Download Privatization of water - Xavier Institute of Management Bhubaneswar

Privatization of water
services
Timeline,
Approaches
and
Issues in Water
privatisation
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
Major private water utilities
 Suez (ONDEO) £33,502
 American Water Works
 RWE AG (Thames)
Company,Inc. $4,324
£22,992
 Philadelphia Suburban
 Vivendi
Corporation$1,531
Environment£13,227
 California Water Service
 United Utilities£3,300
Group$359
 Severn Trent£2,517
 American States Water
 Anglian Water
Company$367
Group£1,502
 Connecticut Water
 Kelda£1,391
Services, Inc. $216
 Southwest Water
Company$133
SOURCE: Schwab Capital Markets LP (2002).
ps :Market Capitalization (in millions)
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 515, Latin America 4-60, Africa 3-33 and Asia
1-20.
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
Identification of
stakeholders
 Consumers
 NGOs and community-based
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organizations
Workers
Private firms and financiers
Media
Alternative providers
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
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
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
STAGES In INTRODUCING PRIVATE
PARTICIPATION
Selecting the operator
 Designate transaction management
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structure
Initial market soundings
Public notification
Prequalification
Tender, evaluation & other steps
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
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.
issues
In
Water Privatisation
Across the Globe
Voices against it
Power Politics of Water
Who gets clean water and who doesn’t?
Gainers
Losers
Industries
Small farmers & ranchers
Export agriculture
Rural communities
Mining
Poor in urban slums
Large land owners
Real estate developers
Wealthy urban consumers
Privatisation of Water
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 Performance
Reality 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 ...?
Role of World bodies
Smacks 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
Role of World bodies
Anti – People Stance
 NAFTA – Sunbelt Water Inc. Vs.
Canada
 BITS – Bilateral Investment Treaties
 ICSID – International Court
Eg. Bechtel Vs. Cochabamba, Bolivia
Metro Manila, Philippines
Status in US
Troubling even in the backyard of Capitalism
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Higher water bills
Reduced water quality
Reduced local control
Less accountability to local citizens
Lower quality services
Complex contracts
Against Privatisation
Eg. Pekin, IL
Lee County, FL
Atlanta, GA
Tempa Bay, FL
Back home in India
Are we Learning from others’ experiences?
Cases in public debate
 Coca-Cola - Plachimada, Kerela
 Seonath river, Chattisgarh
 Delhi Jal Board
Better Alternatives
Needs 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
References
Book referred
 Approaches to private participation in
water services – A toolkit
Weblinks
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www.citizen.org/cmep/water
www.indiaresourcecentre.org
www.indiatogether.org
http://fermat.nap.edu/
Presented By
 Dhirendra Pratap Singh (13)
 Harendra Pratap Singh Raghuwanshi (17)
 Sanjeev Mohapatra (43)