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Private Water, Public Misery
By Ann Ninan
Sometimes
the story is all there in the numbers.
Tirupur,
a thriving industrial center in southern Tamil Nadu, which trucks in 400
tankers of water daily from a 50-kilometer radius of the town, is being
promised piped water by a private consortium. Tirupur, often called
"T-shirt town" because of its enormous production of knitted
cotton garments, accounted for 48 percent of India's knitted cotton exports
in 2000. An estimated 200,000 to 300,000 workers, many of them migrants from
poorer rural areas of Tamil Nadu, are employed both in the informal sector
and in the town's 4,000 garment factories. Under the proposed scheme, the
one billion dollar knitwear industry will receive 115 million liters per day
(mld) of water. Tirupur municipality, which includes 60,000 slum dwellers,
will get 26 mld, while 792 rural settlements in its neighborhood will share
the remaining 36 mld.
The
figures clearly show that industry is more important than people for the New
Tirupur Area Development Corporation (NTADCL), which is behind a consortium
of three companies executing the water and sanitation project. These are
India's Mahindra & Mahindra, Bechtel, the biggest US water transnational
corporation (TNC), and Britain's United Utilities. Yet, Jayalalithaa Jayaram,
the chief minister of Tamil Nadu, while launching NTADCL's Rs 9.6 billion
(US$200 million) project in June last year, averred that her government
gives priority to drinking water.
Tirupur's
private water project that proposes to "integrate water supply, waste
management and effluent treatment system" is the first in a string of
such schemes all across Tamil Nadu involving private funding in basic
infrastructure. Indeed, the NTADCL project is a break with the past in India
where water services have been considered a public utility.
Three
reasons most often cited as justification for the privatization of water
services in Tirupur are: regular and cheap water supply for the towns
textile and manufacturing industry; improving the living standards of its
poorest people; and reduction in pollution because water will be 'soft'
rather than 'hard.'
The
reasons for the polluted ground water in Tirupur are not hard to find. Every
day, the textile industry uses 90 million liters of water and discharges 87
million liters of wastewater into a dry riverbed, from where it percolates
into the underground water system. The ground water in Tirupur is
undrinkable because it is very saline and polluted with chemical dyes.
Additionally, over 50,000 tons of solid waste produced every
year lie in heaps in and around the city. As a result of the polluted
groundwater, tankers bring water from farms up to fifty kilometers away and
many farmers have now given up farming and instead supply water to industry.
It
is this situation that the NTADCL project claims to address. The project is
on a Build-Own-Operate-and-Transfer (BOOT) basis with a 30-year time
stipulation, at the end of which it is to be transferred to the government.
Bechtel is in charge of the 55-km pipeline to deliver water from the Bhavani
river into a complex system of 25 reservoirs, which will be constructed by
the Indian company Mahindra & Mahindra together with Larsen & Toubro.
According to the project document, United Utilities and NTADCL will run the
joint venture at a "fixed operation and maintenance fee" that will
be recovered entirely from Tirupur municipality.
Water-
Commodity or Human Right?
Newspaper
reports say that the Mahindra & Mahindra-led consortium has agreed to
fix the rate at Rs 45 (US$ 1) per thousand liters (kl) per day, revealing
that an agreement has been reached, but no one is telling how this is to be
divided between industry and domestic users. A 1998 report states domestic
consumers will be charged Rs 5 (US$ 0.10) per thousand liters per day while
industry will pay the rest, but officials have not corroborated it. In
contrast, Coca Cola in Pallakkad, Kerala
pays 2.25 paise (US$ 0.00047) per kl for spraying and cooling, 3
paise (US$ 0.00062) per kl for domestic use and 7.50 paise (US$ 0.0016) per
kl for processing!
Is
water a commodity or a human right? Developing country governments that are
under the charmed spell of the pro-privatization World Bank, Asian
Development Bank and other multilateral organizations have come around to a
consensus that water is a commodity. On the other hand, civil society groups
firmly believe that water is a natural resource that belongs equally to all
people and should stay a public utility. The split between the two was again
out in the open at the recently concluded Third World Water Forum in Kyoto
between March 16 and 23. NGOs, trade unions, indigenous communities and
members of the International Water for Life Coalition walked out of the
Financing Water for All plenary aimed at endorsing the controversial "Camdessus
Report", written by the World Panel on Financing Global Water
Infrastructure, a group from the banking, corporate and aid industries,
formed in 2001 by the organizers of the World Water Forum. The panel's
conclusions were that more money should be spent on water infrastructure,
and that this money should be used to subsidize the TNC dominated private
water industry to implement these projects.
Civil
society groups present in Kyoto, deploring what they called "corporate
welfare in the name of human rights" critiqued the corporate model of
providing clean water to the 1.5 billion people who are without it, saying
that it is all about capital, infrastructure, investments and risk, and
little about people or the environment.
Indian
groups cite water projects controlled by Bechtel in Bolivia and the Philippines as
examples of what India should avoid. Bechtel took over the water supply in
Cochabamba city, Bolivia, in
end-1999. In the space of a few months the price of drinking water had risen
by two and a half times. The reason was a government guarantee to the
powerful water firm that user fees would remain the same in dollars, so
every time the local currency fell the price would spiral. By January 2000,
an aggrieved population had taken to the streets demanding the privatization
deal be cancelled. The government had no choice but to give in, although
Bechtel now threatens it with a $25 million legal battle for breach of
contract.
Guaranteeing
Profits and Opening Markets
Has
the government of Tamil Nadu similarly guaranteed profitability to investors
in the Tirupur project? One such hedge against risk is the creation before
the commercial operation of the project of a "Water shortage
fund." This special fund, created by the state government, will be
parked in a public deposit account to be drawn by NTADCL. It will be large
enough to pay the interest and operative expenses of the project in the
event of a water shortage in the Bhavani river. Project authorities
confidently state the fund is only of "notional" value because in
the last roughly 15 years, the water flow level has consistently stayed
above the NTADCL's requirements.
Finances
for the project include both debt and equity funds. The total equity
component will be borne by the state government, Tirupur Exporters
Association and the central government via the Infrastructure Leasing and
Financial Services Ltd. Loans from international financial institutions and
deep discount bonds will also contribute to meeting the project cost. The US
Agency for International Development (USAID) has provided loan guarantees
for $25 million. According to the USAID website, this program "advances
U.S. national interests: economic prosperity through opening markets."
The US looks at this project as "Another outstanding example of the
type of relationship between India and the United States that needs to be
encouraged" and it was under the presence of the U.S. Ambassador to
India at the time, Richard F. Celeste, that the project agreement was
signed.
The
investment has been secured, but the investors will not bear the liabilities
in case of depletion of water resources and default on conservation. How
does the government propose to guarantee the water flow in the Bhavani? In
the Bolivian experience, and
closer to home in central India's Chhatisgarh state where a section of the
semi-perennial Sheonath river, studded with villages on its banks has been
handed over to one individual, people are charged for collecting rainwater
from their roofs or water from their wells. But pressure from civil society
groups and left party politicians might have forced the government to
rethink the project.
Typically,
development institutions have answered people's lack of access to safe
drinking water by instituting "user-pays" systems by privatizing
community assets and effectively handing them over to the global water
industry. Ahead of the Kyoto conference, Tim Connor from AID/WATCH, which
campaigns against private participation in essential water supply, said the
policy is being pushed through in three ways: imposing it as a condition of
loans and debt relief; bankrolling water TNC's in preference
to public enterprises; and persuading governments like in Ghana to sell
water utilities to reduce national debt in 2001.
"Globalization
Challenge Initiative", a Washington-based NGO conducted a review of IMF
loan policies in 40 countries for the year 2000, and found that 12
agreements contained conditions imposing water privatization. These
were mainly countries in Africa; the smallest, poorest and most debt-ridden
nations.
Water
Privatization Wave
By
1999, Chennai, Pune, Bangalore and Hyderabad, were among a few urban centers
in India that successfully bid to attract private participation in the water
sector, extraction, supply and billing of water charges. Delhi will soon
become part of the infamous water corporation Vivendi's giant network of 110
million customers in more than 100 countries. In January 2003, the head of
the public utility in the Indian capital said privatization "is to take
place soon." Indian authorities are rushing to offer management
contracts or grant of concessions to private water firms.
Among
the private water supply schemes in the pipeline along the lines of the
project in Chattisagarh are the ones at Borgaon, Madhya Pradesh, and
Vishakapatnam, Andhra Pradesh. Studies are being done in a number of places
to show how much water-starved consumers are willing to pay. World Bank
sponsored studies indicate that the urban poor already pay five times the
municipal rate for water in Abidjan, Cote d'Ivoire; 25 times more in Dhaka,
Bangladesh; and 40 times more in Cairo, Egypt.
The
modus operandi is clear -- neglect development of water resources, claim a
"resource crunch" and allow existing systems to deteriorate. The
poor and marginalized residents of Tirupur who have been hardest hit by
scarce clean water due to industrial pollution, will be most affected by the
private water industry since water will become a commodity they can ill
afford.
Sheonath River: Privatized
River Becoming Public Again
Ajit
Jogi, the Chief Minister of Chhattisgarh state in central India, has decided
to return a river to its people. Five years ago, water supply from a 23.6-km
stretch of the semi-perennial Sheonath river was
handed over to local entrepreneur Kailash Soni. Now, newspapers have
reported that Jogi has asked the state's Advocate General and water
resources department to examine how best to terminate the contract with
Soni's Radius Water Industry.
The
1998 project, the first case of water privatization in India, which gave
Soni a 22-year (renewable) "concession", was signed when
Chattisgarh was a part of Madhya Pradesh, its western neighbor. Jogi, who is
the first chief minister of the resource-rich state, said this April that
his government was willing to pay any price to terminate the scheme
called Rasmada. Water activists from groups like the Rashtriya Jal Biradari
(National Water Fraternity) and the Jal Swaraj Abhiyan (Water Rights
Movement) and the left political parties have been protesting the
privatization of the river, saying it violated the basic rights of people
over natural resources. Water is categorized under common property resources
in India.
Since
the Rasmada scheme was commissioned in April 2001, villages on the banks of
the stretch of river ceded to Soni have no rights over its water. Fishing is
unauthorized activity here, so is diverting water to irrigate fields. Soni
has a monopoly on the water supply in an 18-km radius covering the Borai
industrial area, close to Durg township. He supplies water to the
Chhattisgarh State Industries Development Corporation (CSIDC), which has
bulk buyers in distilleries, sponge iron units and thermal power plants (for
instance, the Bhilwara group's Hindustan Electro-Graphite Industries or HEG).
Currently, the scheme can supply 30 million liters per day to the CSIDC.
The
Chattisgarh government's announcement that the scheme is constitutionally
illegal is bound to create consternation. The National Water Policy,
unveiled in 2002 by Prime Minister Atal Bihari Vajpayee's government,
envisages private sector participation in "building, owning, operating,
leasing and transferring of water resources facilities." The government
has also announced a tax holiday of ten years, not just for the implementing
agency, but for investors too. In a speech to the National Water Resources
Council last year, Prime Minister Vajpayee said "the cornerstone of the
new National Water Policy should be an explicit recognition that water is a
national resource and ... the policy should also recognize that the
community is the rightful custodian of water," but his government's
water policy is unembarrassedly catering to corporate interests.
Ann Ninan is a Delhi based
freelance journalist.
Courtesy
http://www.corpwatchindia.org
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