Privatisation of SA water - who benefits?

By Claire Roy

Director-General of Water Affairs and Forestry, Mike Müller, has dismissed the furious debate surrounding the privatisation of South African water (a major theme for the placards and slogans of anti-privatisation marchers on Saturday) as "artificial". Müller spoke to Witsnews this week, and following that interview, economist Dr John Pape of the International Labour and Resource Information Group (ILRIG) responded on behalf of the anti-privatisation lobby.

"We get quite impatient with this debate in South Africa because it is not based on fact," Müller said. Attempting to clarify the government's policy on water, Müller explained that they run a programme that makes access to water a right. "We have said that all must have access to water, that's not negotiable," he emphasised. "What isn't an issue is who provides that water."

Municipalities supply water and they must decide how best to do the job given them by the government, Müller said. "If they decide they can't do the job themselves, what is the answer? Should they not supply basic services? Should they leave the poor without water? Or should they use the private sector?" he asked. Pape does not accept this logic. “ Muller is diverting attention from the central issue about water service delivery: whether it is to be driven by the profit motive or the notion that people have a constitutional and human right to water,” says Pape.

For Pape “ there seems to be a very different reality on the ground” about access. “According to Municipal Services Project research published in our recent book, Cost Recovery and the Crisis of Service Delivery in South Africa, access remains an enormous problem.” Pape cites Human Sciences Research Council figures that roughly 10 million people had experienced water cut-offs since 1994. And he points out the social implications of these cut-offs. “In KwaZulu-Natal, the imposition of prepaid taps which required a R50 registration fee was a major contributing factor to the most widespread cholera outbreak in recent history. Clearly in many municipalities across the country cost recovery and fiscal discipline are the non-negotiable items. Access rates a distant second.”

Müller’s main reason for characterising the debate about privatisation artificial is that water is only privatised in three towns, amounting to two percent of the population. The current debate about privatisation, he said was "off the mark". "If we spend more time campaigning on how to make local government work and less on mythical privatisation, we'll achieve our goals faster," he maintained.

"But you'll hear different stories from our friends in the lobbies", he continued. "We challenge them to show where it says that the private sector has preference." Dismissing campaigners, Müller said that the present outcry is the kind situation that occurs when the world's eyes turn to South Africa and "people try to get attention".

Müller however, refused to confirm that privatisation was not on the cards for South Africa. "Municipalities can decide if it's the best way to meet people's needs. They have an obligation to do it - it is the preferable option to remain public," he said.

However, he added that if the three municipalities who have "experimented" with the private sector show that it does a better job, a good case would then be put forward for introducing the private sector. "But this is a challenge for the public sector to get on with its job and a challenge for those who don't want to see the private sector come in - that's what we're encouraging."

Again, Pape questions this interpretation and suggests that what is really going on is a process of “privatisation by stealth.

“Witness the setting up of the Municipal Infrastructure Investment Unit (MIIU) which has spent millions promoting partnerships between local authorities and the private sector. While Müller only notes three municipalities where water has been privatised, in fact dozens of municipalities across the country have outsourced key functions of the water service to private companies: meter reading, cut-offs, collections and maintenance.”

Pape says many more opportunities for the private sector are being set up through the creation of business units, utilities and other structures which lay the groundwork for water service to be operated as a profit-making entity. “Furthermore, our interviews with workers in dozens of municipalities reveal that when employees leave the service they are not replaced. Eventually the capacity of the municipality to deliver is undermined and the local authority allegedly has ‘no alternative’ but to bring in the private sector.”

Pape also questions the assertion that private companies may be a better option for extending access and improving the service. “Even in those cases which Muller likely considers to be ‘privatised’, citizens have not benefited. For example, MSP research in the Eastern Cape area of Fort Beaufort, Queenstown, and Stutterheim has shown increases in cut-offs and tariffs of an astronomical proportion. In Fort Beaufort, water tariffs nearly quadrupled in five years. In Stutterheim, tariffs almost doubled in the first year. In Stutterheim’s Mlungisi township, 20% of residents had their water cut off in the second half of 1997. Less than a third had reconnected six months later. Rising tariffs and harsh cost recovery are hallmarks of privatisation – or municipalities which try to operate like private businesses.” Muller was also keen to downplay the controversy around “mega-dams” such as the Lesotho Highlands Water Project. He said that without such dams, the whole industrial heartland of the country would stop and South Africa would only be able to support 10 percent of its population. "If it wasn't for the Lesotho dams", he added, "the delegates would be very smelly at the moment."

"We don't believe that South Africans want to close down industry or live without adequate water supply," he said, adding that the era of mega big dam building was coming to an end with R12 billion allocated for the next 25 years. "To achieve quality of life we must build infrastructure", he said, insisting that what is built will be done "responsibly and in consultation with the people affected."

But Pape argues that the international experience is not a positive one in terms of development and sustainability. “In fact, across the world the experience of water privatisation and cost recovery models is becoming a scourge on the poor. In Cochabamba, Bolivia water tariffs which cost up to 25% of workers’ wages led to a general strike. Eventually the transnational company involved, Bechtel, was driven out. In Buenos Aires, Argentina, the French transnational Suez promised a tariff reduction of 26,9%, only to change their tune and increase the tariffs by 13% in the first year of the contract. Given these and similar experiences in countries as diverse as Ghana, Peru and even parts of Canada, little wonder that privatisation is a source of debate and concern in South Africa,” he says. -- Witsnews

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August 2002