Public private partnerships (PPP) in water supply projects had their first application to the urban water sector in India nearly 230 years ago! Fort St. George was the first settlement of the East India Company (EIC) in South India. It was already growing in size in the mid-1700s, but by this time the Anglo-French war spread to India. It was estimated that water supply for the Fort’s garrison needed to be assured for six months (the maximum period of any siege) at the rate of two quarts per person per day. The supply then was only one-ninth of what was necessary.
The wells in the Fort could not provide clean drinking water entirely, though the water from several wells was potable. The problem was that Madras was surrounded on the landward side by the Cooum River, which intercepted any flow of potable subsoil water towards the town. The Fort and town itself had no potable ground water.
Into this situation entered Captain George Baker, who had knowledge of local conditions, technology and venture capital. In 1771 he made a proposal to supply water to Fort St. George and Madras. He offered to supply water and to maintain storage for supply of three quarts of water per person per day for 3,000 persons, to last three months. He proposed to eliminate the arduous task of moving the water in casks on carts and instead bring it through a pipeline to the town and Fort.
He proposed a fixed price contract at two thousand pagodas per year over a 15-year period. He also wanted the right to charge separately for water supplied to other consumers. Finally, it was agreed to increase the quantity supplied to maintain 6,000 men for four months and also increase the payment by 20 per cent and the contract tenure to 25 years.
Captain Baker commenced operations. The lead for the pipes did not arrive in Madras till May 1771, but Baker promised to have the supply line completed in two months, which he did.
The old cisterns were filled and Baker urged the government to construct the new ones so that he could complete his undertaking. The provision of storage facilities would plague the Company for years thereafter and would be completed only in 1782. In 1776 it was decided that the terms of Baker’s monopoly should begin only after the reservoirs were built, and in the meanwhile, he would “enjoy the interim advantages of his contract”.
The capacity of cisterns available was sufficient for 6,000 men — for only one month, at that. It was proposed to construct two open cisterns, but the Select Committee ordered that at the first instance the repair of the old cisterns be attempted. Baker complained in 1780 that the whole system was inadequate for the fulfillment of his contract.
He claimed that while the cistern in Nabob’s Bastion had held water for the last seven years, the bomb-shelters in the same locality, which the EIC had tried to convert to cisterns, leaked so much that there was little real storage. Eventually, in mid-1779, the Select Committee also approved compensation for any private property that may be needed for the new works.
The next year — 1781 — Baker complained that the pipeline was being affected by the activities of the population (largely native) living above and around it. While for a period of the first seven years there had been no problem, he reported that the locals were digging pits, cess pools, all kinds of sinks and wells in front of their houses, either for lodging dirt, or for letting foul and dirty water drain out of their homes and yards. In the loose and sandy soil this had the effect of destroying the pipeline, which was made of iron, by cracking the joints of the pipes.
Nonetheless, in early 1782 Baker reported that he was able to complete his contract by making available to the Fort 2,160 tons of water for 6,000 men for four months. He also reported that he had since stored a further 1,080 tons over and above his commitment — a total amount that would be sufficient for six months.
By 1782 Baker’s energy was exhausted. He had earlier offered to sell out to the EIC in 1777, 1778, 1780 (twice) and 1781. Baker claimed that the project cost him “ten thousand Pagodas more than I can expect to refund myself by my Contract...”
The 1782 offer was for a consideration of 30,000 pagodas on a bond of the EIC payable in England at the end of two years at an exchange rate of 8 shillings per pagoda, at an interest rate five per cent per annum (payable annually), plus an annuity for life of 500 pounds sterling. Considering that he was contractually entitled to receive a monthly fee of 200 pagodas, apart from income on whatever water he sold to others, this was an attractive deal for Baker.
The Company however accepted the offer of 30,000 pagodas as the purchase price in bonds, payable to Baker in London after two years, and 5,169 pagodas as arrears due to him — but not the annuity. This brought the first public private partnership in India to an end. Build, Own, Operate and Transfer was completed.
