WATER SUPPLY: EVERY BODY'S BUSINESS OR PURELY BUSINESS? by Fardah

    Kyoto, March 26 (ANTARA) - "Water is every body's business - women and men alike, the poor as well as the rich," said many experts in different sessions at the Third Water Forum.    However, for water industry and corporations attending the Forum, water can be a real good business. Water used to be treated as free good. The argument that water should be treated purely as an economic good originated in Dublin conference, Ireland, 1992.

    Since then, water was increasingly being managed as an economic, rather than a social good, and decentralization - in various - forms has been a useful good to support this new approach, recalled Mahmoud Abu-Zeid, Chairman of the World Water Council (WWC).
      The Forum organized by WWC from 16 to 23 March 2003, spreaded a strong message that water is in scarcity. In Asia alone, 1.3 billion people do not have access to safe drinking water and more than 40 per cent of the urban poor does not have piped water at home. More than three million people died of water related diseases because they do not have access to clean water.
     Water has become important for capital because water is increasingly characterized by a crisis of scarcity, which is the basis of modern capitalism, Richardo Petrella, a professor at the Catholic University of Louvain in France, said as quoted by International Consortium of Investigative Journalists (ICIJ).
    According to the World Bank, as part of its commitment to help developing countries provide adequate water supply for their people, the Bank has outstanding commitments of about $17 billion in water projects, or about 16 per cent of all World Bank lending.

        The Asian Development, another major creditor in water projects, spends also around $17 billion, or about 20 per cent of its total lending. The two funding companies encourage partnerships on water, involving governments, private corporations and NGOs. They also recommend appropriate pricing in order to ensure water conservation and cost recovery.
        What the two funding agencies call as the participation of the private sector, is considered privatization of water supply by NGOs. Although a water specialist of ADB said that the participation of the private sector is different from water privatization.
        "The governments still own water in the participation of private sector. Water can not be privatised," said the ADB water specialist.
        In Indonesia, 10 per cent of ADB's 55 active projects are water sector. The Indonesian government also requested the World Bank to finance the water utilities rescue Programme in 1998. The participation of private sectors started in 1998 when Thames Water and Suez joined in.
        ICIJ, a project of the Center for Public Integrity, in its investigative report called The Water Barons, showed that world's three largest water companies: France's Suez and Vivendi Environnement, and British-based Thames Waterowned by Germany's RWE AG, have since 1990 expanded into every region of the world.
        Three other companies, Saur of France, United Utilities of England and Bechtel of the United States, have also successfully secured major international drinking water contracts.
        "The water companies are chasing a business with potential annual revenue estimated at anywhere from $400 billion to $ 3 trillion," according to the ICIJ report.
        On the third-day of the Forum's session, delegates debated whether there was a place for profit making in water development and management. Some groups believe that government should provide water for all with no charge, while other say that the private sector can be an important partner.
        "The private sector has not proven that it can deliver water services," said Tony Clarke, a director of the Ottawa-based Polaris Institute.
        He said that This Forum has been unbelievably dominated by the water industry and corporations. They talk about partnerships, but this meeting is not designed to help. It is all very tightly controlled, he added.
        Turner said the success of privatization of water utilities in industrialized nations like Britain cannot be repeated in developing countries that lack clear regulation and strong government.
        Two major British NGOs, WaterAid and Tearfund, also dismissed as irrelevant the private sector's involvement in solving problems in developing countries, and said that the Forum is wasting time discussing the issues.
        Joanne Green of the Tearfund said international donors should have a more realistic understanding of the role private companies can play. The international community must stop arm-twisting countries to give access to private sector companies as a condition for receiving development aid, grants and loans. What is the use of replacing a failing government monopoly with a private monopoly that can do what it wants because there is no adequate regulatory environment?, according to the NGO's report.
        The NGO spells out four main concerns about private sector involvement in developing world water projects: Firstly, the vacuum created by a diminishing public sector role in water supply. Civil society needs to develop the readiness and capacity to engage in private sector contracting process.
        Secondly, the institutional reform that is needed to improve accountability. Such mechanisms are ultimately the means with which problems of corruption and inefficiency can be dealt with.
        Thirdly, inadequate participation by poor people in decisions and contracts. The key to any partnerships success is the presence of community organizatons that negotiate on behalf of the poor. Finally, excessive water and financing costs. WaterAid believes that cost recovery is a sound principle, provided it does not become a barrier for the poor to access services.
        Some NGOs consider WWC as a water mafia mostly made up of technocrats from development, irrigation and power agencies and representatives of multinational water, engineering and construction companies. Among the Council's Members are Mitsubishi  WATER SUPPLY: EVERY BODY'S BUSINESS OR PURELY BUSINESS?

by Fardah Assegaf

        Kyoto, March 26 (ANTARA) - "Water is every body's business - women and men alike, the poor as well as the rich," said many experts in different sessions at the Third Water Forum.

        However, for water industry and corporations attending the Forum, water can be a real good business. Water used to be treated as free good. The argument that water should be treated purely as an economic good originated in Dublin conference, Ireland, 1992.

        Since then, water was increasingly being managed as an economic, rather than a social good, and decentralization - in various - forms has been a useful good to support this new approach, recalled Mahmoud Abu-Zeid, Chairman of the World Water Council (WWC).

        The Forum organized by WWC from 16 to 23 March 2003, spreaded a strong message that water is in scarcity. In Asia alone, 1.3 billion people do not have access to safe drinking water and more than 40 per cent of the urban poor does not have piped water at home. More than three million people died of water related diseases because they do not have access to clean water.

        Water has become important for capital because water is increasingly characterized by a crisis of scarcity, which is the basis of modern capitalism, Richardo Petrella, a professor at the Catholic University of Louvain in France, said as quoted by International Consortium of Investigative Journalists (ICIJ).

        According to the World Bank, as part of its commitment to help developing countries provide adequate water supply for their people, the Bank has outstanding commitments of about $17 billion in water projects, or about 16 per cent of all World Bank lending.

        The Asian Development, another major creditor in water projects, spends also around $17 billion, or about 20 per cent of its total lending. The two funding companies encourage partnerships on water, involving governments, private corporations and NGOs. They also recommend appropriate pricing in order to ensure water conservation and cost recovery.

        What the two funding agencies call as the participation of the private sector, is considered privatization of water supply by NGOs. Although a water specialist of ADB said that the participation of the private sector is different from water privatization.

        "The governments still own water in the participation of private sector. Water can not be privatised," said the ADB water specialist.

        In Indonesia, 10 per cent of ADB's 55 active projects are water sector. The Indonesian government also requested the World Bank to finance the water utilities rescue Programme in 1998. The participation of private sectors started in 1998 when Thames Water and Suez joined in.

        ICIJ, a project of the Center for Public Integrity, in its investigative report called The Water Barons, showed that world's three largest water companies: France's Suez and Vivendi Environnement, and British-based Thames Waterowned by Germany's RWE AG, have since 1990 expanded into every region of the world.

        Three other companies, Saur of France, United Utilities of England and Bechtel of the United States, have also successfully secured major international drinking water contracts.

        "The water companies are chasing a business with potential annual revenue estimated at anywhere from $400 billion to $ 3 trillion," according to the ICIJ report.

        On the third-day of the Forum's session, delegates debated whether there was a place for profit making in water development and management. Some groups believe that government should provide water for all with no charge, while other say that the private sector can be an important partner.

        "The private sector has not proven that it can deliver water services," said Tony Clarke, a director of the Ottawa-based Polaris Institute.

        He said that This Forum has been unbelievably dominated by the water industry and corporations. They talk about partnerships, but this meeting is not designed to help. It is all very tightly controlled, he added.

        Turner said the success of privatization of water utilities in industrialized nations like Britain cannot be repeated in developing countries that lack clear regulation and strong government.

        Two major British NGOs, WaterAid and Tearfund, also dismissed as irrelevant the private sector's involvement in solving problems in developing countries, and said that the Forum is wasting time discussing the issues.

        Joanne Green of the Tearfund said international donors should have a more realistic understanding of the role private companies can play. The international community must stop arm-twisting countries to give access to private sector companies as a condition for receiving development aid, grants and loans. What is the use of replacing a failing government monopoly with a private monopoly that can do what it wants because there is no adequate regulatory environment?, according to the NGO's report.

        The NGO spells out four main concerns about private sector involvement in developing world water projects: Firstly, the vacuum created by a diminishing public sector role in water supply. Civil society needs to develop the readiness and capacity to engage in private sector contracting process.

        Secondly, the institutional reform that is needed to improve accountability. Such mechanisms are ultimately the means with which problems of corruption and inefficiency can be dealt with.

        Thirdly, inadequate participation by poor people in decisions and contracts. The key to any partnerships success is the presence of community organizatons that negotiate on behalf of the poor. Finally, excessive water and financing costs. WaterAid believes that cost recovery is a sound principle, provided it does not become a barrier for the poor to access services.

        Some NGOs consider WWC as a water mafia mostly made up of technocrats from development, irrigation and power agencies and representatives of multinational water, engineering and construction companies. Among the Council's Members are Mitsubishi Heavy Industries and the World Bank.

        Spending and Cost recovery

        According to the World Water Council (WWC), the world needs to raise annual spending on water and sanitation from $80 billion to $180 billion if it is to supply everyone with basic services by 2025.

        However, Gourisankar Ghosh, executive director of the Geneva-based Water Supply and Sanitation Collaborative Council (WASH) said the annual increase of $11 billion will be enough to meet the United Nations Millennium goal of halving the proportion of those lacking water and sanitation by 2015.

        The costs of water supply and sanitation technologies have fallen sharply over the past 20 years but unfortunately they have still not reached the poorest, according to WASH referring to a huge water investment stilled needed in developing countries.

        An important factor to assure cost recovery is setting the right pricing. Pricing water is a real sensitive and controversial issue and the implementation of service charges is a complex issue as it includes many aspects that are still debatable and need consensus, said Abu-Zeid, who is also irrigation minister of Egypt.

        According to Abu-Zeid in a session on Water Pricing and Options, in setting water charges or prices to attain cost recovery, the price level should meet criteria such as: it will ensure efficient water use and lead to water conservation; it will ensure adequate return to fully cover operation and maintenance and to cover capital cost to the extent possible; it will be within the capacity of the users to pay; and it is agreeable to all stakeholders.

        Jamal Saghir, director of Energy and Water at the World Bank said that the water sector has the lowest cost recovery of all utilities. In the developing world the sector barely recovers the cost of operation and maintenance.

        Pricing policy is often the key, but at the same time it is a dilemma. The price too high and the poor will ignore the improvement and resort to the methods is sanitation and water collection that they have always used. Set the price too low and maintenance and expansion will not be possible, so that the poor are not adequately served and only the better-off benefit from lower prices, warned WASH.  – END

Fardah. Kyoto, March 26, 2003.