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)
5

4 15
Rs.Lakh/habitation

10

Rs.Lakh/habitation
3

2 5 Cost

1
prices)
0

0 2003-04 2004- 2005- 2006- 2007- 2008 2009--10

91-92

92-93

93-94

94-95

95-96

96-97

97-98

98-99

99-00

00-01

01-02

02-03
year

Cost in Expect ed
Const ant P rice(1993-94) in lakhs 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
Percentage
household (in $)
< 25 41
• In 69% of Projects, low cost 26-50 34
solutions was the preferred
option.
51-75 15
• Rehabilitation of old
schemes was as high as 30%, 76-100 5
extension of pipelines to serve
new areas 7% and source > 100 5
augmentation 10%.
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, 72%
one or more decision implemented 12%

Decision – Making:
76%
Democratic; All members able to discuss and decide on 12%
most issues

Involvement in Dalit areas :

60%
Choice of Solutions discussed with Dalits 9%

Implementing Decision: 82%

Water Committee has implemented one or more of the 12%
decisions.

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
0%

adequate quality & quantity, 25%

100%
all had an effect in the nature 5.50

and functioning of water systems 4.93

4.44 4.35
4.50
at each village. 3.92 3.99
3.88
3.66
3.50 3.74
This had a major impact in reducing 3.68
3.45 3.10
O&M Expenditure 2.89
2.50
Nov 05 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 % Change in O&M

Targets (% of O&M Exp.) revenue

0% + 57%

25% + 60%

100% +73%
 Voluntary Imposition Of User Charges
Number of VPs % of VPs
VP User Charge
Imposing PF imposing
Collection
user charges PF user
While the Government of Tamil Targets (% of
voluntarily charges
O&M costs)
voluntarily
Nadu have not imposed
mandatory user charges for supply 0% 12 35%
through public fountains (PFs),
several of the 105 VPs in the pilot
25% 10 29%
TNRWSP areas imposed PF tariffs
on their own .
100% 8 24%

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 Action taken to reduce use of piped water
Charge
Collection
Targets Type of actions taken by households in %
Conserve
(% of
Water
O&M Store Use waste Report / Use other
Exp.) less water for fix leaky water
water gardens / taps sources
cattle
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

0% 25% 100%
(% of O&M costs)

% Increase or decrease in
- 9.54 +7.63 + 9.91
consumption (in lpcd)
between Nov 05 & Feb 06 %

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 No Problems with Water Supply

Charge proble
Collection
distribution
Targets (%
ms Leaks &
Frequent Supply Timings
of O&M faced breakdow unsuitab
Low
hours pressure
Exp.) n too short le
0% 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
Satisfaction with functioning of Water
VP User Charge supply
Collection Targets
More Less No
(% of O&M costs)
satisfied satisfied response
0% 76% 6% 18%

25% 79% 4% 16%

100% 78% 5% 15%

The myth exposed: User opinion on WS management
Frequecy No Problems faced Satisfaction Conservation

100
90 96
90
95
91
80 85
84
79 78
70 76

60
50 54
48 48
40
30
20
10
0
0% 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