Financial Management of
TamilNadu Water Supply Program
– A Contrarian Experience
Vibhu Nayar. I.A.S
Project Director
World Bank Assisted TNRWSP &
IAMWARM Projects
TamilNadu
Visit : www.cmgtn.com
TAMILNADU STATE PROFILE
Total Area
: 130,059 sq.km
Administrative units
: 31 Districts
Population
: 62.406 million
Rural : 36.180 million
Urban : 26.226 million
TWAD BOARD – Exclusive mandate
to provide drinking water and
drainage across the state.
Rural Water Supply Coverage
- Marginal Cost of Supply
Figure 2.4.2.1 (a) M arginal Cost at Constant Prices (1993-94 Prices)
6
Figure 2.4.2.1 (b)Projected Cost (2002-03 Prices)
4
15
3
10
Rs.Lakh/habitation
Rs.Lakh/habitation
5
2
1
prices)
0
2003-04
02-03
01-02
00-01
99-00
98-99
97-98
96-97
95-96
94-95
93-94
92-93
91-92
0
Cost
5
2004-
2005-
2006-
2007-
2008
2009--10
year
Cost in
Const ant P rice(1993-94) in lakhs
Expect ed
value
Cost in constant prices in 1993-94
Projected Cost in 2002- 03 prices
The cost of covering a habitation has increased sharply from
Rs.1.45 lakhs in 1991-92 to Rs. 8.51 lakhs in 2002-03. The increase
in cost is due to use of more expensive technologies such as
power pumps and CWSS.
Change Management Initiatives in Water
In 2004 TWAD Board began a self critical and open
process of exploring shifts in –
Roles and functions
Relationships
Values
Aiming at • Attitudinal transformation
• Perspective change at
Individual
Organization
Institutional levels
Change Management Project
Project in 145 Village Panchayats covering 455
habitations across the state was taken up by the
CMG-TWAD during the year 2005 as the
experimental workspace within which to test and
implement the concepts learnt through the
consultative process of the change management
initiative.
Main focus of the pilot were:
• Community involvement in planning&
implementation
• Targeting of poor villages
• Sustainable and cost-effective investment
solutions
• Conservation and recharge of water
External Evaluation
A research was undertaken on the impact of user
charges on water management practices.
Randomized Trial designed by Poverty Action Lab,
Department of Economics, M.I.T., Cambridge & Study
done by Pragmatix, India and UNICEF-India.
Choice of Technology & Cost effective solutions
Cost range per
household (in $)
< 25
• In 69% of Projects, low cost
solutions was the preferred
option.
• Rehabilitation of old
schemes was as high as 30%,
extension of pipelines to serve
new areas 7% and source
augmentation 10%.
Percentage
41
26-50
34
51-75
15
76-100
5
> 100
5
Total
100
• The most significant impact is the reduction in the capital cost per
household by 40% in the project villages.
The cost per household is less than Rs.1000 ($ 22) in 41% of schemes.
• In the regular budget schemes the average cost per household was
about Rs.4436 (on habitation basis) ($ 100) whereas in the project the
average cost is only Rs.1555 (on village basis) ($ 35).
Total Community Water Management (TCWM)
Achievements
Community Involvement:
A cash contribution of 14.20 million by 50,896 HHs
Conservation and Sustainability
Construction of 45 recharge structures;
Revival of 109 traditional water bodies;
More than 12000 tree saplings planted;
Reaching the Unreached
Dalit (SC) & Women Groups had 72% & 75% higher
satisfaction & ownership with the interventions by
the Engineer.
Last Mile Targeting
65% of the Schemes taken up are in SC/ST and BPL
Villages.42% of these Villages had the SC/ST or
Women Presidents.
Community Participation
Village Water Committee Perspective
Committee Functioning:
Meets regularly, dalit and women members attended,
one or more decision implemented
Decision – Making:
Democratic; All members able to discuss and decide on
most issues
72%
12%
76%
12%
Involvement in Dalit areas :
Choice of Solutions discussed with Dalits
60%
9%
Implementing Decision:
Water Committee has implemented one or more of the
decisions.
82%
12%
CMG Settlements
Control Settlements
Conventional wisdom
The conventional wisdom that (higher) user charges
leads to greater efficiency of service delivery, hence
better collection, overall greater conservation & user
satisfaction
This was tested through
a randomized experiment, where 105 VPs were randomly divided
into three groups and assigned a collection target based on the
portion of O&M costs to be covered- viz., 0%, 25% & 100% .
Reduction in O & M Expenditure
Adoption of appropriate technology
options, ensuring timely maintenance
& thereby reducing potentially
expensive replacements in the future,
regulating hours of pumping &
distribution, maintaining both
Av erage M onthly O&M Costs per capita
adequate quality & quantity,
5.50
all had an effect in the nature
4.93
and functioning of water systems
4.44
4.50
at each village.
3.99
3.92
This had a major impact in reducing
O&M Expenditure
3.50 3.74
0%
25%
100%
4.35
3.88
3.68
3.45
3.10
2.89
2.50
Nov 05
3.66
Dec 05
Jan 06
Feb 06
Improved Revenue
Irrespective of the target, the VPs have achieved reduction of
over 21% in their O&M costs through better system
management and as well as more than 57% higher collection on
tariff which was the result of over all improved system
management and higher satisfaction level.
VP User Charge Collection
Targets (% of O&M Exp.)
% Change in O&M
revenue
0%
+ 57%
25%
+ 60%
100%
+73%
Voluntary Imposition Of User Charges
While the Government of Tamil
Nadu have not imposed
mandatory user charges for supply
through public fountains (PFs),
several of the 105 VPs in the pilot
TNRWSP areas imposed PF tariffs
Number of VPs
Imposing PF
user charges
voluntarily
% of VPs
imposing
PF user
charges
voluntarily
0%
12
35%
25%
10
29%
100%
8
24%
VP User Charge
Collection
Targets (% of
O&M costs)
on their own .
The largest proportion of VPs (12 out of 34 or 35% ) that imposed user
charges are those without a collection target, followed by VPs with a
25% target (10 out of 35 or 29%), and those with a 100% target (8 out of
33 or 24%).
Water Conservation
VP User
Charge
Collection
Targets
(% of
O&M
Exp.)
Action taken to reduce use of piped water
Conserve
Water
Type of actions taken by households in %
Store
less
water
Use waste
water for
gardens /
cattle
Report /
fix leaky
taps
Use other
water
sources
0%
48%
48%
17%
18%
20%
25%
54%
54%
15%
17%
20%
100%
48%
48%
12%
15%
22%
Invariable of the treatment, the VPs have achieved conservation
of water in different forms over 48% which has ultimately
reflects in the O&M cost reduction as a indicator of higher
awareness generated and followed.
Consumption level
VP user charges Targets
(% of O&M costs)
% Increase or decrease in
consumption
(in
lpcd)
between Nov 05 & Feb 06 %
0%
25%
100%
- 9.54
+7.63
+ 9.91
Reduction of water consumption was seen in the VPs under 0%
of the treatment, more than 75% of the households reported
that even in case of problems faced in water supply was
attended the next day or within a week showing a better
maintenance of systems.
Better Management
VP User
Charge
Collection
Targets (%
of O&M
Exp.)
No
proble
ms
faced
0%
Problems with Water Supply
distribution
Leaks &
Low
pressure
Frequent
breakdow
n
Supply
hours
too short
Timings
unsuitab
le
90%
2%
1%
2%
5%
25%
85%
2%
1%
10%
2%
100%
84%
4%
2%
8%
2%
• Invariable of the treatment, more than 84% of the households reported that they do
not face any problems in water supply daily such as breakdown, shorter & unsuitable
timings and leaks & low pressure, and the system management is better.
• Invariable of the treatment, more than 75% of the households reported that even in
case of problems faced in water supply was attended the next day or within a week
showing a better maintenance of systems.
Satisfaction with Water Supply Delivery
Invariable of the treatment, the households in VPs have
recorded a higher satisfaction level in terms of adequate
water supply that resulted through better implemented
community decisions and management
VP User Charge
Collection Targets
(% of O&M costs)
Satisfaction with functioning of Water
supply
More
satisfied
Less
satisfied
No
response
0%
76%
6%
18%
25%
79%
4%
16%
100%
78%
5%
15%
The myth exposed: User opinion on WS management
Frequecy
100
90
80
70
60
50
40
30
20
10
0
No Problems faced
96
Satisfaction
Conservation
95
90
91
85
84
79
76
54
48
0%
78
48
25%
100%
Conclusion
• The study indicates that there is hardly any relationship between higher user
charges and better
• Service delivery
• Conservation
• Water Governance
On the contrary
When the community understands importance of water as a resource and
Participates in conservation & management-. performance and service
delivery improves.
• The study conclusively and factually exposes the fallacy underlying the
conventional wisdom in relating to user charge
Therefore
• Policy makers and professionals need to rethink the premise for
prescribing unbridled Technology,Investment and User charges in
water supply projects
THANK YOU
Vibhu Nayar I.A.S
On behalf of
Change Management Group,
TWAD Board, Chennai, INDIA
POLICY IMPLICATIONS
Three major policy implications of the findings
of this study• Focus on community management for better service
delivery
• Fixed versus flexible O&M collection targets
• Non-prescriptive policy