Just came across a very interesting write-up on water tanker industry in Mumbai. Do go thru it, will surely be an eye opener in many aspects.

Mumbai is a city that never sleeps. Even then, the night time traffic is less weary and the roads are quieter after midnight, save for night shift BPO workers, or intrepid late night vada-paav chasers. Into this relatively tranquil scene, after the last BEST bus has gone to sleep in its depot, comes to life a creature of Mumbai’s nights. This is a vehicular specie that prowls the streets mostly at nights, and slips silently in and out of housing societies and buildings, or narrow lanes in slum clusters.

When it makes its periodic stops, a huge rubbery tentacle comes out from its belly and feeds into a typically concrete box, or a large plastic or PVC container. This nocturnal wanderer is called the water tanker. (Maybe in the northwest suburban areas of Mira Road and Bhayander it can be spotted in broad daylight too.)

The water tanker is a big beast and typically carries 12000 litres of water, refilling thirsty receptacles in its nightly rounds. Maharshtra has a vision of becoming a tanker-free state. Tankers are supposed to be only an emergency response to deliver drinking water during droughts. But even in water rich Mumbai city, and as early as January (not the parched month of May), tankers roam freely. Mumbai’s relatively abundant water supply piped in from reservoirs and dams 100 kilometres away, has rendered many distant villages totally dry. This includes the regions around the upper Vaitarna basin or Bhatsa. And yet we cannot do without the tankers. So what is the economics of the water tanker business?

As per the BMC, the greater Mumbai metropolitan area requires about four billion litres of water every day. Only three fourth of this amount is supplied. For a region with close to 20 million inhabitants, this still amounts to an availability of 150 litres per man, woman and child. Even then, there’s a shortage, and BMC claims that 50 million litres is supplied by tankers. (Maybe this is to make up for leakage, pilferage and evaporation losses.)

In these inflationary times, the price of a water tanker has rocketed. The pricing is also finely tuned, and responds nicely to people’s willingness to pay, and perceived needs. Thus Nariman Point and Pedder Road pay Rs 1000 per truck whereas Chembur pays 800. (These tankerwallas with their selling savvy and market segmentation can teach a trick or two to their MBA brethren sellers of soaps and toothpastes.) At an average price of say, Rs 500 per truck, the estimated total sale of tanker water is more than Rs 25 lakh per day. That is close to a Rs 100 crore per year. That’s as per BMC estimates. The actual number must be higher.

Of course we don’t know whether these water truck companies are paying VAT, octroi or any other taxes, or whether their numbers are filed with the registrar of companies. The average cost for BMC of providing water supply to the city is more than eight rupees per kilolitre, aggregating to a water budget of a thousand crore rupees annually. That implies that one tenth the water in the city is catered by an informal market. (In Chennai this number is 20 per cent, among the highest in India.)

The water companies’ cost of production is much lower. If they are sucking water out of community wells, or tube wells or plain old baavadis, the cost is only electricity and diesel for the trucks. That’s why it’s a profitable business. Maybe some of these water carriers should list on the stock exchange! After all with the kind of population growth expected, and the higher willingness to pay of most Mumbaikars, the growth in demand for tanker water is assured – thanks also to delays in implementation in the mega water schemes of Ulhas and Vaitarna basins.

Mumbai’s population grew at 2.8 percent per year in the past decade. This growth was much faster in the suburbs, where the tanker business thrives. And many of Mumbai’s residents have already simulated a 24/7 water supply situation in their houses. How? Borewells in the society, overhead storage tanks on the terrace or inside the flat, booster pumps on BMC taps, and of course – the water tankers to feed all this. So expect the tanker economy to boom in the coming years.

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