Water privatization
They cite Manila, Guayaquil in Ecuador, Bucharest, several cities in Colombia and Morocco, as well as Côte d'Ivoire and Senegal as success stories.
[4][5][6][7][8][9] Water privatization in Buenos Aires, Argentina and in England are cited by both supporters and opponents, each emphasizing different aspects of these cases.
This figure includes people served by publicly owned companies that have merely outsourced the financing, construction, and operation of part of their assets, such as water or wastewater treatment plants, to the private sector.
[10] The World Bank estimated the urban population directly served by private water operators in developing countries to be much lower at 170 million in 2007.
Privately owned water utilities were common in Europe, the United States, and Latin America in the mid and late 19th century.
Their importance gradually faded away until the early 20th century as they proved unable to expand access and publicly owned utilities became stronger.
[13] The tide turned completely in 1989 when the conservative government of Margaret Thatcher privatized all public water and sewer companies in England and Wales.
[14][15] The French water companies also escaped the nationalizations after the war and later under President François Mitterrand, because the central government did not want to interfere with the autonomy of municipalities and was unwilling to finance heavy investments.
European and local private water companies expanded in Latin America, Africa, and Asia in the second half of the 19th century, all while their importance declined in Europe.
In Uruguay, water supply was privately managed from 1867 to 1950; in Buenos Aires, Argentina, for a brief period from 1887 to 1891 and again from 1993 to 2006; in Cairo and Alexandria, Egypt, from 1867 to 1956; in Beirut, Lebanon, from the 19th century until 1951; in Shanghai, China, from 1875 to 1949; in Casablanca, Morocco, from 1914 to 1962 and then again after 1997; in Senegal until 1971 and then again after 1996; and in Côte d'Ivoire from colonial times until today without interruption.
Full privatization of water supply and sanitation is an exception today, being limited to England, Chile and some cities in the United States.
In Algeria, Saudi Arabia, Colombia and Cuba increasing efficiency and improving service quality were principal motives for water privatization.
They claim that this counteracts many of the advantages associated with the market economy because without competition between multiple water service businesses there is nothing to drive prices down and levels of efficiency up.
[24][12] External influences, such as from the World Bank and the International Monetary Fund (IMF), often play a role in the decision of governments to privatize water, as was the case in Bolivia and in several African countries.
This influence may take the form of structural adjustment programs, whereby a development loan is given on the condition that the receiving country privatize their water utility system.
In addition, in Chile, the Czech Republic, Armenia, and three African countries – Côte d'Ivoire, Gabon and Senegal – private companies provide water services to the entire urban population.
In Algeria, Colombia, Germany, Italy, Malaysia, Mexico, Morocco, Poland, and South Africa less than half the population is served by private companies.
[31] A World Bank report lists the following examples of successful public-private partnerships in developing countries: the full privatization in Chile; the mixed companies in Colombia; the concessions in Guayaquil in Ecuador, Brazil, Argentina, Eastern Manila in the Philippines, Morocco, and Gabun; and the lease contracts in Côte d'Ivoire, Senegal, and Yerevan in Armenia.
If development aid agencies are involved in directly financing private sector participation, they systematically require competitive bidding.
However, in some cases – such as in Timişoara, Romania – the European Bank for Reconstruction and Development has financed parallel investments, while a concession was awarded by the government after direct negotiations.
[44] Being monopolies, all water utilities – public or private – need to be regulated concerning tariff approvals, service quality, environmental compliance and other aspects.
The privately owned companies have been found to have trouble with water quality, environment pollution, sewage management, leakage and logistical errors.
The government and critics argue that the concessionaire failed to achieve the targets set under the concession contract in terms of expansion of access, investment and service quality.
In the previous years, despite encumbered funds made available by the World Bank to support the public utility of Cochabamba, access to piped water in the city had decreased to 40%.
[68] This contrasted with the situation in Bolivia's second-largest city, Santa Cruz, where a utility run as a cooperative had managed to increase access and improve service quality with the support of the World Bank.
To achieve universal coverage, the operator made extensive use of community bulk-supply schemes that provide safe water to the many illegal settlements that were expanding on the city's periphery.
A before after comparative study by World Bank analyzes how access, quality of service, operational efficiency and tariffs have evolved under 65 public-private partnerships for urban water utilities in developing countries.
However, there are some other cases that tariffs under water privatization did not increase in a long run, typically in Sub-Saharan Africa, where most of investments are funded through development aid.
The magnitude of tariff increases is influenced by the profit margin of private operators, but also to a large extent by the efficiency of utilities in terms of water losses and labor productivity.
The study reviews the impact of private management on the efficiency of water utilities in many countries from many continents including Africa, Latin America, Asia, and Eastern Europe.
