the state government to the municipal bodies. They will also rationalize water tariffs and property tax to ensure the institutions have a fair and sustainable revenue stream to finance urban services and improvements.  I am sure, the unwritten texts talk about privatising these services further and actually weakening the municipal bodies. 

The rest $250 million, that comes as a project loan, will support water system improvements in five cities— Hanumangarh, Jhunjhunu, Pali, Sri Ganganagar, and Tonk—which currently have low piped water coverage and high losses, says ADB. These upgrades will include nearly 200,000 new house connections with proper metering to cut losses. Around a third of the connections will be in low-income households. Moreover, in those five cities, plus Bhilwara, sewer pipelines and treatment plants will be upgraded and expanded, wastewater recycling schemes put in place, and sludge will be used to generate electricity.

We have to see what impacts these reforms will have on the low income groups in reality. 

The full program—expected to be completed by the end of 2019—aims to expand water supply in the cities from just 2 hours a day to 24 hours by 2019, as well as sharply increase the collection and treatment of sewage and septage waste.

On top of ADB’s $500 million in loans and a $1 million grant from its Technical Assistance Special Fund to finance capacity building in state institutions, there will be a $2 million grant from the Sanitation Financing Partnership Trust Fund, supported by the Bill and Melinda Gates Foundation. The trust fund will finance innovative sanitation improvements, including septage management and decentralized wastewater treatment, in non-sewered areas for low-income households in two of the cities.

Whatever may be the written intentions of the project, we are sure that ADB’s knowledge creation game to support privatisation of basic services is going to impact the urban poor badly.  The loan has more politics in agenda than real services, it seems.

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