privatisation of water

People’s Democracy

Organ of the Communist Party of India (Marxist)


No. 39


Corporate Takeover of Water

Amit Sen Gupta

antiquity it has been assumed that water is a common resource that can

and should be shared according to the needs of people. This assumption is

being challenged across the world, as water becomes a scarce resource.

Already 160 km3 of water is pumped out each year from groundwater sources

that are not replenished. In Africa and parts of Asia women spend an average

of 3 hours every day to collect water. The global demand for water has

increased more than six fold over the past century — more than double the

rate of population growth, and 1.1 billion people in the world do not have

access to safe water.

answer to the huge challenge of managing water resources could have been

sought in a framework of equity and pledging of greater public resources.

Instead it is sought to be located in a framework that advocates

privatisation of a resource that was long considered a key public resource.



The World Forum on Water (in which all major countries of the world

participated and which came out with a Ministerial Declaration), that took

place in the Dutch city of The Hague in March 2000, and organised by the

World Water Council (WWC), overtly proposed the commercialisation of water

through a world wide private oligopoly. It is a proposal that has been

echoed by multilateral agencies such as the World Bank. The World Bank has

even advanced the increase of water prices to force a reduction of demand.

Interestingly the World Water Council includes two French Companies – Suez

and Vivendi – which are the largest water Multinationals in the world!

Vivendi Water calls itself “the world’s leading provider of outsourced and

privatised water and waste water treatment services and systems”, a

characterisation that Suez Lyonnaise des Eaux also applies for itself. While

Vivendi claims to have 110 million customers in more than 100 countries all

over the world, Suez claims to supply water to 115 million people in 130

countries in five continents.

The global oligopoly on water that exists today is formed by Suez and

Vivendi, along with eight other private British and U.S. companies,

including Thames Water, Biwater, and others. Thus the international

committee that studies the global problem of water is at the same time

partially controlled by the companies that eventually would profit from the

solutions the committee proposes. It is hence not surprising that the

“integrated water resources management” proposed by the WWC strongly

advocates “handling water as just another merchandise, whose just price can

only be set by the market.”

The World Water Forum in its Hague document defined access to water as a

“universal need” as opposed to a “human right”. This was
consciously done as

defining the access to water as a human right would have restricted the

freedom of private institutions involved in water management.



Subsequent to the Hague Declaration on Water Security in March, 2000, the

World Water Commission, Global Water Partnership, World Water Council and

the World Bank, in their own ways, have been advocating global water

management as a response towards the water crises around the world. The

lynchpin of the vision of multilateral financial institutions like the World

Bank, as articulated in the World Water Vision, is that: Water is now more a

commodity than a natural resource. To understand the underlying principles

of the new approach one has to look carefully at the “word Water

that was issued after the Hague Conference.

The World Water Vision while not addressing the issue of water quality

degradation through urban and industrial use, blithely advocates that

efficiency is achieved through pricing and privatization. It explicitly

states that pricing water will lead to equity, efficiency and

sustainability. It states: “Because of its scarcity, water must be treated

as an economic good. To give this concept meaning, this Report recommends

that consumers be charged the full cost of providing water services”.

Clearly opening the way for entry of the private sectored, the Vision

statement argues that: “More investments are needed in water infrastructure

– from current levels of $70-80 billion a year to about 180 billion, with

$90 billion coming mainly from the local private sector and

Such an argument has a familiar ring – we have heard it when projects like

the Dhabol project by Enron were justified on the plea that they would bring

in private investments in public utilities.

A further push towards privatisation of water is going to come soon through

discussions under the General Agreement on Trade in Services (GATS). While

no WTO member has made a commitment under GATS on services related to water

distribution, it is an area that is likely to see intense lobbying soon.



Let us turn to the record of one recent example of water privatisation. In

1999, the Bolivian government, under heavy pressure from the World Bank,

sold Cochabamba’s public water system to Bechtel’s Aguas del Tunan. Details

of the deal still remain secret, with Bechtel claiming the numbers

constitute “intellectual property”!

That Bechtel’s subsidiary was intent on obtaining maximum returns on its

investment, as quickly as possible, is clear. Within weeks of hoisting their

corporate flag over local water facilities, Aguas del Tunari slammed

water-users with rate hikes of double or more. Protests against the move

became so sustained that President Hugo Banzer was forced to clamp martial

law in response to weeks of protests, general strikes and transportation

blockages. While ninety percent of Cochabamba’s citizens believed it was

time to return the water system to public control, the government insisted

otherwise. Ultimately the government had to give in and Bechtel was thrown

out of Bolivia.

Bechtel is a global giant, with more than $12.6 billion in revenue in 1998.

IWL is its subsidiary through which it pursues water-privatisation schemes.

Bechtel claims that IWL “with its partners, is presently providing water

wastewater services to nearly six million customers in the Philippines,

Australia, Scotland, and Bolivia and completing negotiations on agreements

in India, Poland, and Scotland for facilities that will serve an additional

one million customers.”

The World Bank’s role in the Bolivian fiasco is worth recounting. A Bank

spokesperson argued that giving public services away leads inevitably to

waste, and said that countries like Bolivia need to have a “a proper system

of charging.”

Bechtel, seeking to pin the blame on anything but its own irresponsible

corporate venality, released a statement claiming that “a number of other

water, social and political issues are the root causes of this civil

unrest.” Moving to shift the blame, Bolivian government it said the

“subversive” protest was “absolutely politically financed by

narcotraffickers. But the uprising had nothing to do with drugs: It was all

about water. And the real culprits were not narcotraffickers but the

well-groomed executives of the Bechtel Corporation sitting smugly in their

San Francisco Financial District offices a hemisphere away.



The newly formed Chhattisgarh State has privatised water supply from a

semi-perennial river Sheonath. This is the first case of a river water being

handed over to private interest in India. Called the Rasmada scheme, it is

owned by a local entrepreneur called Kailash Soni. The scheme, commissioned

18 months ago, supplies water to the Chhattisgarh State Industries

Development Corporation, which has bulk buyers in distilleries, sponge iron

units and thermal power plants (for instance, the Bhilwara group’s Hindustan

Electro-Graphite Industries or HEG). Currently, the Rasmada scheme can

supply 30 million litres/day to the CSIDC.

Prime Minister Atal Bihari Vajpayee in his speech to the National Water

Resources Council said that “the cornerstone of the new National Water

Policy should be an explicit recognition that water is a national resource

and …the policy should also recognise that the community is the rightful

custodian of water.” But with his government attempting to outdo

republics” in their blatant attempts to sellout to corporate interests,

Bolivia may well be repeated in this country.