NMC loss in water supply Rs70cr, OCW profit Rs8.23cr

Nagpur: From a profit of Rs3 crore per annum in 2010-11 from drinking water supply, Nagpur Municipal Corporation (NMC) is today facing financial loss of around Rs70 crore for 2018-19. At the same time, the profit after tax of NMC’s private water operator Orange City Water Private Limited (OCW) has increased to Rs8.23 crore in 2018-19.
NMC data shows the payments made to OCW were increased for the seventh time in January.This has come to fore as NMC’s special purpose vehicle — Nagpur Environmental Services Limited (NESL) — started reconciliation of payments made to OCW in 2019-20.
Mayor Sandip Joshi, who is also NESL chairman, did not respond to TOI’s calls.
A NMC official told TOI, “OCW’s rate was Rs12.01 per unit of water supplied in 2018-19 and revised to Rs13.926 per unit. The revision is as per the agreement, which provides for increase in payment with rise in wholesale price index and consumer price index by the central government.”
OCW’s payment was Rs109.59 crore in 2018-19 and increased to Rs137.24 crore. Since 2012-13, the payment has increased by 75%.
NMC’s budget shows the expenditure of the civic body on drinking water supply is over Rs210 crore and revenue was Rs140 crore in 2018-19. As per data obtained under RTI Act by NCP state vice-president Vedprakash Arya in the past, NMC earned a profit of Rs3 crore in 2010-11 from water supply.
OCW was engaged from March 1, 2012. Despite the water tariff being Rs5 per unit, NMC had approved payment at the rate of Rs7.90 per unit to OCW in 2012. Thus, NMC started to incur financial loss immediately. Now, the loss has increased to over Rs70 crore per annum.
As per the financial statements submitted by OCW to the Ministry of Corporate Affairs, the operator had faced loss of Rs6.49 crore in 2013-14. The loss had decreased to Rs1.81 crore in 2014-15. Since 2016-17, the operator is registering profits, Rs4.73 crore in 2016-17, Rs6.03 crore in 2017-18 and Rs8.23 crore in 2018-19. The operator is yet to upload documents of 2019-20 with MCA.
Since OCW got the contract, this is the first time its financial statements have come to fore.
Some days ago, Arya had lodged a complaint with home minister Anil Deshmukh demanding an inquiry into OCW’s payments. He had claimed NMC had gone from earning Rs3 crore per annum profit to loss of Rs600 crore since OCW was roped in. Accordingly, Deshmukh had forwarded the complaint to municipal commissioner Tukaram Mundhe for necessary inquiry and action.
In 2019-20, NMC had approved one time settlement (OTS) scheme for OCW in which the cash-strapped civic body incurred a loss of Rs374 crore. NMC had even disbursed Rs73 crore of OTS to OCW even though the revised agreement was yet to be signed. NMC is also approving payment and bills to OCW without any third party checks for last 16-17 months.