DEVELOPMENT-ASIA: Privatisation Will Abandon the Poor – Critics

By Marwaan Macan-Markar Reprint | | Print |

Marwaan Macan-Markar

BANGKOK, Nov 6 2002 (IPS) - A small but growing number of activists in Asia are forging new alliances to resist further attempts by the region’s governments to privatise the energy sector.

In countries such as India, Sri Lanka and Thailand, employees of government-run electricity utilities have been going on strikes and placard-carrying citizens have been holding demonstrations outside government offices.

In Thailand, for instance, a recent demonstration attracted more than 3,000 people from 24 unions and democracy groups to a protest rally here, in the Thai capital.

In the Philippines, political parties such as the left-leaning Bayong Alyansang Makabayan (New Nationalist Alliance) are in the vanguard of such protests along with other public interest groups.

”There are many troubling factors about (energy) privatisation,” says Subodh Wagle, a ranking member at Initiatives in Health, Energy, Learning and Parenthood (Prayas), an Indian-based non-governmental organisation.

Not least, Wagle said, is the ”secrecy, haste, opacity and lack of sound analytical foundations” that mark the decision-making process leading to the privatisation of energy, often undertaken by governments in a bid to expand coverage of services and plug inefficiencies.

Activists often trot out as the best example of corruption linked to privatisation the manner in which the failed U.S. energy giant Enron gained a foothold in India’s Maharashtra state to supply power through a subsidiary, under circumstances disadvantageous to the state.

This was achieved through secret negotiations that violated India’s Electricity Supply Act. The Enron contract was finally suspended last year.

But activists see other problems with the privatisation of energy. ”The decision of privatisation and reforms are based on the wrong diagnosis, which puts all the blame for the current performance and financial crises at the door of public ownership,” Wagle said. ”(This) leads to wrong prescriptions, which focus on the change of ownership.”

Since the nineties, along with the push for the privatisation of water services, Asian governments have been letting the private sector take on what was traditionally a state domain the provision of electricity.

Often, this is part of economic reforms that equate the entry of the private sector and competition with efficiency and a stop to huge financial losses of state electricity enterprises.

By this logic, the private sector can bring more capital and provide more efficient services, but activists say its supposed benefits must be weighed against the larger public good.

Profit-oriented ventures may appear to be more efficient and more capable of plugging system losses and theft of electricity. For instance, it is estimated that more than half the electricity supplied to the Indian capital of New Delhi is siphoned away or stolen, which is why corrupt politicians and officials fought the privatisation of the capital’s power utility in July this year.

But the private sector also often increases prices and do not have the state obligation to balance profit with equity and give more access to the poor, critics add.

Privatisation policies leave the public vulnerable, says Nepomuceno Malaluan, senior analyst at the Manila-based public advocacy organisation, Action for Economic Reforms. ”The results for the public are high electricity rates, high probability of private market power, loss of control over environment regulation and lesser consumer protection,” he says.

For instance, Malaluan argues, ”The biggest sources of disaster for Philippine power sector privatisation has been the private sector fundamentalism of the Asian Development Bank and the World Bank and an unaccountable Philippine government.”

Before the privatisation trend came about, ”the government was the planner, developer, financier, manager, producer and distributor of electric power,” states Thomas Smith, a social scientist at Dubai’s Zayed University, in a paper at a recent seminar here on the privatisation of power.

But the International Monetary Fund, the World Bank, the AsDB and other U.S. development agencies provided ”Asian policymakers with strong arguments supporting deregulation and privatisation,” he adds.

The consequence is evident in the Philippines today, where over 55 percent of power plants are in the hands of the private sector. This percentage will increase due to a June 2001 law declaring that power generation ”is not a public utility operation,” according to Malaluan.

In Thailand, the state-owned Electricity Generating Authority of Thailand (EGAT) supplies 64.5 percent of power needs and the private sector supplies the remaining 35.5 percent, says Suphakij Nuntavorakarn, a Thai researcher specialising in energy and electricity policy.

”Privatisation in Thailand up to now has happened to power generation only. (Electricity distribution) is a state-owned enterprise,” he adds.

Currently, close to 99 percent of villages in Thailand receive electricity, a success story not shared by Sri Lanka, India or some of the other developing countries across Asia.

In fact, activists believe that privatisation will make it even harder for many Asian countries to catch up with other nations like Thailand, saying the inroads made by the private sector into state-run utilities will mean less people having access to electricity.

Thailand has 1,352 kilowatt-hours of electricity consumption per capita, compared to Singapore, which has the highest per capita consumption of electricity in South-east Asia at 6,541 kilowatt-hours per capita (kwhpc), according to the U.N. ‘Human Development Report’ for 2002.

The Philippines has 454 kwhpc and Burma, on the lower end of the scale, has 71 kwhpc.

In South Asia, the same report says, India has 379 kilowatt-hours of electricity consumption per capita, Sri Lanka has 255 kwhpc and Nepal, on the lower end, with 47 kwhpc. ‘ ”A price increase is unavoidable under privatisation,” says Asoka Abeygunawardana, an electrical engineer at the independent Energy Forum of Sri Lanka, an independent organisation pushing renewable energy technology. ”Hence the poor and the lower middle class will find it difficult to purchase from the national grid.”

”There is no possibility that the shift to private ownership would lead to increased access to the Indian public,” adds Wagle. ”The private companies – driven by the logic of profits – have no real incentive to reach out to these people.”

DEVELOPMENT-ASIA: Privatisation Will Abandon the Poor – Critics

By Marwaan Macan-Markar Reprint | | Print |

Marwaan Macan-Markar

BANGKOK, Nov 6 2002 (IPS) - A small but growing number of activists in Asia are forging new alliances to resist further attempts by the region’s governments to privatise the energy sector.
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