World Water Forum 6, Marseille, France, 2012. Flickr. Some rights reserved.This week around 30,000 people will descend on
Daegu, South Korea to attend the 7th 2015 World Water Forum (WWF). Often portrayed as a policy-making
forum committed to the goal of water for all, the gathering of the
international water community is really more of a trade show, dominated by
private water companies who promote private-sector solutions to the global
crisis. Their solution was happily imbibed by most of its delegates and
proclaimed in many of WWF’s previous declarations.
Unfortunately
on the ground, the promise of private water services has all too often turned
into a mirage. Starting in 2000, increasing numbers of cities (from Atlanta to
Accra, Berlin to Buenos Aires) have demanded a return to public water services
as prices rose and services declined. A book Our public water
future: The global experience with remunicipalisation, published by Transnational Institute
and other organisations this month reveals that over the
last 15 years, 235 cases of water remunicipalisation have been recorded in 37
countries, impacting on more than 100 million people. Moreover the pace of
remunicipalisation is accelerating dramatically, doubling in
the 2010-2015 period compared with 2000-2010.
Most notably, even Paris has remunicipalised, even though
it is home to two of the
largest water multionationals in the world, Veolia and Suez. If even their
home-town was turning them down, what did that say about these companies
potential to deliver in places where the need for investments in infrastructure
was much higher?
The most recent city to decide to remunicipalise is Jakarta,
whose court in March annulled privatised water contracts for failing
to protect residents’ human right to water. This court decision came after years of public anger at
private operators Palyja (Suez is a major shareholder ) and Aetra’s record
profit rates and dismal service record: their coverage never extended beyond 59% of
the population, their leakage levels were an astounding 44%, and their rates increased almost fourfold.
In the face
of growing criticism, the WWF has toned down its talk of privatisation – this
year the language is all about
“innovative investment”, promoted most typically through Public-Private Partnerships (PPPs). But on
closer examination, this is another mirage. PPPs are not an “innovative”
financing mechanism but a cherry picking exercise: one that allows water
multinationals the most attractive contracts (and all profits), while
governments assume the risks. In the case of Bandung in Indonesia, for example,
the PPP guaranteed a private company a 20% profit rate in exchange for an
investment of $500 million in water infrastructure, that could only be paid
back because of the presence of profitable local industries. But this
cherry-picking means that the public sector is left operating only in regions
where cost recovery is not possible – and it prevents the public sector – that
can borrow at cheaper rates and is not required to pay back shareholders – to
use earnings from more profitable districts to support extending service in
less well-serviced low income areas.
Research by
Public Services International Research Unit shows that despite the big
expansion of PPPs in recent years, financing for all infrastructure across the
world still predominantly comes from public sources, as high as 90
per cent.
Investment
in the public sector can deliver far better results than public-private
partnerships. “Our Public Water future” shows that the 235 cities (that have
remunicipalised) provide better services
– not only because they can reinvest all profits into infrastructure,
but also because they are better placed to consider other issues such as labour rights, environmental conservation and democratic
accountability. Undistracted from competing for markets, public water operators
are also linking up through Public Public Partnerships to share learning and
best practice, and build capacity of less well-resourced utilities.
In the
flagship remunicipalisation of water in Paris, for example, in the first year
of operations the new municipal operator Eau de Paris was able to realise
efficiency savings of -€35 million What is more, they are prioritising environmental
conservation measures and have set up a unique body in which the public can
have a say in how the company is run.
Not surprisingly, rather
than embrace this progress, private water operators are doing their best to
undermine it. As they try to seduce cities into signing PPPs, they may project
images of everlasting supportive partnerships, but if a city decides to part
ways, their behaviour is more like an angry jilted lover. In just the last
week, Suez has said it will appeal and fight the Jakarta decision. At the same
time, they also won an award for $405 million from Argentina after it cancelled
its contract during the country’s economic crisis. Rejected by ever more
citizens for profiteering from water, private water companies are now seeking
to sabotage public water companies through legal costs and legal actions.
Their actions show the
mirage behind the term public-private partnership. The reality is the
partnership of a city and a company in delivering the right to water always
holds the tension of conflict because the mission of a government and company
are completely different. If the World Water Forum is serious about its goal to
implement solutions to the global water crisis, it should realise that the
promise of private investment in water services was always a mirage. The
private sector does not have the interest to invest in public infrastructure at
the level needed, and has frequently turned out to be more expensive and less
effective than the public sector in delivery. It is time for the World Water
Forum to look at how it can boost investment in real public solutions that can
deliver the human right to water for all.
