Collection Efficiency

Innovative billing practices help ULBs in revenue management

At present, most urban local bodies (ULBs) in India lack a proper mechanism for levying appropriate user charges for water supply and sewerage services. Poor billing and collection practices have prevented them from recovering sufficient costs to operate and maintain infrastructure facilities and provide adequate services to customers.

Generally, water supply and sewerage taxes are charged as a fixed percentage of the total property tax. At some places, a flat fee is charged irrespective of the volume consumed. As a result, user charges in most cities are inadequate and recover only a part of the cost of service provision. This lower revenue collection hurts the creditworthiness of many municipal agencies, affecting their bankability and ability to tap the financial markets. Low cost recoveries and poor efficiency in collecting charges are mainly a result of sparse metering coverage, faulty meters, incorrect bills, the absence of proper customer records, lack of capacity, high extent of non-revenue water (NRW), high number of defaulters, and the unwillingness of customers to pay for ULB services.

Some cities are now taking initiatives to improve their revenue collection and management services. Innovative billing practices like online bill payments, SMS bill payments and spot billing services have been introduced for recovering water supply charges, property tax, etc.

Smart Utilities reviews the revenue management solutions (RMSs) adopted by some of the country’s leading ULBs.

Experience so far

In general, an effective billing system has a cycle as per which customers are billed on a monthly basis. It is based on a volumetric structure so that billing is done for actual consumption. However, in India, billing practices are based on a variety of different pricing mechanisms (flat-rate tariff, property tax-based tariff, volumetric tariff or a combination of flat and volumetric tariffs) with different billing cycles (bi-monthly, monthly, quarterly or yearly). Volumetric tariffs are often not effective because of inaccurate or faulty meters, forcing ULBs to charge a minimum flat rate irrespective of the volume of water consumed.

Prior to the launch of the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), initiatives to fully recover operations and maintenance (O&M) costs from user charges for water supply had been negligible. With the JNNURM, the Ministry of Urban Development made it mandatory for all mission cities to levy rational charges for water supply to recover the full O&M costs incurred in providing services. During 2005-2014, about 17 per cent of cities achieved 100 per cent cost recovery in this regard. The majority of the ULBs that have implemented this reform have seen an increase in their claimed bills and collections.

Over the past five to seven years, ULBs have started taking initiatives to improve revenue generation for water supply and sewerage services. Some like the Delhi Jal Board (DJB) have launched an RMS to provide a wide range of value-added services, including online applications for new water or sewerage connections, bill details, payment services, the registration of mutation requests and grievances, SMS alerts and payment receipts. ULBs in Bengaluru, Delhi, Patna, Surat and Navi Mumbai have launched mobile applications where citizens can pay water bills and lodge complaints, saving time and reducing the need for in-house systems and staff for collection.

Innovative billing and collection practices of ULBs

  • The Hyderabad Metropolitan Water Supply and Sewerage Board (HMWSSB) introduced a spot billing and collection mechanism for paying bills in 2009, equipping meter reading staff with automated meter reading machines for issuing bills and collecting payments on the spot. These machines are fully integrated with the board’s central server and allow revenue collection information to be monitored and reviewed online. Transactions carried out via hand-held terminals are sent to the server using GSM or GPRS technology.

As a result, revenue collection has increased from around Rs 240 million per month to Rs 300 million per month. In addition, there are cost savings of around Rs 200,000 per month due to the elimination of the Rs 5 per transaction charge paid to third-party collection agencies like e-Seva and AP Online. Subsequently, the board has introduced facilities for online bill payments, SMS bill payments, and bill monitoring.

  • DJB launched the first phase of its RMS project in 2012, with the primary objective of replacing the manual billing process with advanced digitised metering, billing and bill collection. The software application for the system is being developed by Tata Consultancy Services, along with a data centre for collating information on outstanding bills, payment receipts, consumer complaints, etc.

The civic agency is also set to launch a new mobile application called m-sewa, which will help consumers upload meter readings and generate monthly bills. They can input their latest meter readings along with a photograph of the meter, following which the water bill will be generated. The application will also enable online payments, including credit and debit card transactions.

  • The Pimpri Chinchwad Municipal Corporation (PCMC) has started collecting property tax and water charges online as part of its e-governance system. Using this, consumers can generate property and water bills online by providing details like zone, name, register number, consumer number or property tax number, address, bill number, etc.

PCMC has appointed a private agency to get water readings and issue bills. Meter readers visit houses and take pictures of meters to maintain a record of readings and other details provided to the civic agency. The agency delivers monthly water bills to citizens along with photographs of the meter readings. Consumers can pay property and water bills through credit cards, debit cards or net banking services. Different service charges apply for these payment modes.

The online system captures and stores an audit trail of payment records (chronological record of bill payments) since it is directly linked to PCMC’s bank account. It is also capable of generating reports stating the paid amount and outstanding bills, along with pending and received amounts. Citizens also have the option of verifying and correcting billing amounts on the spot. They can lodge complaints online or through the SMS-based application and get the correction done in the PCMC database. This also helps PCMC receive bill payments on time.

For customers who do not have internet access, PCMC has set up five pay point centres at different locations in the city. Here, consumers can pay property tax and water bills and avail of other online services.

  • The Bangalore Water Supply and Sewerage Board (BWSSB) has implemented the Bengaluru Ganakeekrutha Grahakara Seve (BGGS), a revenue billing and financial accounting system that is managed by 26 sub-division offices through a well-connected LAN. The National Informatics Centre was responsible for the project’s development and implementation.

BGGS offers services like pre-fixed reading days for water meters, the monitoring of abnormal consumption patterns, and the generation of bills with detailed demand structures and historical payment records. These bills are secured by a barcode and a media access control address. Data is taken from kiosks, BangaloreOne systems and cash counters, and then transmitted to the head office. It is then accessed by the respective subdivisions through structured query language merge replication technology. Single bills with multiple payments and multiple bills with single payment options are also provided at these centres. Over 90 payment collection kiosks have been installed at cash counters and strategic locations to help citizens pay their water bills. To improve transparency, BWSSB has integrated a new workflow-based water connection module and started spot billing services. These initiatives have increased customer interface and improved bill collection.

BWSSB is also planning to introduce a net-banking facility on its website to enable customers to pay water supply and sewerage charges online. It is also considering gateway charges and penalties for delayed payments.

  • In January 2015, the Navi Mumbai Municipal Corporation launched a mobile application with the objective of improving revenue collection. This application provides access to information like pending bill payments, previous bill details and late fee payments. It also allows consumers to pay water bills through net banking, which is available for 41 banks. The civic agency has also introduced an online bill payment facility on its website.

Conclusion

Given the high cost of providing potable water, combined with the increasing quantity of NRW owing to leakage and theft, large-scale initiatives for improving revenue collection are expected to be taken up. Innovative billing and metering systems are likely to be introduced to improve collection efficiency and recover O&M costs as many ULBs strive towards round-the-clock water supply. In the long run, the revenue growth resulting from these initiatives is expected to strengthen municipal finances, besides enabling the effective delivery of services. It will also encourage other utilities to undertake similar initiatives for improving their financial performance.

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