Townspeople came out to celebrate when last year water came to another 10 000 people in El Alto, the sprawling city of one million on the high plain above La Paz, Bolivia.
The mayor made a speech to the cheers of more than 1 000 people. In the crowd was Gerard Payen, a vice-president of Suez, the world’s largest water company, which has a reputation for being one of the most aggressive in developing countries. Its subsidiary, Aguas de Illimani, had worked with the local community, a Spanish NGO and the World Bank to bring water in what was widely considered a model public-private partnership contract.
Payen was proud of what Suez had achieved in Bolivia. Aguas de Illimani had won the contract to bring water to La Paz and El Alto in 1997 and in three years had invested R128-million in a decaying system, connected 42 000 people to the mains and built new treatment plants and a supply pipe from the glaciers above La Paz to the metropolis.
Water prices had risen, but the municipalities, the water regulator and local political parties were broadly happy — unlike those in Cochababamba, 500km away, where a water privatisation contract had gone horribly wrong and had led to riots and deaths.
The 10 000 delegates at the World Water Forum in Kyoto, Japan, recently debated how to bring water and sanitation to the world’s poor. The role of companies such as Suez, finance bodies such as the World Bank, public authorities like that of La Paz and communities similar to those in El Alto were fiercely debated, for how they work together will determine whether millions of people receive water over the next 20 years.
The public sector was starved of cash throughout the 1990s and a handful of water companies were encouraged to expand massively into the developing world. Banks and governments felt that the public sector, which still maintains 95% of the world’s water, was inefficient, ineffective and incapable of handling large contracts.
But the private sector’s record in more than 400 major contracts awarded in the 1990s has been scarred by bungles and bad deals. It has been accused of steamrolling poor countries into disadvantageous contracts, of expropriating profits, of raising prices far too much, of firing workers, profiteering, corruption, doing deals in secret, cherry-picking the most profitable contracts and failing to fulfil its obligations to bring water to the poorest.
Payen argues that the companies must make profits on their investments, but admits that in the early days of privatisation Suez (and other companies) did take advantage of poor countries. ”If a government came to us and said, ‘We want to sell our assets’, then who were we to say no? We are in business, after all.”
How easy it was for a water company to hoodwink a government can be seen in Ghana where protests and accusations of corruption finally forced the World Bank to withdraw from a contract to provide water for the capital, Accra.
Dozens of other cities now regret that they privatised their water too hastily in the 1990s, but in the past few years the attitudes of governments and companies have changed.
There are signs that the party may be over for the giant water companies. In January Suez announced it was withdrawing from ventures in developing countries, partly because several contracts had been a disaster and the risk of investing in poor countries was too great. Vivendi and Saur, two other large European water companies, indicated they, too, had increasing reservations about investing in water in the developing world.
The United Nations estimates that 2,7-billion people will face water scarcity by 2025. About 40% of the world’s population now lives in countries with water shortages.
Payen is despondent: ”The trend is not good. There is no way … the UN targets of halving the number of people without access to water can be achieved … The current programmes will not reduce the figure.”
The Institute for Public Policy Research in London has reviewed the situation and brought together some of the world’s leading thinkers on water and sanitation. The thinktank concludes that the role of the private sector has been overhyped, that international banks must explore new ways of raising money and that communities should have a greater say in their water and sanitation provision. Greater use, it says, ought to be made of appropriate, low-cost technologies that local people can afford to maintain and manage.
”If the private sector is not a panacea, then neither is the existing public-sector model. If water and sanitation targets are to be met, governments and international institutions need to strengthen their political commitment and radically refocus their resources. For developing countries, that means giving water and sanitation a higher priority; for donors, it means increasing aid allocations and refocusing them on rural and poorer urban areas.” — Â