Sans approvals, 24/7 water supply in Chandigarh still a pipe dream

Published on Oct 08, 2021 03:02 AM IST

Chandigarh MC has not taken in-principal approvals from the Centre for the 24 hour water supply project; it may end up missing the October 15 deadline for signing of the memorandum of understanding with a French firm for the project.

Chandigarh MC officials, in May this year, had even announced the timeline for the project, stating that the agreement will be signed in August or September, tenders floated by October-end and work on the project will start by February 2022. (AFP)
Chandigarh MC officials, in May this year, had even announced the timeline for the project, stating that the agreement will be signed in August or September, tenders floated by October-end and work on the project will start by February 2022. (AFP)
By, Chandigarh

City residents will have to wait more for 24/7 water supply as the project’s commencement itself is set to get delayed by at least three to six more months.

With the requisite Union government approvals still not in place, the municipal corporation (MC) will miss the October 15 deadline for signing of the memorandum of understanding (MOU) with the French firm, Agence Française de Développement (AFD).

After October 15, the AFD can revise the rate of interest to be charged on the loan amount, making it more expensive for the city and consequently raising the cost of the project. MC can end up re-negotiating the interest rates.

Confirming the development, UT adviser Dharam Pal, said, “MC will not be able to sign the agreement with the AFD by October 15. It will take another few months.”

A senior MC official pegged the delay at three months to six months.

The project to supply water to Chandigarh residents 24/7 is set to cost ₹591 crore in all.
The project to supply water to Chandigarh residents 24/7 is set to cost ₹591 crore in all.

The fact that the MC hasn’t taken all the requisite approvals came to light during the two-day visit of MC commissioner Anindita Mitra to the Ministry of Home Affairs (MHA) this week. The adviser held a meeting with Mitra here on Thursday. Mitra briefed the adviser on her MHA visit and the status of the project.

Notably, MC officials had earlier claimed that requisite approvals were in place.

MC officials, in May this year, had even announced the timeline for the project, stating that agreement would be signed in August/September, tenders floated by October-end and work on the project to start by February 2022. Officials had declared that by December this year, AFD would release 43 crore while EU would release around 9 crore as the first installment for the project.

The AFD is to provide 413 crore to the project in the form of a loan, which is to be repaid in 15 years. In addition to it, the European Union (EU) is also giving a grant of 98 crore to the project.

But before the grant is released, the AFD has to sign “Credit Facility Agreement” (CFA) with the Department of Economic Affairs (DEA) of the Union ministry of finance. Thereafter, a MoU will be signed between the MC and the donor agencies.

MC yet to take MHA “in principle” approval

An MC official who didn’t want to be named said, “The MC is still to take the “in-principle” approval of the Ministry of Home Affairs (MHA) and the nod of the standing finance committee (SFC) of the Ministry of Finance. Without both, DEA of will not come on board and sign the CFA with the AFD.”

“MC has not submitted the requisite papers for the process to begin,” said the official.

“The MC officials are still to assess whether the union government will consider the project worth 6,000 crore incorporating the operations and maintenance costs over its 20-year period or just 591 crore, the construction cost,” said the official.

Taking a serious note of MC officials’ earlier laxity on the issue, Pal, said, “I am going to monitor it very aggressively. Commissioner will also take it up on priority basis. This project is very important for the city. I have directed the MC to complete the paperwork as quickly as possible so that necessary approvals of the MHA and the DEA are taken.”

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Tuesday, October 04, 2022
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