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" "$" ""!""!$ ") Strategic Roadmap for Institutional Restructure of Urban Water and Sewerage Services in Orissa Indo-US Financial Institutions Reform and Expansion Project September 2006 Contents Acknowledgements............................................................................................................... 6 Acronyms ................................................................................................................................ 7 Executive Summary............................................................................................................... 9 Section 1 ................................................................................................................................ 15 1.1 Introduction ........................................................................................................................15 1.2 Objectives of the Study........................................................................................................15 1.3 Study Methodology .............................................................................................................15 1.4 Aim of the Report ................................................................................................................15 Section 2 ................................................................................................................................ 16 2.1 Urbanisation in Orissa........................................................................................................16 Chart 1 Population Growth Trend .........................................................................................16 2.2 Class I Towns (100,000 & above)........................................................................................19 2.3 Class II Towns (50,000-99,999)..........................................................................................20 2.4 Class III Towns (20,000-49,999).........................................................................................20 Section 3 ................................................................................................................................ 22 3.1 Urban Water and Sewerage Sector in Orissa......................................................................22 3.2 Status of Water Services as per PHEO ...............................................................................25 3.3 Sewerage and Sanitation Services .......................................................................................26 3.4 Institutional Framework in Orissa......................................................................................27 Section 4 ................................................................................................................................ 29 4.1 Public Health Engineering Organisation ...........................................................................29 4.2 Financial Review .................................................................................................................29 4.3 Operations, Maintenance and Management.......................................................................30 4.4 Income from Water Charges................................................................................................31 4.5 Water Tariffs .......................................................................................................................33 4.6 Investments Proposed during 2006-2013 ...........................................................................34 4.7 Organisation Review...........................................................................................................35 Section 5 ................................................................................................................................ 37 5.1 Orissa Water Supply and Sewerage Board .........................................................................37 5.2 Financial Review .................................................................................................................38 5.3 Organisational Review........................................................................................................40 Section 6 ................................................................................................................................ 42 6.1 Urban Water Sector Policy Framework ..............................................................................42 6.2 Water under Indian Constitution .......................................................................................42 6.3 UN Resolution 1977 ...........................................................................................................42 6.4 The Millennium Development Goals ..................................................................................42 6.5 10th Five Year Plan..............................................................................................................43 6.6 National Water Policy.........................................................................................................43 6.7 Orissa State Water Resources Policy ..................................................................................44 6.8 JN National Urban Renewal Mission .................................................................................46 6.8.1 Mandatory reforms .........................................................................................................46 6.9 Orissa Municipal Corporation Act .....................................................................................46 6.10 Orissa Municipal Act 1950.................................................................................................47 6.11 Policy Framework for Urban Drinking Water in Orissa ....................................................47 Section 7 ................................................................................................................................ 49 7.1 Urban Water Sector in India - Institutional Framework ....................................................49 7.2 Water Sector Reform in India..............................................................................................50 7.3 Reform Initiatives in Other States ......................................................................................51 Chart 11 Urban Water Institutional Structure in Karnataka......................................................53 Section 8 ................................................................................................................................ 55 8.1 Summary of Water Services in Orissa ................................................................................55 8.2 Strategic Road Map for Orissa............................................................................................55 8.3 Criteria for Selecting an Appropriate Management Structure ...........................................56 8.3.1 Operational Autonomy ...................................................................................................56 8.3.2 Responsiveness to Consumers........................................................................................57 8.3.3 Efficiency .......................................................................................................................57 8.3.4 Commercial Viability .....................................................................................................57 8.3.5 Capacity to Grow and Transform ...................................................................................57 8.3.6 Ability to Manage Staff ..................................................................................................57 8.3.7 Flexibility to Meet Growth Requirements ......................................................................57 8.3.8 Ability to Manage within Justifiable Budgets ................................................................58 8.3.9 Synchronise with the Administration Boundaries ..........................................................58 8.4 Options for Management Structures ..................................................................................58 8.5 Option A - Integrated Municipal Management (IMM) .....................................................59 8.5.1 Strengths of Integrated Municipal Management.............................................................60 8.5.2 Weaknesses of Integrated Municipal Management ........................................................60 8.6 Option B – Dedicated Municipal Management (DMM)....................................................61 8.6.1 Additional Strengths of Dedicated Municipal Management...........................................62 8.7 Option C - Municipal Water Board ....................................................................................62 8.7.1 Strengths of the Municipal Water Board ........................................................................63 8.7.2 Weaknesses of the Municipal Water Board....................................................................64 8.8 Option D – Regional Water Corporation............................................................................64