NGOs Ask Donors to Drop World Bank Water Privatization

THE HAGUE, The Netherlands, May 21, 2007 (ENS) - More than 138 civil society groups and trade unions from 48 countries are urging donor governments to withdraw their support for an agency of the World Bank determined to privatize the supply and delivery of water. The campaigners say that water, like air, is so essential to life that access to it is a human right, and water should not be treated as a commodity.

In an open letter, groups argue that the bias of the Public-Private Infrastructure Advisory Facility, PPIAF, towards private sector "solutions" to water access represents a poor use of aid money. PPIAF works in a range of sectors including transport, and telecommunications, but this open letter is directed towards the agency's activities in the water sector.

Coordinated by the World Development Movement, Friends of the Earth International, the Norwegian group FIVAS, and the Transnational Institute, the letter was released ahead of a May 23 meeting of the 13 donors to PPIAF.

Current donors are the Asian Development Bank, the World Bank, the European Commission, and the governments of Canada, France, Germany, Italy, Japan, the Netherlands, Sweden, Switzerland, the United Kingdom, and the United States.

The UK is the largest donor by far, contributing over 50 percent of PPIAF’s funds, an amount which totals £53 million (US$104 million) from 1999 through 2008.
water pots

Women fill the pots lined up near a public water source in the city of Bangalore, India. (Photo courtesy India Water Portal)
Earlier this year, the Norwegian government announced that it will not support PPIAF in the future as it no longer believes the agency is increasing access to water for the poor.

In their open letter to PPIAF’s remaining donors, the groups say, "The evidence shows that the private sector has shown a great reluctance to commit finance to connecting the poorest people to clean, affordable water."

"Our conclusion is that aid could be better spent and we ask donors to withdraw this funding accordingly," wrote the nongovernmental organizations, including some from poor countries where PPIAF has funded water privatization processes.

Elías Dias Pena of Friends of the Earth in Paraguay says, "In Paraguay, despite public protest and a parliamentary vote against it, water privatization is still pushed by the PPIAF, the International Monetary Fund and powerful private companies. But opposition remains strong."

"A new law on water developed by civil society groups and members of Parliament declares water a property of the state and access to water a fundamental human right," said Pena. "The law is awaiting its final vote in the Paraguayan chamber of deputies right now."

PPIAF says its activities in the water sector help people to obtain clean drinking water. In a statement issued in advance of the May 23 meeting, PPIAF says, "Solutions don’t have to be either public or private - everyone can benefit from creative partnerships that recognize the strengths of both."

"Private companies, from small businesses selling water through kiosks to local and international operators with global expertise, have much to offer," the agency says.

To reach the targets set out in the United Nations' Millennium Development Goals, investment needs to double, PPIAF says, pointing out that 55 countries are already off track to meet their goals.

"The public sector, which now funds about 70 percent of infrastructure needs, can’t do it alone. Donors, the private sector, and consumers all must play their part too," says PPIAF.

As an example of its positive results PPIAF points to one of the projects it helped to finance in Kenya.

"In Kenya community-owned piped water systems are run on a commercial basis, with little support from the government," PPIAF explained. "To help pave the way for market-based lending to small water providers, PPIAF and partners launched a pilot project to build up business development services to support them - such as business planning, construction management, access to markets, and audit features."

"Now under way, the pilot will also identify innovative instruments to make loans more accessible to small, community-owned piped water systems," PPIAF said.

A shallow well with handpump in the Lower Tana area. (Photo courtesy KWAHO)
A multi-donor trust fund, The Global Partnership on Output-Based Aid, established in 2003 by the UK's Department for International Development and the World Bank, is providing financial support with subsidies covering 40 percent of the total project cost.

"These 21 subsidized systems will serve 60,000 people," PPIAF said.

But Afsar Jafri from Mumbai Paani, a citizens’ coalition against water privatization in India, says, "PPIAF does not believe in democratic governance or public utilities and basically acts as an agent of corporations on behalf of the World Bank."

"This has been demonstrated in Mumbai where consultants from Castalia - funded by PPIAF and the World Bank to conduct a study on water distribution improvements – have recommended handing over water services to private contractors in their final report," said Jafri.

Denied permission to observe PPIAF’s annual meeting, campaigners are organizing a forum in The Hague on Tuesday to discuss PPIAF, its role within the World Bank and progressive alternatives in the area of water.

On PPIAF’s agenda is a proposal to extend its remit further and give the agency a stronger role in World Bank water policies.

Demonstration against water privatization in Los Angeles, California. (Photo courtesy Sierra Club)
Activists believe that donors should reject this extension and instead create a wholly new fund to support water utilities in the global south based on "public-public partnerships."

They argue that PPIAF undermines the right of poor countries to decide how to run their public services.

PPIAF has funded projects in many poor countries where international financial institutions such as the World Bank and the International Monetary Fund have attached water privatization conditions to loans, debt relief or aid.

Campaigners are particularly critical of PPIAF’s funding for "consensus-building" projects which try to persuade stakeholders in developing countries to accept water privatization.

In a report published last year, campaigners said that since 1999, PPIAF has funded one or more processes aimed at developing private sector participation or privatization in water and sanitation services in 37 countries.

In at least 16 countries, PPIAF has sought to "build consensus" for water privatization projects.

Building consensus refers to activities that promote the benefits of privatization or particular privatization options andattempt to persuade skeptical members of governments, parliaments, business, trade unions, civil society and citizens that privatization is in their interests.

In at least 18 of the countries in which PPIAF has worked on water privatization, donors have made their support conditional on privatization.