Facing intense public pressure to abandon an ambitious round-the-clock water supply scheme, the Chandigarh Municipal Corporation has put forward eight distinct and cost-effective alternatives to rescue the project. This comes after the estimated expenses for the initiative skyrocketed from an initial Rs 550 crore to a staggering Rs 1,700 crore.
What Caused the Massive Cost Surge?
The shocking increase in project cost was formally disclosed during last month's general house meeting of the municipal corporation. The primary drivers behind this financial ballooning are linked to international finance. A significant hike in the euro exchange rate coupled with a sharp jump in the six-month EURIBOR benchmark interest rate—from 0.26% to 2.113%—has drastically inflated the borrowing expenses for the project. All eight proposed options to move forward will be put to a crucial vote in the house on December 30.
Exploring Private Partnership and Full Privatization
The first set of options involves greater private sector participation. Option 1 is a Comprehensive Public-Private Partnership (PPP). Under this model, a private operator would be chosen through a transparent bidding process to handle network rehabilitation, smart metering, reducing non-revenue water (NRW), leak detection, and daily services. The municipal corporation would retain ownership of the assets, while payments would be linked to performance and revenue sharing. This approach is modeled on Bhubaneswar's bulk water scheme executed by Megha Engineering and Infrastructures Limited.
A more radical proposal is Option 6: Full Privatization. Here, a private firm would finance, upgrade, operate, and maintain the entire citywide water system. The MC's role would shift to that of a regulator overseeing tariffs, aiming for greater efficiency but requiring strong consumer protection safeguards.
International Aid and Government Funding Routes
Other proposals look outward for technical and financial support. Option 2 suggests forging global technical partnerships with nations like Israel, renowned for leak reduction, or Russia, for infrastructure modernization. This model would seek grants and technology transfer instead of loans, avoiding exchange rate risks, but would need coordination with the Indian government to prevent tariff hikes for consumers.
Option 3 involves seeking enhanced financial support from the Government of India or the French development agency, Agence Française de Développement (AFD). This would be based on a revised Detailed Project Report (DPR) that now pegs the full cost at Rs 1,741 crore for complete pipeline replacement, pumps, meters, and monitoring systems, aiming to fix flaws observed in the Manimajra pilot without imposing steep user fees.
Phased and Internally Managed Approaches
Recognizing fiscal constraints, several options propose a gradual, ward-by-ward rollout. Option 4 focuses on a Gradual NRW Reduction over 5-10 years using the MC's internal funds, which would mean cancelling the AFD loan (incurring penalties) but avoiding external debt.
Option 5 is a One-Zone Pilot, suggesting full 24/7 implementation in a single zone with currently available funds to create a scalable model, repaying loans at fixed rates plus EURIBOR.
Option 7 recommends hiring a specialized NRW agency to tackle leaks, illegal connections, and pressure management without handing over overall operations, thus maintaining public control.
Finally, Option 8 is a Phased Hybrid Annuity model. The MC would keep control of operations but contract private firms in phases for specific tasks like NRW reduction and SCADA system installation through engineering-procurement-construction deals, including revenue sharing and staff training.
These eight options represent the municipal corporation's attempt to balance the urgent need for advanced, leak-free water infrastructure with the harsh reality of its fiscal limitations. The decision on December 30 will chart the course for how Chandigarh aims to meet its growing urban water demands sustainably.
