Challenges in and Levers for success of the 24x7 water supply projects in India

As one wonders what has been holding back the operationalization of the 24x7 water supply projects in India, we thought of penning down our observations around it.

Even before kicking-off the operations, one observes that the long gestation period (5+ years) to engage and realize even first pilot is a show-stopper. This is primarily because of:

• lack of standardization of the model, and various agency issues at Central, State & ULB level
• delays in contract sign-off & getting consensus on SLAs and new Tariff agreement
• Delayed financial closures - constricted investments flow from investors, because of perceived high risk of regulated (& politicised) utility

Levers for Successful Implementation of 24x7 Projects

As the operators take-over and start the operations, the first challenge hitting them in the face is the inaccurate baselines. Revisions in tariff, SLAs, employee deputation follow. The lack of education of customers, employees and local politicians on the PPP models affect all the other stakeholders. 

The nascency of the industry has created an acute shortage of skilled middle management resources that are ready to engage on-ground in Tier-2/3 towns. Further to this, the lack of investment from operators in Strategy, Structure, Systems and Processes, and doing it right from long term perspective creates a totally different shade of problems.

The technological levers of GIS modelling based on low confidence data collection, and fast obsoletion, no useful optimization and design possible. Only static view is captured on GIS and no real  updates happen in the system. Even though water metering (bulk and end-customers) and regular auditing is being stressed upon & invested in, no useful actions are enforced based on analytics. (Power sector has long been metering and doing energy audits, but losses have only increased, because of missing actions. Water is just starting to walk on same trail, and will likely see similar results.)

Finally, there seems to be a total lack of SLAs performance monitoring and enforcement institution. This gives rise to ever-moving targets, and cross blaming.

Overall, currently Management change, and Technology are being stressed upon for the success of 24x7 water supply projects. We believe that there is a need for two additional levers - Performance Monitoring and Customer Engagement, to bring effective Change Management. We strongly believe, that its operationalisation of these models that has to be improved, and rest will follow. 

Delayed Bids opening: Perceived risks from 'few & new' players

Both Mumbra-Shil-Kalwa and Jharkhand Distribution Franchisee (DF) bids are pending for bid opening for more than a month. SAIL has only recently open the Bhilai bid, while other 3 areas are still pending. There seems no check on the utilities to monitor governance on the bid process, and be responsible to its bidders. One likely inferred reason for this delayed response from DISCOM is its perceived risk of non-performance from following:

• Few number of bids received 
• Mumbra: 3 out of 11 RFP purchasing companies
• Jharkhand: 2 out of 6 only qualified companies
  
• Most new entrants, with no prior experience in the Distribution business
• Mumbra: Konark, Saicare InfoSystem (SIS) and Supreme Infra
• Jharkhand: JV of Essel & Enzen and CESC

There are increasing risks of Mumbra bid getting scrapped, looking at continuing delays of bid opening date, and previous legacy of bid scrapping with 5 bidders that time. Similar is the case with Jharkhand, with 2 bids received each for Ranchi and Jamshedpur, and only one for Dhanbad. It is understood, that the overall market confidence on DF model is low at the moment, mainly because of reported contractual non-performance at Nagpur and Aurangabad DFs. Also there has been no recent success story on DF model post Torrent at Bhiwandi. These apprehensions of high risk of another failure with a new player is what is likely leading the utility to consider bid scrapping.

While above utility apprehensions might have some grounds, the opposite of it i.e. 'an established & experienced player will do good' has also examples, that were found untrue. For example:

• same Torrent, is struggling to stabilise the Agra model
• Reliance continue to struggle with Orissa, and has itself invited different versions of DF models with limited success

So it is not the limited experience of new players, that is causing current slow down in DF, but its the Model characteristics & its resulting forced dynamics from lack of proper planning, and non-involvement of relevant stakeholders during the design phase. The non-attractiveness of the DF model in its existing form to bankers is not only SPANCO's and GTL's problem, but it's a high risk to all other bidders as well.