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of communal toilets that have been set up both by local government and by NGOs. The latter also operate these facilities on a ‘user pays’ principle. In Bangalore, the corporate sector has also participated in the improvement of urban management and subsidized entry fees as practiced in the watsan sector in Bangalore. In the case of Bangalore, the Bangalore Water Supply and Sewerage Board (BWSSB) completely subsidizes the access charges for the urban poor and is moving towards individual facilities in the case of water supply. The consumption charges remain the same for all users in the city. An overview of some creative financial activities in the watsan sector is given in the following table.

Table 8 Failed private sector participation efforts in Bangalore

BOT Project for Cauvery Bulk Water Supply. Initiated in 1997 and abandoned.

ROT (Rehabilitation-Operate-Transfer) of existing system. Initiated in 1997 and abandoned.

BOT for two sewage treatment plants (two separate projects). Initiated in 1997 and abandoned.

However, Bangalore has been able to issue bonds to finance the necessary investments.

Good accounting increases the transparency. Hence the population, the councilors, the donors and the ADB all want to see better accounting. That is exactly the reason why so many initiatives have already been taken. TCS-IHS (2000) has detailed the procedures for Karnataka. The Institute of Chartered Accountants of India (ICAI) plays a crucial role in working out the details and sanctioning the proposals. Also there is a need for involving regula­tors at different levels of government.

Direct access to financial markets will be applicable only for large cities in Karnataka. Small and medium cities will need to pool their issues to attract capital and reduce the transaction costs. Satyanarayana (2003) suggests in these cases that based on the experience of US Municipal Bond Market, USAID and the FIRE project Pooled Finance is interesting. The first pooled deal concerned 14 small cities in Tamil Nadu, with a credit enhancement through a Development Credit Authority (DCA) guarantee from USAID. The second pooled finance deal is expected to take place shortly, providing eight cities in Bangalore Metropolitan Area in Karnataka with a similar type of credit. Meanwhile, the Indian Government is in the process of establishing a Pooled Finance Development Fund at national level to provide support to states for credit enhancement and grants for reforms. The case for a pooled finance framework for also for peri-urban and semi-urban settlements is strong, as demonstrated in Karnataka  and in other states (Tamil Nadu).

Bangalore is considering the involvement of the private sector in the watsan sector, Negotiations for a management contract were initiated in early 2001 for two pilot areas of 1 million people each. The contract covers operation and maintenance to improve the service quality and efficiency. Vivendi and Northumbrian Lyonnaise International have jointly submitted a proposal in 2001. Negotiations followed in 2002, but have collapsed in 2003. The previous Chief Minister kept saying that he would be interested to involve the private sector more and a Leakage detection and reduction for a pilot area was awarded to Thames Water and L&T in April 2003.

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