Pan-city 24x7 water supply project in doldrums as cost triples in 3 yrs

Three years after an agreement was signed with a French agency to provide uninterrupted water supply across the city, the project of the Municipal Corporation faces a bleak future. Against the initial outlay, the project cost has risen three times and is estimated at Rs 1,500 crore, which may put a severe financial burden on the civic body.

Ever since the signing of the agreement in 2022, the project has seen no significant progress. During the MC General House meeting on Tuesday, councillors had rejected the agenda to scrap the pan-city 24x7 water supply project. A pilot project launched in Manimajra has already drawn criticism over unsatisfactory results.

No significant progress

A credit facility agreement (CFA) was signed with Agence Francaise De Developpment (AFD), a French agency, in New Delhi on September 15, 2022, for implementation of the project.

As per the agreement, the project was to be completed by 2027. However, the project has seen no significant progress ever since the pact was signed three years ago.

A pilot project launched in Manimajra has already drawn criticism over unsatisfactory results.

On September 15, 2022, a credit facility agreement (CFA) was signed with Agence Francaise De Developpment (AFD), a French agency, in New Delhi for implementation of the project. As per the agreement, the AFD was to provide Rs 413 crores in the form of a loan, which was to be repaid in 15 years. In addition to it, the European Union promised to give a grant of Rs 98 crore. The project, with the financial outlay of Rs 591 crore, was to be completed by 2027.

Chandigarh Smart City Limited, which was to implement the project, closed its operation in March this year and the project was transferred to the civic body.

Sources said the MC conducted a detailed assessment of the project and highlighted eight critical gaps and financial risks that could severely affect the project’s success. It said additional funding is required to bring 13 villages under the scope of the project. These villages were not included in the venture when the detailed project report (DPR) was made.

Extra funds will be required for restoration of roads after these will be dug up for laying pipelines. Leak detection was reportedly not carried out and additional pipeline may be required over and above 244 km provided in the DPR, which will affect the overall cost of the project. Further, significant cost variation is likely due to changed Euro exchange rate.

The Public Investment Board (PIB) has restricted the final project cost to Rs 576.57 crores with remarks that no additional funds shall be sought for it.

Sources said during the AFD meeting on July 7–8, several concerns and suggestions were discussed with the MC and the Long-Term Technical Assistance (LTTA) firm. To implement the project, the MC had appointed M/s InfraEn India Ltd as the LTTA firm, in joint venture with NJS India Pvt Ltd. It was observed that the existing DPR was outdated and did not reflect the expanded scope of 13 villages.

The AFD informed the MC that any request for additional information or revision will require more than a year. This exceeds the timeline for disbursement for the fund, which is capped at September 2027. The DPR revision will take time and this poses a serious risk to the project continuity.

As per the tentative revised estimate, the replacement of 900 km line, including flow meters, sluice valves, etc, will cost Rs 880 crores, road restoration Rs 100 crores, upgrading water works Rs 200 crores, additional provision for advanced metering infrastructure Rs 270 crores, and SCADA installation and fixing charges Rs 50 crore.