The need for an effective and wastewater management in India is critical given its rising demands and sharply dwindling sources of freshwater. The government set-up has clearly been inadequate in this respect. The Centre’s own data shows that more than 70% of the wastewater remains untreated. Even with the under-construction STPs, this gap will not close.
Since we cannot reduce the population or wastewater generation, it is time to look for other innovative wastewater treatment solutions. One of these is the involvement of the private sector in the sewage treatment plants in India. The private sector brings in much needed capital, expertise and organisational efficiency to the problem.
Such a partnership is not without precedent, of course. One of the reasons for private partnership is the largely positive outcome of such ventures in India. Where the government institutions still suffer due to lack of commitment, official apathy, crippling bureaucracy and corruption, private companies have brought in a more efficient system of working.
We have already seen such partnerships in other public utilities’ management, such as power and water supply. Private partnership in wastewater management also has plenty of examples in countries like the USA. In fact, we can device multiple ways for private partnership — from management to plant installation.
Seeking private partnership
Private players in this field are not exactly new. There are plenty of contenders in manufacturers dealing in sewage treatment plants in India. These manufacturers are using state-of-the-art technology in treating wastewater. Many of them have completely localised solution for sewage treatment, making it both effective and affordable.
However, we now need a well though out policy to involve private players. We need a multi-layered approach where we can have private partnership at different levels, according to requirement. Some of the options in public-private partnerships or PPPs are:
End-user PPP: Here the end user is also the private operator. It could be a company/industry/business or a community, such as a village, colony or town. This ensures that the end user remains invested in the operation of the STP. Such operations are usually small-scale, since it would be difficult to involve a big population in the day-to-day running of a plant. Decisions are usually taken by a representative body.
Annuity PPP: Here a third party (the private player) is hired by the government for whole or part of the wastewater management. This could involve all or any one of the following: collection, setting up of sewage treatment plant, running the operation or dispersal of the treated wastewater. In return the government body pays an annuity to the private operator.
User charge PPP: Here too the government body hires the private operator to run the sewage treatment operation. However, the operator charges the end user for its services. The revenue covers its investment, operation and management costs as well as provides for a reasonable profit.
DBO model: In the Design, Build, Operate Model, the government and private operators come together for a temporary period to bring in immediate solutions or improvements. The government body invests the costs, while the private operator brings technological and managerial expertise for a period of 5 to 10 years. Here the government has a financial liability, while the private player has operational liabilities.
Of these models, the end-user PPP works the best in sewage treatment plants in India because the end-users are themselves involved in the project. However, this is hard to implement on a large-scale. Of the other models, the DBO model has also proved successful. Here the government and the private both have a stake in the success of the operation.
As in any such partnership, we also have certain risk factors that can derail the project. The biggest risk are to do with compensation or revenue models.
- Failure by the government to pay the agreed amount to the private operator.
- Unreasonable tariffs charged by the private operator.
- Biased decision making by the government body.
- Rigid contracts that limit the operational efficiency.
- Poor quality of municipal sewage, coupled with the wrong application.
Given India’s mounting deficit in wastewater management, private partnership in sewage treatment plants in India has become essential. Private players can provide operational, managerial and technical expertise.