Clearing the air

April 1, 2002
Water privatisation issues must be resolved through global dialogue on all levels so government leaders can take action to lay the groundwork for ambitious water agendas.

By Gérard Mestrallet

The Suez subsidiary Ondeo serves 115 million people around the world in Argentina, Chile, Gaza, Hungary, India, Jordan, Mexico and the UK.
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Solving the world's water problems is much more than a technical or financial undertaking. Widely divergent economic and ideological viewpoints in regards to water privatisation must be reconciled by stimulating active global dialogue at all levels. Only then can new solutions gain support from all parties involved - government, private industry and consumers.

Dogmatic discussion stymies real progress in providing water to the 1.2 billion people who lack access to adequate drinking water, according to the World Health Organisation. Instead of debating "Who does what service?," the following questions should be asked.

Why don't people have water? Why do we allow water-related diseases to kill 30,000 children every day? Why does the proportion of city-dwellers who benefit from drinking water diminish every day? Why does the development of networks for drinking water and sewerage systems not keep pace with exponential demographic growth and urban sprawl?

Water is a common good, one of the basic public goods. At Suez, we are opposed to the private ownership of water resources precisely because water is not a commodity. Our focus is on making clean water continuously available to all, and returning water to the natural habitat once it has been treated. It is the price of that service that is billed, not the price of water as a raw material.

The public sector must retain ownership of both types of assets, water and water infrastructures. The transfer of water infrastructure from public to private ownership is unnecessary in most developing countries. The preferred framework for Suez is a public-private partnership in which operation of assets is entrusted to a private operator for the contract term. The operator must maintain and improve infrastructure. Through contracts based on this model of delegated management, in cities including Casablanca and Buenos Aires, Suez invested nearly two billion US dollars in engineering structures that will be returned to local authorities at the end of the contracts.

The universal right of access to water must be recognised. In many places, the poor pay more for water of low quality. Suez programmes have extended water services to nine million customers living below the poverty line. Connecting underprivileged districts to the public water system is a basic tenet of social justice. The public-private partnership model is not problem-free, but it has unquestionably produced tangible results.

The water sector desperately needs more investment. Developing countries alone require more than US$ 180 billion to improve water services. Leveraging such resources requires a combination of private finance and national or multilateral funds. Initiative and control are the responsibility of public authorities, while implementation and management should be the responsibility of the private sector - this is the true meaning of a public-private partnership. Private groups are trained to intervene quickly and to achieve tangible, verifiable results.

Ondeo connected 1.6 million inhabitants in Buenos Aires, Argentina, over the last eight years to the drinking water network and nearly one million to a sewage system. The water service charge is still less than when the contract became effective. By the end of 2001, all inhabitants of La Paz, Bolivia, obtained access to drinking water, while only 60% had access in 1997. These new customers in Bolivia, the Philippines, Indonesia, Morocco and in Argentina are often underprivileged families living in shantytowns.

In towns and in rural areas we involve local communities in decision-making and sometimes in carrying out construction work, with the backing of efficient local non-governmental organisations (NGO). Where these solutions have been adopted, the price of water decreased tenfold in comparison with that of water dealers and its quality is incomparably better.

These outcomes are encouraging, but they are far from meeting today's needs. Progress is being stalled by inappropriate debates.

Opposing standpoints need to be reconciled so that progress can be made by political authorities in every country by taking immediate action to lay the groundwork for a more ambitious, efficient water agenda.

Author's note
Gérard Mestrallet is the president and chief executive officer of Suez, based in Paris, France.