David Le Page
‘Nothing is being privatised,” says Johannesburg council water representative Jamieel Chand of the council’s management deal with a British-led consortium.
The deal was signed two weeks ago and provides for a 12-person team from the winning consortium the Johannesburg Water Management Company (Jowam) to join the 2 500 workers employed by Johannesburg Water. Johannesburg Water remains the sole property of the Johannesburg Metro.
Johannesburg Water is the consolidated organisation formed by the merger of the water departments of the five municipalities now subsumed by the Greater Metropolitan Council.
The South African Municipal Workers’ Union (Samwu) has vigorously protested against the deal. The union argues that Suez Lyonnaise, the holder of an effective 34,5% share of the management contract, has “an appalling track record”, and cites instances where its international subsidiaries have raised water prices in other cities.
The Jowam partners are the leading French water multinational Suez Lyonnaise, with a 20% share in the company; Water and Sanitation Services South Africa (WSSA), its 50-50 South African joint venture with Group 5; and a British company, Northumbrian Water, with 51%. Suez Lyonnaise is a global utilities giant, specialising in utility services ranging from toxic waste treatment to electricity generation and distribution.
In 1996 a Suez Lyonnaise executive was jailed for bribing a municipal official. But Patrick Ayoub, Suez Lyonnaise’s general delegate for Southern Africa and chief executive of WSSA, argues that the conviction amounted to a single incident for a company with 3 000 contracts in France and a 100-year history.
He said that since the 1980s’ event that led to the conviction, laws about improperly influencing public officials in France have been tightened up.
“We have very strict ethical codes in the organisation relating to bribery,” he says.
Northumbrian Water, the 51% partner, has an almost impeccable reputation in the United Kingdom.
A 1997 incident, when it pleaded guilty to supplying discoloured water to the town of Ashington, appears to be very much the exception to the rule.
The management deal is worth R25-million over five years to Jowam. If performance targets are met, it will receive a R20-million bonus.
Chand says that the value of the deal is negligible alongside Johannesburg Water’s yearly turnover of R1,6-billion. Workers will remain employees of the Johannesburg Metro, with all their terms and conditions of employment preserved. Those conditions include the three-year no-retrenchment guarantee the Metro gave unions a year ago when Johannesburg’s iGoli 2002 restructuring plan was adopted.
When the no-retrenchment guarantee expires, Johannesburg Water is more likely to be hiring than firing, argue both Chand and Ayoub. They say the demands of the industry and of infrastructural upgrades will keep all Johannesburg Water employees busy for years.
Ayoub, emphasising that Jowam is only about to begin its assessment of Johannesburg Water, said he feels the company is more likely to be hiring.
Meanwhile, if there are any price increases, the blame will lie with the elected Johannesburg Metro officials who have the sole discretion to adjust water tariffs. All procurement decisions by the non-council but council-owned company will be open to public scrutiny, as is Johannesburg’s contract with Jowam, says Chand. “At the end of the day, council still calls the shots.”
Acknowledging the Grenoble case, Chand argues that “the point is that [Suez Lyonnaise] operate in three dozen companies. You’ve got to take the good with the bad. They brought down water costs by 30% in Buenos Aires.”
He pointed out that the responsibility for its appointment rests with public officials, who chose Jowam from three consortiums that bid for the contract.
The challenge for Jowam is to weld together five previously separate municipal departments into a single organisation run like a private company that can stand on its own in five years’ time. Every year R176-million of water, 40% of that purchased from Rand Water, simply vanishes within the pipes and aqueducts of the Johannesburg water system. Whether it is diverted by the thirsty or leaks through old pipes is not known but it costs a lot.
In both Johannesburg and the Eastern Cape, where WSSA runs water services for Fort Beaufort, Samwu argues that it has been blocked from seeing the details of the contracts between the imported water experts and the local councils. Chand and Ayoub, however, say the contracts are a matter of public record.