The White Paper on Tamil Nadu’s finances has cited the gross under-recovery of operational costs as the reason for the huge losses incurred by the Tamil Nadu Water Supply & Drainage (TWAD) Board and Chennai Metrowater.
In the case of the 50-year-old TWAD Board, which is responsible for the development of the water supply network and sewerage across the State except in the Chennai Metropolitan Area (CMA), the operational cost is about ₹20.81 per kilo litre (KL), of which only ₹10.42 per KL is levied from urban local bodies (ULBs) and ₹8.11 per KL from rural local bodies (RLBs) towards water charges during 2020-21.
‘Dues not paid on time’
Based on the revised estimates for the year, the cost recovery, excluding items like government grants, interest and depreciation, worked out to only 44.21%. A substantial portion of the dues from the local bodies was not paid on time. The water charge payments due from the local bodies, as of March 31, 2021, was ₹484.1 crore.
The rise in the deficit was caused by the “high increase” in the pension cost and the maintenance cost of the combined water supply schemes (CWSS) which have, of late, gone up as more and more water supply schemes of that kind are being maintained on outsourcing contract basis and not by employees of the Board. To underscore the growing pension cost, the White Paper mentioned that while the total number of TWAD Board employees was 2,583, as of March 31, 2021, the number of pensioners was 9,101 — over three times the number of serving employees.
As for the 43-year-old Chennai Metrowater, the operational cost is about ₹36.58 per KL, of which only ₹14.08 per KL, accounting for about 38%, is being recovered. This does not include government grants. For supplying water to tenements of the Tamil Nadu Slum Clearance Board, Metrowater gets only ₹36 crore as a grant from the government, despite incurring an expenditure of ₹100 crore annually. While the total demand raised during 2020-21 was ₹1,061.74 crore, the total amount collected was ₹512.83 crore till the end of March 2021.
As in the case of the other water utility, Metrowater’s mounting losses have been caused by the huge increase in employee cost, pension cost and operation and maintenance cost. As of March 31, 2021, the total number of employees of the utility in the city was 2,621, whereas the total number of pensioners was 5,818.
Pointing out that the operational cost of Metrowater is higher than that of TWAD Board, the document attributes this to the higher cost incurred on the purchase of water produced from seawater desalination plants and the higher distribution cost, which occurs as the former distributes treated water to households whereas the latter supplies water in bulk to ULBs and RLBs for further distribution to end consumers.
In the last four years, the water tariff revision was carried out twice for consumers of Metrowater — once in October 2017 for commercial and institutional consumers with an annual increase of 10%, and then in May 2018 for domestic and partly commercial consumers with an annual increase of 5%. However, the annual tariff revision was not made in May 2019 for domestic and partly commercial consumers due to a drought, and again in 2020 due to the COVID-19 pandemic.
Terming as “inherently unfair and regressive” the Metrowater’s scheme of getting the bulk of its receipts from water and sewerage tax and flat charges for domestic connections, the White Paper said this favoured those who lived in large houses and bungalows and paid a flat fee without a meter, rather than the middle class who lived in apartments and made payments on the basis of bulk water metering, let alone the poor who used much less water per-capita, independent of metering.