Unable to collect Rs 1,500 crore in arrears, Kerala Water Authority reels under financial crisis

The cash-strapped Kerala Water Authority (KWA) struggles to meet its daily expenses and relies on the state government's non-plan grant to run its offices. This despite the fact that the organisation is sitting on a huge treasure that its management is averse to dig out.

Consider this. The authority has to get a whopping Rs 1488.59 crore in arrears from the consumers till January 2021. This is approximately the amount earmarked in the recent state budget to provide COVID-19 vaccination to all aged above 18 and to purchase allied equipment for Covid management.

The arrears are mounting every month. The KWA has 29 divisions across the state and each division has to collect arrears above Rs one crore, according to sources in the authority. This indicates KWA’s inefficiency in settling the arrears.

The Public Health Division of Thiruvananthapuram (North) tops the defaulters’ list with Rs 157.28 crore, while the Medical College Hospital in Thiruvananthapuram has to pay Rs 92.12 crore in arrears. Among private institutions in Thiruvananthapuram, Vallakkadavu Jamaat (Rs 5.9 crore) and Beemapally Jamaat (Rs 5.8 crore and Rs 5.4 crore) are the major defaulters.

Forty-eight government institutions and 42 private institutions have to pay dues between Rs 1 crore and Rs 5 crore. 8,208 government institutions and 13,51,611 private companies have to pay less than Rs one crore in arrears.

KWA officials cannot blame COVID-19 for the financial crisis as the arrears till March 2020 - when the state came under pandemic threat - was Rs 1243.19 crore.

Inefficiency

While KWA spends Rs 23.89 for production of one kilo litre of water, it gets only Rs 10.48 from the consumer. If one splits the Rs 23.89 required for production of one kilo litre of water, Rs 14.38 goes for salary, pension and related expenses, Rs 5.41 for power, Rs 1.36 for maintenance, Rs 0.22 for purchase of chemicals, Rs 2.26 due to wear and tear and 0.26 for other office expenses.

This huge gap could be bridged either by increasing the water tariff or by commissioning more income generating projects. Water tariff was last revised in 2014. Though the minimum price of one kilo litre water is Rs 4, attempts to revise tariffs have always faced opposition from political parties for fear of public backlash.

So the focus naturally shifts to commissioning of income-generating projects. However, KWA performs an abysmal show here too. As many as 2,537 projects have been stuck in various stages. Of these, 356 projects alone would be worth Rs 7,438.35 crore. KWA could resolve a major part of its losses through commissioning of these projects.

Improper planning appears to be the main reason for the delay in executing the projects. For example, KWA had got administrative sanction for an ambitious 120-million per day-capacity water supply scheme at Neyyar in 2017. The project would have ended Thiruvananthapuram city's dependency on Peppara as the only source of potable water. However, the KWA realised that there was a dispute over the land after awarding the project. Finally, KWA shifted the project site, but it couldn't find a successful contractor even after inviting several tenders. As per KWA's estimate, the project could have generated Rs 12.57 lakh per day in revenue through distribution of 120 million litre water. The annual loss due to the delay in commissioning the project is estimated to be 45.90 crore.

Last year, the Water Resources Department took the decision to hand over KWA's bottling water project to Kerala Irrigation Infrastructure Development Corporation, citing delay in project execution and KWA's inefficiency.

Dependency

The KWA now owes Kerala State Electricity Board Rs 670.65 crore in arrears for power consumption.

As the authority couldn't pay power bills, the state government intervened several times in the past to reduce the burden. For instance, in 2008, the state government reduced the bill from Rs 700.84 crore to Rs 250 crore, which KWA paid after securing a bank loan. In addition to this, the government took over the power bills of Rs 500 crore in 2015-16 and Rs 1,326.69 crore in 2018-19.

KWA's major source for all its expenses is the non-plan grant allotted by the state government. In the past one decade, the state government provided Rs 2,649.98 crore as non-plan grant alone.

In the meantime, the KWA also lost Rs 202.12 crore, the last instalment of the central government share for the Jal Jeevan Mission because of the delay in submitting the bills.

Transparency

KWA's accounts wing and internal audit section resumed functioning last year after a long gap. The post of accounts member, who is responsible for taking crucial financial decisions, remained vacant for over seven years before appointment was made in 2020. The audits of 2015-16 and 2016-17 were recently submitted to the Accountant General’s office while those for remaining years are under preparation. The post became vacant again in May when accounts member V Ramasubramani retired from the service.

(Jisha Surya is an independent journalist based in Thiruvananthapuram.)