World Bank Approves $100 Million for Urban Water Supply Modernization in Karnataka, India

March 31, 2016

Continuous, piped water supply to one million residents in Hubballi-Dharwad, including to 160,000 slum-dwellers

WASHINGTON, March 31, 2016 - The World Bank will support the efforts of Hubballi-Dharwad, the second largest urban centre in Karnataka, to become one of the first Indian cities to provide citywide, continuous, piped water supply to its residents. 

The $100 million Karnataka Urban Water Supply Modernization Project (KUWSMP), approved today by the World Bank Board, will help bring clean water to one million citizens of Hubballi-Dharwad, including 160,000 people who live in slums and currently depend upon public standposts or private vendors for water. The Project will finance physical investments in the water supply system for the twin cities, and support city authorities in strengthening systems and procedures required to sustainably close the current water service delivery gaps. 

“No major city in fast-urbanizing India provides its residents with continuous piped water supply, a situation that particularly affects the poor, women and children, who spend time and money to secure water for their basic needs,” says Onno Ruhl, World Bank Country Director for India. “The Government of Karnataka and the city authorities of Hubballi-Dharwad are trying to change this reality. The World Bank is pleased to support their efforts to ensure that all the citizens of the twin cities, including the poor who usually remain under-served in most urban areas, have access to clean water in their homes.” 

Most Indian towns and cities supply water intermittently. According to the Ministry of Urban Development, only 50 percent of consumers in most cities have household connections to the pipe system, while the poor are typically not connected at all, and have to pay significantly higher prices to purchase water from private vendors.  Women and children bear the cost of coping with intermittent supply by spending time collecting water from public standposts or waiting hours for water to become available. 

The Government of Karnataka has acknowledged this challenge and has undertaken significant efforts to improve urban water service levels in select cities, most recently through a World Bank-supported pilot project which provided continuous water supply to about 230,000 people in select wards of the cities of Belagavi, Kalaburagi and Hubballi-Dharwad.  The government now intends to scale up this level of service delivery to the entire city of Hubballi-Dharwad, the second largest city of Karnataka. 

Under the KUWSMP, the Hubballi Dharwad Municipal Corporation will hire a professional water supply operating company to help make the necessary improvements to its water supply system, and to manage the refurbished system through a 12-year contract in accordance with strict performance criteria. The municipality will retain ownership of the water supply assets and control of the service delivery set up.  The Project will help the Hubballi-Dharwad Municipal Corporation set up a city-level water utility that will take over water supply operations from the professional operating company at the end of its contract period. 

The municipality will control tariff-setting in accordance with guidelines laid down by the state Government of Karnataka, which include provisions to ensure that the water tariff for lifeline consumption (up to 8KL) is kept at levels that poorer households can afford.  The Project will also ensure that poorer households are able to avail of the improved services by subsidizing household-level water connections.

“The Government of Karnataka has laid down strict contractual provisions to hold the operating company accountable for improving levels of service to customers, whilst at the same time providing incentives to ensure that the improvements are achieved and sustained in the most cost-effective manner and do not strain the city’s finances,” said Bill Kingdom, Lead Water and Sanitation Specialist and the project’s task team leader for the World Bank.  “In parallel, the Project will help the city of Hubballi-Dharwad establish institutions and financing mechanisms that will support sustainability of water services to the city in the long term.”  

The loan, from the International Bank for Reconstruction and Development (IBRD), has a 5-year grace period, and a maturity of 24 years.

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