Whose water?

By R K Srinivasan
Published: Tuesday 31 January 2006

-- The Water Business, Corporations Versus People Ann-Christin Sjolander Holland Zed Books London and New York 2005

In 1989, uk's prime minister Margaret Thatcher privatised water supplies in her country; in the next 10 years, new water companies raked in 10 billion (us $4 billion) as profits from the uk alone. Water utilities in other countries were also sucked into the riptide of privatisation. Today, private water companies reach about 335 million people: a more than 65 per cent increase from the 51 billion consumers they catered to in 1990. Two transnationals, Veolia Water Company and Suez, control around 80 per cent of the private water business; two others, Thames Water and Saurs control about 17 per cent.

What are the implications of this oligopoly? In The Water Business, Corporations Versus People , Ann Christin Sjolander Holland argues that water today has become a tradable commodity -- from a freely available natural good. She also takes issues with the pundits who argue that this development has been accompanied by improvements in supplies. As an example, Sjolander Holland notes that after water utilities were privatised in the uk, an inspector was no longer at hand to attend to leakages in supplies. The consumers had to make do without this service after 1989, even though their water bills rose by almost 55 per cent.

Who is to blame? Hollander incriminates developed country governments and global financial institutions such as the World Bank and the International Monetary Fund for pushing privatisation of water utilities down the throats of under-prepared developing country authorities. But hers is not mere rant. The evidence is quite telling. For example, the World Bank's data -- 84 of the 276 loans granted by it for water projects between 1990 and 2002 had privatisation as a pre-condition -- belies the Bank's oft-repeated contention that it does not impose privatisation as a pre-condition for loans. Recently, the Bank forced the cash-strapped government of Niger to privatise its water utilities. Similarly in Jakarta, Indonesia and Manila, Phillipines, water utilities were handed over to private companies following conditions set by the World Bank.

No less complicit are governments of developed countries. In 2003, for example, uk's ambassador to Indonesia bullied the country's government into allowing Thames Water to increase Jakarta's water fares by 20 per cent. The Turkish government was also browbeaten by the same company into shelling out us $387.

Regulatory authorities and civil servants in developing countries are too ill equipped to stand up against such machinations. Sjolander Holland laments that lawyers employed by municipal authorities are no match to the well-paid attorneys of the transnationals. Moreover, bribery and forgery have become rampant. The book notes how a private company won a contract for water utilities in Buenos Aires, Argentina, by bribing the city's councillors with free tickets to World Cup football matches.

The way out Privatisation has not gone unchallenged: the water giants have been forced to eat humble pie in Bolivia, Argentina, Ghana and South Africa. But this has only made the water transnationals to move over to new countries in Asia, Europe and North America.

So what's the way out? Sjolander Holland feels that public sector will continue to run most of the world's water utilities. But the author also argues that the this sector cannot continue to operate in the way it does today. She advocates 'public-public' partnerships so that utilities in the developing world can learn from each other's experiences. In fact, such partnerships have already become a success in Recife municipality in Brazil and Faisalabad, Pakistan. In an interview with the author, Belinda U Calaguas of the international ngo Water Aid advances another alternative: "Adroit use of local financing, household investments, taxes and grant aids".

The book contains extensive references. It will be useful for all those interested in the ramifications of water privatisation.

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