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NEPAL: ‘Privatisation’ Violates Right to Health – Activists

Marty Logan

KATHMANDU, Feb 9 2007 (IPS) - Hiring a private firm to manage the drinking water system in Nepal’s capital violates the right to health guarantee in the country’s interim constitution, activists are set to argue before the Supreme Court.

Four groups are opposing a plan to break up the Nepal Water Supply Corporation (NWSC) in the Kathmandu Valley and disperse its work and assets among three new agencies, one of which will hire the British firm Severn Trent to manage water delivery in the Valley’s five municipalities for six years.

The scheme, which has been approved by Nepal’s new legislature, is a condition tied to building the huge Melamchi project that will divert river water to the capital. It is led by the Asian Development Bank (AsDB).

“Health is a fundamental right. When you say health, that includes water,” says Gopal Siwakoti ‘Chintan’, legal advisor at Water and Energy Users’ Federation-Nepal (WAFED). “What is the guarantee that Severn Trent will continue the supply in a free and affordable manner?” he added in an interview.

The organisations that launched the court challenge also contend that the management contract should have been awarded to a local company and that NWSC should have been given a real chance to reform.

AsDB counters that its plan will devolve responsibility for supplying drinking water and managing wastewater to Nepal’s municipalities, where it belongs, and that the NWSC is not being privatised because 80 percent of the shares in the new utility operator will be held by the central and local governments, making Severn Trent a “private sector participant”. That firm was hired because its expertise is unavailable in Nepal, adds the Bank.


Water supply in the Kathmandu Valley, home to close to two million people, is notoriously poor. Roughly 30-40 percent of people are not connected to the NWSC system, according to Chintan, relying on public water taps, which are unreliable, and springs and other surface water sources.

Many homeowners who have connections supplement the piped supply by tapping groundwater, which supplies 60-70 percent of the Valley’s demand during the dry season. In 2004, the NWSC was supplying only 145 million litres a day to meet a demand of 294 million litres, according to the corporation.

Nor is the piped water potable in many areas. One-half of households tested in the Valley were receiving water that contained no chlorine, the simplest method for disinfecting water, according to a study done by government and NGOs in August 2006.

One of the first tasks for Severn Trent will be installing water meters where none now exist, says AsDB Senior Urban Development Specialist Keiichi Tamaki. That includes at the more than 1,000 public taps where locals now often collect water for free. NWSC currently charges those with meters 50 rupees (0.71 U.S. dollars) for the first 10,000 litres of water and 15 rupees for every 1,000 litres above that.

That base rate will remain unchanged until delivery is improved, says AsDB, but the charge for water supplied beyond 10,000 litres needs to increase by 50 percent to finance operating costs, capital investment and professional management of the new company. The tariff rose 15 percent in September 2004 and will “likely” increase once this year and again in 2008, Tamaki said in an interview.

“People are already paying much more than expected in the form of tankers (to deliver water), diseases and bottled water. When you add up these ‘coping costs’ the increase is easily affordable,” he added.

The Nepal Government says it is too soon to predict if the review board that will be created from splitting the NWSC’s Valley business into three – including the utility operator and management board – would approve an increase. “If the operator wants the tariff raised they will have to make a request to the management board, which will make a request to the Tariff Fixation Board, which is independent,” said Krishna Prasad Acharya, joint secretary at the Ministry of Physical Planning and Works.

“It’s not like AsDB has recommended a 50 percent raise so it has to go up by 50 percent. It could be done like that in the past but now you’ll have to go step-by-step,” Acharya told IPS.

What is certain is that those using public taps will have to start paying a monthly tariff, and that they will not benefit from what the bank calls the “generously subsidised” first 10,000 litres of water. Tap users will pay 70 percent of what homeowners pay for their non-subsidised water, at today’s rates 10.5 rupees for each 1,000 litres. By 2008 that would rise to almost 14 rupees, slightly more than a packet of milk in Kathmandu, according to Tamaki’s projected rate hike.

“In our visits and surveys (to lower income areas) a family is using 15-30 litres a day for drinking and cooking. That’s 450-900 litres a month,” says Divas B Basnyat at the Melamchi project’s Low Income Consumer Support Unit. “They laugh when we tell them how much that will cost because they’d rather pay than get up early in the morning to stand in line for water,” he added.

At the same time, the Unit has also found that low-income people now use other water sources, like spring water, for washing and bathing, but would prefer to use piped water. If they were to start doing that, then their monthly bills would rise.

The Unit is planning to rehabilitate most of the public taps in the Valley. The work will be free but the community will have to set up a users’ group to manage the water. Water in the first year after a meter is installed will be free and it will be piped for half-price in the second year, added Basnyat.

‘Chintan’ asks why such improvements could not be made by the existing NWSC working with Severn Trent. Alternatively, “Hand the operating system to the municipalities so they own the board, the management and the profit. Then they will have the incentive” to provide quality service, he suggests.

“In all legal, political and technical terms, (the plan) is a privatisation,” he adds. A public institution will be de-authorised and all its wealth and functions transferred to a Nepali private company and ultimately to Severn Trent.”

According to Tamaki, “A number of (reform) models were tried by the World Bank from the late 1970s to the early 2000s and failed…in the eyes of the donor community the NWSC is a non-starter.”

Water expert Ajaya Dixit disagrees. “It was never given an opportunity to reform,” he told IPS. “Its creation (as a board to usher in a World Bank water supply project) was greatly flawed. It ended up basically becoming a procurement agency. The law said it had to follow central government directives and a minister sat on the board.”

“You can do things when you’ve been given responsibility but responsibility must be given,” added the founder of the Nepal Water Conservation Foundation.

In an email, a Severn Trent employee told IPS he could not discuss the management contract now. Media here have highlighted the UK firm’s recent overcharging of customers, which led to a probe by utility regulatory Owfat. It found, “Severn Trent Water had provided regulatory data that was either deliberately miscalculated or poorly supported”. The firm must refund customers 42 million pounds (82.2 million dollars) by 2009.

The investigation into Severn Trent’s “customer service performance failures is still continuing”, Peter Mandich from Ofwat’s press office told IPS via email.

The AsDB is unconcerned, says Tamaki. “Disputes between operators and regulators are not uncommon at all…Severn Trent was very cooperative in the first instance – they realised (the miscalculation) themselves and reported it.”

 
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NEPAL: ‘Privatisation’ Violates Right to Health – Activists

Marty Logan

KATHMANDU, Feb 9 2007 (IPS) - Hiring a private firm to manage the drinking water system in Nepal’s capital violates the right to health guarantee in the country’s interim constitution, activists are set to argue before the Supreme Court.
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