DEVELOPMENT: Water Privatisation Foes Highlight Ghana Deal

By Emad Mekay Reprint | | Print |

Emad Mekay

WASHINGTON, Nov 9 2001 (IPS) - Plans to open a major water plant to foreign investors in Ghana will block access to clean water and increase poverty in the West African nation, according to critics of the scheme.

Ghanaian organisations opposed to the possible privatisation of the state-owned Accra-Tema water facility planned to launch Friday a nationwide protest march to coincide with the opening of the World Trade Organisation ministerial meeting in Doha, Qatar.

“There’s a wide spectrum of groups that are against the Accra-Tema going into private hands,” said Sarah Grusky, co-director of the non-governmental, Washington-based Globalisation Challenge Initiative.

“You can sense the mounting anger and resistance by simply looking at the local newspapers,” she added.

The Ghanaian coalition and its Washington-based partners also are collecting signatures for a letter to be sent to the World Bank, the International Monetary Fund (IMF), and to the President John Kufuor of Ghana. The letter urges them to reconsider the sale.

According to Ghanaian media reports, the bidding process for Accra- Tema is near completion, with five multinational corporations in the running.

However, the World Bank, which is providing advice and loans to the government in Accra, denied the project is even up for sale.

Rather, the companies are bidding to manage the project for ten years, said a Bank official.

David Henely, who heads the Bank team overseeing Ghana’s water sector reform programme, told IPS the multilateral lender has provided 1.7 million dollars toward feasibility studies.

“This is not a privatisation process,” Henely said. “All assets will remain in the ownership of the government.”

A Ghanaian diplomat here said his government was not selling the water service. “We are not selling the facility,” he said on condition of anonymity. “We are not thinking of selling it, at least for now.”

However, he did not rule out the possibility of a sell-off later, saying this would depend on performance under private management.

“We’ll have to wait to see how the company that will manage the utility will perform in terms of profits,” the diplomat said. “We do not want the project to add more burdens on the government’s budget.”

A winning bidder for the management contract would be announced “early next year”, according to the embassy staff member. Henely, however, said he did not expect the process to be finalised before “later next year.”

The Bank official said foreign management would be aimed at reducing the irregularity with which water is delivered, especially to Ghana’s poor. “A few expats” – or expatriates – would start off running things, he said, but in time local staff will have acquired the expertise to manage for themselves.

Ghana’s water infrastructure supplies some 115 million gallons per day, according to the Bank. Of this, Accra-Tema, the country’s largest facility, accounts for some 60 million gallons daily.

Henely, who will supervise the transfer to private management of other projects in Ghana, says the new managers hope to improve efficiency and thereby preserve water. At present, according to project figures, some 56 percent of the facility’s output is unaccounted for and much of it likely is simply wasted. In response, water service charges are to be raised.

Poor people, he emphasised, “have been considered very seriously.”

“This is all about poor people,” Henely declared. “They will be able to turn on their taps and find running water.”

Labour unions and civil society groups in Ghana and United States said they remained unconvinced, however.

The Ghana National Coalition Against Privatisation of Water, in a statement, termed the Bank-supported effort part of “the worldwide attempt to commodify water for the profit and benefit of a few.” Coalition members include the country’s Christian Council, Trade Union Congress, National Association of Teachers, and Registered Nurses Association. They said water privatisation in the country is on “a fast track” – official disavowals notwithstanding.

The Ghana Water Company Ltd., which oversees national distribution, is embarking on an ambitious effort to improve urban water supply by the year 2010 with private help. The World Bank said local firms might take part in similar but smaller rural schemes. By some estimates, only 36 percent of people in the countryside have access to piped water.

The initiatives fall under agreements made by the government in Accra in exchange for continued financing and consideration for debt relief by the Bank and IMF. Although the country is rich in natural resources and has twice the per capita output of some of its poorer neighbours, it remains heavily reliant on international aid and loans – especially amid the currency devaluations and export commodity price slumps of recent years.

In August, IMF officials commended the government for raising the prices of petroleum products, and tariffs for electricity and water, in order to “stem the current losses experienced by the respective public enterprises.”

Ghana is required to increase consumer fees for water even as it pursues privatisation, and to open up its oil, telecommunications, and electricity sectors to private players. If it does not meet these performance criteria, the institutions can hold back on disbursements of funds, according to Globalisation Challenge Initiative’s Grusky.

“There is widespread international concern about privatisation and cost recovery policies that treat water primarily as a commodity, or an economic good, to be bought and sold in the marketplace,” the Ghanaian coalition reiterated.

“By imposing water privatisation as a condition for access to Bank resources, there is a risk that the pressure on the government will reduce accountability to the concerns and viewpoints of citizens,” its statement said.

These concerns include the mysterious method by which investors determine service charges; in some instances, these already consume nearly half the minimum wage yet are considered by some to be below ‘market rate’.

Similar controversies in other developing countries have sent angry populations to the streets. In April 2000, violent protests broke out in Bolivia following the privatisation of the water supply in the city of Cochabamba and the raising of tariffs by as much as 200 percent.

South Africa’s Anti-Privatisation Forum, a collective of community- based organizations and labour unions, embarked on a two-day strike in November to protest privatisation of local government services including water.