The Hindu 21.08.2010
Mounting expenditure, marginal rise in income worry Metrowater
T. Ramakrishnan
CHENNAI: Marginal rise in income through sale of water, growing expenditure and the resultant cash deficit are becoming matters of deep concern to Chennai Metrowater.
The 32-year-old organisation posted cash deficit during 2009-2010 [for which final figures are not yet out as auditing is on].
Conscious of Metrowater's financial condition, the State government has allowed it to defer loan repayment since 2006. The total amount of principal and interest outstanding is around Rs.550 crore.
Implementation of the new pay structure for employees and pensioners, bonus payment and non-revision of water tariff are among the reasons cited for the present financial condition of Metrowater. In view of the average supply of 650 million litres a day (MLD) since July 2007, operating expenses are also on the rise.
In 2009-2010, income through sale of water was around Rs.250 crore. It is going up by about Rs.15 crore annually, senior officials say.
Even though the overall picture is not rosy, Metrowater is required to take up new projects to cater for the increasing requirements of the people of the city and suburbs. Capital works to the tune of Rs.1,400 crore are being executed.
Every year, 10,000 to 13,000 water connections are added. However, income through the addition of connections and infrastructure development charges (IDC) are considered “other income,” which is regarded as a component of capital income.
Metrowater has also been collecting IDC in the cases of special buildings and multi-storeyed buildings if, on verification, owners of such buildings are found not have paid the IDC to Chennai Metropolitan Development Authority.
Last year, Metrowater netted Rs.50 crore of ‘other income.' For the current year, the target is Rs.75 crore. It is using this money for various projects.
For domestic consumers, the tariff was last revised in October 1998 and for commercial establishments, in January 2003, officials recall.
On the perceptible rise in revenue and expenditure during 2007-2008, the officials attribute it to a host of factors. That year, Chennai Corporation carried out intense verification of property. As a result, Metrowater got Rs.56 crore towards remittances of water and sewer taxes.
The same year, Metrowater, on its part, conducted a drive in which it found that 51,000 assessees of property tax were not paying water charges despite having connections. This fetched about Rs.21.4 crore. Owing to an accounting procedure – reversal of moratorium interest – the water agency showed Rs.30 crore towards income.
However, in 2007-2008, Metrowater showed about Rs.100 crore more towards expenditure as it had to provide for depreciation of assets that were not taken into account earlier. Since 2009-2010, Metrowater started implementing the new pay structure.
The officials explain that for the current year, the State government has provided Rs.100 crore for purchasing water from the recently-commissioned Minjur desalination plant, which is being operated by the Chennai Water Desalination Limited (CWDL). This amount has been reflected both as income and expenditure.
On an average, Metrowater will have to pay Rs.15 crore a month to the CWDL for the purchase of water from the desalination plant, the officials say, adding that work for another 100-MLD desalination plant at Nemmeli is on schedule.
