Chennai: Plan panel frowns at desalination expense

C Shivakumar
Mar 17, 2012 at 11:59am IST

CHENNAI: The desalination plants in Chennai are capital intensive and expensive and will force Metro Water to rethink its future finances, says a report of the Working Group on Urban and Industrial Water Supply and Sanitation for the 12th Five Year Plan.
   Two major desalination projects, at Nemelli and Minjur, had been started during the previous DMK regime.  The report stated that high capital and operation and maintenance of desalination plants in Minjur and Nemelli would require the utility to rethink its future finances.
“The Tamil Nadu Government has committed that it will pay for the cost difference. But all this does mean that utilities will continue to have to depend on external funding for their viability,” the report added.
While the foundation stone of the Nemelli plant was laid on February 23, 2010, the one for the Minjur plant was laid on July 31, 2010.
The report said that often city governments bid for more and more expensive pieces of hardware, without any idea of how this investment would be sustained. Interestingly, the government is currently buying 90 MLD of water a day from the Minjur desalination plant at an average cost of `48.66 per KL (4.8 paise per litre of water) for the next 25 years that includes water capacity charges (the cost for the facilities they have provided) as well as water variables (cost of treatment, manpower and chemicals).
The second plant at Nemmelli, also of 100 MLD, is being built by a private company and with a different arrangement.
The contract is to build the plant and to operate it for the next seven years. The water board will own the plant and capital investment has been paid through Central subsidy.
This will underwrite the costs of the delivered water at roughly Rs 20/KL, said the report. But the big issue is what these two capital-intensive and expensive plants will do to the sustainability of the city’s water board.
“Chennai MetroWater is an efficient water utility with balanced books —more than many others. But the high capital and operation and maintenance will require the utility to rethink its future finances,” the report added.

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