http://www.atimes.com/atimes/Asian_Economy/GC26Dk01.html
Private sector still running after water rights By Anil Netto PENANG - Selling water rights to private institutions and then having people buy them back again is an issue that rears its ugly head at every World Water Day, which fell on Tuesday. Goaded by international financial institutions and corporate interests, regional governments are pressing ahead with plans for more private participation in water services. And yet all across Asia, water privatization schemes are failing to deliver clean and safe drinking water to communities, despite forcing consumers to pay for a basic human right. "If you look for a water privatization arrangement that works ... I cannot think of any," Manila-based Mary Ann Manahan, a researcher with Focus on the Global South, told Inter Press Service in a telephone interview. In contrast, the sterling performance of some major publicly managed water utilities in Asia has demolished the argument that private-sector participation is the only way to improve efficiency. Cities such as Osaka, Phnom Penh and Penang, where water is publicly managed, have outperformed Jakarta and Manila, two cities with massive privatization arrangements in several key sectors. Osaka, for instance, has a non-revenue water level (NRW) of 7%. This is an indicator of the level of unaccounted water and lost income due to leakages and unpaid bills. An NRW of 7% is a sign of outstanding performance. Phnom Penh records an NRW of 26% and Penang a commendable 19%. In comparison, Jakarta has an NRW of 51% and Manila 62%. The British-owned Thames Water Plc and the French operated Suez-Lyonnaise respectively, operate the largest water privatization schemes in Jakarta and Manila. Public Services International (PSI), based in Britain, which analyzes the privatization and restructuring of public services around the world, revealed in a recent study that Sri Lanka's capital Colombo, where water is publicly managed, has a water-leakage level of only 23% compared to a leakage level of 35% for the city of London, which is covered by Thames Water Plc. "There has been an extremely high failure rate for private concessions and long-term BOT [build-operate-transfer contracts] which may get worse if Suez and Thames leave their contracts in Manila and Jakarta," said the study. And yet, privatization schemes are being pushed with vigor by international financial institutions such as the World Bank and the Asian Development Bank, coupled with lobby groups such as the Global Water Partnership and the World Water Council. Manahan pointed out that the World Bank has increased its lending on water projects from US$546 million in 2002 to $3 billion in 2005. "But there is no clear indication that this has led to cleaner, more affordable water for people on the margins," she said. In addition, the European Union has come up with initiatives in the World Trade Organization to pry open national water services to the big foreign players. Indeed, since the mid-1990s, developing countries have been coaxed to privatize water services through "public-private partnership" or private-sector participation. But many of these schemes in Asia have had disastrous results, leading to soaring water tariffs, unmet targets, and crippling financial losses and debt. Faced with embarrassing results, several Western multinationals that once thirsted for water-privatization projects in Asia have tried to make a quick exit from loss-making or problem-saddled privatization agreements in Asian countries. Instead, they are now restricting themselves only to sure-fire problem-free projects or "safer" markets such as Japan and South Korea. Critics of water privatization complain that it tends to focus on urban consumers, whereas the vast majority of those who most need water live in rural areas. Worse, privatized water operations are diverting water in rural areas to urban centers, said Kuala Lumpur-based economist Charles Santiago, coordinator of Monitoring Sustainability of Globalization. "They do this in two ways: by actually channeling water meant for rural areas into urban areas and by ground-water mining in rural areas [for use in producing] bottled water, which is largely consumed in urban areas," Santiago told IPS. The experience in cities across Asia and elsewhere is that when multinationals enter the scene, or when private participation is introduced, water-tariff rates invariably soar. For instance, in Manila, the government touted water privatization as the solution to a looming water crisis in the Philippines. "They promised there would be no price hikes in water for five years," Manahan pointed out. "But within three years, they filed for tariff increases." Instead of the promised lower rates, Maynilad Water Services, which holds Manila's west zone concession, raised tariffs by as much as 400% between 1997 and 2003. Manila Water Company, the east zone concessionaire, raised water tariffs by 700% in the same period. When Manila's privatized arrangements failed, the eventual "solution" by the Philippine government was "rehabilitation". But Manahan prefers to call a spade a spade. "It's a bailout," she said starkly. Civil society groups now are making their voices heard. In Manila, they have filed a petition in court to oppose the ongoing "rehabilitation", arguing that it is against public interest and would only burden consumers and taxpayers. In Thailand, thousands of workers protested against the government's privatization policy in early 2004 - though the administration of Prime Minister Thaksin Shinawatra has since reiterated its plans to press on with privatization. And in Malaysia, a newly set up Coalition Against Water privatization, made up of 26 civil society groups, is opposing the government's plan to privatize even more publicly owned water utilities in the country. Manahan has her own solution to the dilemma facing many Asian governments. The Focus on the Global South researcher points to the example of Porto Alegre, Brazil. Water services in Porto Alegre were private until 1904, then the city took it over. In the participatory budget process the city people get together in meetings throughout the year and decide where the investments of the Municipal Department of Water and Sanitary Sewage are going to be made. Between 1989 and 1996, the number of households with access to water services rose from 80% to 98%, while the percentage of population served by the municipal sewage system rose from 46% to 85%. "My bias would be to call for a democratization in decision-making on how water should be managed in the community," said Manahan. 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