Outsourcing the operation and maintenance of the water supply system via a performance-based contract in Navi Mumbai has resulted in an 80% reduction in complaints on water pressure and quality, and a perceptible increase in revenues of the Navi Mumbai Municipal Corporation




Lying on the eastern seaboard of Thane Creek, Navi Mumbai, the twin city of Mumbai, is one of the largest planned cities in the world. Navi Mumbai is spread over parts of two districts of Maharashtra – Thane and Raigad. The total area of the city is 344 sq. km., of which 108.6 sq km is under the jurisdiction of the Navi Mumbai Municipal Corporation (NMMC). It has a population of around 12 million (source: nomination submitted by NMMC), with a growth rate of 82% during 1991–2001. The main economic activities are industry, commerce, IT, services, and fishing & farming in some areas. The city is emerging as the knowledge hub of the region.
The NMMC took over the water-supply system from the City and Industrial Development Corporation (CIDCO) on November 1st, 1999. NMMC had limited manpower for carrying out operation and maintenance (O&M) work of water supply. Managing the O&M posed an administrative and technical challenge for NMMC. This is because each of the various components of O&M were outsourced to a different agency / contractor viz. electrical, piping, pumps and valves, tanks and chambers, water-supply operations, water-supply connections, billing and recovery, processing and bill preparation. This made coordination and quality supervision difficult. As a result, there were frequent breakdowns of systems. Further, there was inadequate interfacing with customers, there was no system for communication, and there was a poor mechanism for registering and redressal of complaints.
In order to find a solution to these challenges and improve efficiency of operation and maintenance, the NMMC decided to outsource the O&M of the entire water-supply system to a single contractor through a comprehensive performance based contract. An expert committee was appointed to study all aspects of the O&M works. Water supply districts were defined and an inventory of each district was prepared. The expert committee set benchmarks for the O&M. Scope of work, bonus and penalty clauses were defined for a performance-based O&M contract. A provision of penalty was made for improper, inadequate and negligent performance, and there were incentives for excellent performance. General and special conditions of the contract were also defined.

The contractor was made responsible for the management of various tasks like water and energy audits; regular and preventive maintenance of civil, mechanical, electrical and distribution works; coordination with all authorities viz., MJP, CIDCO, MIDC, MSEDCL; registering of consumer complaints; meter reading and distribution of bills and notices; leak management; detection of illegal connections; operation of the system; maintenance of residual chlorine content; distribution of water to the citizens, and maintenance of pumping machinery and electrical equipment.
NMMC integrated all functions related to O&M in a single contract. Having a single contractor responsible for all O&M Functions reduced administrative transactions significantly, and improved monitoring of O&M activities. NMMC officers now have adequate time to focus on strategic and long term activities like contingency planning, introduction of 24X7 water supply planning, and MIS.
The performance based single O&M contract has proven to be economical and more effective. The visible benefits are :

• The annual revenue increased from Rs. 44 to Rs. 55 crores on attaining 88% bill collection efficiency, and through savings from the reduction in water wastage, illegal connections, water theft, power bills, breakdown of electrical component and mechanical machinery.
• The maintenance costs of motors and pumps went down by 35%.
• There was an 80% reduction in complaints relating to water pressure with efficient and sustainable service being provided to the consumer.
• Complaints relating to water-quality were reduced to almost nil, attributable to the introduction of daily water-quality monitoring system.
• The billing system is fully computerised for full accounting and bill recovery, which has also reduced paperwork.
• The NMMC also observes that improved quality of water has reduced incidences of water-borne diseases.

Effective monitoring of the contractor responsible for O&M of the entire water-supply system has resulted in better revenues and efficiency. The NMMC is now able to focus on strategic improvements for the sustainability of the project.

For further details, contact:

Mr. Vijay Nahata, IAS
Municipal Commissioner
Navi Mumbai Municipal Corporation
Belapur Bhavan, 1st Floor, CBD
Belapur, Navi Mumbai, Thane – 400 614