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Status Report: Where we are with the privatization of water in Ghana
Rudolf Amenga-Etego
In 1993 the Government of Ghana [GOG] embarked upon a WB driven restructuring program for the water sector. The reforms included separating the responsibilities for urban and rural water and sanitation. In 1998, a group of British and American consultants worked on the business framework for private sector participation in Ghana water supply and issued a report recommending that the government should lease the urban water systems [packaged into two business units] to two private operators. The current supplier, the Ghana Water Company Limited, which is publicly owned, would be downsized and restructured to play the role of a nominal asset holder. At stake are 80 systems distributed through out the country. The recommendations also led to the setting up of the Community Water and Sanitation Agency [CWSA] to manage community water systems in conjunction with District Assemblies.
By the close of 2002, five multinational corporations had been pre-qualified and bidding was underway. Under the original arrangements, each successful bidder was expected to invest $70 million in rehabilitation, renewal and improvement of the water systems. However, due to the groundswell of resistance against the privatization and the desire of the corporations to minimize risks in the face of the resistance, the five pre-qualified corporations became increasingly hesitant and unwilling to invest at the $70 million level. A second document was circulated among the donors and creditors, which reduced the financial commitments of the private companies from $70 m apiece to $30m apiece. The private corporations rejected this document in June 2002 because even the $30m from each successful bidder was considered too high. By February 2003 it was obvious that the contract as originally drafted would not fly principally because the five pre-qualified corporations were insisting on a nil investment, an option that was not attractive to the government of Ghana. Meanwhile a proposition made to the government of Ghana (GoG) by the National CAP of WATER through the former minister of Works and Housing [Mr. Yaw Barima] calling for a tripartite meeting between itself, the G oG and the WB to move the process forward was disregarded.
Management service contract
In July 2003 the new minister of Works and Housing reached agreement with WB to go ahead with the privatization under a “new arrangement.” The new arrangement specified a five - year management service contract beginning from the year 2005 to be followed by 10-25 year lease renewable. It should be noted that it is standard WB policy to resort to a management service contract whenever there is resistance to a lease or concession and get back to it as soon as things “cool down” In furtherance of this the Water sector restructuring secretariat has been downgraded to a “project “ office with Mr. Emmanuel Nkrumah [an engineer by training] as the project manager and Mr.Emillion Ashon as the communications man. With this arrangement policy matters are now tightly and exclusively the preserve of the Minister for Works and Housing.
Contract Drafting Committee
According to Mr. Emmanuel Nkrumah a new contract drafting committee has been set to specifically provide for a management service contract dovetailing into a lease. According to him a final draft of the contract is ready for submission to cabinet. Significantly the national CAP of WATER, which remains the only organized opposition to the privatization agenda, has been ignored and a demand for a copy of the draft contract has so far been refused. It will appear that the lessons from the rancorous years of 2001 and 2002 have not meant much to the government and the WB. They are continuing the old way picking and choosing the “civil groups” they want to deal with. True to style they have hand picked Dr. Ferdinand Tay formerly of the National Development Planning Commission and now with a Consumer organization to represent “civil society”. Like the proverbial ostrich they have buried their heads in the sand refusing to see that there is an organized group with profound reservations about the World Bank driven privatization process. Is it not better to have the organized opposition within the loop rather than outside it?
According to an insider the 5-year service contract will be a mere book transaction between the WB and the multi-national corporation –MNC Suez [Ondeo?] contracted to provide the service. There will be a signing ceremony between the GoG and the bank principally for the government to agree to the terms of the loan, the money is then released directly to the MNC as stipulated in the contract. Essentially the Ghana government will be borrowing to pay the foreign corporation who will then be expected to provide “managerial services” for a period of 5 years and is allowed to bid for a 10-25 years lease thereafter. It is a risk free investment for the MNCs because they are not expected to contribute any money. The rumour mill has it that the draft contract will be submitted to the Parliament for approval in the course of 2004. The strategy it appears is to take the water debate from the wider public domain into the confines of parliament house where the ruling party has a comfortable majority. Recent opinion sampling by the Center for Community Initiatives and Policy Dialogue indicate that the water issue will be key in this years elections in spite of government attempts to down play it. Most communities prefer to manage the systems themselves or in partnership with the Ghana Water Company as in the case of Savelugu in the northern region. With elections around the corner, it is important the water issue is kept in the front burner.
Growing local Expertise
Under the guise of growing local expertise in water management the community systems are also been privatized contrary to the original plan. The community systems are been out sourced to private Ghanaian companies some of which are owned by former top bureaucrats of the Ministry of Works and Housing who have been supportive of the privatization agenda.
It is increasingly clear that current attempts at reforming public utilities in Ghana are neither driven by national priorities nor aimed at universal access. Multilateral donor interest in, and influence over, the privatization process is demonstrated by the World Bank’s commitment of substantial financial resources towards the water sector in a manner that creates opportunities for the private sector to make easy money.
Refusal to Disclose
The typical approach was and still is for foreign consultants to undertake research and report their findings to a carefully selected group of “stakeholders.” The public has never been informed of the terms of the proposed contract, or the background and qualifications of the companies. The people on whose behalf the contracts are being worked out have been left in the dark. Similarly the current draft contract document is only available to a select few. As recent as March the GoG [GWCL] entered into 2 consultancy contracts worth $135m.The WB is proving $100 while the remaining $35m will come from DFID, the Japanese government and the Nordic fund. A contract for an environmental, resettlement and dam safety study has been signed with Messrs Royal Haskoning of the Netherlands and another with Messrs IGIP of Germany. The details of these contracts particularly in respect of whether they dovetail into the “management service contract leading to Lease” plan is not publicly stated. What the selection process has been is not available to the public.
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