Paul Redfern, Special Correspondent
4 October 2004
Nairobi — A new report by ActionAid says Biwater, one of the firms behind the World Bank-Funded City Water, has a reputation internationally for failed concessions and for reneging on the terms of its contracts
WATER PROVISION in Dar es Salaam has not improved since privatisation, while the World Bank-funded British firm providing the service is charging far too much.
That is the conclusion of a new report produced by the UK aid agency ActionAid last week. It says that the Tanzanian government was effectively forced into the privatisation of the water service through loan agreements with the World Bank and conditions applied under the Highly Indebted Poor Countries (HIPC) agreement, which is worth around $3 billion to Dar over time.
Moreover, the report questions the background of the British firm Biwater, which is one of the three firms - the other two are Gauff from Germany and Superdoll from Tanzania - behind City Water.
"Biwater has a reputation internationally for failed concessions and for reneging on the terms of its contracts," the report says. "Unfortunately, City Water seems to be repeating many of Biwater's errors by charging households for water which does not come."
ActionAid says that Biwater is known internationally as "a byword for failure." It is owned by Adrian White, one of the richest men in Britain, with an estimated fortune of £68 million. It is one of Britain's largest water companies but ActionAid says it is "one of those with the worst reputation."
Britain's water services were privatised in the 1980s under the Thatcher government. Since then, prices have risen dramatically, although the companies concerned say this was necessary to update and modernise a failing system.
But for poor people in Tanzania's capital, the results have been dramatic and concerning, the report says.
While most people in Dar do not have access to piped water supplies, they are nevertheless being forced to pay more for canned water because City Water is charging those residents who do have tap water, far more for their supply. They in turn charge the street water vendors more, which in turn gets passed on to their customers.
Although ActionAid recognises that City Water has only been operating for 10 months, it says that its record so far is poor.
"Water tariffs have increased substantially but water quality has not improved," the report says. "Whole areas (of the city) are being cut off because a few households fail to pay their bills."
Moreover, some customers are being charged for water supplies but never receive tapped water, ActionAid says. This means they have to pay twice - to City Water and to private water vendors - to receive their supplies.
The report adds that the privatisation of Dar's water supplies was introduced without proper consultation, although the process has some support within the Tanzanian government.
"While there was some support for privatisation among government officials, the public was largely opposed to a process that they feared would lead to greater domination by foreign firms and increase water charges," the report says. "For this reason, the government and donors have attempted to limit public consultation and discussion, focusing on selling the reform package rather than debating policy alternatives. There was also a lack of transparency around both the reform process and the content of the final lease agreement (with City Water)."
The World Bank - which provided a $143 million loan for the project - should look clearly at its role in the whole matter, ActionAid says, because the biggest criticism of all is that it does not benefit the ordinary people of Dar es Salaam.
ActionAid's report says that the pro-poor measures included in the privatisation programme are "paltry and tokenistic" compared to the scale of unmet (water) needs.
"In fact, donor resources and the Tanzanian government's current and future tax revenues will be used to fund a project in which 98 per cent of the money will be spent on the richest 20 per cent of the population. Those designing and implementing the reforms seem to have paid scant attention to the fact that 80 per cent of Dar es Salaam's residents are poor. For them, unwillingness to pay could in fact be inability to pay."
So unpopular are City Water's debt collectors, the report says, that in some areas they have been "chased away with dogs and knives."
But ActionAid's report says that not only are the benefits of privatisation extremely limited if not non-existent, the risk associated with the project is not being borne fairly divided the public and private sectors. City Water itself is in fact only providing a fraction of the funds (five per cent) needed to repair and renovate the water system.
Nevertheless, the complexity of the part privatisation programme of Dar's water supply, coupled with the realisation that the infrastructure improvement needed to deliver a competent and reliable service, has already led City Waters bosses to realise that there will be little money to be made.
"Faced with a population unwilling to pay high prices for a poor service, City Water itself is facing financial difficulties," the report says.
One City Water official has already described the first year of operation as "difficult" and complained that the company would have to go back to investors and ask for more money just to cover operation and maintenance costs.
"Rather than the tidy profit they were anticipating, City Water now expects to make a loss of $0.7 million this year. If such losses continue the company's commitment to the project may well be called into question."
But while such financial results undermine the future of water provision in Dar, for most poor people the fear is that the increasing cost of clean water supplies will lead them to take water where they can.
"Overall, the reforms of Tanzania's water system appear to have focused mostly on increasing efficiency and cost recovery, for example, by improving service delivery, reducing leakages, improving billing and bill repayment and eliminating illegal connections. Although the project aims to increase people's quality of life, the lack of gender analysis clearly illustrates that poor peoples' needs have not been in any way central to the reform design."
The three key objectives of the privatisation process were to bring in new money and relieve the government's budget; improve the management of the water system in order to increase efficiency in service provision and enable greater access to clean water, especially for the poor.
The report from ActionAid however gives a damning conclusion in which it says that initial results now show that the project is unlikely to meet any of the above objectives.
With the Tanzanian government becoming ever more dependent on donor aid, which now makes up a massive 41 per cent of all government spending ActionAid says that the World Bank and other Western government aid bodies like DfiD must look again at the issue.
Moreover, not only are there questions about the whole privatisation process, but ActionAid questions why big money is being spent on right-wing think tanks like the Adam Smith Institute, which has received $1.3 million to undertake a public awareness campaign in Tanzanian "extolling the virtues of privatisation."
In its defence, City Water has said that the recent problems with water supply in the capital are due to a string of equipment failures at one of the main water treatment plants. It says that more water will flow now that this has been fixed.
ActionAid country director Billy Abimbilla said: "We do not have any political agenda in this because it is common knowledge among all Dar residents."
The Deputy Minister for Water and Livestock Development, Anthony Diallo, declined comment, referring the matter to his Permanent Secretary, who was not available.
Last Thursday, officials from City Water, led by Mr Diallo, spent the day inspecting the two major water plants of Lower and Upper Ruvu about 60km west and north of Dar es Salaam, respectfully in an apparent attempt to resolve the serious water shortage afflicting the city of nearly four million residents.
Additional reporting by Faustine Rwambali in Dar es Salaam
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