The World Bank's (the Bank) loan to the Delhi state government to support a water project which would ensure round-the-clock water supply seems drenched in a variety of questions. Lack of transparency in the functioning of a leading multilateral organization, favouritism for specific private sector firms, and inadequate homework done by the Delhi Jal Board (DJB) are only a few of the issues soaking the venture.

In a recent letter addressed to the Chief Minister of Delhi, a group of NGOs and individuals under the banner of a 'Right to Water Campaign' demanded that the Delhi government withdraw the loan application for this project. The group, with Madhu Bhaduri as Convenor, has come together to create awareness amongst Delhiites about the negative impacts of this project. Their founding belief is that water is a natural right of every living being including humans and the private multi-national companies cannot be given control over water to earn profits, as is being proposed under this project.

Initiated by the Delhi-based NGO Parivartan -- that readers will know from earlier reports -- the campaign has participants from a cross section of society, including the NGOs Kabir and Sivana, as well as the Resident Welfare Associations of Rajinder Nagar, Rohini and South Delhi. Also, even though the activists are calling their initiative a "campaign', it is not time-bound to the water project in question. The group plans to stretch its work beyond putting an end to this project to address systemic reforms in water supply.

After a detailed presentation in August by campaign members, Chief Minister Sheila Dixit appeared concerned about the adverse impacts of this project (steep rise in tariffs, water inaccessibility to the poor, no guarantee of improvement in services or of constant water supply etc.) Moreover, citizens of Delhi would also have to bear the brunt of salaries of a total of about USD 25,000 per month which have been recommended for the employees of the concerned water distribution companies. This is merely one instance of additional recurring costs.

Despite assurances from the Chief Minister that the project would be put on hold, the process would be made transparent and nothing would happen without public consultations, a contrary reality emerged. This caused the controversy. The DJB seems to be simply implementing the 'orders' of the World Bank. In the process of providing this loan to Delhi Government for its water sector reforms, the Bank is intervening at every stage – deciding the Terms of Reference of every contract, deciding the eligibility and selection criteria for bidders and then apparently forcing the DJB to subvert and manipulate the process of award of contracts in the interest of the Bank's favourite players.

Records obtained by the Parivartan under the Right to Information (RTI) Act indicate that the World Bank arbitrarily intervened in the award of a consultancy contract (to draw up the blueprint of reforms) of Rs 7 crores to favour Price Waterhouse Coopers (PWC) in November 2001. PWC lost thrice in the normal bidding but still bagged the contract due to the Bank’s interference despite strong protests from DJB officials.

According to Arvind Kejriwal of Parivartan, the Bank’s interference is not limited to ensuring that its favorite firms get the contracts. “They are setting the entire agenda of reforms in its minutest details. In effect, the DJB seems to be relegated to the status of secretariat of the World Bank. The nature and extent of this interference is clearly unconstitutional and against all norms of democratic functioning,” says Kejriwal.

The Bank has curiously succeeded in suppressing all protests at the DJB. “By intervening in the drafting of Terms of Reference, eligibility criteria and by intervening in the process of award of contracts, the Bank is pushing for conditions to ensure minimum risks and guaranteed profits for the water companies. And if the DJB officials were to submit so meekly, who would protect the interests of Indian public?” asks Kejriwal.

But what interests of the public are at stake? Previous unacceptable interventions of the Bank in other parts of the world have led to water companies making huge and unjustifiable profits at the expense of local citizens. Water tariffs skyrocketed, water quality deteriorated, water was diverted from residential areas to amusement parks and hotels and supply to the poor was cut off because of unaffordable prices.

The citizens of Delhi are already bearing the burden of the decisions in the power sector which was privatised in a non-transparent and non-consultative manner. According to Parivartan, after three years of privatisation, promises of better availability of power and better services morphed into a steep hike in tariffs, deteriorating services and worsening power availability.

The roots of the present water project go back to 1998 when the DJB approached the Bank for a loan. The Bank suggested that they hire a consultant to suggest basic reforms to be carried out by the DJB for which the Bank offered the DJB a loan of $2.5 million. Accordingly, DJB invited expressions of interest to which 35 consultants applied and 6 were to be short-listed. An evaluation committee, comprising senior officials of DJB, ranked each company on the basis of the World Bank guidelines. PWC, one of the bidders, was ranked a low 10th. According to the Bank’s guidelines, one of the short-listed companies should be from a developing country. This provision was misused to bail PWC out – bringing PWC up from the tenth to sixth position. PWC was treated as an Indian company because the branch of PWC which had applied, is incorporated in India.

Technical and financial proposals were invited from the six short listed companies. PWC failed the evaluation of these proposals. It is here that the Bank displayed its interests in PWC, demanded an explanation from the DJB regarding the low marks secured by PWC. The Bank not only raised objections to the criteria and sub-criteria used by the evaluation committee but also prescribed new sub-criteria and directed DJB to cancel this evaluation and do a re-evaluation. Quite unprecedented – changing the sub-criteria after the bids had been opened!

When the Bank insisted that this was not the first time they were interfering in this manner, DJB passed a resolution (No 514, Item No 531) stating that “the Board was of the view that the World Bank be requested to reconsider their position on revising the sub-criteria, failing which fresh bids should be called on the basis of newly introduced sub-criteria.”

The DJB, the State Government and the Central Government finally revealed their helplessness before the World Bank and a new evaluation committee was formed with the approval of the Bank. Once again, PWC failed to get pass marks and the Bank was again dissatisfied. This time around, the Bank went to the extent of asking the DJB to recast the scores, to which the latter complied and PWC scraped through.

As for the consultants who topped the evaluations, Binnie Black and Veatch (UK) topped in the pre-qualification bid stage while Deloitte (USA) qualified the technical bid stage. Since both these bids were called off by the Bank, the third bidding was held in which the firm M Watson (UK) made it to the top.

PWC, in its analysis, proposed privatisation of water supply by roping in private water distribution companies. For the entire project, the Delhi government applied for a World Bank loan of $150 million.

What is all this worth? The project is supposed to ensure 24 hours water availability. A closer scrutiny of facts indicates that even this basic aim might remain unfulfilled. Each water distribution company would enter into a bulk water supply agreement with DJB separately for each zone. DJB would be obliged to supply certain quantity of water at the input of each zone. The water company would provide 24/7 water only if DJB supplied this water, failing which, the company would be under no obligation to ensure it 24/7. There is a deficit of almost 150 MGD of water in Delhi today.

Also, at the end of the day, the World Bank is advancing $150 million, spread over a period of six years at a commercial rate of interest. It comes to a little over Rs 100 crores per annum. This appears insignificant considering that Delhi government has a surplus budget. But there are questions without obvious answers. What are the compulsions of the Delhi government?

Unclear motives of the government in applying for the loan, possible hiccoughs in 24/7 water supply even after the project is through, and questionable discrepancies in the style of working of a multilateral as weighty as the World Bank – the project seems flooded with controversy.

Parivartan makes a reasonable demand: that the flawed, non-consultative processes be scrapped and the procedure be restarted with full participation of the citizens of Delhi – the real beneficiaries of the Delhi Water Project. The NGO also holds a tough line saying that the expenses incurred in the process so far should not be repaid to the Bank by the Delhi or Central Government since the flaws have come in due to the Bank's unacceptable interference.

The bottom-line is perhaps as muddy as it ought to have been obvious – that the priority in executing any such project should be the interfacing of the government and the citizens towards meeting their needs – and this should easily wash away hidden or commercial interests of both multilateral and private actors.