Bangalore citizens to pay for water supply layout

KUIDFC to try out novel idea

The Karnataka Urban Infrastructure Development and Finance Corporation will do a first of its kind in the state by involving citizens in asset formation for an upcoming project.

KUIDFC has taken up the Rs 340 crore water project in eight municipalities around Bangalore and Rs 120 crore, around 35 per cent of the project cost, is expected to come from the citizens who reside or plan to reside in these municipalities.

These eight municipalities are Bommanahalli, Byatarayanapura, Dasarahalli, Krishnarajapuram, Mahadevapura, Rajarajeshwarinagar, Yelahanka and Kengeri.

KUIDFC is also planing to raise Rs 100 crore by issuing bonds to commercial banks. These bonds have been rated as "AA" by ICRA, the credit rating agency. The US Agency for International Development has guaranteed 50 per cent of the principle amount.

While this is not a government guaranteed bond, the state will intervene only at the last stage to make good the deficit, if any.

The only hurdle to getting started right now is the fact that since budgeting for this project was done nearly a year ago, costs have to be reassessed.

"Various factors like the increase in steel prices are responsible for this cost escalation," V Chandramohan, executive director-finance, KUIDFC, said.

Most of the people living in these areas depend upon borewell water and water tankers, KUIDFC has decided to collect the nearly Rs 120 crore from plot owners seeking piped water connections. Sites with an area of 2,400 sq ft will pay about Rs 10,000 and those above would pay Rs 15,000 for the connection.

KUIDFC's has arrived at a figure of Rs 120 crore by assuming that a minimum of 50 per cent of the households will pay upfront.

KUIDFC will soon sign an memorandum of understanding with Janaagraha, a well know non-government organisation, which will help set up citizens committees and help in communicating to the residents of these areas on the benefits of this approach.

KUIDFC expects recovery to come from the revenue surpluses of the urban local bodies which will levy water charges. The corporation is also organising an upfront collateral of Rs 25.5 crore which will be equally shared by the central and state governments.

The project is being undertaken under the Pooled Finance Scheme and KUIDFC will set up Karnataka Water and Sanitation Pool Fund Trust which will collect the money. KUIDFC will move ahead only after it receives a minimum of 60 per cent of the amount to be collected from the citizens.

The project will be executed by the Bangalore Water Supply and Sewerage Board has been directed to float tenders only after this amount is collected from the citizens.

"We are also planning to privatise the maintenance and operations of the waterworks of this project after it has been completed. The project will take 18 months to complete," added Chandramohan.