Just as the name suggests, O&M costs include employee compensation, repair and maintenance costs for buildings, roads and machinery, and other operating costs such as expenditure on office supplies, rent, travel, lighting etc.
The DJB management has often stated with pride that theirs is the only water utility in India that is covering its O&M costs (i.e. their sales are greater than their O&M costs) – a claim that sends me rolling off my chair with laughter every time. Infact, here I go again…..
The DJB does indeed cover its O&M costs, but here’s what management conveniently fails to mention.
Consequently, the way things stand, the DJB is guaranteed to lose Rs 2,500-3000 crore /year on its current account right out of the gate!
Some free advice for the DJB
- Please find an entity worthy of being benchmarked against, like the New York City Water Board for instance.
- And for God’s sake, have some self-respect! This whole ‘the-one-eyed-man-is-king-amongst-the-blind’ logic is beneath even you.
Bottom-line: DJB needs Rs 4,000+ crore/year from the government
While we’ve talked about the DJB’s Current Account Deficit, we haven’t considered its Capex requirements so far.
These would include expenditures on laying new pipelines, water links and sewer lines, building more storage dams, Under Ground Reservoirs (UGR) and pumping stations, expenditure on machinery, equipment and all that good stuff.
As we showed in the Gross Expenditure table earlier in this section, the DJB spent an estimated Rs 1,413 crore on Capex in 2012-13. While we don’t have B/Es for the current year, simply adding the Capex and Current Account Deficit for 2012-13 indicates that as things stand, the DJB will need to borrow Rs 4,000+ crore/year from the government in order to go about its business.
In plain words
The DJB is in BAD shape.
But lets not end on that depressing note, because……
…CONGRATULATIONS are in order! You have successfully completed this section. Your IQ just rose 30 points.
In the next two parts, “Part IV: Whipping the Delhi Jal Board into shape”, we will discuss solutions. We will discuss the first pillar of our multi-pronged approach to managing the water crisis in Delhi.