Privatisation

The word privatisation is derived from the latin word “privatus”. Privatisation of water services means transfer of ownership, property or the business of water services from the government to the private sector. This includes services such as operation and maintenance of water services, bill collection, metering, revenue collection, etc.

Water: Commons or a commodity?

Water is a basic need of life and even the United Nations (UN) has recognized this need as a human right. The UN World Water Report of 2006 notes that "there is enough water for everyone" and "water insufficiency is often due to mismanagement, corruption, lack of appropriate institutions, bureaucratic inertia and a shortage of investment in both human capacity and physical infrastructure". 

However, the process whereby all resources not limited to water are transformed from a public good to a tradable commodity is due to economic processes at work. Fears over water scarcity and the need to manage water efficiently by giving it an economic value is the starting point from where privatization is pushed. Critics of public supply of water insisted on the state’s inability to operate efficiently and created a case for a shift towards market-based water governance. However, “when private companies try to make large profits through high water prices, it denies the poor the inalienable right to the most necessary substance for life”, says Vandana Shiva, noted environmentalist.

Yet worldwide, there is a rush to privatize water services.

Myths of privatization

There are several myths associated with the concept of privatisation, the most popular being:

  • Privatisation saves money.
  • Private company does a better job than those in the public sector.
  • Privatisation will lead to lower prices and better standards of service.
  • Turning the public utilities into private companies results in a dramatic improvement in their performance and efficiency.
  • Privatization needs to be accompanied by minimal regulation.
  • Privatization allows governmental entities to better anticipate and control budgetary costs.
  • Privatization allows governmental entities more administrative flexibility.
  • The public still maintains control over a privatized asset or service and the government retains the ultimate ability to make related public policy decisions. 
  • If anything goes wrong, the government can easily fire the contractor or adjust the contract.
  • Companies are chosen for privatization contracts on the merits, not based on political or financial connections.

(Sources: Exposing the myths of privatization, Privatization myths debunked)

Background of water privatization: International experience 

The water privatisation wave started in the early 1990s in Latin America and then it spread to other developing countries across the globe. The rapid thrust in water privatization in developing countries was due to increased involvement of the World Bank and International Monetary Fund (IMF) in pushing structural reforms with governments to facilitate private sector growth. Lending terms were imposed on developing nations through stipulations in trade agreements and loan conditions to impose water privatization. The water sector was sought to be opened through the World Trade Organisation (WTO) and General Agreement on Trade in Services (GATS) that are a set of rules governing international trade.

Divesting the water sector of social obligations

The provision of the resource was increasingly vested in the hands of a few multinationals mostly European and American, with the top two multinationals controlling about 75% of the water industry. The sector is a natural monopoly owing to the high levels of investments and extensive distribution networks required. These big multinationals were able to exert strong pressure on national governments to privatize water provisioning. An attempt was made to recover the full price of water provisioning, and cross-subsidies were removed to ensure free market trade. Although pro-privatization proponents claim that it has a great record of accomplishment of success with regards to increase in efficiency, quality, reliability and affordability of services to the people, in reality, privatisation programs are structured in a manner where the risks are passed on to the public and no major investments are made by the private company without a ‘take or pay’ clause.

Impact of privatisation

Across the globe people resisted privatisation of water services due to its serious impact on the poor. "In Australia, in 1998, the water in Sydney, was contaminated with high levels of giardia and cryptosporidium shortly after its water was overtaken by Suez Lyonnaise des Eaux…  In Britain, Water and sewage bills increased 67 percent between 1989 and 1995. The rate at which people's services were disconnected rose by 177 percent… Water rates in England increased by 450 percent while company profits soared by 692 percent. CEO salaries for the private corporations behind the water supply increased by an astonishing 708 percent. As one can expect with such high price fixing, service disconnection increased by 50 percent. Meanwhile, the British Medical Association condemned water privatization for its health effects because dysentery increased six-fold. After privatization, water fees in France rose by 150 percent while the water quality declined.” (Water is life)

The anti privatization protest has started gaining popularity after the water privatisation conflict in Cochabamba, Bolivia in 2000. The model of privatisation advocated by the World Bank has started failing in many countries like Buenos Aires, Tucuman (Argentina), Dar es Salaam (Tanzania), Grenoble (France), Metro Manila (Philippines), Nkonkobe (South Africa), Atlanta (USA),etc. In South Africa, this has led to thousands of disconnections (from water supply) for those who cannot pay. Commentators fear that this has affected the health of the nation’s people and decreased social equality further. (Water, Private Limited, Manthan Adhyayan Kendra)

The case of Cochabamba and El Alto in Bolivia

Cochabamba, the city of the now famous ‘water wars’ in Bolivia is the most well known example of the conflict over privatization of its municipal water supply utility (to Bechtel, a US based Corporation) at the behest of the World Bank. Many people were forced to literally choose between food and water leading to a peoples uprising in 2003 to oppose the concession.

In El Alto, Suez got several concessions including an assured rate of return and soft loans but yet, hiked connection charges steeply. The monthly water bill rose to $20 in a city where the minimum wage is less than $100 a month the moment Aguas del Illimani (AISA), a subsidiary of Suez, a water giant took over the water services. The government was forced to revoke its water privatization legislation soon after people protested.

Elements of the water privatisation process

The process of privatisation of water services entails:

  • Unbundling (separation of source, ‘transmission’ and ‘distribution’)
  • Independent regulator to free the sector from ‘political interference’, to set tariffs and decide other issues
  • Steeply increasing tariffs, de-politicisation of tariffs
  • Full cost recovery
  • Elimination of subsidies
  • Cutting off supplies for non-payment
  • Dismantling public/ community supplies like public taps, stand posts
  • Retrenchment
  • Privatisation and Public-Private Partnerships
  • Allocation of water to highest value use through market mechanism
  • Water entitlements being introduced for ensuring markets of tradable water rights
  • New laws to enshrine and ensure all this

(Source: Water, Private Limited, Manthan Adhyayan Kendra)

Modes of privatisation

Privatisation of Water Supply and Sanitation (WSS) can be several levels and can be of various types. It may involve components from the dam, canal system, water treatment plant, water distribution system, billing system, collection/ treatment/ disposal of wastewater and sewage.

  • Service Contracts: These are short-term contracts for providing particular services like meter reading and bill preparation.
  • Lease/Management Contract: The ownership of the water facility remains with the municipal authority and the company is appointed by it to manage the facility or the facility is leased out to the company. The municipal authority does new investments and expansion while the company has to manage the day-to-day operations.
  • Build Own Operate Transfer (BOOT) Contracts: The company builds a part of the infrastructure (treatment plant, filtration plant etc) and runs it under a long-term contract, with a purchase agreement that has ‘take-or-pay’ guarantee clauses. 
  • Concessions: These are long term contracts wherein the private company takes full responsibility of the system, provides services and is responsible for expansion, new investments, recovery of bills etc.
  • Divestures: In this case, the Government either fully or partially divests its equity in a utility that is then bought off by a private company.

Water privatisation in India

Water privatization in India started in the late 1990s. The government with the technical assistance of International Financial Institutions like the World Bank and the Asian Development Bank developed water policies and various laws to facilitate private sector participation in the water sector. The entire paradigm of the water sector is seeing modifications manifesting in changes in water policies, laws and institutions. Manthan Adhyayan Kendra describes the happenings in the water sector as "not merely privatisation, but more accurately corporatisation or corporate globalisation (since most of the companies involved are foreign multinationals)".

“The Borai Industrial Estate Build Own Transfer (BOT) Water Supply project on the Sheonath river in Chhattisgarh, the proposed private sector management contracts for several zones in Delhi, proposed privatisation of water services in Bangalore under Greater Bangalore Water Supply and Sewerage Project (GBWASP), the Maheshwar Hydro Power Project on Narmada in Madhya Pradesh, the Coca Cola factory in Plachimada, Kerala exploiting public groundwater to manufacture soft drinks – all are examples of the rapidly growing privatisation of water services and resources in India. As these examples show, privatisation in the water sector involves all elements – hydropower, industrial and domestic water supply, and even irrigation.” (Water, Private Limited, Manthan Adhyayan Kendra)

India has witnessed the violation of standards of operation by private companies who indulge in price fixing and amplify prices after they take over. It is the poor who face disconnections and are often forced to drink contaminated water, consequently.

The Sheonath river project in Chhattisgarh was one of the initial water privatisation projects in India. Thousands of people protested against the government;s decision to hand over 23 kms of the river to private companies and the banning of the locals from using the river water. In this case, privatisation was not limited to the water service but extended to the river itself.

In the last two decades, there has been a massive increase in private sector participation projects in the water sector in various cities across India. Most of the major private sector players like Suez, Vivendi, Thames Water and Bechtel are present in India. The state wise list of private sector participation projects is available on Manthan’s web site, an organization involved in the public scrutiny of water privatization projects.

To know more about the myths and the reality related to the privatisation of water services in New Delhi please see the report titled: Privatisation of water services in New Delhi : Myth and reality - Report by Water Privatisation - Commercialization Resistance Committee.

Aid agencies like Department for International Development (DFID), AusAID and USAID are pushing for privatisation of projects initiatives. The centrally sponsored Jawaharlal Nehru National Urban Renewal Mission (JNNURM) has through Municipal Reforms Projects in states made it mandatory for municipal corporations to undertake mandatory urban reforms, including possible privatisation of water, in order to be eligible for central funds. The irrigation sector too is seeing greater involvement of the private sector in canal operations and comprehensive privatisation of select schemes often in the name of Participatory Irrigation Management (PIM). Concepts like tradable water entitlements and tradable pollution permits are likely to lead to the cornering of water resources by those who have the purchasing power or who can buy the right to pollute.

Manthan's website has a database of water supply, sanitation and hydropower projects involving privatisation in India.

The way out

Because private sector focuses on profit it is important that Government’s restructure Water Utilities to reverse the infrastructural decay and improve their performance. There is a need to have greater engagement with the public and make Water Utilities accountable and capable of delivering water services.

References

  1. Green Left Weekly
  2. Exposing the myths of privatization
  3. Privatization Myths Debunked
  4. Running Dry: the humanitarian impact of the global water crisis
  5. Water Privatization Case Study: Cochabamba, Bolivia
  6. Shiva, Vandana. 2002. Water Wars: Privatization, Pollution, and Profit. South End Press. 158 pgs.
  7. Water: Private, Limited, Issues in Privatisation, Corporatization and Commercialization of Water Sector in India, Gaurav Dwivedi, Rehmat and Shripad Dharmadhikary, Manthan Adhyayan Kendra, Badwani, 2007

 

 

 

 

  • In the article titled 'A hundred days closer to ecological and social suicide' published in the Economic and Political Weekly, the author argues that the recent changes in the government do not seem to have helped in changing the environmental policies of the country. Rather, they reflect regre...
    aarti kelkar kh...posted 4 years 5 months agoread more
  • Sir/Mam, I am from Kapurthala, Punjab, and the TDS in our water is 200. Kindly let us know that whether we should install UV filter or RO filter. Please tell us about it because we are very confused about it because of various models available in the market. I look forward for your useful suggesti...
    Anonymous (not verified)posted 4 years 7 months agoread more
  • Kaladera, a small village about 40 km from Jaipur has always been known for its chaubandi (mud resist printing) and natural dyeing but it has been getting a lot of attention since 1999. No, it's not because of the handicraft but because of Coca Cola, which set up a bottling plant there. Soon af...
    Amita Bhaduriposted 4 years 10 months agoread more
  • Twenty four students were washed away in the Beas river in Himachal Pradesh earlier this month. The students, all from an engineering college in Hyderabad, were picknicking in the river on their way back from the tourist town of Manali. While cooling their heels in the knee deep water and clicking p...
    ravleenposted 4 years 11 months agoread more
  • Get More information about the course on Water Science and GovernanceKnow more about TERI University
    ravleenposted 4 years 11 months agoread more
  • NGOs urge World Bank not to promote water privatizationThe Bank has been funding a lot of such projects in South Asia. Even as they face a lot of problems, they are being cited as models to be emulated elsewhere. Nagpur's Orange City Water is one such project plagued with corruption and service shut...
    ravleenposted 5 years 1 month agoread more
  • Water hardly an agenda for politiciansTwo of the three main political parties in fray for the Parliamentary elections, the Congress and the BJP, have just paid lip service to water conservation, while the AAP is atleast talking about Gram Sabhas holding decision making powers for water projectsPiped...
    ravleenposted 5 years 1 month agoread more
  • Piped water only for 40% of the middle classOnly 15% of the middle class, households with an annual income above Rs. 88,800, get about three hours of water supply says the latest data from National Council for Applied Economic ResearchLow rainfall in Western Ghats means less water for citiesRainfall...
    ravleenposted 5 years 1 month agoread more
  • India will be the hotspot of water crisis by 2025: UNThe United Nation's report on the World Water Day talks about conflicts between India and its neighbouring countries over river water sharing.  Areas of conflict might include Ganga-Brahamputra basin and the Indus and Mekong river basins, say...
    ravleenposted 5 years 1 month agoread more
  • Since water reforms were introduced in India in the 1990s, water privatisation has been propagated as a panacea to the sector's problems. Water privatisation is the process of transferring ownership of basic services or public property from the public sector, which is f...
    makarandpurohitposted 5 years 1 month agoread more
  • 24*7 water relief for BelgaumThe 24*7 water supply by the Karnataka Urban Water and Sanitation Improvement Programme in collaboration with a private company to about 10% the population in the city has been able to curb water-borne diseases due to high pressure in pipelinesArsenicosis widespread but ...
    ravleenposted 5 years 2 months agoread more
  • India's first river interlinking project inuaguratedBJP leader LK Advani inuagurated the first phase of the Narmada-Kshipra river interlinking project in Ujjaini village near Indore. The 432 crore project will lift water from the Narmada with pumps upto a height of 350 metres from a distance of 50 k...
    ravleenposted 5 years 2 months agoread more
  • Drinking water at railway stations highly contaminated: Report50 lakh passengers using Northern Railways drink extremely polluted water. Of the samples tested for coliform bacteria, all in the Lucknow division were found contaminated while 59% were found contaminated in the Moradabad division and 94...
    ravleenposted 5 years 2 months agoread more
  • Ganga full of SuperbugsLevel of multi-drug resistant viruses in the river goes up by 60 times during the pilgrimage season of May-June, say researchers.Wells around ISRO unit contaminated with rocket fuel chemicalAround 40 wells found contaminated with ammonium perchlorate that affects iod...
    ravleenposted 5 years 3 months agoread more
  • Contaminated water killed 13,000 in last four yearsUttar Pradesh had maximum 3,382 deaths followed by West Bengal, Andhra Pradesh and Odisha, reveals data from the Union Ministry of Health and Family Welfare. Diarrhoea claimed most number of lives. Woman slaps AAP MLA over water supply iss...
    ravleenposted 5 years 3 months agoread more
  • 285 people die due to drinking water contamination in KarnatakaData by the Central Health Ministry between 2010 and 2013 shows five major water-borne diseases were responsible. Maximum number of deaths, 113, in the year 2012Delhi Chief Minister to look into Rs 10,000 crore Delhi Jal Board scamP...
    ravleenposted 5 years 3 months agoread more
  • Brahamputra claims four Assam villages 2500 people lost their homes due to erosion along the river while seveal others in Dhubri district are at risk.Minister, mining and manufactured sand Union Minister of State for Commerce and Industry calls for promotion of sand made by a metal to...
    ravleenposted 5 years 4 months agoread more
  • In the 60-odd years since we began managing our own resources, we have managed to throttle and poison all our rivers, suck our groundwater resources nearly dry and shave our forests bald. This is despite a great deal of effort, time, thought and resources that have gone into this 'management'.So far...
    chicuposted 5 years 4 months agoread more
  • On a train journey from Nagaland, a friend and I began talking on the subject of water. He said to me, "You have so much water in the Brahmaputra Valley and your lands are always flooded but we have to struggle for a drop of water in the hills". I said, "You can save us from the catastrophe of flood...
    Manu Moudgilposted 5 years 5 months agoread more
  • Discussions, dialogues and solutions to overcome the challenges of urbanization: A report by CEEW 'Urban Water and Sanitation in India'
    sabitakaushalposted 5 years 5 months agoread more

Pages

Hyderabad sources water for most of its amusements and recreation from villages nearby, depleting groundwater and creating water shortage for the villagers.

An impromptu weekend plan landed me in Wonderla Amusement Park in Hyderabad. My fear of heights made me go only on those rides that seemed slower and lower. These happened to be the water rides, as they were my safest bet. Even if all the safety belts and harnesses of the ride failed, I would just end up falling in the water, with all my bones and skull intact. Nevertheless, I enjoyed myself.  At that point, I never questioned how this park was procuring water for all its rides.

Topics

Sub-Categories

Regions

While the states prepare to build their smart cities, we look at the feasibility of the government’s smart city mission.

India's urbanisation continues unabated but most of its 53-million plus cities offer an appallingly low quality of life. Ten of the world’s 20 most polluted cities are in India as per a report by the World Health Organization.

Topics

Sub-Categories

Regions

Women are not considered farmers despite their active participation in farming in rural India. A gender responsive budget and its implementation are essential to support and empower women farmers.

Sneh Bhati, a 52-year-old farmer from Madanpur Khadar in Delhi’s fringes finds the change in the landscape of her 100-year-old village in the last two decades remarkable. Yet it has not taken away the rural charm. Men still sit for hours at the village chaupal (a common meeting spot) chatting over a game of cards. Sneh, a Gujar by caste, says that most of the work in the household as well as in the farm is done by women.

Topics

Sub-Categories

Regions

The land of gems will have a new government soon. We look at what leading political parties have to say about issues related to natural resources.

The key issue in the Manipur Assembly election is the ongoing economic blockade in the state, which, in turn, is attributed to the present government’s decision to bifurcate districts.

Topics

Sub-Categories

Regions

In our quest to feature unsung heroes who go about their good work silently, we met Pushpa RTI, an enthusiastic right to information activist, who fights for transparency in governance.

With the Right to Information (RTI) Act coming into force in the year 2005, the country saw many RTI activists making the most of it to demand the rights and entitlements of the people from the government. Pushpa, warmly known as Pushpa RTI, is one of them. In 2003, she set up the Bhalaswa Lok Shakti Manch, a citizens’ group working on the outskirts of north-west Delhi to promote transparency and accountability in local governance. Bhalaswa mostly has slum dwellers working in the informal sector.

Attachments

Topics

Sub-Categories

Regions

The new urban water supply scheme in Madhya Pradesh that encourages private sector participation is replete with lacunae, according to an NGO that studied the scheme.

In November 2011, the government of Madhya Pradesh sanctioned Rs 493 crore to 37 Urban Local Bodies (ULB) for drinking water supply projects under the Chief Minister’s Urban Drinking Water Supply Scheme (CMUWSS) along the lines of the Urban Infrastructure Development Scheme for Small and Medium Towns (UIDSSMT).

Topics

Sub-Categories

Regions

Budget 2017-18: Which social sector schemes and ministries got major shares of the pie? An analysis.

The much-anticipated budget this year treads largely on the path set last year with the rural sector receiving more allocation than its urban counterpart. On the surface, the budget indicates an increase in rural spending under the rural employment guarantee, sanitation, water resources and agriculture sectors and an unchanged outlay in drinking water despite its significance.

Topics

Sub-Categories

Regions

The banks of Yamuna have witnessed many forced evictions of illegal settlers over the years. The officials, however, turn a blind eye to encroachment by massive infrastructures.

Shalu’s household was evicted from Koyla Basti of the Yamuna pushta (embankment), a massive slum cluster on the banks of the Yamuna river in the year 2004. Earthmoving machines bulldozed thousands of homes at the site which was to host the Commonwealth Games of 2010.

Attachments

Topics

Sub-Categories

Regions

The holy city of Ujjain is dealing with severe water and sanitation issues. A study reveals serious anomalies in the WASH situation in the city.

Despite all the hype around Swachh Bharat Mission, the situation on the ground remains dismal. The city of Ujjain is located on the western part of Madhya Pradesh on the Malwa Plateau and is primarily a religious tourism centre due to the Mahakal temple. The temple is not only one of the 12 jyotirlingas in India but also has prominence as the location for the Simhastha Kumbh Mela every 12 years.

Attachments

Topics

Sub-Categories

Regions

Water privatisation has a history of failure in India. Why are we still engaging private operators to manage our waters?

In August 2016, the Karnataka government gave Abu Dhabi-based businessman B.R. Shetty permission to privatise the iconic Jog Falls to make it a perennial waterfall and to develop it into a tourism hotspot. As per the newspaper report, Shetty is to invest Rs 450 crore towards the project and charge visitors a “minimal” fee. 

Topics

Sub-Categories

Regions

Pages

Subscribe to RSS - Privatisation