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Wed23Apr2014

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India's first bid to privatise irrigation project stalled

By Anosh Malekar

The Maharashtra Water Resources Regulatory Authority has directed the Maharashtra Krishna Valley Development Corporation to withdraw its controversial proposal to privatise the Nira-Deoghar project, a long-pending, money-guzzling project in the Krishna river valley

Nira-Deoghar, a major irrigation project spread across western Maharashtra’s Pune-Satara-Sangli districts, was touted as the first bid to privatise a major irrigation project in the country, where the private player would, on a build- operate-transfer (BOT) basis, manage the river and supply water for irrigation and domestic use, for profit.  

Now, the Maharashtra Water Resources Regulatory Authority (MWRRA) has directed the Maharashtra Krishna Valley Development Corporation (MKVDC) to withdraw its proposal to privatise the project. 

MWRRA issued the order on November 10, 2008, in response to a petition by the Pune-based NGO Prayas’ Resources and Livelihoods Group. Incidentally this is the Authority’s first order; it comes three years after it was established by the state government. 

MWRRA came into being under an Act by the same name, in 2005, to regulate water resources in Maharashtra and “facilitate and ensure judicious, equitable and sustainable management, allocation and utilisation of water resources, fix the rates for use of water for agriculture, industrial, drinking and other purposes, and matters connected therewith or incidental thereto”. 

The present order will have far-reaching consequences on Maharashtra’s plans to complete unfinished irrigation projects on a build-operate-transfer basis vis-à-vis transparency in water-sharing and tariff structures, says Prayas.  

The 20-page order directs the government to withdraw its advertisement inviting BOT proposals for the Nira-Deoghar dam within a fortnight, and amend a July 15, 2003, government resolution (GR) that was contradictory to the provisions of the MWRRA Act, 2005, under which the advertisement was issued. 

This resolution (GR No BOT/702 (425/2002)/MP-1), declaring the Maharashtra government’s policy of privatisation of irrigation projects, preceded the setting up of the Authority. 

The MWRRA directives are: 

    1. The respondent MKVDC shall withdraw the advertisement within 15 days from the date hereof and shall not re-advertise until such time as the government resolution dated 15-7-2003 is revised.

    2. MKVDC shall approach the state government seeking a revision in the government resolution addressing the various contradictions that need to be resolved in light of the provisions of the subsequently enacted statutes (the MWRRA Act, 2005, being one).

    3. The revised government resolution shall further lay down in clear terms the role of the Authority in the BOT process. This will include: fixing criteria for selection of the project and the developer; vetting the revenue model; fixing entitlements of various users; allowing permissible changes in water tariff rates; vetting the revenue model finally selected for approval; determining whether the project is covered under the backlog regime prescribed by the governor’s directive viz State of Maharashtra (Special Responsibility of Governor for Vidarbha, Marathwada and the Rest of Maharashtra) Order, 1994; the role of the high-level committee vis-à-vis the Authority.

The Authority has further directed that the above orders shall be complied with within three months, and that MKVDC shall report back to it. 

The Nira-Deoghar project consists of a 59 m high and 2,320 m long dam on the river Nira, approximately 90 km south of Pune, near what was earlier Deoghar village. The dam has a total storage capacity of 337.3 million cubic metres. 

MKVDC’s advertisement last year for ‘Expression of Interest’ generated a heated debate on several fronts. 

First, public money to the tune of Rs 450 crore was invested in constructing the dam, originally conceived in 1984 as a Rs 62 crore project, according to information made available by state irrigation department sources. 

Second, MKVDC suddenly wanted to throw the project open to private players under the pretext that the state could not raise an estimated additional investment of over Rs 870 crore to complete the dam. 

Third, the private investor, according to available official information, was supposed to complete the remaining 5% construction of the dam, build 164 km of canals, and put in place a water distribution network in lieu of complete control over the river, the dam, and its water. 

Fourth, companies with apparently little or no expertise in managing irrigation projects had thrown their hats into the ring for construction of the dam, by November last year.  

Fifth, the MKVDC had completely ignored issues relating to the backlog of existing development of backward regions in Maharashtra, which have to be kept in mind for irrigation projects, according to the governor’s orders. 

A detailed analysis, carried out by Prayas, of the advertisement and the July 15, 2003, government resolution showed that the resolution seriously contradicted provisions under the MWRRA Act. 

Dr Subodh Wagle, who heads the Resources and Livelihoods Group at Prayas, says: “MKVDC had proposed to hand over certain powers related to water tariff and decisions on distribution of water to private developers, as provided in the government resolution dated 2003. But, in fact, the said powers are vested with the MWRRA as per the law that came into being in 2005.  

“While giving such unilateral powers to private developers is detrimental to the public interest, a more alarming fact is that the MKVDC advertisement did not even mention MWRRA as a regulatory authority for water resources in the state,” he adds. 

Prayas’ contention is that MKVDC, a corporation floated by the state government to speed up implementation of irrigation projects in the Krishna river valley, could not alter any project stipulations without fresh administrative approval. 

The organisation points out that at stake are nearly 208 km of right bank canal and 21 km of left bank canal, along with four lift schemes of the project that will irrigate nearly 43,000 ha. The private player will invest money and complete construction of the remaining 5% of the dam, build 164 km of canals and in return will have complete control over the river, the dam and its water. Anyone investing nearly Rs 1,000 crore will have to recover the money as well as generate profits. 

According to Dr Bharat Patankar, who built up the equitable water distribution movement (Saman Pani Watap Chalwal) over several decades, in southwestern Maharashtra, the government’s move was shocking. He says it’s the World Bank, under its $ 325 million Maharashtra Water Sector Restructuring Project, that is pushing for privatisation of irrigation projects. 

When MKVDC took up the project, what did it have planned for financial mobilisation? Why was the project taken up without proper planning? Instead of going in for privatisation, should not those responsible for the mismanagement be held responsible and action taken, Patankar asks. 

Maharashtra’s Minister for Water Resources Ram Raje Naik Nimbalkar was not available for comment, but a senior MKVDC official said, on condition of anonymity, that the corporation would study the regulatory authority’s order in detail before declaring its decision. 

InfoChange News & Features, November 2008