World Bank: private role in water under scrutiny

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At this year's World Bank water week, the Bank and water CSOs took a step closer to dialogue; while the contentious role of the private sector in water provision has been highlighted by the withdrawal of Norway from an infrastructure trust fund, a new UNDP-supported report, and pending investment arbitrations.

During the four days of seminars end-February under the title Water futures: Sustainability and growth, the impact of climate change on water access was a recurring theme. Other topics covered included lessons learned from the NT2 dam in Lao PDR Update 45), and experience with public-private partnerships and sector-wide approaches.

NGO Freshwater Action Network held a joint workshop with the Bank as part of a scoping study to "assess the potential for dialogue" (see Update 50). They discussed how to enable the participation of poor people in diagnosing and overcoming the obstacles to provision of services to them; how those services can be financed; and the roles of the public and private sectors and community-based groups in providing them. The scoping study is to be completed by June.

In February, Norway pulled out of the Bank's Public Private Infrastructure Advisory Facility (PPIAF). Norwegian NGO, the Association of International Water Studies and UK NGO World Development Movement published a report entitled Down the Drain that showed how the PPIAF promotes water privatisation through the use of consultants. The Norwegian Ministry of Foreign Affairs announced that contributions to the fund would cease June 2007.

A new UNDP-supported book by Bayliss and Fine, concludes that private companies have shied away from investing in utilities in Sub-Saharan Africa, and their focus on cost recovery has failed to promote social objectives. African countries have been caught in a terrible bind as donor financing — particularly that of the World Bank — has dried up in anticipation of private investment that never materialised. The authors advocate for scaled-up donor financing which invests in strengthening public-sector capacities.

Water privatisation cases are high on the agenda of the World Bank's International Centre for the Settlement of Investment Disputes. In February, the tribunal granted civil society organisations the right to make written submissions in the cases where UK firm Biwater and France-based Suez/Vivendi are suing Tanzania and Argentina respectively over claimed breach of contract. The submissions are groundbreaking for ICSID and will have important ramifications for how water concessions are negotiated around the world.

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Published: 2 April 2007 , last edited: 25 June 2007

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