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)