Panel of Experts Criticizes Water Privatization in Ghana

Aug. 26, 2002

Panel of Experts Criticizes Water Privatization in Ghana

JOHANNESBURG, SOUTH AFRICA ? A World Bank-backed proposal to privatize the urban water system in Ghana would further drive up the price of water and ignores the plight of low-income citizens, an international delegation says in a new report.

The report stems from a May visit to Ghana of a 12-member delegation that included Public Citizen. The group studied the government?s proposal, which calls for leasing the urban water system to two private-sector companies. The major bidders are large multinational water corporations and include Vivendi Environnement, Suez and Bi-Water. Final negotiations on the terms of the contracts have been mired in controversy and are dependent on major loans from the World Bank and other creditors.

“Major investment is needed to rehabilitate and expand the urban water systems in Ghana, but we?re concerned that the private water companies are focused on guaranteed rates of return, not on the needs of the people,” said Wenonah Hauter, director of Public Citizen?s Critical Mass Energy and Environment Program.

Heated debate has surrounded the water privatization proposal in Ghana. The controversy follows similar confrontations in Argentina, Bolivia, the Philippines and South Africa. It centers on whether water, a substance essential to life, should be viewed as a market commodity or a human right.

Activists in Ghana, many of whom are organized under the Ghana National Coalition Against the Privatization of Water (National CAP of Water), are concerned that the privatization of water would place profit-making concerns above the critical need to expand access to clean and affordable water. In Ghana, about 35 percent of the population lacks access to piped water services; 78 percent of the urban poor lacks such access, leading to high rates of waterborne disease. In developing countries around the world, more than 1 billion people lack access to clean and affordable water and more than 2 million people, mostly children, die annually from diseases related to lack of clean water and sanitation services.

International donors, creditors and foreign consultants have dominated the privatization decision-making process in Ghana. Although water system privatization has not occurred, water rates already have increased.

A succession of International Monetary Fund (IMF) and World Bank loan conditions placed pressure on the government of Ghana to raise consumer prices for water and privatize the urban water system. Water fees in Ghana increased by 95 percent in May 2001 and another 40 percent this month. IMF loan documents, dated March 2002, require the implementation of an automatic tariff adjustment formula that imposes higher consumer water fees every time the domestic currency depreciates. This is a common demand of foreign corporations that don?t want to see losses when they transfer their in-country earnings back to headquarters.

“This formula is a deadly poison and a prescription for death for the poor,” said Patrick Apoya, a representative of the Community Pact for Health and Development in Ghana.

“The current water fees are already beyond the means of most of the population in Ghana,” said Rudolf Amenga-Etego of the National CAP of Water. “How will the population be able to absorb a so-called ?market price? in the context of privatization?”

The international delegation consisted of representatives from Public Citizen, economists, representatives of human rights groups and public health professionals. The trip was sponsored by Public Citizen, Christian Aid-UK, Cordaid and Oxfam, Netherlands, in response to requests from local and international civil society organizations. Click here for a?list of delegation members; click here for a copy of the?report.

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