Roger Ronnie
Right to reply
The article “Water contract won’t mean job losses” (March 2 to 8) hid the truth about Suez-Lyonnaise, the multinational company that Johannesburg unicity has privatised the city’s water to. The article gave the company’s representative, Jameel Chand, free rein to make unchallenged and untrue assertions about the company’s poor track record.
Chand claims that in Johannesburg municipal workers have a three-year job guarantee, and that in Buenos Aires Suez-Lyonnaise has cut water prices by 30%.
The three-year job guarantee is known to be a sham. Already some workers have been retrenched or told to reapply for their jobs. The pension funds of all the workers are in limbo. At Metro Gas, a two- (not three-) year job guarantee emerged from out of the blue. In Buenos Aires, almost half the workforce 3 600 people were fired during privatisation. We foresee the same job losses soon in Johannesburg.
Chand falsely asserts that Suez-Lyonnaise brought down water prices in Buenos Aires by 30%. The company itself only claims to have reduced tariffs by 26,9%. Both are untrue. In the run-up to privatising the water of Buenos Aires in May 1993 the government increased water tariffs drastically. Prices shot up by 25% in February 1991 and then by another 29% in April 1991. A year later a special tax of 18% was added to water bills. A few months prior to privatisation another 8% increase was granted.
“The effect of these increases was to allow the company in 1993 to offer what seemed to be a 27% decrease in costs. In reality it was a manufactured reduction,” say Dr David McDonald and Alex Loftus, researchers at the Municipal Services Project at Queens University, Canada.
This strategy is no secret to government officials. It is recommended by the World Bank.
Buenos Aires’s 30-year privatisation deal was signed under the National Administrative Reform Law that declared a state of emergency on the provision of public services. The law authorised the “partial or total privatisation or liquidation of corporations totally or partially owned by the state”. Through such a decree the Buenos Aires water and sewerage network was privatised without public consultation. This would fly in the face of the South African Constitution.
The lives of the poor have been made unbearable by the company. To connect to water, citizens must pay an infrastructure charge of between $43 and $340. The infrastructure charge for sewerage is $572 for everyone, irrespective of economic status. A connection fee is also charged.
Water services cost a further $6 every two months and tax was charged on top of this. “Not surprisingly, many households were simply unable to pay such costs and remained unconnected,” say Loftus and McDonald.
The people have not only been denied access through economic constraints but they now face environmental hazards. “The company failed to meet its sewage treatment targets by the end of the first-year period,” say McDonald and Loftus.
The company also broke its contractual agreement that there would be no price increases in the first 10 years, and increased prices four times within the first five years. In 1997 it successfully renegotiated its contract to allow for a universal surcharge more profit.
A pattern is likely to be repeated here. Johannesburg has many poor communities that still lack access to water. It is doubtful that any provision for extension of water into these communities has been made. The privatisation of water was a rushed and secretive process.
The company’s bid was accepted although it was so low it can never make a profit. Reputable organisations like the Rand Water Board say that a renegotiation of the contract by shrewd company lawyers is imminent. This means cost-cutting possibly on staff or health and safety expenditure. It also means tariff increases are inevitable. Is this is what the citizens of Johannesburg can look forward to?
Roger Ronnie is general secretary of the South African Municipal Workers’ Union