Water privatization a controversial step around the world<\/p>\n
Moch. N. Kurniawan, The Jakarta Post, Phnom Penh, Cambodia<\/p>\n
The privatization of water distribution has caused controversy
\nnot only in Indonesia but also in other parts of the world,
\nparticularly in neighboring Asian countries.<\/p>\n
Most people doubt that the privatization of water services
\nwill result in the people having greater access to clean water.<\/p>\n
During last month's East Asian Journalists Workshop on Water
\nPolicy in Phnom Penh, Cambodia, many participants expressed
\nskepticism that the involvement of private firms could
\neffectively expand and improve water distribution.<\/p>\n
Many water privatization programs adopted by developing
\ncountries and territories such as Bolivia, South Africa and
\nPuerto Rico have failed to meet expectations.<\/p>\n
During the workshop, which was sponsored by the World Bank
\n(WB) and the Asia Development Bank (ADB), many participants said
\nprivate firms would only work for the interests of their
\nshareholders, and thus would focus on making a profit rather than
\nexpanding services for the people. They also feared that the
\ninvolvement of private firms would limit people's access to
\nwater.<\/p>\n
But other participants said state-owned companies could not be
\ntrusted to deliver consistent and quality tap water services,
\nthus making the involvement of other parties necessary.<\/p>\n
Responding to the controversy, the WB and ADB emphasized the
\nneed for the privatization of private firms, public-private
\npartnerships and autonomous and accountable service providers to
\nimprove and expand the delivery of water services, including tap
\nwater, irrigation and drainage.<\/p>\n
"It is necessary to involve private firms in managing water
\nservices, as the government will never have enough funds to
\nfinance the expansion of water services amid the growing demand
\nfor water," Wouter T. Lincklaen Arriens, a lead water resources
\nspecialist at the ADB said.<\/p>\n
Indonesia, China, Vietnam, the Philippines and Thailand will
\nrequire some US$47 billion through 2010 to meet the rising water
\ndemand from a growing urban population, according to WB data.<\/p>\n
But to lure investment to the water sector, one important
\nthing that must be considered is that the water rate structure
\nmust be able to recover the costs of the business, which does not
\nhappen at present, Arriens said.<\/p>\n
The fees in many developing countries imposed by the
\ngovernment on private tap water providers are higher than tap
\nwater rates charged customers, causing tap water providers to
\nsuffer losses.<\/p>\n
In regard to irrigation services in developing countries, the
\nexemption of farmers from paying water charges and for irrigation
\nsystem maintenance has resulted in poorly maintained irrigation
\ninfrastructure and an unreliable water supply for farmers.<\/p>\n
In the bottled water business, however, there is no serious
\nproblem for private firms, which are operating in many developing
\ncountries with few complaints about their presence.<\/p>\n
Arriens said that if water rates were higher than costs,
\n"money would be available for maintenance, sustainability, future
\ngrowth and expansion would be ensured, poor people would be
\nconnected to water and people would be aware of the value of
\nwater".<\/p>\n
The success of water privatization in the East Zone of Manila,
\nthe Philippines, is a good example of a private tap water firm
\nmaking a profit and increasing its service from three million
\npeople in 1997 to four million people in 2002. Water rates in
\nthat zone stand at 17 US cents (about Rp 1,500) per cubic meter.<\/p>\n
The failure of water privatization in several developing
\ncountries should be analyzed case by case, to find out whether
\nthe problem was the inefficiency of the private firm or other
\nfactors, Arriens said.<\/p>\n
For example, he said, in the West Zone of Manila, a private
\ntap water firm failed to meet its expansion target because it was
\nshouldering a huge amount of debt from the previous state-owned
\ncompany and had to pay the debt in the short term.<\/p>\n
Thus, good regulations to ensure that private water providers
\ndo not ignore public interests are definitely required, Arriens
\nsaid.<\/p>\n
As the WB and ADB persist in promoting water privatization,
\nnon-governmental organizations (NGOs) under the Indonesian Forum
\non Globalization (INFOG) and farmer associations at home continue
\nto campaign against privatization.<\/p>\n
Rather than depending on investment from private firms, INFOG
\nsaid public funds and taxes should be used to finance the
\nexpansion of water services.<\/p>\n
The group also raised concerns that access to water would be
\nlimited and only the rich would get improved access under water
\nprivatization.<\/p>\n
It urged the government to maintain the role of state-owned
\ncompanies in managing various water services, but demanded these
\ncompanies be transparent about their plans and performance.<\/p>\n
Indonesia, with the support of the WB, is preparing a law on
\nwater resources that would allow for the great involvement of
\nprivate firms in managing water services.<\/p>\n
Thus, it is unlikely that the drive toward water privatization
\nwill stop, unless the people force the government to back down,
\nas they did over the increase in utility prices.<\/p>",
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