Special Correspondent

CMCs may incur debts to fund the project

  • Total cost of the project likely to exceed Rs. 850 crore
  • CMCs may not have enough funds for civic amenities

    Bangalore: The Greater Bangalore Water Supply and Sanitation Project (GBWASP) may result in centralising the decision-making and control while decentralising the debt burden. The city municipal councils (CMCs) served by the project may have to incur debts to finance their part of the funding and pass it on to consumers in the form of increased tariff.

    This may happen even if the seven CMCs and one Town Municipal Council are merged under Greater Bangalore. A disturbing feature is that while the CMCs incur debts to fund the water supply, they may have fewer funds left for providing civic amenities to the residents. The urban poor in "non-notified slums" may be left out of the picture altogether.

    Because the project was developed with little public consultation or disclosure of information, GBWASP appointed citizens' representative Janaagraha, walked out of the project in February this year. Now both Bangalore Water Supply and Sewerage Board and Karnataka Urban Infrastructure Development Finance Corporation control the project design and operation. Elected members of the CMCs have had no part and their role has been left unclear.

    A study by CASUMM (Collaborative for Advancement of Study of Urbanism through Mixed Media) shows the total cost, with overruns still on, may exceed Rs. 850 crore. The water supply component of Rs. 450 crore will be financed by a combination of grants (Rs 74.8 crore), loans of Rs. 46.8 crore, municipal bonds of Rs. 100 crore, and beneficiary citizen contribution (BCC) of Rs. 119.44 crore, based on 50 per cent of citizens signing up.

    The project debt may well force CMCs to cut back on other routine works, according to CASUMM's Vinay Baindur, who was actively involved in the study. These urban local bodies are expected to serve the debts before incurring any other expenses. "The project relies on a steady increase in property taxes for debt servicing. This may not materialise even if land value goes up under Greater Bangalore entity, since property tax cannot exceed 50 per of the market value under a legislation," he points out. The result will be the CMCs cutting down on expenses related to road repairs and street lighting.