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Great Lakes Article:

International Seminar on Advancing Alternatives to Water Privatisation
Kyoto's Seika University, Japan, 22 March 2003


Organised by Transnational Institute, Corporate Europe Observatory (The Netherlands), Monitoring Sustainability of Globalization (Malaysia)



Facilitator: Charles Santiago (Monitoring Sustainability of Globalization)


Charles Santiago: Thank you for coming to today's seminar. We begin with two presentations this morning: one is by Carlos Antonio Todeschini (Porto Alegre's Water and Sanitation Department DMAE), the other is by MD Zahirul Hoque (DWASA Employees Union, Dhaka, Bangladesh). After that we have questions of clarification and we have a tea break. Following that we have two other speakers, Pablo Solon (Fundacion Solon) and Antonio Miranda (Brazilian Association of the Public Municipal Water and Sanitation Companies). Subsequently we will have an open discussion, so please hold on to your questions and clarifications. Before we begin I think we have to know we are living a global crisis moment, not only concerning water but also the war in Iraq. Let me invite you to join me in one minute silence for the war victims in Iraq. Thank you very much.

Carlos Antonio Todeschini, Porto Alegre's Water and Sanitation Department, DMAE (translated from Portuguese into English by Mr. Maltz)


Good morning. It is a great pleasure to present the important experience of the DMAE model in the city of Porto Alegre city, which is the capital of Rio Grande del Sul, the southern state of Brazil. Since a neoliberal government took over in Brazil 10 years ago, we have a lot of privatisations, poverty has grown a lot and the Brazilian middle class has gone down. The banking system, the energy system and communication were privatised in these years. But we also had a strong struggle against the privatisation of water and sanitation services, and as a consequence of the resistance we are public, there is very little privatization in this sector. The model of Porto Alegre helps a lot in this struggle because of its sustainable and effective water service.

We heard a lot of theories during these last seven or eight days about how to provide water for all and which are the best ways, but all these things we have already done for the last 13 years. The question is whether water is a commodity that should be submitted to market forces or is it a social trust, a public trust. Porto Alegre is a city with 1,4 million inhabitants and we have got some important figures for you, mainly related to United Nation Human Development index. We are among the best regional capitals in Brazil, in terms of the human development index. A very important indication of this is that the national average of deaths per thousand births until one year old is 65, while we have only 13, so we are far below average.

Water services in Porto Alegre were private until 1904, then the city took it over. In 1961, due to a loan we got from IADB, we changed the company into an financially autonomous facility. So DMAE has financial and administrative autonomy. We are related to the city hall of Porto Alegre but without receiving any money from the city. We get no subsidies, we only have our tariffs. We have economic and financial balance, good technological development and human resources management. So besides economic sustainability we have social sustainability, which is very important, mainly based on our model of social control. There is the deliberative council that brings together 14 civil society representatives to monitor DMAE's administration. And there is the Participatory Budget that for the last 14 years has allowed people of the city to prioritise investments in the water works in the city. People bring their demands, we discuss the technicalities and then they decide the hierarchy. People decide where the investments are going to be made.

So one of the great issues during the World Water Forum was about financing. How to get sufficient financing for water works? DMAE has a very sustainable economic situation. For the last 10 years we have invested about 140 million US$ in the water and sanitation systems. 80% of this amount was from the tariff. So as a result of these actions we now have 99,5% of the population supplied with good quality water, a very reliable system, 24 hours a day, non-stop. We have about 559,000 households supplied with water everyday in the whole city and the 0,5% missing, they are living in risky areas, places where we are not allowed to build pipes because of the risk of floods or because they are in the mountains. These people receive water from water tank trucks and we do not charge them for that. Concerning sewage services, we have sewage collection in 84% of the city and are working very hard these years to increase the rate of treatment of the sewage. In Brazil, the national average in regional capitals is 9-10% treatment of sewage. In Porto Alegre it was 2% in 1990 and 27% in 2002. We are planning to build a new waste water treatment plant and raise it to 77% in 5 years, so almost 80% treatment. It is important to show how public participation, the participatory budget, has influenced DMAE's services. While the population of the city has grown 14% in the last 14 years, the connected households have grown 43%. Until 14 years ago we were serving only downtown and rich areas, then with public participation we started to extend to the outskirts and shanty areas, so everyone has access now to water.

The big change that occurred when the Workers Party entered the city hall thirteen years ago is that before this the government claimed to know what people want. They believed that people wanted better transport in the city, but when the people's administration started to listen to people, the people said they wanted more sanitation and water services. So this is a big change: when you listen to people and they participate then you are discovering their real needs. So during the first 10 years people's first priority was improvements in water and sanitation. Since this change, DMAE had to change itself too, as the conception of attending the needs of the city has changed. So all the staff and workers of DMAE have to focus to attending people's needs, listening to the people and go forward with their demands. So this provoked a strong change in the way our governance was done. After this we are not saying where the investments are going to be done made, people develop their demands and if technically it is possible we implement what they have decided.

In the participatory budget process they get together in meetings throughout the year, and they decide where the investments are going to be made. This way people understand that the tariff is very important for the sustainability of the department. While they decide on investments, they experience the reality of the works so they understand what is important. Our tariff structure has strong cross-subsidies. So there is the social tariff for low-income people, they have the right to ten cubic liters of water per month and pay only for four. We have three different rates and strong cross-subsidising.

This means that people who use water only for basic needs (consumption up to 20 cubic meters per month) are strongly subsidised by people who use between 20 and 1,000 cubic liter per month. Tariffs in the second rate go up exponentially and after this it is very expensive. This very expensive price is for big consumers such as airports, shopping centers and industry. Rich people who use water to fill their pool and other not so basic needs subsidise water for the poor people. With this tariff structure we are able to do all of our investments in maintenance and expansion of the water and sanitation services. This tariff structure allows us to generate yearly a surplus of about 20-25 percent of our annual budget, which goes straight to new investments. This is the difference with the corporations, they generate the same surplus but send this money abroad. They send the surplus as a profit to their main office and we take this money and give it back to the people who paid us, as improved infrastructure for water and sanitation services. So this amount of money people decide how we are going to use in the next year. The participatory budget is always working on next year's budget. With public participation we are also able to make the water works cheaper than before, because there are now these accompanying commissions monitoring the whole process making the bids to the contractors until when they are working on the works. People are monitoring the whole process, so we are now getting more and better results with same money. Due to this work, the investments and the public participation, water-borne diseases in Porto Alegre have been strongly reduced. In Brazil we had some epidemics, but in Porto Alegre we did not feel it as we have no diarrhea cases, no cholera and generally very, very low rates of water-borne diseases. Twice a year the City Hall together with the university makes a public survey about our services. In the last one we got 88% approval of the population concerning water services and 65% for sewage systems. This is a very high rate compared with other state capitals in Brazil.

We would now like to present the virtuous cycle of the DMAE, that allows us to get better and better day by day (shows PowerPoint slides). The tariff revenue gives us economic and financial balance, with the social control and new investments we improve the population's well-being, environmental protection, consumer satisfaction, the development of the city and we get the revenue. So this goes round and round and day by day it is getting better and the city is developing. It is important to say that public water utilities are really viable and could be better than corporate, much, much better. It is very viable if we take care of these issues. We have here in the room another public utility from Brasil, from Campinas in the state of Sao Paolo, and we have the president of the national association of municipal water utilities. We would like to say that what people say should be happening is already happening in Brazil and this model could be reproduced around the world. We believe that this is the way things must be done and we have done this for the last 14 years and people must know about this. We have to get together and make these public water utilities work. We have two short films to show you, one is about an award we got last year for human resources management and the second shows people talking about our services in relation to our tariffs. They really understand that they must pay for this and the quality of the services guaranteed to them is very important.

Charles Santiago: thank you very much, I think that was a very powerful articulation of a people-centred alternative. Now let me give the word to Mr. Hoque from the DWASA Employees Union.

Zahirul Hoque, Dhaka Water Supply and Sewerage Authority, Bangladesh


Good morning ladies and gentlemen. I am from Bangladesh, which is a least-developed country, as you know. My organisation caters for water supply and sewerage services for the city of Dhaka, which is a mega-city, although very, very poor. The average poverty level of Bangladesh is 60% people living below poverty level and in the national capital Dhaka things are not much better. Maybe 45-50% of people there live below the poverty level. However, Dhaka City was a provincial capital from the British days. After the subcontinent was divided in 1947 it became the capital of the province of east Pakistan. Piped water supply began in Dhaka in 1847, a philanthropist gave a grant and a small water works was built. The British government introduced sewerage services in 1921. Since then water supply and sewerage was being catered for by two organisations: the public health engineering department of the government and the civic authority, Dhaka municipal committee, now the City Corporation of Dhaka. In 1958, USAID gave a grant of 200,000 US$ for preparing a master plan for the city of Dhaka to supply potable water and modern sanitation. Based on this study, a project was prepared and on the institutional side, in 1963, an act was promulgated, creating the Dhaka Water Supply and Sewerage Authority, I will call it Dhaka WASA. This authority inherited the assets and liabilities of the public health engineering directorate as well as the Dhaka municipal committee. The main aim for the authority was to develop water supply, sewerage and other functions. The World Bank offered to finance the project on the condition that the authority would have to run on commercial basis. Since then there have been tussles between the government on the one hand and the World Bank on the other. Since it was not a legal requirement the government tried to avoid operations on a commercial basis, while the World Bank continuously keeps pressing for the balance sheet.

Dhaka became the national capital of Bangladesh, as you know, in 1971. Ever since it became the national capital, the city started growing vertically as well as horizontally. The original master plan which was prepared for water supply and sewerage for Dhaka City soon became outdated because this plan was build on the concept of two-story housing. Ever since it became the national capital, skyscrapers started coming up and horizontally the city was also growing. Therefore the project became inadequate, but until today, Dhaka does not have a revised master plan. After liberation, the government was under resources constraint. Water supply was developed based on ground water. Ground water level was going down by one meter every year and there was apprehension of land subsiding in Dhaka City. Therefore, a much larger project had to be made, on the basis of surface water, costing over 100 million US$. The World Bank came up with an agreement, with the condition that there shall have to be a privatisation strategy study and that there shall have to be experimental privatisation in some of the geographical areas of the Dhaka Water Supply and Sewerage Authority. If these conditions were met, then there would be financing for a project worth some 112 million US$. At this point, the officials and employees of the Authority apprehended that they might risk losing their job, risk losing their jobs. They started registering their concerns over privatisation by organising a united front for resistance. Finally, there was a tripartite talk between the governmental authority, World Bank and the resistance leaders. In 1996, it was decided that the privatization strategy study would be allowed to go on and that privatisation of two zones would be allowed on the condition that one of the zones would be given to the employees, the united front of employees, while the other would be given to a private operator. After one year there would be a thorough evaluation about the performance. The zone performing better would become the model for the future operation of Dhaka Water Supply and Sewerage Authority. You can call it privatisation or limited privatisation with trade union participation. After one year of operation, it was found that the employees perform much, much better than the private operators. It was not what the World Bank had expected and it was not liked by the World Bank people coming in different missions to Dhaka. They were not mentally prepared to accept that the employees should succeed. Their mental frame was that the private sector should succeed. Unfortunately for them and fortunately for the DWASA employees, things happened otherwise.

Now I will give you some more details of our results. We started operations in 1997, by now the revenue from billing has increased three times, collection increased three times from the base either of the private operator or of the Dhaka Water Supply and Sewerage Authority in the public sector. Consumers satisfaction: they are happier because they get the right bill at the end of the month. Complaints attendance is much better. System loss reduction which was in the vicinity of 70% has now come down to 30 to 35% in two zones. In Dhaka, one percent system loss yearly amounts to 20 million Bangladesh Taka. Now, you can see the extent of the improvement made by the employees. Our strategy is that since every system you develop has got to pay for the services, we went for the revenue model. If the revenue model is accepted and institutionalised, then we will go for entire operation maintenance in the zones. Once we consolidate in the operation in the zones, then we go for new investments. Now you can come to a more sensible conclusion whether there should be privatisation or not. I think Dhaka Water Supply and Sewerage Authority employees are in a beginning stage. They have almost perfect the revenue billing collection and direct consumer services and they are prepared to take over operational maintenance. And maybe in two-three years the investment responsibilities as well. As to investment, the revenue earnings under the present rate under the Dhaka Water Supply and Sewerage Authority, in the two zones under management of the workers, provide some additional revenue which are being diverted for improvement of the system, in addition to having reasonable levels for depreciation. But the other six zones under the management of the Authority simply back-seated for operational maintenance costs and does not have anything reserved for depreciation. We think that in Dhaka the private sector is not yet prepared to operate the traditional public sector undertakings. The government and the World Bank tried to privatise the electricity services in one area in the city of Khulna, it failed. They tried to privatise some other points of electricity supply, those also failed. Under Dhaka Water Supply and Sewerage Authority, they tried to privatise, experimentally, one zone and operational records clearly show that they are also on the side of failure. As far as water supply and sewerage is concerned, no private sector player in Bangladesh is experienced in the operation and maintenance of water supply. Therefore I personally do not think, on behalf of the employees of Dhaka Water Supply and Sewerage Authority, that the culture of the country and the genius of the people and the capability of the enterprises available in the country, are in any way prepared to effectively take up the water supply and sewerage operations and run it efficiently. On the other hand, the workers are experienced. Officials, engineers and employees are experienced, and they have found out a way to put forward the trade unions, to be followed by the officials and supervisors. This is an effective model. If anybody is interested, come to Dhaka and see. It may sound unusual, but it is happening. It is happening to the surprise of the World Bank and the Asian Development Bank. I think we need support from the international arena and the national arena. We need to institutionalise. We have the purpose to serve in a much better way than was traditionally being served by the public authorities or by the private operators. Thank you very much.

Antonio Miranda, Brazilian Association of the Public Municipal Water and Sanitation Companies


Good morning everybody. I am glad to be here to talk about potentials and obstacles introducing participatory models elsewhere. Well, I will talk with you from the Brazilian point of view. Of course it is not enough to reach every situation worldwide, but it seems to be a good example. I begin with the obstacles. First of all, we have a very strong ideological environment. The capitalists took over our language, our demands, claiming that the neoliberal politics would assist the poorest of the poor people. So, curiously we have the same language: we need to assist the poorest, we need to provide better services for the poor people, we need to provide safe and clear water, we have to provide adequate sanitation services, but they say the solution is the privatisation of these services. So this is the first problem we have: we have same language, but different solutions.

Secondly, we have to struggle against very powerful financial corporations, global corporations in water services, that did not find a way to grow further in their own countries. France has about 70% of the population attended by the private system of provision of water and sanitation services. The other 30 % are attended by public services and these 30% do not want to have their services privatised. England has privatised 100%, but Scotland and Wales do not want to privatise, because they are watching what is happening in England. The United States of America do not want to privatise. The most capitalist country in the world does not want to privatize its water and sanitation services. There are only 15% of the population with private concessions and they do not want to extend this experience. Canada has very few cases of privatisation. So, in the developed world, privatisation of water and sanitation services is not a good solution. There they do not want to expand this solution. So where is the market? The developing countries. And it is not logical, because in the poorest country they cannot expect to have profits. Because the poor people have very low consumption of water, they pay very cheap bills, so where is the profit? We heard the day before yesterday a new idea: a North-South aid in the form of a one euro cent per cubic meter tax for consumers in the developed countries. And this one euro cent per cubic meter should be transferred to the Southern countries as a way to allow the privatisation of the richest part of these poor countries. So the poor part receives this contribution from the Northern countries and rich part of the poor countries should be privatised. It's a problem. These huge corporations are really powerful. Some of these corporations have budgets of about 70 billion dollars a year, much more than the budgets of very many countries themselves.

The third problem: we do not have open lines for credit for loans in many of our governments and from multilateral agencies and international banks. We are not finding it easy to access loans or credit in order to improve our services, in order to built new facilities. And we also have governments that do not like popular participation very much. We have governments in very many countries that do not have any kind of popular participation. Some of these countries even do not have elections, for example. So we have many obstacles to improve popular participation.

But we have potential. First of all, we have a very high demand for these services. People are dying because of diseases caused by lack of sanitation and lack of safe water. We have the failure of some kinds of privatisations worldwide. In Brazil, for example, they privatised the electricity distribution almost 8 years ago. They also privatised the telephone system and they promised heaven: cheap bills and services for everyone. But the result is not heaven, it is close to hell. It is true that the coverage of the services have improved in terms of the telephone system: almost everybody has a mobile telephone, but we have some unbelievable situations. People have a mobile phone but they do not have tap water. And why do they have a mobile and no tap water? Because the pre-paid telephones are being used by people only to receive telephone calls, not to make telephone calls. So everybody has them to receive but they do not pay anything. Last year we experienced a very serious lack of energy in Brazil. We had cut-offs, entire cities were cut-off from energy, although we are a very water-rich country with many hydropowered electricity plants. And the bills grew up about 300%. So, the people could see that privatization was not heaven. This is the situation of Brazil but also in many other countries privatization did not result in better services and cheaper tariffs. So this situation has potential for us. We are living with a global water crisis, water as a natural resource, water in our households, water in terms of pollution of streams, rivers and seas. And this global water crisis also has potential for us.

At last, we have a very strong expansion of democracy, democracy as an improvement of the level of conscience of the people. People are having information. Information is the basis of the participatory process. Information is the basis of democracy. In many countries we are developing citizenship, the conscience of the importance of participation in the decision making process. It is not only the moment you put your vote to elect presidents and governors and mayors and councilors. No, every moment we have consequences of our participation or our lack of participation. So we are talking about mobilisation. I would like to say that democracy is a conquest, democracy is not a gift. We must struggle for democracy. We must struggle for popular participation in decisions. We could see the example of Porto Alegre. But we have very many other examples, in Uruguay and in Brazil.

I am from Recife, a 1.5 million people city in northeast Brazil, a very beautiful city. You are invited to visit us, we have a great carnival, the best carnival of Brazil. Last year we had a seven-months process of discussion about our water and sanitation services policies. I am the municipal secretary for water and sanitation in this city. I have done water and sanitation work for last 22 years and now I have the opportunity to manage the water and sanitation system in the city where I live. We have a concession to a public state company. It is not a private, but a 100% public company. 30 years ago the Municipality made a contract in order to give the concession, I will explain briefly. We had a military dictatorship 30 years ago. This dictatorship lasted 21 years and during this dictatorship all municipalities were forced to transfer the responsibilities from the municipal level to the provincial or state level because the mayors were elected directly by the population, but the governors were not. They were appointed by the military government. So the government told the municipalities: if you transfer the management to a state level company through a concession contract, you will have everything you want. You will have money from the state company, you will have schools, you will have housing programs. And if you keep in your hand the water and sanitation utilities, you will have no money from the national government. About 75 to 80% of all municipalities in Brazil made concession contracts with the public, state level companies. But 1700 municipalities said no and our association (Brazilian Association of the Public Municipal Water and Sanitation Companies) unites these 1700 municipalities. The city where I live, Recife, made that concession contract to a state public company, and for a very long time the municipality had no kind of participation in the management of water and sanitation services in Recife. Now the new mayor decided that we will control the services. We will not control the services ourselves but establish a relationship between the people and the company. So we had 7 month process of discussion, the first popular assembly on water and sanitation in Recife. It involved 4000 people in a seven month long process discussing every alternative, including the municipality having no role to play, privatisation, partial privatisation, treatment plans, reservoirs, etc. Total privatisation and no privatization, all the alternatives were discussed very strongly by the population. I repeat: a 7 month process involving 4000 people, ordinary people. These people elected the delegates. 67% of the elected delegates were individuals, ordinary people. They were invited by loud speakers in the street. 'Come on, let's go the meeting tomorrow night at the school'. They were there , they became candidates and they were elected. They participated in this seven month long process. The people elected 67% of the delegates, organised associations of the population elected 26% and the government decided only 6,6% of the delegates. It was a decision-making assembly, not an advisory assembly. We have made 162 decisions, for example: the municipality must control the state level company. The municipality must write a new concession contract. We do not accept by law that private sector should run the water and sanitation services in Recife. It was a decision and it has become a new law on the municipal level. This small book tells whole story, unfortunately I do not have it in English but those who can read Portuguese or Spanish can understand. We would be very glad to give more information if you want.

I would like to end my presentation saying that the mayor of my city was an outlaw 15 years ago. The police broke five of his ribs in a street fight, he was arrested 12 times because he was fighting for democracy, and now he is the mayor. Our president Lula, we are very proud of him. Lula was an outlaw as well. 15 years ago he was arrested as well and now he is the president of a 170 million people country. So let us take it as an example. I could also mention Nelson Mandela from South Africa. What was his experience when he was in charge as a president of South Africa? 27 years in a jail. This was his experience and he made a real revolution in South Africa. So we must struggle for democracy, we must struggle for popular participation. People even died for it. We have to do our job, for the next generation. No more democracy for a few people, only in the rich countries, but let's globalise the access information. Let's globalise the advantage of the popular mobilisation, so we think the world is going to be better. Thank you.

Charles Santiago: Thank you Mr. Miranda. The next speaker comes to us from Bolivia, Mr. Pablo Solon. He will share with us some of the potentials and obstacles for introducing participatory models in water and sanitation.

Pablo Solon, Fundacion Solon, Bolivia


Thank you very much, it is a pleasure to be here with you. I want to say four things. The first one it that we only speak about privatisation. We must not only look at privatisation of services, that is only one part of the problem. I would say that the biggest problem is privatisation of water resources. That is even much more difficult and has a much larger impact. Take for instance the Chilean model. In the 1980's Chile approved a water law so everybody could come and say "I want a concession of water" and get it for free: 100 liters per second, 500 liters per second, and so on. Now after 20 years, more than 70% of the water resources in Chile are privatised, owned by companies, by very big land owners and by people who just speculate with water. The biggest owner of water in Chili is a corporation from Spain. We are speaking about concessions that are given not only for drinking water, but also for electricity, for fishery, for mining companies, for oil companies, for tourism. So you have so many uses of water and the privatisation covers all these uses. The aspect that we feel most directly, because we are living cities, is drinking water. But if you talk with peasants and indigenous people, they are going to speak about something different. Because their main problem is with other forms of the privatisation, because mining companies take their lakes, take their rivers, take their rights.

So what do we do with these problems? We have discussed in Bolivia, after a very long experience, about who should own water resources. It must be in the public sector but who is the public sector? If it is only the government, then we have lost everything, because we know these big corporations can buy a minister, can buy the prime minister, can buy the president. So we do not have any security if we only say it should be in the public sector. Therefore we have made a proposal that civil society participants should have a majority in the government's committee deciding water rights. So in that case indigenous people, peasants, fisher communities and people that are living in a city can be there and say "what are you doing, to whom are you giving these water resources?". "To a mining company that is going to affect so many people here and there?". So the most important authority of water must not only be public but it also must have civil society participation with decision-making power. So that is the first proposal, we think it is the most important.

The second thing I want to say is that privatisation is coming through another process, called "market access". When we were at the "America Day" here at the World Water Forum, they did not speak about privatisation, they spoke of market access. I think the way they are now promoting privatisation is through market access, by putting water into free trade agreements like the World Trade Organisation where you have the GATS (the General Agreement on Trade in Services), which has to do with drinking water systems. But they are also discussing to include water itself as a commodity, not only the services. For example, there are mining companies in north of Chile that have made a big investment, 5 billion US$, and they need more water in order to process the minerals. They cannot get the water in the northern part of Chile because they have already taken all of it. So they want Bolivia to export underground water to Chile. But we said no, we stopped the law three times. So these big mining companies went to the Chilean president, who is now pushing for water markets to be included in a new free trade agreement between Bolivia and Chile. If this happens we will not be able to stop the marketisation of water as a resource and when you say market, you say privatisation. So we think that we must stop drinking water services from going into GATS but also we must be very careful that water resources do not go into different free trade agreements. Indigenous people have told us that in Canada there is a project to commercialise icebergs, for the Middle East. We think that we need an international convention that protects water in the whole world and rules that water should be exchanged not in market way but in a solidarity way. Sometimes maybe you will need trans-boundary transport of water from one country to another. But which are going to be the rules: market rules or solidarity rules?

Now I go to the issue of drinking water services. We must push the models that our friends from Brazil have explained. In the experience of Cochabamba, when we threw out the Bechtel corporation that privatised the system, the company went back to the municipality and we discussed "what we are going to do?". "Let's have a board of the company that is now elected by the people from each different neighbourhood", not only to have a public company that is ruled by the bureaucrats of the municipality, because these bureaucrats are in many cases very corrupt. So what happened after the company went back to the people of Cochabamba was that we pushed to have this board and now it has been elected. The neighbourhoods have elected the persons that control the board. The board has five representatives that control the management of this water drinking system. I think there are different ways to do it, but we must guarantee concrete participation of civil society, of the people, in the management of water services. The most important principle must be transparency, to ensure that people have information about what is happening with the company, why the tariffs are going to be raised, or why some neighbourhood must pay a little bit more in order to help other neighbourhoods. This is very important. What we see is that transparency usually does not exist in public services of water and if we want support, we need transparency, we need democracy and we need to be more efficient, much more efficient than private companies before or the public companies before. It is a new model that we are fighting for. When we say "public" in Bolivia, we are not talking about what "public" was before because "public" in Bolivia meant bureaucrat, so we are speaking about public with civil society control.

And the fourth thing I want to speak about is investment, because of course you cannot only say "go back to the public sector", where do you get money? Because we need money. In the case of Cochabamba, for example, services covers only half of the population and we need all the population to have access to clean drinking water, and we need money for that. So what do we do to get investment? This is also very important because in the Camdessus panel at the World Water Forum (Camdessus is the ex-director of the IMF), they said that if we want to give water to the poor, we all want to give water to the poor, we have to attract investment. The public sector does not have any money, so where should the money come from? Where? Be realistic, from the private sector! But you are not going to get money from private sector if you do not give them some guarantees, like some profit guarantees. You must allow that the tariffs should be paid in dollars or in relation to dollar! Things like that. So we must have an answer to this. We were discussing with Vandana Shiva that we should work on our own people's report to confront what Camdessus is saying. What are the mechanisms that we see in order to solve the problem of investment? Firstly, there is the debt problem. In our countries, I do not know the percentage of Brazil, 25%-30%, of our annual budget goes to pay the foreign debt. So if you want to have money to invest in water: stop using it to pay back debt. For us this is very, very important. We had a discussion during the America Day, when we asked this to the representative of the IADB (Inter-American Development Bank) that was there. And he said "oh, it really hasn't got anything to do with it: one thing is investment and another thing is debt". But we think it is very, very important because most of our money goes there. Secondly, it has to do with aid, as I already said. The World Bank, the Inter-American Development Bank and so on give aid but they give aid with conditions. So what we are saying is: we want aid, but not with these conditions. It is difficult but you can fight for it and win on this demand.

The other problem is how we see investment in water. The North has solved their water problems, that is the vision they put forward here at the World Water Forum, the problem is with the poor. The poor have a problem. That is a big lie. The water crisis is a problem of the whole world, not just the poor in the South. To solve the problems, not of the poor, but the water problems of the world, the rich countries must invest in water. It is not a problem of the poor countries where they get the money from. It is a problem for the whole world, where we get the money from. And of course the most biggest responsibility is for the richest countries, because if you see what they have done with our water resources in our countries, they have been destroyed by big corporations and their projects. So we say that the money for water must come from the reduction of the military budgets of the richest countries. We have enough money to solve our problems. I said the other day: the problems of Bolivia can be solved with half of the costs of one of the planes that now every day bomb Iraq. You know that one F-114 costs about 2,5 billion dollars. To solve Bolivia's problem for the next 25 years, I am speaking about all of the problems, not only services of drinking water, we need less than 1 billion dollars. So I think this is the real fight. We must strengthen our campaign to show that it is not a problem in poorest countries and that the money of world must be spend on water and life. Just to end, I want to say that our experience has shown us that only if we build a very organized, a very unified, movement with campaigns that join different efforts around the world, we are going to be able to obtain victories in this struggle for life and water. Thank you very much.

Charles Santiago: Thank you very much Mr. Solon. What we will do during this panel discussion is two things, one is clarifications and questions and issues that come out of the presentations. And secondly we also begin some kind of a discussion on how we can promote these models in our own countries. Let me just very quickly recap on some ideas that have been put forward by our four distinguished panelists. I think the first presentation clearly identified that an alternative structure of providing water and sustainable development, along with sanitation services, is possible. It was pointed out to us that a system that is based on accountability, equitable distribution of water resources, sustainability, transparency and participatory democracy can make an alternative system possible. Mr. Hoque told us that in his country the alternative model is better than the private sector model. He was telling us that this alternative model is possible and realistic. The third speaker made a very central point, a very critical point, that in order to have an alternative system, we need people's participation and people need to control the decision making process. He argued that it is people's participation and control of the decision making process that is the central ingredient to the alternative system. Finally, we had another speaker who told us about the need for people's participation but also for the re-ordering of the priorities of our own government as well as the multilateral agencies. Our government can move money away from arms and bombs towards water. So what I hear, very quickly, maybe I have done some injustice in the process, is that another system, an alternative system, is possible. With that short introduction let me invite your contributions, your questions and also suggestions for how to concretise some of these ideas in your own respective country.

My name is Ki-Tae Kwon, I am an activist from the Korean Federation of Environmental Movements. To save time, my translator Mr. Kim speaks directly to you.

Kim Jae-hyun: Nice to meet you. I am a volunteer member of the Korean Federation of Environmental Movements. Briefly I will present the current problems with water privatisation in Korea, maybe most of you also have the report written in English. In South Korea management and operation of social infrastructures are in the hands of central government and state-run companies under those ministries. Especially related to water, the Korea water resource corporation (KOAKO) enjoys a monopoly position. They have constructed many large dams nation wide and these days the Korean NGOs, environmental city groups, many scientist and many civil society members resist construction of new dams and large-scale development of water resources. The current drinking water rate is much lower than the production cost and Korean people tend to consume tap water excessively. This gives an excuse to KOAKO to promote more dams. Finally, Korean people are strongly against privatisation of public services like postal services or railroad and so on, but Korean people and NGOs do want participation of private sector. I do not mean marketisation, but participation of civil society, specialist and NGOs, not leaving it in the hands of the market. The Korean government's state run companies do not have enough resources, expertise and scientific knowledge, but they enjoy monopoly rights concerning water resources development, which is why Korea needs more participation from the non-government sector.

Maria Silva Ortiz (REDES, Uruguay): In 1992 there was a referendum in Uruguay about the privatisation of water. 84% of the people voted against water privatisation. Nowadays, the telephone and the energy sector are not privatised, but the income of these companies is being used to pay the foreign debt. These two big companies are making big profits and have high technology standards, but the income from these companies is not being used for the population. I have two questions. How can we go against what the World Bank is pressuring us to do? We do have successful public companies, but these companies are under pressure from international organisations like the World Bank and from the central government. So my question for the Brazilians is how we can achieve that the interests of the people are prioritised above the interest of the central government and international organisations? Another model, I think, is that successful public companies like electricity and energy can subsidise the water sector, in the case of Uruguay instead of paying the interests on the external debt.

My name is Karen Bakker and I am from Vancouver in Canada, I work at a university there. First a comment on the ideas that were mentioned by the panelists, then a comment on the strategy. I agree that lack of solidarity North-South and between elites and poor, between different communities, is important and I think that lack of information is also important, but what about inappropriate technology? Water treatment and water delivery technology has not changed very much in the last 100 years, maybe we need to be thinking about different technologies that are less expensive and also mean that countries will be less import-dependent. Also, I think the real issue that both the last panelists raised was corporate power and the problems with the corporate model. The problems that we get with private corporations, as Pablo Solon pointed out, we also get with public corporations. The corporation is a sort of historic artifact, it is a recent invention and I think we need to think carefully about whether this model of organising society is the appropriate one. I think your critique of the private should be clearly extended to the public, because they share many characteristics given that they assume a corporate form. We need to think more radically about alternative modes of social organisation. Now some points about strategy. First, I think we have to be very careful about holding the international financial institutions accountable. We have to ask why there has been a shift in finance, from concession finance towards lending to the private sector, with what is essentially public money. For example in the case of the World Bank, a decreasing amount of finance now comes from the IBRD, the concession finance part of the bank and an increasing part goes to the IFC. Why has this transition been made and why has this not been subjected to greater debate and public scrutiny? Also, how have bank loans performed to date? If you look at the performance of the water loans, these are very bad performing loans. There are internal critiques of the way they have administered those loans and the poor performance of those loans. Despite the poor performance of those loans and the mistakes the bank might have made in lending, there has been no suggestions of strategic debt forgiveness in the water sector, despite the water sector being the poorest performing of the World Bank's portfolio. So I think there is a strategic opportunity here for us to critique the Bank's approach to the water sector over the past 30 years. And here I think we can take strategic advantage of the Camdessus report. There are good things in that report and one of them is the statement that we have to start thinking about lending in the local currency for water infrastructure development. This is very interesting, because for the last 30 years the multilateral development banks, with a few exceptions, have insisted on lending in hard currency for local revenue-generating projects. This was not World Bank policy 30 years ago, then they switched. The Camdesuss report policy, I think, is an admission of failure of what has been multilateral development bank policy for the last 30 years. That is a real opportunity for strategising, I think. Finally, let's not wait for the IFI's to change their approaches, let's think about our own solutions. There was a lot of talk at the World Water Forum about local capital markets and municipal bonds, there are some excellent examples from India, Mexico and the US, which have supported a largely public, locally-run water supply utility sector. We need to think creatively about those solutions and not keep going to the IFI's for more aid and grants. In many cases, I think, we have the resources in our own countries, to be doing this ourselves.

My name is Erik Guitterez, I am from WaterAid. First of all I would like to thank the organisers of this session, because what we really need to discuss now is the alternatives and this is a step in the right direction. Just some points and contributions. As a program within the organisation, we have looked at a lot of case studies and experiences from the countries where we work. One extreme alternative that we can contribute into this discussion is the case of the Orangi Pilot Project from Karachi, Pakistan. I say it is extreme because there is absolutely no government role in it, it is 100% funded by the households, urban poor households, and it is 100% self-administrated by the urban poor. Orangi is the biggest urban slum in the city of Karachi. I brought some copies of the report, but it is also available on our website. This case in Orangi, there are a number of reasons why they are able to do it and one of the reasons why they succeeded is that there was a lot of social preparation, social infrastructure-building, they invested a lot in that kind of work. It became very effective and in fact they rejected a 70 million US$ loan from the Asian Development Bank. They said "that is too expensive , we don't need it" and used their own resources. So this is urban poor families paying for their own sanitation connections and this shows what is possible, even with minimal participation from the state or from the government, as long as there is sufficient social infrastructure. Also important was the adoption of low-cost technology, because they used low-cost sewerage and pipe systems, they did not use engineers with sophisticated scientific knowledge, just local artisans and other local people building and constructing the system. It is working until today, so that is proof of what can be a good alternative. But the report also says that there are issues of replicability, questioning whether the experience can be transmitted into other places. Another point that we are looking at is the issue of cost, because this always fills a lot in the debate about water services provision. What we are saying is that costs are typically measured in ways that are not sensitive to poverty. When governments, regulators, companies, even public utilities talk about water prices, they talk about costs in a way that is usually not sensitive to the complexities of poverty. We are trying to develop some new thinking about cost, so for example we try to develop new tools for measurement, looking at the substitution effect when there is a price increase. The only way that the poor can afford a price increase is by substituting spending on other areas. So they will not spend on food, they will not spend on health, they will not spend on the education of their children, because they need to spend the extremely tight budget to finance the increase of their water bill. So far there has been little work done on this, we are coordinating with some academics on how to develop the idea, how to measure the substitution effect, so whenever price increases are being considered, the impact on poor families can be shown and measured. The other big point here is the cost of not providing. If a government is deciding its policies on water and sanitation there is always discussion about whether they can afford investment. We think some work needs to be done on what people spend when they get sick because they do not have access to clean water and the lost economic productivity or when children are not sent to school because they have to get water for their families. These are costs to society at large. Little work has been done to measure these types of costs and we think these are areas we need to develop thinking and instruments around. The last point I would like to contribute: we have done some case studies where we are looking at how to make rights the driver of efficiency, rather than profits. The usual thinking among multilateral agencies, donors and governments is that if you want efficiency you need some form of profit-orientation. They think profits will be the driver of efficiency, you know what kind of impact this kind of thinking has cost around the world. There are cases that show that putting rights at the center of efficiency can be done, just one short example. In Kampala, Uganda, the national water and sewerage corporation was an under-performing public water utility until 1988, when they instituted some reforms in their utility. An important part of these reforms was recognising that the users of the water system actually had rights which they could not violate as a water utility. So if there are complaints about the service and they fail to respond, then they are guilty of not just inefficiency but of violating the rights of the consumers. They enshrined this in a document. In five years time they were able to turn around the utility and it is now a better-performing utility, meeting its different types of performance targets. It is a big task to show that rights can become a driver of efficiency, not just profits.

Zahirul Hoque: About the question of financing, let me give a contribution. In Bangladesh, system loss can be up to 70%. If you can improve this situation it will be a great contribution to the operation maintenance, you can provide for sufficient depreciation funds and for some surplus which in a private company would go to profit, but which a public company can re-invest. I think self-help is the best help. We are mostly talking about towns where there is a certain infrastructure present already, which can be improved, especially if the money is spent more effectively and corruption removed. The participation model I have explained is not a full-blown one, it needs further study and promotion. With participation, the situation gets much more transparent. Everybody is participating in the decision, therefore corruption will be gone. Also the motivation to work well improves. This is a self-correcting system. If we build on this, then financing will not be a problem. It will be an attack on traditional financing, to develop more efficient organisations instead.

Pablo Solon: I want to be very concrete. I think the solutions in our countries must always include subsidies for water. Water is a sector that should be subsidised. Europe, US and Canada subsidise their agricultural production with more than 45% of prices, but they want to make us believe that we cannot subsidise our water sector. Secondly, where does the subsidy come from? We cannot just see the water sector on its own, we must see it within the whole economy. If you are speaking of subsidies, we are not speaking only of subsidies from rich to poor people within a drinking water system. We should look at taking money from other public companies and putting it into drinking water services, like our friend from Uruguay proposed. In Bolivia, our main battle is to re-nationalise our oil company. In Bolivia everything has been privatised except for the water companies. They have privatised the oil companies that now own the oil of Bolivia. We are a very rich country in gas and oil, but who owns that oil? Bolivians? No, the big corporations. So if we do not give back this oil to the Bolivians, then we are never going to have the money to solve the water problems and the problems of poverty. The other important point is that you cannot think about water solutions with out discussing the problem of debt. I want to say that in relation to the Camdessus report, the South African government told us that the report has things that are bad and things that are good. I think the Camdessus report is another way to forward privatisation. It does not say "you must privatise", but it does say that you must give incentives to those who want to invest, the private sector. They say they want to give money to public and private utilities, but in reality most of the aid money will go to encourage the private sector to come and invest in order to 'save the poor people of our countries'. I think we have to make a very strong campaign against the Camdessus report.

Antonio Miranda: About the Camdessus report and the many kinds of aid, I would like to remind that we have very hard lessons from some thousands of years ago, from the Trojans, about being careful with some kinds of donations! What do we think about social control, about public companies, about public services? I personally hate corporations, including public corporations, I hate them. I am now a public servant, a public manager. I am a municipal secretary, but that is only for a while. I am always a citizen. I usually say, when I have meetings with the people from the neighbourhoods, "my goal is, by the end of the mandate of this mayor in 2006, not to be in charge". My role as a public manager is to make those things happen which the people decided for. I am not in charge. If someone asks me "please put water in my household" or "please make a sewage pipeline in my street", I want to say by the end of my mandate, "I can do nothing for you, because you people decided in the participatory budgeting, in the public discussion, in the democratic process, you decided what I have to do with your money. My role here is to do exactly what you have decided, so I am sorry I can't do anything for you, next year you go to your neighbourhood, you join the participatory budget, struggle in order to have your demands included there, then come here and remind me of my obligations". This is my goal at the end of the mandate of the mayor. This is what I think is the role of the public sector: to be a link between the people and their necessities and their future. It is not the role of the public sector to decide about people's needs, because we are usually bureaucrats, as Solon said. I am not speaking about the government that I belong to, but in general governments are bureaucrats, almost a dictatorship. We won the struggle against water and sanitation privatisation in Brazil. Not definitely, because it is a permanent struggle, but still. They privatised the electricity , they privatised the telephone system, but they did not privatise the water and sanitation system. Why? Because people were mobilised. The national government four times sent the proposed law to the parliament to authorise the privatisation of water and sanitation and four times the people mobilised. We were there from Recife, from Porto Alegre, we collected 720,000 signatories and brought them to the congress, saying "no" to this draft law. The draft law was not voted on because the government had the perception that they were going to loose. So, what is the solution? Struggle, mobilisation, information, participation, there is no other way! If someone is expecting a formula, a recipe, forget it, there is no such kind of solution. The only solution is struggle, mobilisation, information, participation and to make all the governments work for us and not in our place! To finish, money is not a matter of finance! Money is a matter of politics, a political issue. The International Herald Tribune wrote that reconstruction of Iraq will cost 40 billion US$, regardless of the costs of the war, only for the reconstruction. We have enough money! We are wasting money. We produce much more food than humanity needs. So let's struggle to put this money in the right place, to secure the comfort the population needs.

Carlos Todeschini: The Camdessus report says that the biggest cause of inefficiency comes from corruption. Corruption is a big problem within water services, but in our opinion, this is not the biggest problem. Concentration of corporate power and money is. The banking sector in Brazil has grown over 400% percent after privatisation, but also the social inequalities are growing. Rich people are getting richer, poor people are getting poorer. We cannot accept the claim that privatisation of water will be more efficient, not just because they send profits abroad to their main offices, but also because they cannot be transparent towards the people the way we can with social control. They never show what they are really spending, they are most of all concerned with increasing profits. We agree about the need for new technology, day by day we have to introduce new technological alternatives, for efficiency, reducing costs and for environmental sustainability. Through social control, democracy and transparency, people can push us to be more efficient. A comment about financing and the blackmailing by international financial institutions. We got this loan from IADB in 1995 and due to changes in exchange rates, we paid three times as much as we received. In order to have the investments guaranteed, we must have a combination of money from tariffs and from national financial institutions. We agree that we must raise money in our own currency, because of the exchange rate problems which we are facing in Brazil and in Argentina too. To conclude, in Brazil we have many, many examples of alternative models that could be repeated all over the world.

Kazumi Sakamoto: I would like to focus on the leakage problem, which is a very big problem of sustainability. In Japan we have a very, very low leakage rate: 7% loss. In other parts of the world 30-50% is common. Another problem is the quality of the water, for instance bacteria and other pollution in the pipes. The treatment plants need investments, but even more so the pipes need improvement to reduce leakage. Do you have any thoughts on this?

My name is Patrick Apoya from Ghana, I am a member of the National Coalition Against Water Privatisation. The problem of water loss that our Japanese friend has raised is a very interesting issue. Besides finance, one of the arguments most often cited by the promoters of privatisation to push their agenda through is the rate of unaccounted-for-water, which is very high in developing countries. In Ghana this is one of the problems most often cited to make the case for privatisation. In Ghana 50% of water is unaccounted-for, due to physical losses, due to ineffective billing and for other reasons. These problems are however not so big as they seem. In a region in Ghana, we tried a very simple experiment to look at how communities themselves can play a role in improving the quality of services delivered to them. In one particular town in the northern region we started an experiment in 1998. This town has 25,000 people and after several years of lack of water because of serious leakages due to old pipes, the community was able to mobilise assistance from UNICEF worth 100,000$ to replace some of the old pipes. They decided to start managing that part of the water supply themselves. They made an agreement with the water utility that said: we are 25,000 people, but just give us one water meter at the entrance to our town and bill us for that water. We will distribute the water ourselves and collect the money for you. The mobilisation of the population in water management committees, the improvement of the pipelines, the decision-making about the tariff structure and everything else took about one year to prepare.

The project was finished in 1999 and the water distribution started. That year the Tamale region as a whole registered 60% rate of water losses, but in that particular area every bit of water that was supplied was recovered 100%. They themselves accounted a 10% losses rate, but they made sure they added that 10% to the tariff and they paid back the water company 100%. Also the following year the water company recovered 100% of every bit of water they supplied to that community. Now let's look at what the community was able to do to improve the service of the water delivery drastically. They involved every person in leakage control. If a pipe was burst and you reported it to the water company, it would take two weeks before they came and fixed it. Today, if there is a pipe leakage in that community, within ten minutes there is somebody there who is patching the water leak. The laws in Ghana do not allow any person outside of the water company to tamper with the pipelines, so in the negotiation of the contract it was made clear that it is the responsibility of the community to take control over the pipeline, not the water company. So the plumbers in the town have been given the responsibility to take care of water leakages. Number two, every pipeline is assigned to a committee and that committee is responsible for accounting for whatever goes through that pipeline. The committee also went from house to house and disconnected households with illegal connections. They were able to reduce a problem which accounted for 25% of the losses. Instead they arranged subsidies for those who cannot pay. They were still able to make a 25% surplus after paying the water company, which goes to the community, for the expansion of their water system. The water company is now using this model as a basis for redesigning their distribution in the whole area. The city of Tamale has about 200,000 people and now they are in the process of seeing how to break the city up into smaller areas to repeat this experience. This shows that the problem of water loss may look impossible to tackle, but it can be solved and I think we should be encouraged to look at it.

Charles Santiago: Allow me to conclude this morning's discussion. There is no denying that there is a scarcity of water. This has enormous implications for food security, trans-boundary relationships between countries, education of children and it undermines people's relationship with the natural environment. The question is now how to resolve the problem of scarcity? One option is promoted by the world Water Council at this meeting in Kyoto, supported by the Global Water Partnership, the World Bank, the European Union, and the likes. This vision was given elaborate explanation and legitimacy in the Camdessus report, suggesting that the market best resolves scarcity. If you hand it over to the market, it will solve the problem of scarcity and realise the UN's Millennium Development Goals of providing clean water to the poor. In 1992, the Dublin Declaration stated that water is an economic good, today the World Water Council is talking about Public-Private Partnerships, with the private partner in monopoly control of water resources. This is unfortunately the dominant view. This morning, however, I think we had a fantastic and rich discussion about the possibility of re-organising our resources, our organisations, our priorities, to create an alternative system of water delivery and sanitation. Each of the speakers made a very important point that an alternative system is possible, based on the experiences of their own municipalities and their own trade unions. If there is accountability, if there is equitable distribution, if there is sustainability and transparency and most importantly people's participation, a popular democracy, then an alternative system is possible. Another important point made is that our government and international financial bodies need to re-order their priorities in order to make the provision of water and sanitation possible. What we have in front of us are two sets of directions: leaving it to the market or letting the people have control over the decision-making process. I think the point made about moving towards the concept of rights-based efficiency is very important. The examples given from Porto Alegre, Dhaka and Recife show that a rights-based approach can be realised. We will stop at this point but when we come back we will talk about how to promote the alternative models for the rest of the world, how to make it achievable for other countries in our regions and how to network among us so that the experiences we have heard can be made available in countries around the world.

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