Privatization of water services

1. Privatization of water services Timeline, Approaches and Issues in Water privatisation

2. Timeline • Privatization of water is as old as the Bible • Water Systems in Egypt, Mesopotamia, India, Pakistan, Crete, and Greece • Dark Ages decline • Industrial Revolution

3. Major private water utilities SOURCE: Schwab Capital Markets LP (2002). ps :Market Capitalization (in millions)

4. WATER UTILITY PRIVATIZATION AROUND THE WORLD • Dublin Declaration (1992) explicitly referred to the role of the private sector. • Growth of the private sector in the water market between 1997 to 2010 will be as follows (in %): West Europe 20-35, Central and Eastern Europe 4-20, North America 5- 15, Latin America 4-60, Africa 3-33 and Asia 1-20. 

5. Private participation toolkit • millennium development goals • World Bank and the two other organizations the Public–Private Infrastructure Advisory Facility and the Bank–Netherlands Water Partnership came together to organize a brainstorming of various water experts through out the world to discuss on private participation in public water systems.Out of this emerged the present tool kit

6. Identification of stakeholders • Consumers • NGOs and community-based organizations • Workers • Private firms and financiers • Media • Alternative providers

7. Grounds for private players to work • Considering how private participation will affect customers and other stakeholders and involving them in the design of arrangement • Working out how tariff might change, according to a proposed arrangement, for eg. After a currency devaluation, and considering whether changes would be acceptable. • Choosing and designing good institutions for monitoring operator performance, adjusting tariffs, and resolving disputes. • Ensuring the arrangements are transparent – that the contracts are published and operator is selected in an open process

8. STAGES In INTRODUCING PRIVATE PARTICIPATION Developing the policy • Develop idea on private participation • Get information and involve the stakeholders • Designate reform leader and institutions • Decide on market structure • Decide on competition

9. STAGES In INTRODUCING PRIVATE PARTICIPATION Designing the process Set service levels, tariffs & subsidies Risk analysis & allocation Design contract management & regulatory institutions Create legal & contractual framework Create institutions Interaction with stakeholders

10. STAGES In INTRODUCING PRIVATE PARTICIPATION Selecting the operator • Designate transaction management structure • Initial market soundings • Public notification • Prequalification • Tender, evaluation & other steps

11. STAGES In INTRODUCING PRIVATE PARTICIPATION Managing the arrangement • Ensure institutions in place • Provide support if necessary • Tariff & service review & other adjustments • Re-tendering or other replacement arrangements

12. CHOOSING LEGAL INSTRUMENTS The legal instrument must: • Provide a legal basis for the transaction and selection of the operator. • Make the tariff and service standard rules legally effective. • Make other commercial aspects of the arrangement legally binding. • Provide clear and effective dispute resolution and enforcement.

13. issues InWater PrivatisationAcross the GlobeVoices against it

14. Power Politics of WaterWho gets clean water and who doesn’t?

15. Privatisation of WaterCure 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

16. Checklist of PerformanceReality check • Efficiency ... ? Eg. Nelspruit, S.Africa • Reduced cost...? Eg. Peru, Ghana, Bolivia • Better service ...? Eg. Jakarta, Indonesia • Improved quality ...? Eg.Bottled water • Competition benefitting customers ...?

17. Role of World bodiesSmacks of nepotism towards private players IMF & World Bank • Push privatisation • Full cost recovery • Collusion with government WTO • Water may be labeled as service under GATS • Progressive liberalisation? • Benefits MNCs over local players

18. Role of World bodiesAnti – People Stance • NAFTA – Sunbelt Water Inc. Vs. Canada • BITS – Bilateral Investment Treaties • ICSID – International Court Eg. Bechtel Vs. Cochabamba, Bolivia Metro Manila, Philippines

19. Status in USTroubling even in the backyard of Capitalism • Higher water bills • Reduced water quality • Reduced local control • Less accountability to local citizens • Lower quality services • Complex contracts Against Privatisation Eg. Pekin, IL Atlanta, GA Lee County, FL Tempa Bay, FL

20. Back home in IndiaAre we Learning from others’ experiences? Cases in public debate • Coca-Cola - Plachimada, Kerela • Seonath river, Chattisgarh • Delhi Jal Board

21. Better AlternativesNeeds to be explored , beforehand • Public Reform • Reorganisation of water & wastewater services under public control • Save money • Reward employees • Enhance services Eg. Pheonix, San Diego, Nashville, Miami

22. References Book referred • Approaches to private participation in water services – A toolkit Weblinks • www.citizen.org/cmep/water • www.indiaresourcecentre.org • www.indiatogether.org • http://fermat.nap.edu/

23. Presented By • Dhirendra Pratap Singh (13) • Harendra Pratap Singh Raghuwanshi (17) • Sanjeev Mohapatra (43)