WASHINGTON – Civil society groups are pressuring the World Bank to disinvest from private water companies, saying that privatising ownership and management of this natural resource has failed to improve access to clean drinking water.
The World Bank is subsidising private profiteering from an essential resource by lending public money to private corporations that manage or run water utilities but have failed to improve services, says Corporate Accountability International (CAI), a Boston-based advocacy group that focuses on corporate abuse and represents an international coalition of water activists.
“The World Bank Group’s reputation and assets are being gambled. Millions of people’s lives are being imperiled,” CAI said in a Sept. 9 letter to World Bank President Jim Yong Kim.
The group has been lobbying the World Bank for more than 17 months to end investments by its banking arm the International Finance Corp (IFC) in private water corporations, and has stepped up the pressure since April.
In its 2012 report “Shutting the Spigot on Private Water: The case for the World Bank to divest”, CAI laid out what it calls a litany of failures by private corporations, particularly multinationals, that have failed to expand water supplies to benefit the world’s poorest. Private ownership or management of water utilities, encouraged by and funded by the IFC, has diverted money critical for maintaining water systems into shareholder dividends, executive pay packages and corporate taxes, it said.
IFC officials concede that not all contracts with private companies for water utilities have proven successful, especially the early World Bank forays in the 1990s, and that privatisation is not the only solution for improving the delivery of potable water.
But 2010 World Bank research into public-private partnerships for urban water utilities reached more nuanced conclusions about a sector fraught with political problems, IFC water specialist Patrick Mullen said in an interview.
Its research found that private operators have improved the operational efficiency of water systems and the quality of service, though there were no clear-cut benefits on tariffs or access to water. The biggest contribution from private participation came from efficiencies, such as reducing the amount of water lost through leaky pipes and better bill collection, which produces rising revenue streams. More money allows water utilities to make capital improvements and further upgrade systems, leading to more hours of service and better quality water and better municipal health, it said.
“Ideologically we are not pressing one ownership or the other. We are just trying to support effective water utilities, whether they are public or privately held,” Elena Bourganskaia, IFC global head of water and municipal infrastructure, said in an interview.
DISAGREEMENTS
One disagreement between the World Bank and the CAI – which represents a coalition of 75 individuals and activist groups worldwide – revolves around the way the World Bank leverages its resources to attract private capital to invest in developing economies.
CAI sees no appropriate role for private company management or ownership of water utilities and hence opposes World Bank funneling investment toward the sector.
Kim on the other hand has said the public sector cannot raise enough capital to finance the infrastructure investment needed, so the World Bank must attract private sector money if it is to help countries develop.
Another area of disagreement focuses upon the role of water as a scarce natural resource essential to life. CAI and water activists view water as a commodity that should be provided without profit for the well being of all. The World Bank takes a more pragmatic approach based upon who can deliver safe drinking water effectively to the most people.
Both sides agree, however, that expanding access to safe drinking water is a high priority. About 2.5 billion people – roughly one-third of the world – have inadequate supplies today, multiplying the risks of water-borne diseases from dysentery to typhoid and cholera, according to World Bank and World Health Organization data.
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