From: Bob Olsen <[EMAIL PROTECTED]>
Date: Sat, 12 May 2001 16:24:33 -0400
To: [EMAIL PROTECTED]
Subject: Municipal water threatened by privatization
Municipal water systems around the world
are threatened by privatization and GATS.
Date: Sun, 13 May 2001 02:38:04 +1200
From: Jim Gladwin <[EMAIL PROTECTED]>
From: "Anna Weekes" <[EMAIL PROTECTED]>
Subject: Press Statement: Shocking new research on Joburg's French private
water company!
Date: Thu, 3 May 2001 11:33:24 +0200
SAMWU Press Statement
Thursday 3rd May 2001
Shocking new research on Joburg's private water company!
The South African Municipal Workers Union (Samwu) has been shocked by the
results of a Municipal Services Project study of the private water and
sanitation concession in Buenos Aires, Argentina. This is the first major
English-language study of the concession conducted outside of the World Bank
Group since the concession began in 1993.
The research on Buenos Aires is particularly relevant to the citizens of
Johannesburg. The major shareholder in the Buenos Aires consortium is Suez
Lyonnaise des Eaux, a large French multinational involved in the
Johannesburg water privatisation which has also been actively pursuing
contracts in other South African cities. Buenos Aires is also one of the
largest water concessions in the world - servicing a population of 10
million people - and has been hailed as a success story internationally.
There have been at least two trips to Buenos Aires by South African policy
makers and bureaucrats study the privatisation as a model for South African
municipalities. Some of these trips have been paid for by the French
government, with the result that councillors and other bureaucrats have
given extremely positive but erroneous evaluations of the concession,
arguing that it has been "remarkably successful" in turning around a
"potentially disastrous situation".
The Municipal Services Project reveals, however, that the Buenos Aires
privatisation has been a major failure.
Accountability and Transparency
One of the core arguments made in favour of privatizing municipal services
is that it generates better public accountability. The experience of the
water concession in Buenos Aires, however, has been just the opposite. The
privatisation started with a Presidential Decree in 1989 which unilaterally
declared that the city's water and sanitation would be run by the private
sector. This announcement was made after the declaration of an "economic
state of emergency" and under pressure from international financial
institutions. All decisions about the privatization in these sectors were
made behind closed doors with no public debate on the matter. Even the
independent regulator set up to monitor the activities of the private
company was marginalized by both the firm and national government, with the
latter intervening on several occasions to overrule decisions made by the
regulator. Rather than becoming more accountable to the public, Aguas
Argentinas has entrenched a process of secretive negotiating practices and
has made no effort to open itself to public scrutiny.
Unfortunately, the Johannesburg Metro Council seems to have followed the
company's lead. The process of privatising the city's water to
Suez-Lyonnaise was very secretive and nobody got a chance to comment on or
influence the proceedings. Although the Council is bound by the Municipal
Systems Act to open all of its committees to the public, and offers up the
full records of all meetings, it has refused to do this and is now facing
legal action from at least one newspaper demanding full public access.
Efficiency
A second argument made in favour of privatization is that private companies
are more efficient than the public sector, thereby reducing costs to the
end user and freeing up resources for the state that can be used for other
development needs. The water concession in Buenos Aires has done the
opposite.
The cost of water has increased by 20 percent in real terms from price
hikes and surcharges. In the run-up to privatisation, the government
artificially inflated prices in order to make the private company look more
eficient. The current president of Argentina, Fernando de la Rua (speaking
in March 1999 when he was Mayor of Buenos Aires) said: "Water rates, which
Aguas Argentinas said would be reduced by 27% have actually risen a total of
20%". These price increases, and the costs of service extension, have been
borne disproportionately by the urban poor. Non-payment rates for water and
sanitation are as high as 30 percent, and service cut-offs are common with
women and children bearing the brunt with health and safety consequences.
Environmental disaster
Sewerage infrastructure development has not kept pace with water delivery
expansion. Water delivery is twice as profitable for the company as sewage
treatment. The company reneged on its contractual obligation to build a new
sewage treatment plant. As a result, over 95% of the city's sewage is
dumped directly into the Rio del Plata river. Households with new water
services are often forced to dump their sewage into makeshift septic tanks,
cesspools or directly onto streets and open fields. The groundwater
equilibrium has been destabilized and basements have begun to flood.
Buildings and pavements are sinking, and water borne diseases are a constant
concern. Poorest households that are most negatively affected.
Massive waste of public money
The costs of this lack of sewerage investment in terms of environment
sustainability, public health and safety, and urban equity in Buenos Aires
certainly bring into question the argument that the private company is more
'efficient' than the former public provider. The arguments that private
companies are able to generate more capital than the public sector have
been proven wrong here. The bulk of the capital used for infrastructure
development and new connections in Buenos Aires water and sanitation have
come from surcharges to end-users and international financial institutions -
financing options that could have been available to the public sector.
Meanwhile, Aguas Argentinas has been making record profits in Buenos Aires:
up to twice the international average and up to three times what water
companies make in the UK on average.
Undoubtedly, the public sector would not have messed up their own city as
much as this private company has done. Residents of Buenos Aires have been
unable to voice their concerns due to the lack of participatory mechanisms -
something which is compulsory in South Africa through the Municipal Systems
Act. A massive amount of public money is going to be needed to clean up the
environmental disaster in Buenos Aires.
The Municipal Services Project's research shows quite clearly that
Suez-Lyonnaise has succeeded in exacerbating the worst socio-economic and
environmental problems of the city. The company seems bent on doing the same
in Johannesburg. Although the ANC has promised a free amount of water to
all citizens, there is no indication from the company about how they will
provide this. Instead, the company was recently touting around research
agencies to investigate how citizens in pockets of Johannesburg's townships
could get water installed as part of pilot project testing. This does not
indicate that the company is serious about providing all Johannesburg
residents with water, but rather that it is much more concerned about only
providing the service where people are able to be reliably contributing
to their profit margins on a regular basis. It is only a matter of months
before the rest of Johannesburg starts getting much higher water bills.
SAMWU is completely vindicated in our demand that the Unicity should deliver
water directly as the public sector provider. Suez-Lyonnaise must be removed
from Johannesburg immediately for not disclosing their bad practices during
the bidding. The union is not prepared to sit back and allow the residents
of Johannesburg to endure the same suffering as people have been forced into
in Buenos Aires. SAMWU demands an urgent meeting with the Johannesburg
Unicity Council to discuss the Buenos Aires research report, impending water
tariff increases in Johannesburg, and the Council's implementation plan for
the free water.
./ends
For comment, please contact
- SAMWU General Secretary Roger Ronnie on 082 2006799
- Municipal Services Project Director Dr David McDonald on 083 4688545
For a copy of the full research report, e-mail [EMAIL PROTECTED]
or call Anna on 083 7141899
......... ......... ......... .........
Bob Olsen adds that an analysis of GATS (General Agreement
on Trade in Services), was published 2 April, 2001 by the
International Branch, Ministry of Employment and Investment,
Government of British Columbia. It discusses the "exercise
of governmental authority" at all levels of government.
It can be found at......
http://www.ei.gov.bc.ca/Trade&Export/FTAA-WTO/governmentalauth.htm
..........................................
Bob Olsen, Toronto [EMAIL PROTECTED]
Power concedes nothing without a demand.
It never did and it never will.
- Frederic Douglass
..........................................
_________________________________________________
KOMINFORM
P.O. Box 66
00841 Helsinki
Phone +358-40-7177941
Fax +358-9-7591081
http://www.kominf.pp.fi
General class struggle news:
[EMAIL PROTECTED]
subscribe mails to: [EMAIL PROTECTED]
Geopolitical news:
[EMAIL PROTECTED]
subscribe: [EMAIL PROTECTED]
__________________________________________________
