India Water Review by Vishal Goyal

Rs. 200

Volume 1 / Issue 1 / July 2014

Inaugural Issue

26 ENTERPRISE VA Tech Wabag surges ahead towards â&#x201A;Ź1 billion mark | 32 INTERVIEW India to be one of the top four markets for Paques | 46 SPECIAL FEATURE How stakeholders view water in India!

Have Despite the growing PE funds investment by Private funds in Indian deserted the Equity companies, there has been Indian water little to report in the water sector? sector.

Volume 1, Issue 1, July 2014 Published by: Girish Chadha on behalf of Xegent Consultants Pvt Ltd Registered address: B-7/5180, Vasant Kunj, New Delhi - 110070 Corporate address: B54-A, Lower Ground Floor, Greater Kailash, Part I, New Delhi-110048 Landlines: 91-11-46612104/05 Printer & Editor Girish Chadha girishchadha@xegent.in Ph: 98102-41035

The Edit Page We live in interesting times. After months of what had been termed as policyparalysis, a new and stable Government is firmly in power. Prime Minister Narendra Modi is seen as a business-friendly person. Indian industry expects him to continue private-sector friendly policies at the Centre too. The sentiment is high, as a Business Outlook Survey by Confederation of Indian Industry (CII) found. Some macro indicators too are looking up.

Design Vishal Goyal (Comdez)

Just how soon and how much can the PM and his Cabinet turn the positive sentiment into results is to be seen in times to come. For the water industry at large, the pickings have been rather humble in the past couple of years. The headwinds hit the industry hard, with most of the players facing challenging times.

Printed at Mehta Offset Pvt Ltd A-16, Naraina Industial Area -II New Delhi - 110028

But, some like VA Tech Wabag, which is eyeing the coveted €1 billion topline mark by 2018, bucked the trend and posted robust numbers for 2013-14. We captured the company’s renewed thrust towards the milestone through an innovative business model in this inaugural issue.

For Editorial contributions, iwreditorial@xegent.in For Subscription, write to iwrsubscriptions@xegent.in For Advertising, write to iwradvertising@xegent.in

Disclaimer All rights reserved. Any and all materials, news stories, articles or any information available in India Water Review magazine may not be used or reprinted or reproduced, whether electronically, mechanically or otherwise, for any purpose without license, or the express written consent of Xegent Consultants Private Limited. All attempts have been made to ensure the accuracy of information contained in the magazine. Neither the publishers not the authors/contributors accept any liability for errors or ommisions. India Water Review, or Xegent Consultants Private Limited, do not take any responsibility for the views expressed in Guest Columns. The articles published as Guest Columns also do not in anyway reflect the opinion of India Water Review, or Xegent Consultants Private Limited.

We also got to know that IDE Technologies of Israel, perhaps the most wellentrenched foreign desalination company in India, is looking with great optimism at the Indian market post-elections. The company indicated it was exploring new areas like wastewater treatment in India and could even come in as a project developer, if it felt its investments would be secure. Most constituents in the industry think the wait-and-watch period is over and several stalled projects might get re-activated. In this issue, you will also find an interesting study that tries to capture the stakeholders’ perceptions and attitudes towards water in the country, perhaps the first such attempt at this scale. The study, based on a survey by ORF, comes up with some interesting insights. It revealed that the highest degree of criticism with regard to water management came from within the government sector itself, and many in India thought water-related problems were due to man-made decisions, or indecisions, than nature gone awry. Lastly, through our cover story, we tried to find out why PE investors were shying away from the water and wastewater sector. Since 2011, there has been a steady decline in number of deals. Absence of a stable and transparent policy framework stopped PE funds from committing to the sector. Also, lack of corporate governance and reliable business models in companies being looked at for possible investments stopped some of them from going ahead. We solicit your comments on the inaugural issue. Write to us on how we can make our offering better. We plan to add more depth to our magazine as we go along. But, without your support, it would not be possible. Jai Hind!

Girish Chadha

Volume 1 / Issue 1 Mitsubishi Corp, Mitsubishi Heavy Industries buy into UAE-based Metito

Cover Story

World Bank ready to provide India $15-18 bn over next three years

Have PE funds deserted the Indian water sector? Despite the growing investment by Private Equity funds in Indian companies, there has been little to report in the water sector. Since 2011, PE investments in companies in the water and wastewater infrastructure space have declined steadily year-on-year.

GE to buy UKâ&#x20AC;&#x2122;s Monsal to expand wastewater offerings Indians spent $150 mn on water purifiers during Jan-May 2014

News Round-Up

Ganga, Yamuna clean-up action plan likely by year-end

India proposes flexible framework for PPP model Luminous Water brand ambassador Sachin Tendulkar bats for clean water

Special Coverage

UAE royal offers $1 mn prize for global water shortage solution

July 2014

19 FM announces mega plan for rural water, Ganga Conservation

Indian industry cautiously optimistic on water sector

In his maiden Budget for 2014-15, Finance Minister Arun Jaitley has rolled out several small and medium-sized schemes related to water and river conservation

Indian players in water and wastewater infrastructure space are eyeing more projects through the PPP route as the Government of Narendra Modi takes business expectations to a new high.

www.indiawaterreview.in

Interview

India to be one of the top four markets for Paques India would remain a key market for Dutch anaerobic wastewater treatment major Paques. The company has already undertaken couple of sizeable and prestigious projects for the PTA industry here, says its India MD.

Special Feature

Ganga will not go dry till 2050

Ganga and Brahmaputra, along with the Indus will continue to have increased water supply for over three decades, a new study has predicted. The finding of the study should come as a shot in the arm for the new Government’s plans to rejuvenate the mighty Ganga and develop it for energy, tourism and inland transport purposes too.

Enterprise

22 26 21

IDE may take to project development in India The Israeli company, known for its desalination solutions, could undertake projects in India as a developer, along with international or local partners, besides getting into areas like wastewater treatment to drive business.

In an assessment of people’s attitudes towards water in India, a report finds that the total quantity of water in the last 10 years has remained the same and ‘water stress’ or scarcity could be man-made.

VA Tech Wabag surges towards €1 bn mark Boosted by strong revenue and earnings growth in 2013-14 and a healthy order book position, VA Tech Wabag is confident that it would achieve an ambitious topline figure of €1 billion by 2017-18.

Thermax to step up focus on international markets as domestic business slips Adani Ports gets Green nod for SEZ; plans desal plant, ETP

How stakeholders view water in India!

New entrant Passavant Energy & Environment goes aggressive in India Voltas, Dow India JV incorporated; to tap water, wastewater treatment market

Environment

Delhi is world’s second most water-stressed city

India, China, US witnessing highest groundwater depletion

Hyflux keeps Indian market in view for floating desalination plants www.indiawaterreview.in

July 2014

News Round-Up

Mitsubishi Corp, Mitsubishi Heavy Industries buy into UAE-based Metito

apan’s Mitsubishi Corp (MC) and Mitsubishi Heavy Industries (MHI) have acquired 38.4 per cent equity stake in UAE-based water management solutions provider Metito Holdings Ltd. The two Japanese companies have paid an undisclosed sum to pick up the stake in Metito, allowing an exit to Abu Dhabi-based private equity firm Gulf Capital and World’s Bank private lending arm International Finance Corp (IFC). While Gulf Capital has brought down its equity stake by 32.2 per cent in Metito, IFC has cut its 6 per cent stake in the company. Gulf Capital, which had made its strategic investment in Metito in 2006, held a 56 per cent stake in it. Metito expects to use the global network and expertise of the two Japanese majors to expand its develop its operations across countries. The acquisition will also allow MC and MHI to expand their presence in the water business in fast-growing Middle Eastern, African and Asian markets. MC has been building up management know-how in the water business through investments in Japan, Australia, the Philippines and Chile. MHI has an extensive track record in building large-size desalination plants in the Middle East and

has developed advanced technologies for water treatment. The Japan Bank for International Cooperation (JICA) will also provide up to $92 million in funds to Metito to help finance its expansion plans. Metito currently has a portfolio of water and wastewater assets worth in excess of $1 billion. The company, which has been growing its presence in China is looking to further consolidate its position in the country, besides eyeing projects in Africa. In India, Metito is present as Metito Pollution Control India Pvt Ltd. The Dubai-headquartered company had said recently it had joined hands with Zulekha Healthcare Group, also of the UAE, to provide clean drinking water to four schools in India. The two companies in May announced a partnership that aims to provide water tanks, water coolers, and ultra-violet (UV) disinfection systems to four schools in Nagpur, Maharashtra. With MC and MHI coming on board, and the support from JBIC, Metito is looking to accelerate the strategic expansion of its water business globally.

Ganga, Yamuna clean-up action plan likely by year-end

he Indian Government has said consultation with stakeholders on cleaning of the Ganga and Yamuna Rivers is currently on and an action plan could be formulated by the end of the calendar year. An interim report has already been submitted and is being circulated to different ministries, departments and other stakeholders for comments. The stakeholders are Ministries of Environment & Forests; Water Resources, Ganga Rejuvenation and River Development; Urban Development; Tourism; Shipping; Drinking Water Supply and Sanitation; Rural Development, as well as academics, technical experts and NGOs associated with cleaning of Ganga. “It is expected plan may be drawn by December 2014 with consultation of stake holders”, said Union Minister of State for

July 2014

Water Resources, River Development and Ganga Rejuvenation Santosh Kumar Gangwar. The Minister said since the inception of the National Ganga River Basin Authority (NGRBA) in 2009, 76 schemes at a total cost of Rs 5,004.19 crore have

been sanctioned in 48 towns in the states through which the Ganga passes. “Against this, Rs 1,229.87 crore has been released by the Centre, including the matching share of the states so far, and a total expenditure of Rs 838.76 crore has been incurred till March 2014 for

www.indiawaterreview.in

News Round-Up

World Bank ready to provide India $15-18 bn over next three years

he World Bank Group has said its global infrastructure spending, including on water, roads, bridges and energy projects, rose by 45 per cent to $24 billion in the fiscal year ended June 2014 even as it committed to provide financial support worth $15-18 billion over the next three years to India. Last year, the Bank had committed $16.7 billion globally to infrastructure development. The jump in financing was due to increased demand from developing countries. The increase comes against a backdrop of an overall decline in private sector investment in infrastructure across the developing world. Such investments – including through publicprivate partnerships – are considered critical in reducing poverty too. Commitments to public-private partnerships (PPPs)

implementation of the projects,” he added. Crystallisation of the action plan, including framing of its salient features, including time line would be known only after the finalisation of the action plan for cleaning of Ganga, said Gangwar. The Government has also said it will rope in national and international technical experts for ecological rejuvenation of Yamuna. Union Finance Minister Arun Jaitley said the Delhi Government intends to source national and international technical expertise for ecological rejuvenation of the Yamuna, besides taking up the beautification of riverbanks in Delhi. “I consider it imperative to ensure the development of Yamuna and tackle the issue of its pollution. Sewerage treatment plants at Pappan Kalan, Nilothi, Yamuna Vihar, and Delhi Gate will be commissioned by the end of this year. This will increase the sewerage treatment capacity from the present level of 604 MGD to 684 MGD”, said Jaitley. With a plan outlay of Rs 750.80 crore for sewerage sector “Old STPs and their allied infrastructure at Kondli, Rithala and Okhla shall be rehabilitated under the Yamuna Action Plan (YAP-III).” with

“A 40 MGD STP is planned technical support of Singapore

July 2014

and fully private projects declined by nearly 20 per cent, from $181 billion in 2012 to $146 billion in 2013. World Bank Group President Jim Yong Kim, who held his first meeting with Prime Minister Narendra Modi on a three-day visit to India last week, said, “The government is committed to introducing key reforms, which are critical to India achieving its full economic potential. They have identified infrastructure development and job-oriented skill development as the deep drivers of growth. The World Bank Group is ready to support these development initiatives with financing, as well as knowledge and capacity building, that is informed by global experience”. India is the largest client for the World Bank Group, which committed a total of $6.4 billion to the country during its last

Government for achieving tertiary quality of treated effluent which is proposed to be discharge into Yamuna river at Palla, so as to have more raw water lifted at Wazirabad water treatment plant”, he added. Jaitley said the laying of interceptor along with three major drains at a cost of Rs 10,976 crore will be completed in phases by June 2015. It will ensure that only treated waste is discharged into the river by each of the drain, thus improving quality of water in Yamuna. The Delhi Government had last month announced a Rs 25000-crore inter-linked project that is aimed at substantially bringing down the pollution in Yamuna by treating effluent and wastewater discharge into the river. The ambitious comprehensive interceptor sewer project, that seeks to ensure that water from drains is treated before being discharged into the Yamuna, will see laying of new intercepter sewer pipelines and making fully operational the existing lines. The comprehensive plan to develop Yamuna was reviewed by Lieutenant Governor of Delhi Najeeb Jung, who pressed upon DJB and other stakeholders, including DDA, DSIIDC, Delhi Municipal Corporations and PWD, UP and Haryana,

the need to prioritise development of Yamuna. Presently, there are 22 drains carrying wastewater, solid waste and industrial effluents directly into the Yamuna. This untreated sewage is being discharged into storm water drains and through them into the Yamuna. Pollution in Yamuna has increased due to major expansion of the city, with its more than 1600 unauthorized/ regularized colonies, 189 rural villages and its extension and more than 1000 JJ clusters. Several of these areas do not have sewerage facilities due to legal and institutional constraints. To address this issue and reduce pollution in the Yamuna, DJB has undertaken a comprehensive scheme of ‘Interceptor Sewer Project’ through which all the drains, which are contributing pollution in the river, shall be trapped. DJB will undertake laying of interceptor sewer in a length of 59 Kms along the three major drains (Supplementary, Najafgarh and Shahdara) to intercept sewerage from around 190 subsidiary small drains and convey it to the nearest sewage treatment plant (STP) to ensure that only treated effluent is discharged into these major drains. With these efforts, around 70 per cent of pollution load in the river is expected to be reduced.

www.indiawaterreview.in

News Round-Up

fiscal year. This comprised $2 billion from IBRD, $3.1 billion from IDA, and $100 million from the Clean Technology Fund that the World Bank Group administers. During that period, the IFC committed $1.2 billion in India.

Going forward, a successful 24X7 water supply pilot will be scaled up in three cities in Karnataka. IFC will help address efficiency and conservation issues in municipal, agricultural, and industrial water.

As of June 2014, total IBRD and IDA net commitments in India stood at $24.4 billion (IBRD $12.7 billion, IDA $11.7 billion) across 84 projects. As of end June 2014, the IFC’s India portfolio contained 239 projects, amounting to committed and disbursed exposure of $5.3 billion.

WBG interventions are expected to result in an additional 34 million people gaining access to improved water sources and additional 12 million to improved sanitation, the India country shapshot added.

According to the World Bank India country snapshot, the already stressed water supply and sanitation delivery system will have to be revamped to respond to the urbanization challenge — an additional 250 million people will migrate to cities in the next 20 years. Although more than 70 per cent of the urban population has access to tap water and more than 80 per cent to basic sanitation, piped water is only available for a few hours per day and raw sewage often overflows into open drains.

India: Commitments by Fiscal Year (in millions of dollars)

GE to buy UK’s Monsal to expand wastewater offerings

E has said it has agreed to acquire Monsal, a United Kingdom-based water, waste, advanced anaerobic digestion and integrated biogas-toenergy company. GE’s water business will buy the privatelyowned and private equity backed business, a move which will further enhance GE’s wastewater treatment product offerings and advance its commitment to energy reduction in wastewater treatment. GE will use its global reach, as well as commercial and execution capability, to take Monsal’s technology, integrate it with its own and proliferate it across the world. GE said with Monsal’s advanced anaerobic digestion technology and industry knowledge, it will be able to help municipalities and industrial manufacturers shift from disposing wastewater treatment byproducts to

www.indiawaterreview.in

generating renewable energy and other value from their streams. “For many years, GE has been working to further the development of water reuse, wastewater and tough-to-treat water technologies. The acquisition of Monsal, with its advanced anaerobic digestion technology, will enable us to provide our customers with more energy-efficient options for water treatment solutions. Now our wastewater treatment solutions can be combined with new, advanced anaerobic digestion technologies to convert biosolids to renewable sources of energy for our customers”, said GE Power & Water President and CEO—water and process technologies Heiner Markhoff. Mansfield-based Monsal provides advanced technology to treat biosolids and biowaste and convert it into renewable energy and saleable byproducts. Anaerobic digestion is a biological process in which microorganisms break down biodegradable material in the absence of oxygen. One of the end products is biogas, which can be combusted to generate electricity and heat — a feature that GE Power & Water’s Distributed Power business can achieve with Jenbacher gas

engines, the company said. Monsal is one of the UK’s leading advanced anaerobic digestion and integrated biogas-to-energy businesses with over 200 installed anaerobic digestion systems. The company has particular expertise in optimizing anaerobic digestion assets to create strategic renewable energy centers for the water and waste markets.

Indians spent $150 mn on water purifiers during Jan-May 2014

he growing appetite for water purification systems among Indian households is pushing the purifier market to a new high. A recent retail audit by market research major GfK shows consumers in the country spent $40 million USD more in the first five months of 2014 on purchasing the systems as compared to the same period last year. The deteriorating quality of groundwater across many parts of India and growing unease about the quality of potable water supplied by public water utilities has led to rapid growth in the

July 2014

News Round-Up

Study

India proposes flexible framework for PPP model

he Indian Government has said it is working on a sophisticated and flexible framework for the public private partnership (PPP) model to boost infrastructure development in the country. The Union Government’s proposed public-private institution 3P India will look into issues relating to regulation, finance structure and management of contracts, Finance Secretary Arvind Mayaram said at a FICCI event recently.

water purification systems market in India in recent years. Non-electric purifiers expanded the category significantly in the last few years due to their low pricing; but electric purifiers are now showing more rapid growth due to increasing awareness of their benefits over non-electric. In the first five months of this year, electric purifiers made up nearly one in every three (31%) water purifiers sold, increasing its contribution by 5 percent to the total sales volume of the market compared to last year. “The water purifier industry in India is showing huge potential due to low penetration of water filters, which is at a low level of four per cent currently”, said GfK India Account Director (Home & Lifestyle) Ushpreet Singh Bawa. “Recognizing the untapped market and the fact that consumers are increasingly being bombarded by messages emphasizing on importance of safe drinking water, manufacturers are actively launching new models to take advantage of this rising concern among the population”. In the five-month period during 2014, 240,000 more units of water purifier were sold, translating to more than 30 per cent value and 15 per cent volume growth in the local market over last year. There were around 30 new launches of water purifiers in the last one year,

July 2014

dominated by electric purifiers with Reverse Osmosis (RO) based technology. This segment has successfully expanded its volume and value sales to account for seven in every 10 (72 per cent) electric water purifiers sold during the first five months of 2014; registering nine per cent contribution gain at the cost of Ultraviolet (UV) technology compared to the year 2013. “The water purifier market is expected to grow rapidly in the next few years, not just in the metro cities but also penetrating into the tier 2 and tier 3 cities. This faster growth is also expected to bring new names in the industry and intensify competition to an even greater extent”, Bawa added. According to GfK, demand for the top end (electric) of the water purifier market as well as the bottom end (non-electric/ gravity based) are both showing strong growth. Non-electric purifiers expanded the category significantly in the last few years due to their low pricing; but electric purifiers are now showing more rapid growth due to increasing awareness of their benefits over non-electric. In the first five months of this year, electric purifiers made up nearly one in every three (31 per cent) water purifiers sold, increasing its contribution by five per cent to the total sales volume of the market compared to last year.

“It will be a unique and powerful institution which will rejuvenate the entire universe of PPP which seems to be slowing down at the moment”, he said. The framework for the PPP model has to be formulated in such a manner to allow flexibility as contracts are spread over 2025 years. “There is a strong case to see whether we can look at developing a framework which is going to decide what stress is, who is responsible for stress, what is causing the stress and how we deal with them? We would meet to now look at what a stress is and how it can be defined,” the Finance Secretary said. Regarding risks associated with PPP projects, Mayaram underlined that the Government alone cannot bear the entire responsibility and the risk should be shared between it and the private sector. Several projects in the water sector have been taken up on PPP basis, yet the model has not evolved into a successful one. Projects under the PPP mode in urban water supply took off in mid-2000s, with the pilot 24x7 project undertaken in the towns of Belgaum, Hubli-Dharwar, and Gulbarga. But, several such projects failed, with some even did not moving to the contracting stage for reasons including cost concerns as well as the limited financial and technical capacity of public water utilities. Mayaram underscored the need for

www.indiawaterreview.in

Study News Round-Up

bidding out projects only after all statutory clearances are available. The problem was not with the bidding process itself, but arises due to very vigorous bidding by the private sector which overestimates its capacity and is unable to assess the potential of project on a 30-year basis, he added. A report by Crisil Infrastructure Advisory, a unit of India’s leading ratings agency Crisil Limited, had warned that many bidders may shy away from water PPP projects if ground-level uncertainties were not addressed. “In the pursuit to create a portfolio of water PPP projects, successful bidders are bidding to lose money in order to win projects. These aggressive bidding strategies coupled with project-level uncertainties are creating lose-lose situations for all concerned”, the Crisil unit said.

Luminous Water brand ambassador Sachin Tendulkar bats for clean water

urgaon-based diversified SAR group, through its CSR arm Livpure Foundation has launched an initiative to spread awareness about safe drinking water across the country. The Foundation has roped in cricket icon Sachin Tendulkar, who is also the brand ambassador of group company Luminous Water Technologies for its Livpure RO water purifiers, to bat for clean water, particularly for children in India. The Foundation intends to map water quality across different regions and help create a platform for stakeholders to address the critical problem. “Access to safe drinking water on sustainable basis constitutes a fundamental and inalienable human right for everyone in India. The initiative has been launched to create awareness among people regarding the benefits of safe drinking water…as per WHO more people die from unsafe water than from all forms of violence including war”, SAR group Chairman Rakesh Malhotra said

www.indiawaterreview.in

during the launch of the initiative called ‘Shuddh Paani, Swastha Bharat’.Initially, the Foundation would focus on urban slums and states like West Bengal, Bihar and Uttar Pradesh. During an event last week, Tendulkar called for eradication of water-borne diseases, asking Indian research institutions to come up with new initiatives against mortality among children due to such diseases. “There are so many children under the age of five who are affected by water borne diseases…...not just affected, but many lives are lost. It is a movement to help eradicate the mortality rate among children due to waterborne diseases”, Tendulkar said. The Foundation plans to work closely with school students under the initiative. Selected school students would also be trained to pick up samples of water for laboratory testing and also bacterial contamination. “In phase one, 250 schools representing all segments from NCR region will be identified. In the second phase, the project is likely to cover next three metros - Kolkata, Chennai and Mumbai as well as selected rural areas”, said Malhotra. The Livpure Foundation has been established to bring into focus the critical problem facing a large population globally and especially India since, as per WHO estimates, more people die from unsafe water than from all forms of violence including war, Malhotra added. Livpure also launched two new reverse osmosis products on the occasion.

UAE royal offers $1 mn prize for global water shortage solution UAE Vice President, Prime Minister and Ruler of Dubai Sheikh Mohammed bin Rashid Al Maktoum has announced the launch of an international prize that seeks to reward a research institution for finding an effective solution to the global water shortage problem using solar energy.The prize money of $1 million will be given to the institute that is able to come up with an innovative solution that uses solar energy to desalinate and purify water. “We are working on searching for durable and radical solutions to the problem of water scarcity using solar energy in the process of purification and desalination of water in needy areas around the world. Therefore, we invite all research institutions around the world to participate in a competition of $1 million to be awarded to people who can find sustainable, cheap and innovative solutions”, Sheikh Mohammed was quoted as saying by WAM Emirates News Agency, earlier this month. Sheikh Mohammed also announced establishment of the UAE Water Aid Foundation with the aim of conducting research and studies to support production of clean water using solar energy. The aim is to provide new, cheap and innovative solutions for millions around the world who face water scarcity and polluted drinking water. As part of the UAE Water Aid campaign, hundreds of wells have been dug up in several countries, including India, Pakistan, Tanzania, Afghanistan, and parts of Africa.

July 2014

Cover Story

Have PE funds deserted the Indian water sector?

July 2014

Despite the growing investment by Private Equity funds in Indian companies, there has been little to report in the water sector. Since 2011, PE investments in companies in the water and wastewater infrastructure space have declined steadily year-on-year.

www.indiawaterreview.in

Cover Story

ndia’s opaque regulatory environment and policy paralysis in last couple of years seems to have killed the private equity (PE) culture in the promising domestic water and wastewater treatment industry.

Luminous Power Technologies to French electrical-engineering and power management company Schneider Electric in June 2011 and decided to foray into several other sectors, including water and telecom.

Despite the huge demand-supply gap for PE funds, the water and wastewater infrastructure segments have failed to attract any worthwhile investment 2012 onwards. In fact, since the heady days of 2011, when the industry saw a jump in PE investments, there has been a constant slide in terms of numbers of deals and the amounts involved.

Luminous Water makes water purifiers under the Luminous brand name and CLSA Capital invested $9 million USD in the company in July 2013. Earlier, in February 2013, Zurich-based PE fund Capvent AG picked up an equity stake in water treatment and purification company Morf India. This deal involved a sum of $2 million USD.

Till now in 2014, there have been just couple of deals involving PEs. The amount invested by PE funds in only one case is known. Angel investor fund Intellecap Impact Investment Network (I3N) and Infuse Ventures, a fund focused on clean technology set up by the Indian Institute of Management, Ahmedabad, invested a paltry $0.54 million USD in Coimbatore-based Surya Power Magic.

The year 2012 was far better than 2013. According to Venture Intelligence, a research service focused on private equity and mergers & acquisitions (M&As) in India, there were as many as six PE deals in 2012 involving a sum of $60 million USD.

The company is not directly involved in the water and wastewater sector but makes and sells affordable solar water pumps that allow farmers to access water for irrigation.

PE / VC Investments in the Water/Wastewater Sector

Year

No of deals

Amount ($ Million USD)

2014 2 (Year till date)

0.54 (Reported amount)

2013

2012 6 60 In the second deal, Nagpur2011 10 134 based Rite Water Solutions (India) Pvt Ltd raised an undisclosed amount from SIDBI Venture Capital’s Samridhi Fund. Rite Water specialises in potable drinking water and water quality Ahmedabad-based Doshion improvement solutions for safe drinking managed to raise nearly 50 per cent, or water across India. $24 million USD, of the total amount raised The firm has its operations across Maharashtra, Madhya Pradesh, Chhattisgarh and Bihar and currently provides contamination free safe drinking water to more than two lakh villages every day. Though the amount raised by Rite Water is not known, industry speculates that it would be in the region of $1-2 million. The year 2013 was hardly better. There were just two deals with a total of $11 million USD being raised. The first deal involved Luminous Water Technologies, promoted by SAR Group Chairman Rakesh Malhotra, who divested 74 per cent of his holding in

www.indiawaterreview.in

through PE deals in 2012. The investor was World Bank’s private lending arm, the International Finance Corporation (IFC), a somewhat regular investor in the Indian water industry. Delhi-based Earth Water Group managed to raise $15 million USD from CLSA Capital while the third major deal was the $5 million USD one that saw Pragati India Fund, a New Delhi-based private equity investor, pick up a minority stake in Indore, Madhya Pradesh-based Jash Engineering Ltd. There were three other deals in 2012, involving a sum of roughly $16 million USD. But, in sharp contrast, the year 2011 has been by far the best year in recent times, with as many as 10 deals involving a sum of $134 million USD.

Also, since 2010, the water sector has managed to raise only $260 million USD in private equity, far less than amounts committed to other infrastructure areas, particularly in power sector. So, why has there been a steady decline in PE deals since 2011 and also the sector is not evoking much interest among private equity investors? From a macro perspective, Indian water and wastewater space still presents a promising opportunity for investors. While water demand is rising, supply is unable to keep pace, necessitating the need for upgradation of existing infrastructure - supply and treatment -and creation of new one. The wastewater treatment market too is expected to maintain robust demand, both in the municipal and industrial segments. Regulatory mechanisms are forcing municipal entities to treat and re-using sewage water for non-potable purposes. Industry too is being encouraged to adopt the recycle and reuse policy, with several state Governments refusing to part with water supply meant for potable purposes. “It’s a combination of factors that had led to the decline in PE investment since last couple of years. Of course, policy paralysis is a major contributor. PE investors don’t commit funds in the absence of a stable and transparent policy framework”, said a fund manager with a Mumbai-based PE fund. Fund managers are of the view that private equity flows largely in companies that have a unique offering in terms of technology or products, or have managed to bag projects that assure continued revenue for years. Since, at least, assured revenues are no more assured given the financial and political risks attached to water projects, PE funds are also staying away. “There do exist regulatory issues and opaqueness in municipal drinking water projects and for the moment, private equity interest may remain subdued in that area”, Sandeep Daga, the Founder Director of Nine Rivers Capital Holdings, a premier India centric private equity investment manager/investment advisor focused on providing growth and expansion capital to small and medium enterprises (SMEs),

July 2014

Cover Story had told India Water Review a while ago.

private developers have often stated.

Things, unfortunately, changed much since then.

All this has prevented big ticket PE deals from taking place even in the large concession projects that have come up on BOOT/BOT basis, even though the Union Government had undertaken one of the most ambitious programmes, the JNNURM (Jawaharlal Nehru Urban renewal Mission) to fasten the pace of infrastructure development in the country.

have

not

Several states and their water public utilities or urban local bodies (ULBs) have embraced the public-private partnership (PPP) model in the water sector. Yet, there remains a rather limited track record of successful private projects. There have been enough speed breakers - from water rights to tariffs to operational transparency. Adhocism in terms of the rules prevails,

“There is an urgent need to have proper regulations governing tariff as

What will keep PEs interested & invested in India?

ith a new business-friendly government commanding a clear majority in place, there are expectations that a growth-oriented and consistently applied regulatory and policy environment will be put in place soon. Indian industry is also looking towards the Government to kick-start projects, some stalled for lack of decision-making at the administrative levels.

Even the PE industry is poised to contribute to the Indian economy on a larger scale than earlier, due to a number of reasons which are fundamental to the industry’s own evolution as well as to the state of entrepreneurship in India, a recent report by PwC India -- ‘PE in India 2025: A 40-bn-USD decade beckons?’ states. “Revival of the investment cycle is likely to spur investments in the infrastructure and manufacturing sectors over a period of time. PE investors also appear quite eager to support solid Indian companies, with a proven local presence, to expand in overseas markets”, writes PwC India’s Leader (Private Equity and Transaction Services) Sanjeev Krishan in the report. Based on conversations with over 40 partners and general principals (GPs) at PE houses, the report captures views of the respondents regarding issues like how has the PE industry contributed to the growth of the Indian economy, or what PE

July 2014

well as standardized procedures for contracting and award of projects in the water space. Besides, there has to be a mechanism to improve bankability of revenue”, said the head of a large EPC company. A report released by PwC (PricewaterhouseCoopers) India last month had an interesting take on the whole debate. According to the report, while lack of policy clarity was identified by PE

A recent report by PwC India -- ‘PE in India 2025: A 40-bn-USD decade beckons?’ offers some insight into what will keep the PEs going in India over the next one decade. And, what would PEs like from the Indian Government.

investors want from the government, or most importantly, what will keep PEs invested in India in 2025? Though the report does not look at the water sector specifically, it does capture the respondents’ views on the infrastructure sector, in general. Respondents identified few factors of almost equal importance as triggers for them to stay invested in India by 2025. Continuance of consumption led growth in India excites the majority of investors. Apart from urban consumerism, PE fund managers believe that over the next four to five years, rural consumption will grow manifold, as growth becomes more inclusive. Together with the welfare schemes announced by the government, this is likely to put more incomes in the hands of rural India. PE managers believe that there are a number of Indian businesses that are globally competitive on account of more than two decades of liberalisation. The revival of the investment cycle, together with its consequential impact on spurring manufacturing growth is likely

www.indiawaterreview.in

Cover Story fund managers as the single biggest impediment to doing business in India, poor corporate governance was identified as the most worrying factor when evaluating targets. “Indian businesses are largely family-owned. There is often a lack of a formal governance structure with owners also being the managers. Decisions are centralised with the quality of information often lacking depth and clarity”. “Lack of transparency and a clearly articulated strategy is often the case.

Companies looking for PE investment are not investment-ready and the management team in many cases, suboptimal. Not surprisingly, promoters are uncomfortable with their decision-making independence being clipped”, the report stated. PE fund managers agree that lack of corporate governance and reliable business models have also stopped several of them from buying stakes into companies, small and large, engaged in the water sector. “We look at several companies. But, very few meet the

strict criterion we have in terms of corporate governance structures even in professionally managed companies”, said the PE fund manager quoted earlier. The PE investments in India in the sector has largely flowed into segments where private companies have established their presence, even though they don’t command a sizeable market share, and have gained some traction over a period of time. So, companies -whether EPC (engineering, procurement and construction) players, technology providers or project developers -- in

Factor liked to drive future PE investment Continuance of India’s consumption led growth Realistic valuations Globally competitive businesses Rising private entrepreneurship Ability to support domestic companies going global Ability to support more innovation to give a fresh impetus to these businesses. A majority of the respondents believe that this is likely to result in opportunities for them to invest in scaled businesses as they grow in India and globally. PE funds are in particular keen to support global Indian businesses as long as they continue to leverage India’s low-cost manufacturing and service base. They are of course also hoping for valuations in India to get more realistic. In terms of sectors, PE fund managers believe that consumer centric businesses will be their biggest focus, followed by sectors such as financial services which mirror the overall anticipated growth in the Indian economy. They also expect infrastructure to be back in investment focus in the next two to three years, and eventually contribute significantly to investments over the next 10 years. In the water space, the purification business, particularly the household point-of-use purification systems business is entirely consumer-centric. The organised market in this segment has seen robust growth and there is still a large growth potential at the more price-sensitive lower-end of the market. What do PE investors want from the government? Policy clarity. India’s image as an attractive investment destination has, over

www.indiawaterreview.in

the last few years, been impaired by frequent policy reversals, corruption scandals and indecisiveness. The retrospective change in tax laws and GAAR, for instance, sent out a negative message to the investor community. This combined with the Supreme Court’s blanket cancellation of all 2G telecom licences has severely hurt the country’s image as an investor-friendly destination. Not surprisingly, an overwhelming majority of respondents believed that clarity and stability in the fiscal and tax regime were the most critical factors for attracting foreign capital and for India to remain as an attractive investment destination in the years to come. Strong and investor-friendly regulatory framework India’s regulatory regime requires numerous approvals and compliances, which often results in considerable delays in the consummation of deals. This is particularly true for pharma, retail and financial services, popular sectors for investment among the PE community. Leveraged financing At least half of the respondents believed that permitting leveraged financing can change the deal landscape in India dramatically. India does not permit leveraged M&A deals except in the case of distressed asset classes, an exemption recently made by the RBI.

July 2014

Cover Story

PE / VC Deals in the Water Sector for 2012, 2013, 2014 (Year till date) Company Name

Industry

Sector

Amount ($ mn)

Investors

Date

Surya Power Magic

Manufacturing

Pumps & Motors (Solar Water Pumps)

0.54

Infuse Ventures, Intellecap Impact Investment Network (I3N)

Mar-14

Luminous Water Technologies

Manufacturing

Water Purifier

CLSA Capital

Jul-13

Morf India

Engg. & Construction

EPC (Water Treatment)

Capvent

Feb-13

Earth Water Group

Engg. & Construction

Water Treatment, Waste Management

CLSA Capital

Sep-12

Jash Engineering

Manufacturing

Industrial Equipment (Valves - Water & Solid Waste Handling)

Pragati Fund

Apr-12

Doshion

Engg. & Construction

Water Treatment

IFC

Mar-12

Supra Energy

Energy

Renewable Energy - Solar (Lanterns, LED, Water Heaters)

Das Star Ventures

Feb-12

Water Health

Other Services

Water Purification

Tata Capita

Jan-12

water supply/distribution, water and wastewater treatment, and desalination, which have seen consistent revenues and have a good track record, have remained favourites of PE funds. Also, if new companies do not emerge on the horizon, PE fund managers have often invested more than once in companies which have shown consistency in terms of revenue growth and have a professional set up in place. IFC’s investment in Jalgaon-based Jain Irrigation Systems Ltd (JISL) is one such case. IFC has been among the most active investors in the Indian water industry over the past several years. Its investment activities in India have remained focused on supporting micro irrigation, improving urban water services, provision of sustainable drinking water supply in rural areas and industrial water use. In JISL, since 2007, it has invested close to $133 million USD in equity and debt. The investments have been primarily used for financing Jain Irrigation’s capital expenditure programme across various projects. IFC also made a $2.7 million USD equity investment in Jain NBFC, a nonbanking finance company set up by Jain Irrigation.

July 2014

Year 2011 has been by far the best year in recent times, with as many as 10 deals involving a sum of $134 million USD.

Companies too are interested in raising funds through the PE route to meet their capital needs rather than take the debt route, a difficult task considering steadily rising interest rates and the unwillingness of the banks and financial institutions to invest in poor assets. New Delhi-based SMS Paryavaran Ltd, involved in construction of water transmission, treatment, storage & distribution and sewage systems for

municipalities and state governments, managed to raise $9 million in 2011 from Aditya Birla Capital Advisor (ABCAP), the private equity arm of the Aditya Birla Financial Services Group (ABFSG), a part of the Aditya Birla group. The company is now again looking to raise fresh funds by divesting equity, hoping to bring in over $20 million to fuel fresh growth. Given the lack of basic water-related infrastructure in the country and the huge requirement of capital investments, experts agree there exists massive potential for PE investments. However, after the slowdown in last couple of years, things might not begin to look up suddenly merely because there is, what the business community believes, a new business-friendly Government, said an official from a law firm dealing in PE and M&A transactions. “To stimulate the interest and faith of PE investors in the water sector, there would need to be good business models and less political interference in water projects. So, basically, the financial and political risks need to be toned down, if not removed completely”, the official added.

www.indiawaterreview.in

Budget 2014-15

Special Coverage

FM announces mega plan for rural water, Ganga Conservation In his maiden Budget for 2014-15, Finance Minister Arun Jaitley has rolled out several small and medium-sized schemes related to water and river conservation. The plans for urban infrastructure development would also provide the private sector with several opportunities to participate in projects related to drinking water and wastewater treatment.

inance Minister Arun Jaitley has taken the first few steps towards achieving some of the pre-poll promises the Bharatiya Janata Party (BJP) made on rolling out new water projects and taking up a mega programme for conservation of the Ganga. The Finance Minister announced direct measures for watershed development and enhancing rural and urban drinking water supply in his Budget 2014-15 speech on July 10. In his maiden budget, Jaitley also allocated a sum of Rs 500 crore for water reforms in Delhi, a key move considering that Assembly polls in the state should be held sometime soon. The Finance Minister also rolled out several other schemes that indirectly relate to water. For instance, the Plan allocation for urban development projects has been increased by 251 per cent and a sum of Rs 50,000 crore allocated to finance urban infrastructure projects while the ambitious The Smart Cities Project has been allocated Rs 7,060 crore under the Plan head. Jaitley said his Government has a major focus of providing good infrastructure, including public transport, solid waste disposal, sewerage treatment and drinking water in the urban areas.

Union Finance Minister Arun Jaitley arrives at Parliament House to present the General Budget 2014-15 in New Delhi on July 10, 2014. (Source: PIB)

July 2014

â&#x20AC;&#x153;The Budgetary provision for the Pooled Municipal Debt Obligation Facility has been enhanced from Rs 5000 crore to Rs 50,000 crore with extension of the facility by five years to March 31, 2019â&#x20AC;?, said Jaitley, adding that the facility was set up in 2006 with participation of several banks to promote and finance infrastructure projects in urban areas on shared risk basis. Jaitley said for urban renewal of cities and towns, four fundamental activities

www.indiawaterreview.in

Budget 2014-15

Special Coverage

are necessary including safe drinking water and sewerage management as well as use of recycled water for growing organic fruits and vegetables. The Finance Minister said it is the vision of this Government that at least five hundred (500) such habitations must be provided support, while harnessing private capital and expertise through PPPs, to renew their infrastructure and services in the next ten years.

Haridwar, Kanpur, Varanasi, Allahabad, Patna and Delhi in the current financial year, saying that riverfronts and ghats are not only places of rich historical heritage but many of these are also sacred.

be launched with an initial outlay of Rs 2,142 crore in the current financial year.

Delhi gets Rs 500 crore for water reforms

The Budget also spelt out a scheme to link the rivers across the country. The Finance Minister has set aside a sum of Rs 100 crore in the current Budget to expedite the preparation of detailed project reports (DPRs) as a serious move in this direction.

Jaitley allocated Rs 500 crore in the Budget for carrying out reforms in water sector in the national capital. However, the Finance Minister did not specify what the reforms would be.

Mega scheme for Ganga conservation

Pradhan Mantri Krishi Sinchayee Yojana

The Delhi Government has embraced privatisation through three pilot projects that seek to provide parts of Delhi with 24X7 water supply.

The Finance Minister has also announced plans to set up an Integrated Ganga Conservation Mission ‘Namami Gange’ with an outlay of Rs 2037 crore, fulfilling a demand from several quarters to make efforts to arrest further decline in the health of the river, which remains a major source of water for 10 Indian states.

Jaitley said the Government has also proposed to initiate the ‘Pradhan Mantri Krishi Sinchayee Yojana’ as there was a need to provide assured irrigation to mitigate risk to the farmer since bulk of the farm lands were rainfed and depend on monsoon.

Jaitley said that an amount of Rs 2037 crore has been set aside for the mission, which is being launched because a substantial amount of money has been spent in the conservation and improvement of the river Ganga but the efforts have not yielded desired results because of the lack of concerted effort by all the stakeholders. To harness the enthusiasm of the NRI community to contribute towards the conservation of Ganga, an NRI Fund for Ganga will be set up which will finance special projects, the Finance Minister added. Jaitley has also set aside a sum of Rs 100 crore for Ghat development and beautification of river front at Kedarnath,

“This scheme would facilitate access to irrigation. A sum of Rs 1,000 crore is being set aside for this scheme”, said Jaitley.

Rural drinking water The Finance Minister also said that for providing safe drinking water, Rs 3600 crore has been earmarked under National Rural Drinking Water Programme in approximately 20,000 habitations affected with arsenic, fluoride, heavy/toxic elements, pesticides/fertilizersthrough community water purification plants in next three years. Also, to give an added impetus to watershed development in the country, a new programme called ‘Neeranchal’ will

The FM also made a separate allocation of Rs 50 crore to address longterm water supply issues in the city, particularly for construction of longpending Renuka Dam. The stalled project would be taken up on priority which would increase water supply to Delhi. The Renuka Dam project envisages supply of 275 MGD (million gallons per day) water to Delhi from Himachal Pradesh. But, the project has not made any progress in recent years due to environmental issues. Delhi’s current average demand for potable water is 1100 MGD, but the Delhi Jal Board is able to supply at best about 840 MGD. The shortfall is often met by private tankers or groundwater extraction and the State Government has to approach neighbouring states Uttar Pradesh and Haryana to source water. The city’s demand for water is projected to touch the 1400 MGD mark by the end of 2017.

budget allocation of water sector 2012-13 2013-14 2013-14 2014-15 Figures in Rs crore Actuals Budget Revised Budget Estimates Estimates Estimates Ministry of Drinking Water and Sanitation 12963 15260 15260 231 Ministry of Water Resources 513 1500 700 3245 Irrigation and Flood Control Sector

439

1200

464

1797

Ministry of Urban Development 8320 10021 9606 13404 www.indiawaterreview.in

July 2014

Budget 2014-15

Special Coverage Central Plan outlay for ministries The Budget has cut the Central Plan outlay for Ministry of Drinking Water and Sanitation for 2014-15 to a paltry Rs 231 crore as against revised estimates of Rs 12000 crore for 2013-14. The Budget estimates for 2013-14 were to the tune of Rs 15,260 crore. For 2012-13, the actual figure was Rs 12963 crore.

However, the allocation for Ministry of Water Resources has been raised almost five times. The budget estimates for the Ministry are Rs 3245 crore for 2014-15, a steep jump from revised estimates of Rs 700 crore during 2013-14 and the budgeted figure of Rs 1500 crore for 201314. The actual Central Plan Outlay for the Ministry was just Rs 513 crore in 2012-13. For the Irrigation and Flood Control sector, the Central Plan Outlay for 201415 has been pegged at Rs 1797 crore. The

revised estimates and budget estimates for 2013-14 were Rs 464 crore and Rs 1200 crore respectively. The actual figure for 2012-13 was Rs 439 crore. The Accelerated Irrigation Benefits Programme and Flood Management Programme: An outlay of Rs 8992.22 crore for this programme includes grants released to States through different projects. This scheme is being shown in the grants of the Ministry of Water Resources starting from this year, 2014-15.

Reactions from Indian industry

“T

he Union Budget 2014 has hit the right notes by laying emphasis on areas that we view as critical human infrastructure. The allocation of budgetary support towards setting up infrastructure for safe drinking water, solid waste management and sewerage via PPP mode – as well as providing the impetus for cleaner sources of energy – gives this budget a sound balance between social and industry expectations”. “We commend the allocation of Rs 50,000 crore for urban renewal, which will address the issues of supplying drinking water and

“

his year’s Budget is a forward looking and futuristic. It is encouraging to see the government giving more attention to infrastructure development. It is important for the country’s economy that growth in manufacturing and infrastructure sectors is revived”. “The Rs 1000 crore provision for Pradhan Mantri Krishi Sinchayee Yojna for irrigation is too less for the country. Budgetary allocations for water sector reforms are ok,

“ 18

July 2014

encouraging the use of recycled water for industrial as well as agricultural purposes. The challenge now is to produce recycled water in a cost effective manner, adhering to rigorous quality standards. It is imperative for all industrial stakeholders to have a comprehensive understanding of water usage across their value chain, and to be cognizant of the impact water-related issues have on their operations.” G Sathiamoorthy Manager & MD Black & Veatch Consulting Pvt Ltd Country

but we need to have specific allocation for long-term and sustainable infrastructure development for water supply and distribution networks. If India has to develop and the trends of urbanization have to sustain, we need robust infrastructure for water sector”

Rishabh Sethi Chief Operating Officer, SPML Infra Ltd

he budget was as expected. A budget appropriate for the times, with no radical changes. There is focus on bringing growth back, reduce inflation and maintain fiscal deficit targetted. Many initiatives have been started, albeit, some with only a token budget allocation, but it is a good start. The intention for 24x7 power, clean water and sanitation for all by 2019 is a good start and is welcomed. What came as a surprise is the Rs 400 crore

allocation for 1 lakh solar pumping systems. This, I hope, is the beginning of this great initiative in demand side management. There is an intent to make things better for manufacturing which can create jobs”.

Ranganath NK MD, Grundfos Pumps India Pvt Ltd

www.indiawaterreview.in

Special Coverage

Indian industry cautiously optimistic on water sector Indian players in water and wastewater infrastructure space are eyeing more projects through the PPP route as the Government of Narendra Modi takes business expectations to a new high.

uoyed in confidence by the landslide victory that the Narendra Modi-led Bhartiya Janata Party (BJP) managed to get in the Lok Sabha elections earlier this year, private players in water and wastewater infrastructure sector are looking forward to good tidings in months to come. Indian industry seems upbeat on the prospects of public private partnership (PPP) projects again taking off after a long hiatus, choosing to go in for the former Gujarat Chief Minister’s reputation for encouraging private investment in the state, than to look at the poor record of project offtake in recent years. A Business Outlook Survey by industry body Confederation of Indian Industry (CII), released at the end of June, revealed that there was a sharp improvement in investors’ sentiments amidst heightened expectations that the new Government means business along with some improvement in basic macro indicators. The CII Business Confidence Index (CII-BCI) for the April-June 2014 quarter moved up to 53.7 from 49.9 in the previous quarter. Modi had taken oath on May 26 as the Prime Minister. (The number 50 is the dividing line on the survey’s index between positive and weak business confidence.) As much as 56 per cent of respondents (the survey was based on responses from

www.indiawaterreview.in

over 150 industry members) expected sales and new orders to increase in the first quarter of 2014-15, which is much higher than the previous quarter, where only 35 per cent of respondents expected a rise in sales. Even if the CII survey remains, at best, a barometer of expectation, it shows that private and public entities are looking for the policy inertia to be replaced with dynamism in terms of projects rollout. “Right now it is too early to say, but we look forward to more projects being announced now that a new Government is in place and it tries to settle in with the expectations of various states”, said the regional head of a foreign desalination major. Participants at the India Business Forum held during the Singapore International Water Week (SIWW) - 2014 in early June too had shown confidence that things would improve. Top officials from public water utilities of Delhi, Mumbai and Chennai made a strong case for more private sector participation, and in particular, through the PPP route. An invitation was also extended to foreign companies to participate in water infrastructure development, particularly in water supply, distribution and treatment. “There are, no doubt, tremendous business opportunities for the private sector in the water sector. Not only are

private funds required for bridging the infrastructure gap and meeting both capex and opex, private sector can bring about a change in upgradation of management skills and bring down nonrevenue water (NRW) and kick in service level efficiencies”, said a top executive of a large Indian EPC company, very much laying out the scope for the private sector. “Even though company officials still lament stalled projects and stretched balance-sheets in the infrastructure space, the mood has turned positive, with renewed expectation from the Government”, the official, who did not wish to be identified, told India Water Review at the sidelights of the Forum. But, the regional head of the foreign desalination major quoted earlier, was of the view that private or foreign investment in project development could start to flow in only when the new Indian Government was able to assure financial security for the developers. “We need to know that even in the worst case scenario, our investment will be recovered”, he added. India has experimented with various PPP formats in urban water supply and wastewater treatment for nearly two decades now. The record, however, is not something that can be touted in front of overseas companies that have remained mere spectators to India’s progress on this front from a distance. The underlying message at the Forum, though, was clear: India needs private investment, both from domestic and overseas companies and unlike in the past, a basket of PPP models would be available to willing players.

July 2014

Special Coverage

Participants at a panel discussion at the India Business Forum held on June 4, 2014 during the Singapore International Water Week (SIWW) 2014.

CII National Committee on Water Executive Member & Pentair India MD & Country Head Mukund Vasudevan

Maharashtra Jeevan Pradhikaran Member Secretary Sonia Sethi

As Pentair India Head Mukund Vasudevan put it, “implementation of PPP schemes in India should be the way forward to managing water supply and demand”. There are great opportunities for the private sector in the water space, right from wastewater recycling and reuse to desalination to even rainwater harvesting, he added.

quality of data available with public utilities and lack of standardisation in concession agreements has kept the private sector away.

While there have been several reasons that put the PPP bandwagon in the water sector off the track, some like lack of political will and mindset of the Government regarding risk sharing and arbitrary decision-making stand out. Industry has also pointed out that poor

Memb er Secretary Sonia Sethi said the agency was envisaging PPP projects in semi-urban water supply schemes in the state, in which the private sector player was to undertake only O&M with revenue collection responsibility. “There would be no CAPEX investment for initial years

July 2014

Maharashtra Jeevan Pradhikara (MJP), for one, is eyeing more participation from private players -- domestic and foreign -for the slew of projects that it has planned.

Chennai Metropolitan Water Supply and Sewerage Board Managing Director Dr B Chandra Mohan

Chairperson for the Board of Governors, ICRIER Dr Isher Judge Ahluwalia

and the MJP would act as regulatory body for regular tariff up-gradation”, she added. However, some believe that beyond improving sentiments, the new Government may not be able to do much in the near term. “There are enough growth drivers for the water industry even otherwise. But, water is considered a democratic right in the country and unless the new Government can change the mindset of people towards paying for it, things will not improve much”, said the chief executive of a south-India based turnkey solutions provider in the water and environment sector.

www.indiawaterreview.in

Enterprise

Thermax to step up focus on international markets as domestic business slips

une-based Thermax Ltd, one of the leading providers of engineering solutions to the energy and environment sectors, is planning to expand its overseas footprint in a bid to de-risk its business and bring down dependence on the domestic market. The company has seen its profits and revenues slip in recent quarters. In order to reverse the declining trend, it plans to focus energies on international markets to further consolidate its position in the current year. Thermax is not a pure play water company but its water & waste solutions vertical is a leading player in India offering water and wastewater treatment and recycling solutions for industrial, commercial, and municipal sectors. The company’s energy business – boiler & heater, power, cooling and heating divisions and the solar performance unit – contribute over three-fourth of its revenues, while the environment business, which includes water & waste solutions account for the remaining one-fourth In the first quarter of 2014-15, Thermax registered a marginal decline in operating revenue to Rs 839.4 crore as against Rs 862.8 crore in Q1 of last year. Profit after tax (PAT) for Q1 dropped 17.7 per cent to Rs 41.4 crore compared to Rs 50.3 crore last year. The company said owing to cost overruns and project delays at a few sites, water and waste solutions vertical incurred losses during the year. Some of the projects will also spill over to the coming year. In the municipal segment too, with the JNNURM funding drying up, there were only limited numbers of sewage treatment projects for the vertical, resulting in significantly lower intake of orders. During 2013-14, geographies like South East Asia, Middle East and Africa, where the company is active offered economic

stability and offered opportunities to conclude several small and medium-sized contracts across verticals. Managing Director and CEO M S Unnikrishnan said the company would, over the next few years, focus on the international markets. “With the firming up of our business presence in South East Asia and Africa, we are rolling out an initiative to consolidate our position. As part of this strategy, we plan to progressively localise more facets of our value chain in these markets. This should enable us to globalise our footprint in a sustainable manner, and derisk the organisation from an uneven dependence on the domestic market”, said Unnikrishnan. The company posted a total revenue of Rs 4,366.5 crore during 2013-14, a 8.3 per cent drop over last year’s figure of Rs 4,763.9 crore. However, revenue from international markets including deemed exports increased by 11.9 per cent to Rs 1,101.1 crore as against Rs 983.9 crore last year. Revenues from international markets accounted for 26 per cent of the company’s total income and South East Asia and the Middle East continued to contribute the major share of export earnings. Currently, the domestic market contributes as much as 70 per cent of turnover. In the next five-seven years, the company is aiming to bring down the domestic revenue to less than 50 per cent.During the first quarter of 2014-15, the company said its order balance on June 30, 2014 stood at Rs 5206 crore, down 5.9 per cent from Rs 5530 crore for Q1 of last year. Thermax could manage to book orders worth Rs 662 crore during Q1 of 2014-15, significantly lower than last year’s Rs 2123 crore, which included a big order of Rs 1350 crore from a petrochemical company.

Adani Ports gets Green nod for SEZ; plans desal plant, ETP

dani Ports and Special Economic Zone (APSEZ), India’s largest port developer and part of the Adani Group, has received the environment and coastal regulation zone clearance from the Union Ministry for Environment and Forests for its 8481-hectare special economic zone (SEZ) in Mundra. The clearance will now allow APSEZ, which operates India’s only port-based SEZ, to set up a mega desalination plant, an effluent treatment plant and intake of sea water, part of the primary infrastructure being provided to companies for setting up business units there. The Adani Group has, which has diverse business interests ranging from coal to logistics including ports and SEZs and energy, is expected to soon invite companies to bid for the projects.

www.indiawaterreview.in

Meanwhile, State-run steel-maker Rashtriya Ispat Nigam Limited (RINL) has initiated the process of setting up a 10 MGD (million gallons per day) desalination plant at Visakhapatnam Steel Plant (VSP) after failing to secure water supply from the state government. RINL has invited expression of interest (EOI) from Indian and foreign companies for setting up the desalination unit on an EPC (engineering, procurement and construction) basis at Visakhapatnam. The steel plant reportedly requires around 35-40 MGD, but it is able to receive at best 25 MGD from the state government.

July 2014

Enterprise IDE’s Sorek plant, with a capacity of 624,000 m3/day, is the world?s largest and most advanced seawater reverse osmosis (SWRO) desalination plant.

srael-based thermal and RO-based desalination major IDE Technologies is eyeing a major expansion drive in India, with a top official indicating that IDE could get into new areas like wastewater treatment and even come in as a project developer in the country to drive up business. Having identified India has a key market with huge growth potential in the wake of growing water shortages, IDE may now look to initiate projects on its own in India along with partners, stepping away from the traditional method of bidding for projects. “We are in talks with several international bodies, multilateral agencies and even private companies for not

July 2014

only bidding, but initiating projects with municipal agencies in India”, IDE Global Sales Director (Eastern Hemisphere) Roni Klein told India Water Review. But, the privately-held company is looking to safeguard its investments in India, even though Klein acknowledged that sentiment has improved in recent months in India and the country is being looked at as a mature market. “We are more than willing to bring in the money in India. After all, we have done that in Israel too. We actually have financial institutions trying to push us to develop projects, but we are trying to be sound in terms of financial security. We need to feel secure enough to know that if we invest in India, in the worst case scenario, we will be able to

www.indiawaterreview.in

Enterprise

recover our principal”, Klein added. The Israeli company’s interest in initiating projects in India on its own may have stemmed from a successful bid by a consortium of Japan’s Hitachi and Itochu and Singapore’s Hyflux to set up a 336,000 m3/day desalination plant in Gujarat. The consortium had reportedly solicited the project directly from the Dahej special economic zone (SEZ), avoiding a tendering process that might have pitted them against some tough competition. IDE is so far known in India for its desalination portfolio, with several projects across the industrial space and one large project -- a 100 MLD desalination plant at Nemmeli near Chennai with local partner VA Tech Wabag -- turning to be the pivot around which it is eyeing more such projects. On the industrial side, IDE has had repeat customers like Reliance and Essar Group in India. For Reliance, IDE has set up one of the largest multi-effect distillation (MED) sites worldwide at the Jamnagar plant in Gujarat. The plant has a capacity of 160,000 m³/day. Now, the company is in the process of developing the first seawater reverse osmosis (SWRO) desalination plant for Reliance. The desal plant, with an installed

Chennai is the pioneer, a leader in desalination market in the municipal sector. Gujarat too is a huge potential and we hope to provide solutions in the state. At the moment, our focus is not only on the municipal side, but on industry too IDE Global Sales Director (Eastern Hemisphere) Roni Klein

capacity of 168,000 m³/day, will also come up at Jamnagar and will help India’s largest private sector corporate to meet the increased water capacity needs of the plant at one of the country’s largest oil refineries. The plant will be close to the sea, thus decreasing the length of pipes and reducing costs related to pumping. It will be commissioned in 2015. IDE is also developing additional units that deploy the company’s Multi-effect Distillation (MED)

technology at Reliance’s Jamnagar plant. These units will also get commissioned in 2015. The company’s growing portfolio of large projects across the world is also expected to give it a leg-up on the competition in India, particularly in the municipal desalination market. In October, the world’s largest and most advanced SWRO desalination plant located in Sorek in Israel that IDE built jointly with Hutchison Water became fully operational.

‘India should learn from Israel’ Against a backdrop of growing shortages and increasing demand, IDE Technologies sees desalination as a major alternative source of water in India in the years to come, with the company’s Global Sales Director (Eastern Hemisphere) Roni Klein suggesting that the country should look at Israel to find out how it managed to surmount the problem of lack of water by undertaking one of the largest desalination programmes across the world. While India has 16 per cent of the world’s population but only four per cent of water resources, Israel is almost 60 per cent desert with very little natural water resources. However, today, in Israel, with four running mega desalination plants and another one coming online later this year, there is enough desalination capacity -- total capacity in excess of 600 million cubic metre per day with IDE supplying about 400 million cubic metre of it -- to cause any serious water problems.

www.indiawaterreview.in

“It does not matter to us now if we have a dry season or wet season. We can actually get water back into the natural reservoirs and replenish our groundwater resources through desalination”, said Klein. To become independent in terms of water availability, India would need to embrace desalination in a big way. “Without water, you can’t grow your population, your industry and can’t have sustainable growth”, reasoned Klein. The IDE official said India could learn from the threepronged approach that Israel had undertaken regarding water. Firstly, there is education. “We started with little kids in kindergarten and taught them that water is precious and we need to save it. Now, we rely on them to educate their parents and I think it is working very well”.

July 2014

Enterprise - cont. from page 23 The second is the price of water. “You know if you buy something cheap, you don’t always appreciate it and take it for granted. In Israel, we pay a lot of money for water, so people are more cautious before using water”. The third is desalination through which supply of water was assured. “Even the cost of making water through desalination is not as high as people think. In Israel, we as customers pay about $2.8 per cubic metre of water, so we also take care before we waste water”, said Klein.

The Sorek plant is capable of producing 624,000 m3/day of potable water, of which 540,000 m3/day is currently supplied to Israel’s water distribution system. IDE would hope that the plant becomes a showcase for it to set significant benchmarks in both desalination capacity and water cost. In India, the company feels that as Chennai initiates moves to launch more desalination projects, other states will also follow suit. And, there will be more projects for it to bid. Gujarat is another key state that IDE is eyeing, with the company brass recognising that there is both need and leadership in the state to push for desalination as a viable means to augment water supply. “Chennai is the pioneer, a leader in desalination market in the municipal sector. Gujarat too is a huge potential and we hope to provide solutions in the state. At the moment, our focus is not only on the municipal side, but on industry too”, said Klein. Also, to successfully bid for desalination projects in Tamil Nadu, Gujarat and other states, if required, the

In India, even though there might be enough water resources in some parts, one of the key challenges remains management of water resources. Also, in places like Chennai, there is just not enough water available nearby. “So, one would need to look at alternatives and the only alternative as far as I know is desalination”, Klein added. Of course, in areas where you have enough water resources, you need to manage it in a more efficient way. “There are many Israeli companies that can help India in this regard, and some are already doing this”.

company is willing to look beyond its existing partners. IDE may tie up with new partners on a project-to-project basis. “In every project, there could be a separate partner or a company that we align with depending upon the value that we both bring to the table”, said Klein. IDE sees some stirring of interest from industrial customers in the power sector, who had seen some projects getting frozen over past couple of years due to several reasons, including rising coal prices. Another area of interest for IDE in India is the wastewater sector. Even though the company has been focussing on, and is known more for, desalination, Klein believes that for the company, the move from desalination to wastewater treatment may not take much. “Wastewater treatment is a much simpler process. IDE has an advantage in desalination, which is a more complex process requiring more indepth knowledge and experience. For wastewater treatment, one can have many companies that can do it. For instance, there could be local companies in India or

a company even from China or elsewhere”, he said. Klein felt that IDE may not be a worthwhile option for price-conscious customers, who may not get convinced to pay a premium for the company’s better quality. “After all, most of the public tenders in India are L1 based”, he added. However, the company has decided to venture into the wastewater space and is looking at several projects in India, where it feels it can share its experience and ideas for reducing construction, operation and development costs. Also, it is open to forging alliances with local partners, including those offering innovative technologies in the wastewater space. “We have started to look for projects in wastewater. Hopefully, we will find success in these areas as well. We think we can offer the best solution and several new technologies in wastewater as we think there are similarities with desalination. We are also open to have cooperation with other companies that bring value”, said Klein.

IDE’s recent large projects in India Customer Location Type & Capacity Commissioning Technology (m3/day) Date Reliance Industries Ltd

Jamnagar, Gujarat

SWRO-168,000

2015

Reverse Osmosis

Reliance Industries Ltd Jamnagar, Gujarat 3 X MED-24,000 2015 Multi-effect (Additional units) Distillation Chennai Metrowater Tamil Nadu SWRO-100,000 2012 Sea Water Reverse Osmosis Essar Ltd Gujarat 2 x MED-24,000 2012 Multi-effect Distillation

July 2014

www.indiawaterreview.in

July 2014

Enterprise

VA Tech Wabag surges ahead towards €1 billion mark Boosted by strong revenue and earnings growth in 2013-14 and a healthy order book position, VA Tech Wabag is confident that it would achieve an ambitious topline figure of €1 billion by 2017-18. And, the company may not even have to resort to an acquisition to fuel this growth.

n January 2014, when VA Tech Wabag announced that it had surpassed its order intake guidance numbers for fiscal 2013-14 in the first nine months itself, Managing Director Rajiv Mittal knew that the company’s unique business model had started to pay dividends.

Strong performance in 2013-14

Going slow on acquisitions

That the strategy is working well became evident in late May, when VA Tech Wabag posted a robust 38 per cent growth in consolidated turnover at Rs 2,239 crore for 2013-14 as against previous year’s Rs 1,619 crore.

Also, the company has tempered its expectations that inorganic growth would fetch it one-fourth of the landmark revenue mark.

The Chennai-based company carried out an internal business reorganisation over the past few years. So, till recently, while there was Wabag India and Wabag Austria and its subsidiaries (MDUs - multi domestic units), the company created a third segment called India international units (India backed subsidiaries).

On the earnings side too, the company performed well, registering consolidated EBITDA of Rs 189 crore as against Rs 154 crore in the previous year, a 23 per cent rise. Consolidated PAT (net profit) jumped 26 per cent to Rs 113 crore from Rs 90 crore earlier.

The new subsidiaries are now handled from India, a move that has helped the company rationalise costs. In essence, the business restructuring armed VA Tech Wabag with European technological competence, Indian cost efficiency and a multi-country presence.

Equally significant was the company’s growth in order book. The consolidated order intake rose by Rs 1,200 crore - from Rs 2,154 crore in 2012-13 to Rs 3,354 crore in 2013-14. The company now has an unenviable Rs 5,354 crore worth of projects to be executed over the next twoand-a-half years.

“We are now asset-light and cash rich. We have local presence in fast growing markets. Our global presence through 18 subsidiaries has enabled us to win international projects”, said Mittal.

The strong order book position has given the company renewed confidence that its ambitious 1 billion consolidated topline mark by 2018 would be achieved. Maybe, even earlier!

July 2014

“When we had first enunciated this target, we had expected that inorganic growth would account for around 25 per cent of the targeted revenue figure. But considering the strong traction coming out of our various segments, geographies and income types, we expect to moderate the role played by revenues from acquisitions to 10-15 per cent”, said Mittal. On the acquisitions front, the company has been scouting for a “suitable candidate” for over two years now. Mittal maintained the company would not rush into an acquisition just because it had announced it would make one. “This is on top of our agenda as there is pressure to put the strategic cash to good use. At the same time, the acquisition must satisfy any one of the parameters – either it should lead us to a new market or it must provide a technology that is new or provide quality human capital to use them

www.indiawaterreview.in

Enterprise to our business advantage”, Mittal said, adding that basically, the deal would have to be EPS-accretive. During past two years, VA Tech shortlisted a few companies across the world and even starting due diligence in two cases, but did not manage to make an acquisition. During this time, it even came very close to acquiring a Spanish company, but it was finally taken over by a competitor at a price that VA Tech thought was “over-paid”. So, even though it chose not to be aggressive on an acquisition, it went full ahead on its plans to bag projects both in India and abroad. As a result, in last couple of years, the company’s order book has doubled. The company’s track record of executing complex projects also helped it win bigger projects and even the average ticket size of projects increased from less than Rs 100 crore in 2009-10 to around Rs 200 crore in 2013-14. Along with it came strong financial backing that ensured positive cash flow/liquidity to the company. “As far as the project revenues are concerned, the total value of unexecuted part of contracts stood at Rs 6237 crore as on March 31, 2014 including framework contracts and we are in a strong position to convert the healthy backlog into sales”, said Mittal. The company’s impressive growth was, no doubt, a result of the multipronged strategy and its play on full technological prowess and competitive costs. But, during the same time, the company also focussed on making itself a truly decentralised organisation and invested in human capital accordingly. “We have been promoting this strategy for past over two years now through which in all our geographies, we have country heads with balance sheet and P&L responsibility. Also, we decided to inculcate the spirit of entrepreneurship. So, now the professionals know that their fortune -- whether it is ESOPs, bonus etc is also linked to how they grow the business. This has also been an added source of motivation for them”, explained Mittal. While the geography heads were pretty much given a free hand, a system was put in place to help check governance and complete compliances. Mittal reportedly has a complete ERP system, which is controlled from his desk in Chennai.

www.indiawaterreview.in

There is also a corporate assurance team, which does remote monitoring and once in a while, even physically ensuring that internal and external compliances are met. “We take corporate governance very seriously. Also, being a listed company, we have an obligation towards our shareholders”, said Mittal.

We take corporate governance very seriously. Also, being a listed company, we have an obligation towards our shareholders

The decentralisation model helped fuel growth in several new geographies. During 2013-14, VA Tech Wabag bagged orders in Tanzania, Nepal and Egypt, all new territories for the company. It also bagged a large order in Libya, besides managing to get projects in the Philippines and Turkey.

(Middle East and North Africa), Latin America (LatAm) and Eastern Europe.

The company has established its presence in all the high-growth water markets of the world -- South Asia, MENA

In LatAm, a key potential market identified by it, the company said it expects to grow its presence through the

Managing Director Rajiv Mittal

July 2014

Enterprise

Over-achieving targets

Revenue

22.30

18.50-19.50 Order Intake

Revenue Guidance

33.50

26.0-27.0

FY 2014 (INR Bn)

21.54

20-21

16.02

16 – 17

FY 2013 (INR Bn)

Order Intake Achievement

there were several international orders.

The company’s future growth engines would be desalination, water reuse and O&M business.

Wabag Spain subsidiary, local alliances and rich technology bank. Back home too, the main driver of growth has been the municipal business group, bagging new orders in both the EPC (engineering, procurement and construction) and O&M (operation & maintenance) space. VA Tech Wabag bagged projects from major municipal clients like Chennai Metro Water Supply & Sewerage Board, Odisha Water Supply & Sewerage Board and Bangalore Water Supply & Sewerage Board. Additionally,

July 2014

During last financial year, even the industrial water group received several repeat orders from key customers in the oil and gas sector. The EPC (engineering, procurement and construction) vertical for the company remains the most profitable, contributing to about Rs 1800 crore to the company’s topline during 2013-14. On a year-on-year basis, vertical posted a 34 per cent growth. However, in terms of percentage growth, the operation & maintenance (O&M) vertical did better, registering 63 per cent rise to about Rs 440 crore. In both the verticals, the municipal side remains the mainstay. In the EPC vertical, Wabag India saw the municipal side contribute Rs 594 crore while the industrial side contributed Rs 400 crore. In the O&M vertical, the figures for Wabag India on the municipal and industrial side were Rs 90 crore and Rs 57 crore respectively. For Wabag Overseas, the EPC vertical recorded revenue of Rs 521 crore on the municipal side and Rs 280 crore on the industrial side. In the O&M vertical, Wabag Overseas had figures of Rs 214 crore on the municipal side and Rs 74 crore on the industrial side. In terms of order inflow composition too, the EPC vertical saw a robust 60 per

cent year-on-year. During 2013-14, the EPC vertical saw total order inflows of about Rs 2840 crore. Again, in the EPC vertical, Wabag India saw the municipal side contribute the maximum, with order inflows worth Rs 1051 crore while Wabag overseas contributed Rs 990 crore. The industrial side saw order inflow figures of Rs 389 crore for Wabag India and Rs 409 crore for Wabag Overseas. The O&M vertical saw 38 per cent year-on-year growth to Rs 501 crore. The municipal side saw inflow figures of Rs 261 crore for Wabag India and Rs 146 crore for Wabag Overseas. On the industrial side, Wabag India saw inflow figures of Rs 12.6 crore while Wabag Overseas saw inflow figures of Rs 95 crore during 2013-14. “The India business provides high business volume; the emerging market provides high volume coupled with high margins”, said Mittal. Most of the large orders that the company booked during the year were funded by bilateral or multilateral agencies, a move which the company feels improves the quality of order intake and de-risks the business. The company has also been taking LoCs from premier European banks for its overseas projects besides taking export credit insurance as part of its derisking strategy.

www.indiawaterreview.in

Enterprise

Adana West WWTP

Financial highlights since 2010-11 Consolidated financials Financial year

Revenue

EBIDTA

(All figures in Rs crore) PBT

PAT

2013-14 2,239 188.50 166.20 113.35 2012-13 1,619 154.02 135.19 90.34 2011-12 1,444 130.03 111.05 73.75 2010-11 1,242 121.03 83.42 52.57

“A wide geographical spread also helps us in de-risking ourselves from being challenged by a downturn in a particular geography”, Mittal added.

Increased focus on desalination Additionally, armed with its flagship project in India - the 100 million litre per day (MLD) seawater desalination project at Nemmeli, near Chennai -- the company decided to step up its focus on the desalination space. The Chennai desalination project achieved its full capacity production of 100 MLD during the year, paving way for the commencement of a seven-year O&M period. Next came a large order to build a 191 MLD seawater desalination plant at Al Ghubra, Oman. This project is expected to be completed during 2014-15. The company remains bullish on the potential of desalination business in India, and elsewhere, and expects projects in www.indiawaterreview.in

through India driving global revenues, enhancing margins and reducing dependence on the Indian business.

Beating guidance During 2013-14, the company beat its guidelines quite convincingly - both on revenue and order intake. While it gave a revenue guidance of Rs 1850–1950 crore on a consolidated basis, the actual figure was Rs 2239 crore.

this space to help achieve the 1 billion mark.

Likewise, against the order book guidance of Rs 2600-2700 crore, it managed a figure of Rs 3354 crore.

“The company’s future growth engines would be desalination, water reuse and O&M business. My expectation is that the desalination business would contribute at least 10 per cent of our 1 billion target”, said Mittal.

Also, even as a difficult business environment prevailed in India, the company managed to win projects while remaining cautious in project selection in terms of margin, client profile and source of funding.

Globally, the company hopes to bag several thermal and membrane-based desalination projects.

The VA Tech Wabag stock price has also mirrored the company’s growth, posting a nearly 300 per cent growth in past one year, moving up from the Rs 350-400 level to Rs 1350-1400 in a 52week span.

In India too, it senses several opportunities in the growing desalination market, with Chennai and Tamil Nadu expected to be key, but tough markets. According to industry estimates, the desalination water market in India is seen growing at a CAGR of more than 30 per cent during 2013-18. In 2018, the country’s desalination capacity is seen at 5350 MLD, with a bulk of it in Tamil Nadu. Going ahead too, the company sees its international subsidiaries managed

For 2014-15, it has already upped the guidance significantly over 2013-14. The company’s revenue target for 2014-15 is pegged at Rs 2600-2700 crore and order intake at Rs 3200-3400 crore. Considering that the newly elected Government would take some time to get settled, it remains to be seen if the company, yet again, manages to overshoot the targets.

July 2014

Enterprise

New entrant Passavant Energy & Environment goes aggressive in India

assavant Energy & Environment, the wholly-owned German subsidiary of UAE-based Drake & Scull International (DSI) PJSC, is on an aggressive growth drive in India. The company is looking to have many more water and wastewater treatment projects in its kitty, having bagged four projects since the beginning of this year itself. Earlier this month, the company, formerly known as Passavant-Roediger GmbH, bagged two projects envisaging construction and operation of two wastewater treatment plants in Punjab. The contracts include operation and maintenance for five years. The two contracts are worth Rs 168 crore (AED 103 million).

spanning power, real estate and water infrastructure in the country.

The client is the Punjab Water Supply and Sewerage Board and the projects will be executed as a joint venture with Mumbai-based Shapoorji Palloonji Co Ltd. The projects are being supported by Japan International Cooperation Agency (JICA).

“So far, since we are new to India, we have not been so choosy in terms of the projects. But, we have undertaken projects where we think we can add value, be it the municipal or industrial space”, the official said, adding that the company would be largely taking up “funded projects”.

In March, the company said it had bagged two contracts for setting up water and wastewater treatment plants (WWTP) in Gujarat and Rajasthan. The combined value of the contracts was Rs 84 crore (AED 50 million). The company is building a Membrane Bio Reactor (MBR) wastewater treatment plant with a capacity of 4.5 million litre per day (MLD) for Ford India in Ahmedabad, and has undertaken work for the construction of a complete sewerage system of 80 kilometers in Nathdwara, Rajasthan. “The parent company, DSI, has a larger vision for India. We are looking for projects in the water and wastewater treatment market and are likely to get into desalination at some stage”, a company official told India Water Review. DSI has identified India as a high potential market and has been its position by undertaking projects

July 2014

However, for the water sector, the company is keen to establish a sizeable presence by bagging EPC and DBO contracts as well as undertaking project management and O&M contracts.

At some stage, Passavant Energy & Environment hopes to leverage its parent’s capabilities in desalination too and take up projects in India. Passavant Energy and Environment Managing Director Dr Mazen Bachir said, “The water and wastewater treatment sector is currently witnessing a significant growth in India with the rise in demand for highly advanced wastewater treatment and waste to energy technologies. There is a tremendous potential for leading companies like Passavant Energy and Environment in the Indian market”. “As pioneers of waste to energy plants in the Middle East, achieving Zero Liquid Discharge at our waste treatment plant in Lebanon, we believe that we will be able to cater to the specific requirements of the region”, he added. www.indiawaterreview.in

Enterprise

Voltas, Dow India JV incorporated; to tap water, wastewater treatment market

ndia’s Voltas Limited and Dow Chemical Pacific (Singapore) Pte Ltd have set up Voltas Water Solutions Private Limited, a joint venture company the two announced in March they would form to take up projects in India’s growing water and wastewater treatment market. The JV company was incorporated early this month and both companies hold an equal 50 per cent equity stake in it. Voltas Water Solutions Private Limited will market and distribute standard packaged water and wastewater treatment systems of capacity up to 20 m^3/hour, to residential complexes, commercial complexes and light industrial markets in the Indian Sub-continent. The new company will leverage the technology prowess of DOW and the brand and distribution capabilities of Voltas. The new entity’s operations would include designing, procuring, testing, marketing, selling and servicing of such standard water treatment systems and wastewater treatment systems. The Tata Group has identified water as a key focus area and through Voltas, which is known more as an air-conditioning

company, it has carried out several turnkey projects in water pollution control, pumping stations and water supply and treatment space. “The company is in the process of holding its first Board meeting, at which detailed plans would be made by the JV partners. We hope that the JV company will become fully operational in six-eight months time”, Voltas Ltd Managing Director Sanjay Johri told India Water Review. “We will work towards establishing the joint venture as a leading provider of water treatment solutions”, Johri added. The water and wastewater treatment market targeted by the new company is largely catered to by unorganized players. The new JV expects to provide a branded and differentiated product line, with a focus on quality and service delivery. “As part of our long-term strategy, we intend to establish the joint venture, to fully exploit the untapped potential of the Indian market. This JV is a significant step towards further strengthening our position in mid-market water systems in India”, Dow Group Global Business Leader for the water and process solutions division Snehal Desai said in a recent statement.

Hyflux keeps Indian market in view for floating desalination plants

ingapore-based water company Hyflux Ltd has put India too on the map for launch of its flagship floating desalination production vessel (FDPV). The company last month demonstrated at the Singapore International Water Week (SIWW2014) the floating desalination vessel, which is being touted as a custom-fitted solution for “humanitarian organisations or communities that require a clean supply of water urgently”. Hyflux said its Kristal UF membranes will be used for onboard pre-treatment on the FDPC and a two-stage desalination process will be able to produce 30,000 m3 per day at maximum capacity. Electrical power would be provided from multiple generators installed on the vessel. The company is hoping to capitalise on a steadily rising worldwide demand for such off-shore or floating desalination plants, but in India, it believes that such floating installations could prove to be an alternative to small land-based desalination plants. While an official indicated at the SIWW that the first fullscale FDPV launch could be as early as 2014-end, with the first likely deployment in the Middle East, in India, the company is understood to have already initiated talks with potential customers. “Discussions are on with couple of likely customers. One is a private company looking to own its captive small desalination plant while the other is a Government agency”, said a Hyflux official.

www.indiawaterreview.in

For Indian customers, the company may end up offering customised FDPVs with capacities of 10-15 MLD. “Small FDPVs won’t even have mobility issues in Indian coastal areas”, the official added. The Indian desalination market is steadily growing and some estimates put the market to be worth as much as $1.2 billion by 2017. Tamil Nadu is leading the pack of Indian coastal states that have embraced desalination for water supply for municipal and industrial purposes. By 2018, the country’s desalination capacity is seen at 5350 MLD, with small and medium sized desalination plants constituting bulk of the capacity. But, unlike the Middle East, where Hyflux is bidding to provide its first commercial version of the FDPV, in India, even the concept of mobile desalination is in a nascent stage. The company official, however, was of the view that if the concept proves to be popular in India, there could be several deployments. “The size will remain small as companies are looking to own the FDPV and produce as much water as they can either consume or sell. Also, there is no need for intake infrastructure in FDPVs, which saves costs compared to conventional on-shore plants”, the official added. The company has maintained that the FDPV brings down substantially the lead time needed to complete a desalination production facility, which makes it suitable for humanitarian organizations or communities that require urgent supply of clean water.

July 2014

Interview

“India to be one of the top four markets for Paques”

utch anaerobic wastewater treatment major Paques Holding BV announced its reentry into the Indian market sometime in August last year, having exited the country after running into some problems with its local partner in the last decade.

making these offerings locally relevant at prices that reflect the purchasing power of local industry. In recent times with India bearing the brunt of fuel price and other imports/exchange rate volatility, the ability and willingness to invest in technologies that help revitalize resources has shown positive indicators.

The closely-held family-owned Paques set up wholly-owned subsidiary Paques Environmental Technology India Private Limited in 2012 and hired former Norit India head and Pentair executive director Sudeep Sangameswaran as managing director in August 2013.

Seeing that these trends will only accelerate with the future economic developments in India and the neighbouring regions, Paques decided to time its entry into India with a fully owned subsidiary, putting behind the relatively indifferent experience we had in this country in the 1990s through a joint venture.

The company is currently scouting for a site to host its manufacturing facility, which will produce all core components for both wastewater & gas treatment. In conversation with India Water Review, Sangameswaran scotched recent news reports that claimed that the company was eyeing Rs 100-crore revenue in five years. Nevertheless, India would remain a key market for Paques and the company has already undertaken a couple of sizeable and prestigious projects for the PTA (purified terephthalic acid) industry here, he said. IWR: Paques Holding BV re-entered the Indian market in 2013 and set up a wholly-owned subsidiary. What decisions prompted the Dutch major to plan the entry in India again? Indian industry has always held great potential for cutting edge technologies that help conserve resources or regenerate waste in sustainable manners and hence has always been a happy prospect for Clean Technology Solutions companies from the West. The challenge has mostly been in

July 2014

The economic maturity in India is right now adequate to welcome our globally proven technologies which not only address wastewater treatment and re-use concerns of Indian clients but also divert such opportunities towards exploring alternate energy options. Such a situation demands strong local presence – in terms of engineering, manufacturing, application development and most importantly human resource and this is what encouraged Paques to set up a wholly owned subsidiary. IWR: What is going to be the relationship between Paques and its Indian subsidiary? Is the Indian operation going to be handled at an arm’s-length? Or, the Indian team will be responsible for creating and driving demand for anaerobic treatment of wastewater and other treatment products from the Dutch parent, without much interference? As I said earlier, the main reason for Paques to be regionalised in India is to serve customers who are looking for high end technological solutions such that the company offers for their industrial

needs – most of which are at this moment profitability driven and not entirely sustainability driven.

Paques India Managing Director Sudeep Sangameswaran

Every market sets its own pace and maturity indices on such matters and the successful companies realise this and tweak it to their advantage. Paques has encountered similar situations earlier in rapidly maturing and yet sizeable markets like China and Brazil where maximum benefits were derived due to pragmatic ‘glocalization’ and we expect this same tried and tested formula to be followed in India. Along with USA, Brazil and China, India will remain a BIG MARKET for technologies like ours well into the next century – the main drivers being size of the countries, population, consumerism and diversity in industry and we are fully geared up to take advantage of opportunities in each of these countries with strong regional strategies that will form the pillars of our global roadmap. IWR: Which sectors does Paques India sees as growth drivers in the next few years? What kind of revenue is the company targeting from India by 2018? It has been reported in media that Paques expects to clock a turnover of Rs 100 crore by 2018. All talk on numbers is mere speculation – as a closely held private organization, we do not communicate these details externally. However, what can be conceded is that due to the drivers I mentioned above, we expect to see multiple fold growth in demand in India for our anaerobic

www.indiawaterreview.in

Interview

technologies, mainly because this segment has missed out on the rapid advances made technologically in this space over the last 10-15 years, when the big players from Europe & USA have largely ignored India. We expect this demand to largely come from businesses which have agrobased inputs such as food and beverage, paper & pulp, liquid food, energy generation from bio-mass etc. These sectors have fairly inelastic demand and are relatively insulated from global economic slowdown. Our aim is to grow revenues at an annual rate in excess of 25 per cent over the next five years focussing on dairy, sugar, beer and distilleries, and other food processing industries, as well as pulp and paper, textiles and tanneries. IWR: The company had announced plans to set up a manufacturing facility in India for producing core components for its systems. What is the status on this? Is India expected to become a sourcing base for such components for Paques’ operations in other countries too? We have identified a couple of locations in the south as well as western coastal India and a final decision on the location is expected to be announced as early as next month. The manufacturing capacities will be ramped up in stages – to first meet Indian demand and progressively regional demand. The facility, expected to get ready within the next 10-12 months, will produce all our core know-how components for both wastewater & gas treatment. IWR: Is anaerobic treatment of wastewater popular in India? Is it difficult to “sell” this technology since there is not much competition available? Anaerobic treatment is well received and popular in India through the older generation of UASBs. Modern anaerobic technologies like Biopaq IC have even greater acceptance in large countries with significant agro-based industries like Brazil, USA & China. I already mentioned how Indian industry missed out on some dramatic changes in this landscape over the past 10-15 years – for instance shrinking footprints, minimal energy consumption

www.indiawaterreview.in

& sludge generation, use of engineering plastics and similar modern material technology to build hassle-free plants with extremely attractive life cycle costs. Ironically, what has been India’s loss so far in exposure to modern, next-gen anaerobic technologies now offers us the chance to showcase a compelling value proposition to Indian clients. Our technologies make great sense at the level of lifetime business value & total costs of ownership and we are convinced the Indian industry is today sufficiently sensitized to consider this as the primary ingredients to a purchase decision than mere ‘low bids’. IWR: Since its India launch announcement, what kind of projects has the company bagged? Are these through Indian partners -- EPC players or project developers -- in which the company provides technology solutions for wastewater treatment? We are executing a couple of sizeable and prestigious projects for the PTA (purified terephthalic acid) industry in India – a segment where Paques is part of a very limited number of players capable of offering anaerobic technologies to degrade the extremely hard to deal with effluent this industry generates. Our mode of operation on projects like these is to deliver our core components/knowhow on the anaerobic treatment portions of the project to the main EPCs executing the larger project and for this reason we do not name the specific projects . IWR: Does it make sense for the Indian entity to tie-up with some Indian developers on a formal basis, or would make its technology available on a project-to-project basis? Our thrust is to offer our basket of technologies, products and solutions to the end-user with various delivery options. The end-user will then ultimately make the call on how he wants it delivered to him – through an EPC, through their in-house project departments or through Paques. Our partnerships with implementation partners too are forged keeping this vision of being receptive to client needs and wants first. IWR: What is the current product portfolio

of the company in India? Which industries do these products find usage in? Are all products from the Dutch parent company now available in India or will be available as it grows? The entire portfolio of Paques global technology & solutions basket is available now in India. Any industry that generates waste with high COD, ammonia, fats, oil & grease etc or generates gas that needs to be remedied for use as clean energy can find a Paques solution that will help improve their profitability & sustainability objectives. It is pertinent to mention here that annually Paques invests 10 – 11 per cent of its global revenue in R&D and as a result, we expect even more innovative clean technology & sustainability solutions to be made almost simultaneously available to India – one of the top markets for such technologies. IWR: While you could have several partners, is there competition in India too? Do you agree that lack of awareness of innovative technology solutions like anaerobic treatment could also act as a speed-breaker in India? Competition leads to innovation. If you’re the only player in your field, it can be difficult to improve. And if you’re working in a crowded market, you won’t succeed by doing what everyone else does. Healthy competition encourages change which will distinguish one company from others. However, as already mentioned, the gaps in Indian exposure to the developments in anaerobic technologies over the last two decades also gives us an opportunity to alter the competitive landscape over the next few years. IWR: Is there a figure that you have regarding the size of the Indian market for the kind of solutions/technology that Paques offers? It’s difficult to put numbers in to it, as there’s huge potential for our technology for existing and new industries. We are experiencing lot of scope for existing industrial clients where they can upgrade and evolve our technology for optimisation – saving operational costs and generate energy. As already mentioned, India will be one of our top four markets – together with USA, China and Brazil.

July 2014

Guest Column

On the Waterfront

Urban Water Supply Sector: Institutional Transformation Required - Abhay Kantak, Director – Urban, CRISIL Infrastructure Advisory

oday, it can be said in general that there is no well-performing urban water supply service provider in India. The question one may ask here is what is well-performing? The only standards of service which can be said to have been universally accepted before 2009 were the Central Public Health Engineering and Environmental Organisation’s one on per capita supply. The City Development Plan preparation toolkit, issued in 2006 under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) framework had three operational performance parameters for water supply – coverage, per capita supply and duration of supply, and two for financial performance – collection efficiency and cost recovery. However nowhere were these performance indicators defined. This allowed cities to interpret performance indicators as they deemed correct, or more often, convenient. For instance, coverage was interpreted as physical coverage – area covered or length of road network covered by the distribution system. The focus on the consumer was clearly absent. Since water is a State Subject as per the Indian Constitution, state governments have full authority to decide on different aspects of service delivery. Often, state governments have delegated the service provision responsibility to a parastatal or to an urban local body (ULB). But, this delegation has not been accompanied by a framework to assess the service delivered. In fact, no performance standards are prescribed to assess how entities entrusted with this critical responsibility are performing with respect to the services delivered. The standards of performance assessment, if any, take the form of the percentage of grants provided that has been spent in a financial year or how many kilometres of pipeline have been laid in that year. Here also, the state government is not assessing the outcome but physical

July 2014

progress and fund utilisation. Thus, the state government by virtue of its Constitutional mandate or the parastatals or the ULBs cannot be called as service providers; they are best described as asset creators. It was only in 2009 that on an initiative of the Union Ministry of Urban Development, performance indicators were identified and defined to help measure the performance of a water supply system. Today, there is no city in India which can provide reliable data for performance measurement. Political interference or low level of tariffs cannot explain why cities do not have proper asset registers or any kind of reliable performance measurement systems. If cities do not have measurement systems for baseline performance, then how can investment decisions be made and the outcomes of these investments measured? Many state governments are passing Service Guarantee Acts. Thankfully, these acts are so poorly drafted that they are designed to fail even before the ink used to sign it and make it a law dries up. When institutions in the urban water sector are functioning more as asset creators, how are they to guarantee services? Today, citizen empowerment and citizen participation have become instruments to transform our dysfunctional governments. So, when an empowered citizen confronts a dysfunctional arm of the government, no constructive outcomes can be expected. The problem lies in the fact that the citizen demands are not aligned with the performance parameters on which the ‘service providers’ are assessed. Also, our local governments are answerable to a higher form of government rather than the citizens they are expected to serve. This is another systemic flaw which remains unaddressed. The problem gets further complicated when the government recognising the failure of its institutions, transfers the responsibility of service provision to the

private sector. In the current dispensation, there is transfer of accountability from the public sector to the private sector. An unbalanced risk-sharing is evident in several publicprivate partnership (PPP) contracts awarded. It is high time we recognise that our institutions have not failed but rather we have failed to build responsive and responsible institutions. There is a need to make our public institutions accountable for the right reasons – for services delivered rather than for assets created or money expended. In the pursuit of improving services, the public institution may engage the private sector if it desires. A public institution, driven to be made accountable for services delivered will see the private sector as a true partner. The lack of partnership spirit is often the bane of PPP arrangements as public institutions in the absence of being made accountable, transfer the accountability to the private sector. Accountable public institution, and accountable for the right reasons, are at the core of the transformation process. The roadmap for reform needs to break the vicious circle of unaccountable investments, low recovery and poor levels of service. The costs of neglect, which are cumulative, will take a longer time to get corrected. Accordingly, the reform process will be lengthy and no quick turnaround can be expected. The first-level transformation will be to make our institutions accountable for services delivered. As a first and fundamental step to this process, reliable systems to measure and monitor performance have to be put in place. Given the times we are living in, to answer the question posed in the beginning, a well-performing ‘service provider’ is one which can measure its inefficiency against the right benchmarks most accurately.

www.indiawaterreview.in

Subscribe to

Rs. 200

Volume 1 / Issue 1 / July 2014

INAUGURAL ISSUE

26 ENTERPRISE VA Tech Wabag surges ahead towards €1 billion mark | 32 INTERVIEW India to be one of the top four markets for Paques | 46 SPECIAL FEATURE How stakeholders view water in India!

HAVE Despite the growing PE FUNDS investment by Private funds in Indian DESERTED THE Equity companies, there has been INDIAN WATER little to report in the water SECTOR? sector.

1 year subscription (12 issues at Rs 2400) Save on multiple subscriptions. Write to iwrsubscriptions @xegent.in for details.

Please fill in your personal details Title Organizaion

Name Designation

Address Pin Code E-mail Phone no. (Mobile/ Office)

Please make payment in company’s current account 50200003412011 in HDFC Bank, Masudpur, Vasant Kunj in name of Xegent Consultants Pvt Ltd. RTGS/NEFT IFSC code: HDFC0000679 Or Send cheque payable to Xegent Consultants Pvt Ltd at B-7/5180, Vasant Kunj, New Delhi - 110070 www.indiawaterreview.in

July 2014

Guest Column

‘Improving water storage capacity, the need of the hour in India’ A B Pandya, Chairman, Central Water Commission

he late arrival of monsoon this year has had an impact on the storage position of major reservoirs across the country. The water storage available in 85 important reservoirs till late July was way below the capacity of these reservoirs. This again reemphasises the need to improve overall storage capacity in the country. First, one needs to look at water availability and requirements in the country. As per the report of the National Commission on Integrated Water Resources Development (NCIWRD-1999), India has roughly four per cent of the world’s fresh water resources. The country receives an average precipitation of about 1170 mm, which corresponds to an annual precipitation of 4000 BCM. There is considerable variation in precipitation both temporally and spatially. Nearly 75 per cent, or 3000 BCM occurs during the monsoon season confined to three-four months (JuneSeptember) in a year. As per the assessment done by CWC in the year 1993, the average annual water availability in the country is 1869 billion cubic meters (BCM). It is estimated that owing to topographic, hydrological and other constraints, the utilizable water with conventional approach is 1121 BCM which comprises of 690 BCM of surface water and 431 BCM of replenishable groundwater resources. It has been estimated by Central Water Commission (CWC) in 2009 that about 450 BCM of surface water is being utilized for various purposes. Similarly, Central Ground Water Board (CGWB) has also estimated in 2009 that about 243 BCM of groundwater is being used.

July 2014

Against this, the total water requirement of the country for different uses for the years 2010, 2025 and 2050 as assessed by National Commission on Integrated Water Resources Development (NCIWRD-1999) constituted by Ministry of Water Resources was 710, 843 and 1180 BCM respectively. The systematic development of available water resources was taken up with the beginning of Plan era and in the process of planned development of water resources since independence, live storage in the country has been built up from 15.6 BCM at the time of independence to 253.388 BCM in 2010. This has made a significant contribution in meeting water demand of various sectors in the country. As per the information on storage scenario in 2004, the live storage capacity of completed, under construction and under consideration projects was 225.14 BCM, 63.90 BCM and 107.54 BCM respectively, totalling 396.58 BCM. The reassessment of live storage capacity of completed, under construction and under consideration projects was carried out in 2010. As per this assessment, live storage capacity of completed, under construction and under consideration projects was 253.388 BCM, 50.959 BCM and 104 BCM respectively, totalling about 408 BCM. So, for harnessing of 690 BCM of utilizable surface water, it is estimated that approximate live storage capacity of 450 BCM will be required. Thus, new storage projects with storage capacity of about 95 BCM (450 BCM - 355 BCM) are required to be identified and completed by 2050. This means that the pace of creation of storage needs to be ramped up too.

An idea of pace of storage creation is obtained from storage capacity of completed projects as per assessment of 2004 and 2010. The live storage created during this period is (253.388 - 225.14) i.e., 28.248 BCM during the six-year period. Thus, annual rate of storage creation is of the order of 4.7 BCM. The pace of live storage creation required is (450 + 53 - 253.388)/40 i.e., about 6.2 BCM per year. We are embarking upon a rapid pace of development where the demands for water are likely to become more and more uniform throughout the year. Since we have to bring the entire country to an acceptable minimum standard of living providing adequate water and power, we will need to harness all the resources at our disposal in a sustainable way. In this respect, the Reliance will necessarily have to be on surface water as it is an annually replenishable resource. Depletion of groundwater is already causing concerns and the natural recharge and even artificial recharge can’t meet the sustainability requirements of the present level of groundwater usage.

www.indiawaterreview.in

Guest Column It is, therefore, required that we increase our reliance on surface water resources for the future. Rainfall availability is generally about 100 days in a year, which is largely responsible for the water flows in our rivers and water courses recognised as surface water. It reaches maxima during monsoon season and minima during summers. As against this, the demands are generally at minima during the monsoon seasons and reach a critical level during the summer months clearly indicating an inverse relationship between availability and demands. This is akin to a situation where the funds made available to many of us as a salary will have to be made to last for the entire month and still some surplus to be left at the end to meet peaking demands for funds during special situations. We meet this by conserving the money available in a bank. Water storages are exactly the same. We do not think twice before justifying the requirement of an overhead water tank and possibly one more in the loft when we know that the municipal supply will be available for a fixed period during the day only and we need to have water throughout the day. No further explanation is needed for establishing the need for the storages.

Water storage policy Although no separate national water storage policy has been formulated by the Government, creation of storage has been given adequate emphasis in the National Water Policy 2002 and thereafter, in National Water Policy 2012.

The National Water Policy 2002 had recommended that water resources available to the country should be brought within the category of utilisable resources to the maximum possible extent. in its various forms, namely, soil moisture, ponds, groundwater, small and large reservoirs and their combination and that States should be incentivized to increase water storage capacity, which inter-alia should include revival of traditional water harvesting structures and water bodies. The National Water Policy 2012 further recommends that all water resources projects, including hydro power projects, should be planned to the extent feasible as multi-purpose projects with provision of storage to derive maximum benefit from available topology and water resources.

Planning considerations Creation of storage of water is not limited to defining the quantities/ capacities alone. It is also dependent upon the topography, geotechnical conditions and the land availability. Each of these ingredients is not available in plenty nor are they uniformly distributed so as to enable us to create storages at will and wherever we like to have them.

The National Water Policy 2002 had recommended that water resources available to the country should be brought within the category of utilisable resources to the maximum possible extent. The Policy had further recommended that water resource development projects should as far as possible be planned and developed as multipurpose projects, which inter-alia involves creation of storage.

Optimising the land requirements is an important aspect of the storage planning. Though much reviled, large storages require lesser land foot print for storing relatively larger amount of water and are also efficient in conserving the storage throughout the year by way of lesser evaporation from a deeper water body.

The National Water Policy 2012 also recommends that the anticipated increase in variability in availability of water because of climate change should be dealt with by increasing water storage

Greater resilience can be built in form of carryover storage which can see through the difficult periods of the shortfalls. For example, better than average reservoir storage position in 2013 has enabled us to tide over the crisis of

www.indiawaterreview.in

late arrival of adequate rains in 2014 so far. Areas around foothills are the ideal locations since they provide us with the necessary depths of reservoirs and also are located at the head of the agricultural and urban hubs located in plains. The transfer of the water can take place through gravity removing the necessity of energy for pumping.

Concerns Very often, concerns and apprehensions are expressed over many perceived effects and need some disambiguation. The major concern in a populationrich country like ours is the relief and rehabilitation. However, it has been demonstrated that successful implementation of R&R activities is feasible. Government has put adequate safeguards and provisions in terms of legal instruments as well as financial provisions for addressing the issues. The concerns of seismic risk to the structures have been adequately taken care of by way of development of state of the art methodologies of earthquake hazard assessment and competence of the country is demonstrated by the fact that no dam has failed due to earthquakes when we have dams as old as 150 years are existing and performing satisfactorily in the country. Geotechnically, our technological community has been adept at meeting any challenge of foundation, materials of construction and constraints of site since our early history. All the challenges that have been met in the past have built an experience base in the country which is unique in the world. Overall dam safety concerns have been addressed through establishment of sound dam safety practices in the country. Various means of effective surveillance on a routine basis and assurance of the health of the dam are in place and have so far been proving to be adequate. In a nut shell, for meeting the future irrigation, industrial and drinking water needs, and maintaining an overall sustainable water management paradigm, the need of the hour is to increase water storage capacity in the country. # The views expressed are personal.

July 2014

Special Feature

Ganga will not go dry till 2050 Ganga and Brahmaputra, along with the Indus will continue to have increased water supply for over three decades, a new study has predicted. The finding of the study should come as a shot in the arm for the new Governmentâ&#x20AC;&#x2122;s plans to rejuvenate the mighty Ganga and develop it for energy, tourism and inland transport purposes too.

ndia will continue to have increased water supply in the Ganga, a major source of water for 40 per cent of its population across 10 states, for over three decades despite rising precipitation levels and glacier melt in the Himalayas. Even the Brahmaputra and Indus rivers, whose waters feed millions across regions in India and Asia, will have increased water flow till 2050, a joint study conducted by The Netherlands-based global research organisation FutureWater and Utrecht University, and Nepal-based International Centre for Integrated Mountain Development (ICIMOD), said recently. Scenarios for the distant future, or until the end of the century, remain uncertain, in particular for the Indus River where meltwater is most important For India, the findings of the study predict an increase in average water availability in years to come, a welcome respite from several studies that predict the country would be facing severe water shortages as competing demands for limited water resources in the country rise. The study comes at a time when the newly elected Government has announced ambitious plans to clean and rejuvenate the 2,525 km trans-boundary Ganga and develop the mighty river for energy, tourism and inland transport purposes. Glacier and snowmelt contribute water to 10 important river basins originating from the Himalayas and in the Tibetan Plateau serving over 1.3 billion people. The scientists had assessed the importance of meltwater for

July 2014

www.indiawaterreview.in

Special Feature the Ganga, Indus, Brahmaputra, Salween and Mekong rivers, among others, and discovered how climate change will alter river flow in the coming decades. For India, and other riparian countries that surround these river basins, the findings of the study will be important in shaping their climate change adaptation policies too. ++Several studies have warned that receding Himalayan glaciers would reduce water supply in Indian rivers in coming years. A Chinese study, launched last month, said glaciers in the Qinghai-Tibet Plateau, the watershed for several Himalayan rivers, have shrunk by 15 per cent in the past three decades. The situation could worsen in future due to global warming,

the Institute of Tibetan Plateau Research of the Chinese Academy of Sciences (CAS) said in the study. Interestingly, a briefing by Global Military Advisory Council on Climate Change (GMACCC), the Institute for Environmental Security (IES) and the University of Cambridge’s Institute for Sustainability leadership (CISL) with the support of the European Climate Foundation (ECF), released last month, said that the melting glaciers in the Tibetan plateau, source of water for almost 40 per cent of the world’s population, have the potential to raise tensions between several of the region’s countries. Though frictions between neighbours in Asia over scare trans-boundary water

sources is not something new, the briefing stated that tensions could increase due to climate-driven water variability in the trans-boundary drainage systems linked to the vast Tibetan plateau in central Asia. “Climate change is projected to reduce both the quantity and quality of freshwater resources in many regions of the world. Groundwater resources will be reduced in many regions. Adaptation measures can include water resource management projects, additional water treatment systems, and water conservation. Many of these methods are expensive and take significant amounts of time to implement. This may limit their application in poorer countries”, the briefing noted.

‘India to have up to 27 per cent increase in average water availability’ Dr W W (Walter) Immerzeel is one of the authors of the study - ‘Consistent increase in High Asia’s runoff due to increased glacier melt and precipitation’. Immerzeel has rich experience in geo-informatics, water resource management and climate change, and currently works at the Department of Physical Geography of The Netherlandsbased Utrecht University. Climate change is not likely to result in a decrease in water availability, at least till 2050, for India, he said. IWR: What is the key takeaway in the study regarding water supply in Asian countries, and India in particular? The main point is that climate change is not likely to result in a decrease in water availability for two reasons: (i) The glaciers will provide melt water for a long time to come. Even though the glacier area will decrease the melt rate per unit area of glacier is increasing and as a result the amount of melt water is rising at least until 2050. (ii) Most climate models predict an increase in precipitation. For India we project an increase in average water availability between 1 and 27 per cent. IWR: The study states water supply in rivers like Ganga, Brahmaputra and Indus will increase in the coming decades, at least till 2050. What happens after that? Does that mean that in India, in the watersheds of these large rivers, we should not face any shortage regarding available water resources? We are now working on longer term simulations up to 2100 and it seems this trend persists. For the Ganga as a whole, glacier melt is not very important and future changes in water availability are primarily a function of changes in rain. www.indiawaterreview.in

Most models project and increase in rain and therefore an increase in average water availability. Some caveats are warranted though: there is a lot of uncertainty between the models and there may be seasonal shifts in water availability, which could cause water shortages in certain periods of the year. IWR: Is India equipped in terms of an adequate climate change adaptation mechanism to deal with such instances when flow of water in rivers increase due to glacial meltdown and then eventually starts to dwindle? I do not think flows will start to dwindle for reason explained above. I am not an expert on Indian water policy, but I think the challenge for the future is to develop policies that cope with adapting to changes in water availability within the year. Or, policies that deal with less reliable water supply and the stable glacier flow during dry seasons going down and policies that focus on dealing with extreme weather events which are likely to increase. IWR: Do you think the kind of scenario painted by the study (till 2050) will lead to more cooperation among Asian neighbours that share waters of these rivers, or, will cause tension between them? Our key message is positive and more water is likely to become available. Yet, the biggest challenge in Asia is to deal with the demand side of the equation. Population numbers are rapidly increasing, diets are changing, and economies are growing rapidly. These all go hand in hand with sharp increase of the demand for water. Each country will deal with this in its own way, but it will certainly be recommendable to promote collaboration at regional level to avoid that downstream countries pay the highest price.

July 2014

Feature

Slipping And Sliding, Kashmiri Women Trek For Water Chetna Verma

n the scorching heat of the vast expanse that is the Rann of Kutch, a woman, straining with the weight of her near-term unborn child, walks in a daze beside her husband. He is a water diviner, who knows that his desperate search for water is hopeless.

She calls out to him faintly and collapses in a heap on the sand… This is the heart-rending reality of millions of Indian women, portrayed sensitively on the big screen in the recent film, ‘Jal’. In another narrative, a female protagonist is raped by a man from another village who offered water in exchange for her body. This film has indeed been a sobering reality check for many, particularly big city folks who take for granted the availability of water 24X7 in their homes. Ask Rubiya Kausar (name changed), 24, from Ari, a remote village in Mendhar tehsil in the border district of Poonch in Jammu and Kashmir, and she is likely to assert that the situations depicted in ‘Jal’ are disturbingly close to a reality that she is faced with today. For her, gaining access to water has been an ongoing struggle for the last 15 years, despite the fact that the state she resides in is blessed with numerous water resources. In fact, the crisis stemming from water shortage has been the cause of miscarriage, not once but on two harrowing occasions. Kausar got married in 2007 and fetching water for the household was among the first few responsibilities given to her after she arrived as a new bride in the village. Water is available at a walking distance of 20 minutes from her home – but it is not a straightforward trek. A downward lane carved out of gaps between the fields and the houses, with big river rocks scattered in a zigzag manner, is the only way to the ‘chashma’ (natural spring) that provides drinking water to over 15-20 houses in the village. It was just another day in 2009 when Kausar had left the house with a bucket and a vessel in tow. She was four months pregnant then. “On the way back, I lost my balance and fell. I started screaming in pain and was taken to the hospital in Mendhar where doctors told me that I had lost my child,” she shares, tonelessly. Her inlaws add that she suffered another miscarriage in 2012. Now pregnant for the fourth time, Kauser’s daily hike

July 2014

Kashmiri women in the border regions undertake an arduous trek of four kilometres in the winter and eight in the summer to the nearest water source. (Credit: Chetna Verma\WFS)

www.indiawaterreview.in

Feature

Lugging heavy buckets makes women vulnerable to miscarriages, and over a period of time, they suffer from severe back and joint pains. (Credit: Chetna Verma\WFS) continues as always. She simply doesn’t have any choice. Kausar’s story of despair is familiar to almost every woman in her village and for that matter most women in this border region. They hail from families living below the poverty line and are left wanting for basics, such a proper home, drinking water facility, and access to schools and health centres. “Who will fetch water for us if we don’t? Men in the family have the task of bringing back enough earnings to meet the day’s requirement. The task of meeting the water needs of the household is left to the women and children. Our vessels fall off our head, we ourselves fall several times, and many of us have suffered a miscarriage at least once. But that doesn’t change our daily routine,” rues Naeda Akhter, 28, adding that even after delivery, they barely rest for 15 days before resuming their grinding chores. Coming from a state ranked among the top seven in terms of average time spent by household members for fetching water from outside the premises, these women walk an average distance of four kilometres in winter and eight in summer, lugging large quantities of water. The impact of this on their physical and reproductive health is palpable. According to a report published by World Health Organization on Gender, Climate Change and Health, at least 30 per cent of a woman’s daily energy intake is spent fetching water during the dry season in www.indiawaterreview.in

The unhygienic ‘chasma’ (natural spring) that fulfils the water needs of the 15-20 families living in the remote Ari village in the border district of Poonch in Jammu and Kashmir. (Credit: Chetna Verma\WFS)

rural India. Carrying heavy loads over long periods of time affects the spine, the neck muscles and the lower back, wearing down the vertebral column earlier than usual. “I have been fetching water for the last 25 years. Today, I suffer from extreme aches in my head, neck, back and knees,” says Hamida Bi, 49, adding, “Initially, I had a problem only in my back but now my entire body has given up. From a monthly expense of Rs 200 on medicines, I am now spending over Rs 1,000, with little improvement to show for it.” Hamida has no regular income so she finds it difficult to pay for her treatment. While physical ailments are visible and discussed freely, what is kept under wraps are the repercussions on the reproductive health of the women. The conservative social customs and cultural traditions don’t allow the topic to be brought up. Lifting heavy weights during pregnancy can lead to several complications that affect a woman’s health not only during pregnancy but after child birth as well. During pregnancy, the connective tissues (ligaments) that keep the joints firm tend to be more elastic in order to prepare the pelvis for delivery. Hauling heavy loads can injure the spine enough to cause temporary or permanent damage. “My mother recently had a uterus operation. She lives in Nar Banloi, near the border, where non-availability of

water is a major problem. She has to walk every day for an hour to get water from the ‘chashma’ that flows near the border. The surgery has forced her to be on bed rest for one month,” says Safeena, a Class 12 student in Mendhar, who has opted to stay in a hostel in town because of the water crisis. Clearly, she understands the implications that this scarcity can have on her health. Kashmiri women have inherited this unfortunate legacy from their elders, which they too, in all likelihood, shall pass on to their subsequent generations. The only difference would be the increasing distances; and the subsequent fallouts. In its State Action Plan on Climate Change, the Jammu and Kashmir government has mentioned that the snowfall patterns in the Western Himalayan range have indicated a decrease of 280cm in the total seasonal snowfall from 1988 to 2008. The snowfall has decreased by 280cm over the Pir Panjal Range that falls in Poonch district. The report mentions the impact that climate change can have on the health of the people and suggests that adaptation and mitigation strategies in response to this challenge should include providing good governance, strengthening the health system, surveillance and control of communicable diseases and securing availability of fresh and safe drinking water.

(Women’s Feature Service)

July 2014

Environment

Delhi is world’s second most water-stressed city

elhi has been ranked the world’s second most water-stressed city as per a new global research, coming second after Japanese capital Tokyo. The city-state is experiencing severe surface water stress, two models -- Water Balance Model and WaterGAP Model -- that the researchers used to rank cities, showed.

first global database of urban water sources and stress, was carried out by The Nature Conservancy and the results were published recently in the Global Environmental Change Journal. The survey’s findings showed that these cities collectively move a total of 504 billion litres of water per day across an estimated distance of 27,000 km.

In the first such global survey of the water sources of large cities and stress, which looked at 50 largest cities and a representative sample of more than a hundred other large cities, researchers found that as many as six of the top 10 cities facing water stress were from Asia, which is witnessing a fast rate of urbanisation.

Laid end to end, all those canals and pipes would stretch halfway around the world. While large cities occupy only 1 per cent of the Earth’s land surface, their source watersheds cover 41 per cent of that surface, so the raw water quality of large cities depends on the land use in this much larger area.

In India, Kolkata was also ranked among the world’s 10 largest cities under enhanced water stress, coming at 6th place. In neighbouring China, two of the largest cities - Shanghai and capital Beijing -- were ranked at number 4 and 5 respectively.

Even though urban growth is increasing the demand for freshwater resources, the water sources of the world’s large cities have so far not been globally assessed, hampering efforts to assess the distribution and causes of urban water stress, the researchers said in a report - ‘Water on an urban planet: Urbanization and the reach of urban water

The research, which created the

July 2014

infrastructure’. The research found that one-quarter of the largest cities suffering from water stress account for a significant amount of economic activity - estimated at $4.8 trillion. “Put another way, this $4.8 trillion in economic activity directly or indirectly depends on the supply of 167 billion litres of water per day to these cities. Finding ways to maintain this water supply over time is thus of considerable economic importance”, the report said. The large amount of economic activity in large cities with insecure sources of water emphasizes the importance of sustainable management of these sources, not just for the viability of individual cities but for the global economy. Therefore, the strategic management of these cities’ water sources is important for the future of the global economy. The study also makes clear the extent to which financial resources and water resources are intertwined. It is possible for

www.indiawaterreview.in

Environment Urban agglomeration

Country

Population (2010)

Sources

Tokyo Japan 36,933,000 Surface (WG) Delhi India 21,935,000 Surface (WBM, WG), Ground Mexico City

Mexico

20,142,000

Ground (stress), Surface

Shanghai China 19,554,000 Surface (WBM, WG), Ground Beijing China 15,000,000 Ground (stress), Surface Kolkata India 14,283,000 Surface (WBM, WG), Ground Karachi Pakistan 13,500,000 Surface (WBM, WG), Ground Los Angeles United States

13,223,000

Surface (WBM, WG), Ground

Rio de Janeiro

11,867,000

Surface (WG)

Brazil

Moscow Russia 11,472,000 Surface (WBM, WG), Ground Largest cities under water stress. The water sources are shown, as well as if they are stressed in our analysis (WBM = Water Balance Model shows stress, WG = WaterGAP model shows stress) a city to build itself out of water scarcity — either by piping in water from greater and greater distances or by investing in technologies such as desalination — but many of the fastest growing cities are also economically stressed and will find it difficult to deliver adequate water to residents without international aid

and investment, the research found. For instance in Delhi, the State Government is looking to source as much as 275 MGD of water from the Renuka dam in Himachal Pradesh, about 300 km from the national Capital, to bridge the growing demandsupply gap.

However, many cities are not as waterstressed as previously thought, the study found. While earlier estimates had put approximately 40 per cent of cities into the water-stressed category, this analysis put the number at 25 per cent.

‘India, China, witnessing highest groundwater depletion’ India, the US, Iran, Saudi Arabia and China are the countries with the highest rates of groundwater depletion, a new study that mapped global groundwater reservoir depletion rates, has found. Annual groundwater depletion during the first decade of this century was twice as high as it was between 1960 and 2000. About 15 per cent of global groundwater consumption is not sustainable, meaning that it comes from non-renewable groundwater resources. On the Arabian Peninsula, in Libya, Egypt, Mali, Mozambique, and Mongolia, over 30 per cent of groundwater consumption is from non-renewable groundwater, the study revealed. Led by Frankfurt-based Goethe University’s hydrologist Prof Petra Döll from the Institute of Physical Geography, the researchers found that 90 per cent of water consumption is due to irrigation for farming purposes. Only the comparatively small remainder is used for potable water and industrial production. As an example, 40 per cent of the cereals produced around the world is irrigated. However, in many cases this results in increased scarcity of water resources and puts a burden on ecosystems. In dry regions, the amount taken from groundwater reservoirs can easily exceed the amount being replenished, so that the groundwater reservoir is overused and depleted. Döll has been researching what parts of the world and to what

www.indiawaterreview.in

degree groundwater reservoirs have been depleting over the past 50 years. Using WaterGAP, the global freshwater model that calculates flows and storages of water on all continents, she has arrived at the most reliable estimate to date by taking into consideration processes that are important in dry regions of the world. According to the study, the new estimate of global groundwater depletion is 113,000 million cubic meters per year for the period from 2000 to 2009, which is lower than previous, widely varying estimates. This can be considered to be the most reliable value to date, since it is based on improved groundwater consumption data which takes the likely deficit irrigation into account, and since the model results correlate well with independent comparative data. About 15 per cent of the globally abstracted groundwater was taken from non-renewable groundwater during this period. “By comparing the modelled and measured values of groundwater depletion, we were able for the first time to show on a global scale that farmers irrigate more sparingly in regions where groundwater reservoirs are being depleted. They only use about 70 per cent of the optimal irrigation amounts”, said Döll. The increased use of groundwater for irrigation also results in a rise in sea levels: According to Döll’s calculations, sea level rise due to groundwater depletion was 0.31 millimetres per year during the period from 2000 to 2009. This corresponds to roughly one tenth of the total sea level rise.

July 2014

Event Calendar

Important water events/ conferences World Water Week 2014 Dates

August 31 - September 5,

City/country

Stockholm, Sweden

Website

www.worldwaterweek.org

World Water Week is hosted and organised by the Stockholm International Water Institute (SIWI) and takes place in Stockholm. The World Water Week has been the annual focal point for the globe’s water issues since 1991. Each year the World Water Week addresses a particular theme to enable a deeper examination of a specific water-related topic. While not all events during the week relate to the overall theme, the workshops driven by the Scientific Programme Committee and many seminars and side events focus on various aspects of the theme. In 2014, the World Water Week in Stockholm has a theme of “Energy and Water”. In 2014, the World Water Week in Stockholm has a theme of “Energy and Water”.

IWA World Water Congress & Exhibition 2014 Dates

September 21-26, 2014

City/country

Lisbon, Portugal

Website

http://www.iwa2014lisbon.org/

The International Water Association (IWA) organises the high-profile IWA World Water Congress and Exhibition every two years. It is a leading edge event bringing together over 5000 experts, specialists and opinion leaders from the water and related sectors. The IWA World Water Congress and Exhibition is a unique event covering the full water cycle, connecting the latest research, science and technology with industry, utilities and practice to find the water solutions of the future.

July 2014

www.indiawaterreview.in

Event Calendar

International Water Summit 2015 Dates

January 19 - 22, 2015

City/country

Abu Dhabi, UAE

Website

http://iwsabudhabi.com/

The International Water Summit (IWS) is a unique global platform for promoting water sustainability in arid regions. IWS brings together world leaders, field experts, academia luminaries and business innovators to accelerate the development of new sustainable strategies and technologies. Hosted by Masdar and organized by Reed Exhibitions, IWS 2015 is endorsed by the UAE Ministry of Environment and Water, Abu Dhabi Water & Electricity Authority, the Environment Agency of Abu Dhabi, the Regulation and Supervision Bureau, and Abu Dhabi Sewerage Services Company.

World Water Forum 2015 Dates

April 12-17, 2015

City/country

Daegu - Gyeongbuk, South Korea

Website

http://eng.worldwaterforum7.org/main/

The World Water Forum is the worldâ&#x20AC;&#x2122;s largest event on water held every three years and serves to move the international agenda on water forward through the collective action of the global water community. The World Water Forum mobilizes creativity, innovation, and know-how around water. Serving as a stepping-stone towards global collaboration on water challenges, the Forum is a unique multistakeholder platform where the water community and the policy and decision makers from all regions of the world can work together to find joint solutions.

www.indiawaterreview.in

July 2014

Special Report

How stakeholders view water in India! In an assessment of people’s attitudes towards water in India, a report by ORF finds that the total quantity of water in the last 10 years has remained the same and ‘water stress’ or scarcity could be man-made.

ack of political will, failure of Government organisations to coordinate among themselves and absence of a coherent water management strategy are some areas that have emerged as major challenges in India, a new report that maps the attitudes of key stakeholders towards water in the country has found. The report revealed that respondents held the view that the total quantity of water in the last 10 years has remained the same, and it is in fact issues of accessibility, population pressure, failure to manage the competing demands of water and lack of water efficiency that have decreased the per capita availability of water in the country. India possesses abundant water resources. But, it is fast projected to be reaching a ‘water stressed’ situation with its per capita availability of water at 1588 cubic meter per year (m3/yr) as against the international desired standard of 1700 m3/yr per capita for basic human needs. While the total utilizable potential of water resources in India is 1123 BCM, the present utilization is only 605 BCM indicating that while spatio-temporal factors might have contributed towards this state, the ‘water stress’ or scarcity could be man-made, stated the report ‘Attitudes towards Water in India’ based on a project conducted by the Observer Research Foundation in collaboration with Chatham House, United Kingdom. The report was the outcome of 165 extensive interviews conducted with key stakeholders of the water scene in India - Government officials including secretaries, advisors from several Union ministries, ambassadors and diplomats, personnel from Governmental water resource management organizations, researchers, academics and NGO employees/experts on water. The research was conducted with a view to study the key drivers, incentives

July 2014

and traditional nodes of influence that shape the policy process and public discourse around water management in India. The dominant view among water thinkers and specialists, recurring in this study, was that the water management paradigm as it exists in India has to be overhauled. In fact, views of interlocutors were overwhelmingly negative towards the current situation of water management and policies and 82.7 per cent of the respondents were unhappy with water management and emphasised issues of mis-governance in India’s water scene.

How Indians rate current water management!

82.7

15.3

resource have a bearing towards policy outcomes? The respondents do think so. For a country like India and its complex nature of water demand, perceptions are important for getting at the root of its numerous problems of water governance and, in turn, addressing them in a mindful, efficient and cooperative way. It was found that an overwhelming majority of the respondents - 75 per cent of the people interviewed - identified the lack of a coherent water management strategy as the most pressing challenge for India, which, as a developing country, is in the midst of a resource crunch – compounded by the effects of immense population growth, urban expansion and rapid industrialization. Interlocutors from policy circles often indicated awareness of an imminent crisis wherein demand would fall short of supply, unless timely measures were taken to balance demand and supply.

2.0

Given this scenario, most interviewees conveyed their belief that water management strategies in India were followed on an ad hoc basis – without any clear objectives or coherent plan that kept in mind optimum water efficiency.

Negative Natural Positive Notably, respondents who were key decision makers, government employees or policy experts displayed a clear awareness of the high priority for water challenges for the country, and conceded that the gap between knowledge and implementation existed because of a lack of political will. The highest degree of criticism with regard to water management therefore came from within the government sector itself. The project is, perhaps, the first attempt in India to record stakeholders’ perceptions towards water. But, do perceptions or attitudes towards the

Interestingly, the research also revealed water shortages and scarcity as conditions created by domestic mismanagement, rather than actions of upstream countries, a conclusion that could significantly lower the threat perception induced by India among its neighbours and have a transformative impact on transboundary relationships in the region. According to the report, respondents commonly voiced the view that the water management methods need to be reshaped in a holistic way, by viewing water as intrinsic to food security,

www.indiawaterreview.in

Special Report

energy security, economic growth and social equality. Such a view of water would ensure that it receives immediate primacy in policymaking and no longer be seen as an abstract resource. It was also felt that this would also create better coordination between ministries connected to water, such as those of power, forest and agriculture and thereby strengthen water governance. Water pricing and privatization On the rather ticklish issue of water pricing, following on from the debate on water conservation, an overwhelming number of respondents felt that allowing water pricing and market mechanisms to operate in the sector would be the most effective way of ensuring responsible use of water. Most commonly, it was believed that maximum wastage of water occurs in the agricultural sector, where water-intensive crops and irrigation subsidies for farmers have led to wanton use of water at very low prices. There was a consensus that water supply distribution in India needs a higher degree of reform and water prices need to be equitable. In the current scenario, it was agreed, the poor pay disproportionately high prices for water while the wealthy get continuous supply at a price, that compared to their income, was relatively low; this was seen as unfair, and differential pricing was seen as the best way to meet the water needs of the poor while also encouraging judicious use of water among the elite. However, the benefits of water pricing were not weighed against the underlying implications of turning water into an economic good or its impact on the inequitable access, by majority of the respondents. The common thinking was that the moment water became an economic good, people’s attitude towards it would become less wasteful and the market forces would ensure that water supply meets demand. Most respondents were also comfortable with the idea of the entry of private players to handle the water delivery system, as stipulated in the National Water Policy 2012, if this ensured continuous supply. Surprisingly, a large majority also displayed keenness for private players to handle the service delivery of water to households, particularly in urban areas. The implications of deeming water as an economic good for a developing country like India were not deeply explored by those who subscribed to this view.

www.indiawaterreview.in

The report, co-authored by Samir Saran, Sonali Mittra and Sarah Hasan, recommends India should: Devise a strong water-management approach •

Focus on better coordination between relevant ministries dealing with water management, such as Ministry of Power, Ministry of Environmentand Forests (MoEF), and Ministry of Agriculture in order to tackle water governance in a multi pronged way.

•

Emphasize the food-water-energy nexus to ensure a holistic approach to water.

Increase water efficiency •

Encourage agricultural practices that are water efficient via means such as pricing and incentivize the usage of less water intensive crops.

•

Promote cost-efficient irrigation technologies and invest in technologies for wastewater reuse to boost supply.

Consolidate water conservation measures •

Water pricing be administered as a way of curbing wastage of water. This would also foster the idea of water as a finite resource and an economic good, which is an effective, long term method of promoting water conservation.

•

Stringent water audits for industries to strengthen pre-existing environmental conservation laws

Mainstream gender concerns in water management •

Recognizing that water collection is usually carried out by women, improve the access to water in rural areas by ensuring better transport, roads and last mile connectivity.

•

Enhance legal, decision-making capacity of women with regards to resource planning in rural areas. Integrate gender perspectives into the planning, implementation and evaluation of all nation-wide policies and practices related to water management.

Follow a bottoms-up approach to water management •

Community participation must be strengthened, especially when it comes to micro-conservation techniques that are effective but not scalable. Their implementation requires community initiatives that can support mainstream government efforts.

•

Laws related to water and its conservation be made available in local languages to facilitate greater local involvement.

Improve quality and accessibility of data •

Integrated and multidisciplinary data be made available, in order to assess water issues not alongside with broader questions of socioeconomic contexts, livelihood dependence, agriculture, land, ecology, effects of industrial expansion and climate change.

•

Supply data, which would entail proper metering records; basin data on rivulets, smaller rivers and data on industrial consumption be facilitated.

Modify methods of trans-boundary watersharing •

Statist control over policy processes and negotiations in transboundary water dealings be reduced, to include the interests of multiple stakeholders from both sides of the border.

•

The river basin, not the state, be made the center of water negotiations and collaborations on shared water management interests such as watershed management be facilitated.

July 2014

Case Study

Leading in biological wastewater & gas treatment With more than 50 years of experience, Paques has developed into one of the world’s leading companies for anaerobic wastewater treatment. Constantly challenging itself and developing innovative technologies, Paques has become a total solution provider for wastewater treatment in numerous industries and municipalities. With already more than 1,800 installations worldwide, now we are also bringing our experience to the Indian market. Wastewater challenges Most industries that use water in their production process face the same problems: high fresh water intake, high energy cost, high discharge cost, etc. And the list doesn’t stop there. Today, companies need to explain themselves for excessive use of resources and they need to convince the matured consumers that their products are sustainable. This makes wastewater treatment an important issue. Not only must a wastewater treatment system clean the water, but it must also produce biogas which can be used for the production of energy. Besides that, the system should also recover valuable nutrients and metals from the water. These byproducts can be used or sold. The water for its part must be clean to a point where it can be reused in the production process. The advanced integrated solutions of Paques can do all of this, all steps combined in one treatment plant, all provided by one experienced and reliable technology provider. Case study – Sugar factory Paques has built many of these energy production plants all over the world. Take for example this sugar factory in the Netherlands. The challenge here was to treat the highly concentrated wash water from the sugar beets processing plant. A flexible solution was needed with a positive energy balance of the wastewater installation. Paques built two highly effective anaerobic BIOPAQ®IC reactors. They easily handle the seasonal changes in wastewater flow resulting from the process cycle. Biogas is produced from the wastewater as a source of green energy. The plant now produces 8.3 MW of primary energy and the water is reused in the production process. “There are no odor emissions and the challenge of achieving a positive energy balance is met with ease. The installation has delivered an exceptional performance since it was started up in 2009” says Peter van Leeningen, Chief Commercial Officer of Paques, the Netherlands. Total solution provider Examples of the combination of several Paques technologies in one project can be found all over the world. Since the beginning of its activities Paques has been working together with dedicated partners, universities and water associations. By sharing and extending its knowledge Paques has become a total solution provider for the wastewater industry. The close cooperation with the client always leads to the best solution of the specific wastewater issue. Whether it is one product or an integrated solution, Paques always guarantees for the best quality and a reliable system.

July 2014