Privatization of water Privatization of water servicesservices

Timeline,

Approaches

and

Issues in Water

privatisation

TimelineTimeline

Privatization of water is as old as the Privatization of water is as old as the BibleBible

Water Systems in Egypt, Mesopotamia, Water Systems in Egypt, Mesopotamia, India, Pakistan, Crete, and Greece India, Pakistan, Crete, and Greece

Dark Ages declineDark Ages decline

Industrial Revolution Industrial Revolution

Major private water utilitiesMajor private water utilities Suez (ONDEO) £33,502Suez (ONDEO) £33,502 RWE AG (Thames) RWE AG (Thames)

£22,992£22,992 Vivendi Vivendi

Environment£13,227Environment£13,227 United Utilities£3,300United Utilities£3,300 Severn Trent£2,517Severn Trent£2,517 Anglian Water Anglian Water

Group£1,502Group£1,502 Kelda£1,391Kelda£1,391

American Water Works American Water Works

Company,Inc. $4,324Company,Inc. $4,324 Philadelphia Suburban Philadelphia Suburban

Corporation$1,531Corporation$1,531 California Water California Water Service Service

Group$359Group$359 American States Water American States Water

Company$367Company$367 Connecticut Water Connecticut Water

Services, Inc. $216Services, Inc. $216 Southwest Water Southwest Water

Company$133Company$133

SOURCE: Schwab Capital Markets LP (2002).SOURCE: Schwab Capital Markets LP (2002).ps :Market Capitalization (in millions)ps :Market Capitalization (in millions)

WATER UTILITY WATER UTILITY PRIVATIZATION AROUND PRIVATIZATION AROUND

THE WORLDTHE WORLD Dublin Declaration (1992) explicitly Dublin Declaration (1992) explicitly referred to the role of the private referred to the role of the private sector. sector.

Growth of the private sector in the water Growth of the private sector in the water market between 1997 to 2010 will be as market between 1997 to 2010 will be as follows (in %): West Europe 20-35, Central follows (in %): West Europe 20-35, Central and Eastern Europe 4-20, North America 5-and Eastern Europe 4-20, North America 5- 15, Latin America 4-60, Africa 3-33 and Asia 15, Latin America 4-60, Africa 3-33 and Asia 1-20. 1-20. 

Private participation toolkitPrivate participation toolkit

millennium development goals millennium development goals World Bank and the two other organizations World Bank and the two other organizations the Public–Private Infrastructure Advisory the Public–Private Infrastructure Advisory Facility and the Bank–Netherlands Water Facility and the Bank–Netherlands Water Partnership came together to organize a Partnership came together to organize a brainstorming of various water experts brainstorming of various water experts through out the world to discuss on private through out the world to discuss on private participation in public water systems.Out of participation in public water systems.Out of this emerged the present tool kit this emerged the present tool kit

Identification of Identification of stakeholdersstakeholders

ConsumersConsumers NGOs and community-based NGOs and community-based

organizationsorganizations WorkersWorkers Private firms and financiersPrivate firms and financiers MediaMedia Alternative providersAlternative providers

Grounds for private players Grounds for private players to workto work

Considering how private participation will affect Considering how private participation will affect customers and other stakeholders and involving them in customers and other stakeholders and involving them in the design of arrangementthe design of arrangement

Working out how tariff might change, according to a Working out how tariff might change, according to a proposed arrangement, for eg. After a currency proposed arrangement, for eg. After a currency devaluation, and considering whether changes would be devaluation, and considering whether changes would be acceptable.acceptable.

Choosing and designing good institutions for monitoring Choosing and designing good institutions for monitoring operator performance, adjusting tariffs, and resolving operator performance, adjusting tariffs, and resolving disputes.disputes.

Ensuring the arrangements are transparent – that the Ensuring the arrangements are transparent – that the contracts are published and operator is selected in an contracts are published and operator is selected in an open processopen process

STAGES In INTRODUCING STAGES In INTRODUCING PRIVATE PARTICIPATIONPRIVATE PARTICIPATION

Developing the policyDeveloping the policy Develop idea on private Develop idea on private

participationparticipation Get information and involve the Get information and involve the

stakeholdersstakeholders Designate reform leader and Designate reform leader and

institutionsinstitutions Decide on market structureDecide on market structure Decide on competitionDecide on competition

Designing the processDesigning the process Set service levels, tariffs & subsidiesSet service levels, tariffs & subsidies

Risk analysis & allocationRisk analysis & allocation

Design contract management & Design contract management & regulatoryregulatory institutionsinstitutions

Create legal & contractual frameworkCreate legal & contractual framework

Create institutionsCreate institutions

Interaction with stakeholdersInteraction with stakeholders

STAGES In INTRODUCING STAGES In INTRODUCING PRIVATE PARTICIPATIONPRIVATE PARTICIPATION

Selecting the operatorSelecting the operator Designate transaction Designate transaction

management management

structurestructure Initial market soundingsInitial market soundings Public notificationPublic notification PrequalificationPrequalification Tender, evaluation & other stepsTender, evaluation & other steps

STAGES In INTRODUCING STAGES In INTRODUCING PRIVATE PARTICIPATIONPRIVATE PARTICIPATION

Managing the arrangementManaging the arrangement Ensure institutions in placeEnsure institutions in place Provide support if necessaryProvide support if necessary Tariff & service review & other Tariff & service review & other

adjustmentsadjustments Re-tendering or other Re-tendering or other

replacement replacement

arrangementsarrangements

STAGES In INTRODUCING STAGES In INTRODUCING PRIVATE PARTICIPATIONPRIVATE PARTICIPATION

CHOOSING LEGAL CHOOSING LEGAL INSTRUMENTSINSTRUMENTS

The legal instrument must:The legal instrument must: Provide a legal basis for the Provide a legal basis for the

transaction transaction and selection of the operator.and selection of the operator. Make the tariff and service standard Make the tariff and service standard

rules rules legally effective.legally effective. Make other commercial aspects of the Make other commercial aspects of the arrangement legally binding.arrangement legally binding. Provide clear and effective dispute Provide clear and effective dispute resolution and enforcement.resolution and enforcement.

issues issues

InIn

Water PrivatisationWater Privatisation

Across the GlobeAcross the Globe

Voices against itVoices against it

Power Politics of WaterPower Politics of WaterWho gets clean water and Who gets clean water and

who doesn’t?who doesn’t?

Gainers Losers

IndustriesSmall farmers & ranchers

Export agriculture Rural communities

Mining Poor in urban slums

Large land owners

Real estate developersWealthy urban consumers

Privatisation of WaterPrivatisation of Water Cure or Disease in itself?Cure or Disease in itself?

Profit driven corporate objectives are at odds with the needs of the public

Rates hike usually follow privatisation

Wealthy customers get better service

Local community needs and objectives are overridden

Water Conservation efforts suffer

State to private monopoly

Checklist of PerformanceChecklist of PerformanceReality checkReality check

Efficiency ... ? Eg. Nelspruit, S.AfricaEfficiency ... ? Eg. Nelspruit, S.Africa

Reduced cost...? Eg. Peru, Ghana, Reduced cost...? Eg. Peru, Ghana, BoliviaBolivia

Better service ...? Eg. Jakarta, IndonesiaBetter service ...? Eg. Jakarta, Indonesia

Improved quality ...? Eg.Bottled water Improved quality ...? Eg.Bottled water

Competition benefitting customers ...? Competition benefitting customers ...?

Role of World bodiesRole of World bodiesSmacks of nepotism towards Smacks of nepotism towards

private playersprivate playersIMF & World BankIMF & World Bank Push privatisationPush privatisation Full cost recoveryFull cost recovery Collusion with governmentCollusion with government

WTO WTO

Water may be labeled as service under GATSWater may be labeled as service under GATS Progressive liberalisation?Progressive liberalisation? Benefits MNCs over local playersBenefits MNCs over local players

NAFTA – Sunbelt Water Inc. Vs. NAFTA – Sunbelt Water Inc. Vs.

CanadaCanada

BITS – Bilateral Investment TreatiesBITS – Bilateral Investment Treaties

ICSID – International Court ICSID – International Court

Eg. Bechtel Vs. Cochabamba, BoliviaEg. Bechtel Vs. Cochabamba, Bolivia

Metro Manila, Philippines Metro Manila, Philippines

Role of World bodiesRole of World bodiesAnti – People StanceAnti – People Stance

Status in USStatus in US Troubling even in the Troubling even in the backyard of Capitalismbackyard of Capitalism

Higher water billsHigher water bills Reduced water qualityReduced water quality Reduced local controlReduced local control Less accountability to local citizensLess accountability to local citizens Lower quality servicesLower quality services Complex contractsComplex contracts

Against PrivatisationAgainst Privatisation Eg. Pekin, IL Atlanta, GAEg. Pekin, IL Atlanta, GA Lee County, FL Tempa Bay, FLLee County, FL Tempa Bay, FL

Back home in IndiaBack home in IndiaAre we Learning from others’ Are we Learning from others’

experiences?experiences?Cases in public debateCases in public debate

Coca-Cola - Plachimada, KerelaCoca-Cola - Plachimada, Kerela

Seonath river, ChattisgarhSeonath river, Chattisgarh

Delhi Jal BoardDelhi Jal Board

Better AlternativesBetter AlternativesNeeds to be explored , Needs to be explored ,

beforehandbeforehand Public ReformPublic Reform Reorganisation of water & wastewater Reorganisation of water & wastewater

services under public controlservices under public control Save moneySave money Reward employeesReward employees Enhance services Enhance services

Eg. Pheonix, San Diego, Nashville, MiamiEg. Pheonix, San Diego, Nashville, Miami

ReferencesReferences

Book referredBook referred Approaches to private participation in Approaches to private participation in

water services – A toolkitwater services – A toolkit

WeblinksWeblinks www.citizen.org/cmep/waterwww.citizen.org/cmep/water www.indiaresourcecentre.orgwww.indiaresourcecentre.org www.indiatogether.orgwww.indiatogether.org http://fermat.nap.edu/http://fermat.nap.edu/

Presented ByPresented By

Dhirendra Pratap Singh (13)Dhirendra Pratap Singh (13)

Harendra Pratap Singh Harendra Pratap Singh Raghuwanshi (17)Raghuwanshi (17)

Sanjeev Mohapatra (43)Sanjeev Mohapatra (43)