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Debate Water supply

The Earth Summit in Johannesburg agreed to halve the number of people with no access to safe water and proper sanitation by 2015.

This week we ask: Are private companies best placed to deliver clean water and sanitation in developing countries?

Yes

Bill Alexander, chief executive, Thames Water

Meeting the Earth Summit objective is so great a task that the investment needed cannot be met from public funds alone - the private sector also has a part to play if it is to meet this ambitious target.

There is no single solution to the challenge of delivering sustainable safe water supplies and wastewater services. As the world's third largest water company, Thames Water serves more than 50M people in 46 countries.

We respond to the needs and circumstances of each community 'A carefully crafted PSP contract, together with a wide regulatory framework, should create a link between efficiency savings that keep costs down on the one hand, and the amount of profit to be made on the other.'

we work with, from delivering clean, affordable water to low income homes in Jakarta to improving water services in the US. Our work clearly demonstrates the diversity and potential benefits of private sector participation (PSP).

We recognise that there is a widespread, but inaccurate, perception in some quarters that private companies run water and wastewater services to the detriment of water quality and service improvements. Since privatisation, Thames Water has invested over £1M a day in improvements and has helped turn the River Thames from a dead river into one of the cleanest metropolitan estuaries in the world, with more than 120 species of fish.

Clearly, private partners will need to make a reasonable return on their investment, in addition to recovering their costs. However, the cost recovery principle is not the same as profitability, which is a legitimate and necessary aspect of economic sustainability. A carefully crafted PSP contract, together with a wide regulatory framework, should create a link between efficiency savings that keep costs down on the one hand, and the amount of profit to be made on the other.

Thames Water understands that water is a renewable but finite resource that needs to be managed in a sustainable way on behalf of the communities we serve. That is why sustainability is at the heart of Thames Water's business and why we are committed to sustainable development in all of the markets in which we operate.

No

Mark Ellis-Jones, head of information and research, World Development Movement (WDM)

Plans on how to achieve the Johannesburg target reveal a model for basic service delivery ill suited to the needs of the poor.

Attending the summit as official European Union and UK delegates were representatives from two of the world's largest water multinationals, Vivendi and Thames Water. Their presence, combined with the EU and UK's enthusiasm for public private partnerships, ensured delegates agreed the target could only be met through the increased commercialisation of basic services in developing countries.

Yet the global map of successful water privatisations has very few pins in it. Failed privatisations and public private partnerships in developing countries are widespread, often resulting in higher prices, reduced access for the poor, increased unemployment and unmet infrastructure extension targets.

For example, customers in the Tucuman province, Argentina, experienced a 100% rise in water rates after a subsidiary of Vivendi was granted a 30 year concession to provide water.

Thames Water has recently been requested to renegotiate a Turkish contract to operate a build, operate, transfer (BOT) water plant after claims that the company was charging over double the planned amount.

What is more, these experiments could become effectively irreversible under new negotiations on the General Agreement on Trade in Services (GATS) at the World Trade Organisation.

WDM has joined other civil society groups in expressing deep concern over the UK government's enthusiastic backing for GATS and the EU's demands that developing countries open up their water supplies to the free market without any evidence of benefits to poor communities or the environment.

The EU and UK, at the behest of companies like Thames Water, are aggressively promoting a flawed one size fits all model for providing essential services to the poor, putting the commercial interests of companies before those of the poor or the environment.

This approach represents a triumph of free-market ideology over evidence based policy, which suggests that affordable or free services to the poor are most effectively delivered using publicly owned and accountable systems.

The facts

The European Union estimates that more than 1bn people have no access to clean water and 2bn are without sanitation.

ln the UK, regulator Ofwat ensures that water companies invest in infrastructure, at the same time as controlling charges to customers.

Many argue that charging even token sums for water is one of the most effective ways of curbing waste.

On 11 July the French competition council ruled that multinationals Suez and Vivendi had been abusing their market dominance in France, where they control 85% of the privatised water sector. Worldwide they control 70% of the privatised water business.

ln 1995, water privatisation in Puerto Rico left poor people without supplies while US bases and resorts had plenty.

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