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Ghana |
SOCIAL CONDIT.
The Government is encouraging private sector participation in the water sector
Ghana is expected to embark on Private Sector Participation (PSP) in the urban water sector in the year 2003. But this has not been well received by various interest groups in the country. This proposal has, since its announcement, caused sharp reactions from civil society and other participants in the water industry. – Already the opposition Convention People’s Party, which is socialist inclined, has reacted against it, describing it as «obnoxious to the people.»
Yaw Manu, an environmental consultant, is still unsure why the government would do such a thing. He asks: «Why do we want to privatise or invite private participation in the water supply industry?». His argument is, that to provide water is a social service which the government can’t ignore. And if one of the reasons is to improve upon efficiency in the sector, then this is just not going to happen.
«There’s many other matters which have to be taken into consideration», says Manu. «Supplying water involves more than just the water company. Other institutions such as Town and Country Planning have to have their say. And I can’t believe for a moment that any prospective investor in the water sector would be interested in investing in the messy water distribution networks we’ve created in this country, especially in Accra. And it’s not just a matter of supplying water — there’s also the question of waste management».
Earlier on this year, ISODEC, a non-governmental organisation, which operates in the water and sanitation sector, held several Workshops and public fora to explain why it was opposed to the government’s policy of introducing PSP in the urban water sector. ISODEC argued that the involvement of the private sector in the production and distribution of water, would, among other things, raise the cost of water and put drinking water beyond the reach of the already impoverished Ghanaian. ISODEC has held to this position and vowed to garner public support to compel the government to abandon its privatisation programme. «Besides», says ISODEC, there’s always the danger that any privatisation initiative will allow foreign multinationals to control Ghana’s water sector.
Indeed, most people are puzzled just why the government wants to privatise the water industry. Their main concern is that if the sector falls into the hands of the private sector, they will be called to pay more for a service which cannot be described as performing credibly.
In some locations in Accra, pipe-borne water runs only during the night. In other places, water runs through the taps once a week. Frequent interruption of service is a normal occurrence in all the major cities. The picture is gloomier in the rural communities where an inadequate clean water supply or the complete absence of water services, has led to guinea-worm infestation and other water-borne diseases.
Fears unwarranted
Kwamena Bartels is the minister responsible for the water sector. He thinks people’s fears are unwarranted. According to him, the production and distribution of water will not be handed over completely to private firms. Rather, what the current government intends to do, is to forge a partnership with the private sector in urban water supply.
Bartels describes ISODEC‘s criticism as a «half-truth» and «misleading», saying that privatisation connotes a total sell-out of the sector to a private buyer who then runs it, fixes his own prices without monitoring and regulation. «Such is not the case with the PSP, which is aimed at building a contractual relationship between the state-owned Ghana Water Company Limited (GWCL) and a private company». Presently, nine companies have been short-listed as potential partners with the GWCL.
The government’s desire to embark on the PSP initiative, stems from the very poor performance of the GWCL over the years. An average revenue of $28 million is lost annually by the GWCL as a result of overall inefficiencies of water supply to urban areas. According to a document prepared by the Water Sector Restructuring Secretariat in Accra, non-revenue water, which occurs as a result of burst pipes and illegal connections, leads to the loss of approximately 52 per cent of the annual revenue. The document further reveals that the GWCL‘s total debt as at December 2000 was $367 million.
According to Bartels, the water sector restructuring programme will involve the leasing of GWCL assets for a maximum of 10 years, under a partnership that will facilitate the rehabilitation of the existing water distribution infrastructures, some of which are obsolete.
The programme will expedite the renewal and laying of more pipes for wider accessibility to water and so increase water production. Bartels explains that the programme, which is focused solely on urban water delivery, is also intended to reduce the high incidence of «non-revenue» water. «The programme’s priorities includes the equitable distribution of safe drinking water in an expanded market, and accessibility to unserved and under-served urban areas at affordable prices,» he adds.
Indeed, while Ghana’s urban population is growing rapidly, the water distribution infrastructure in the country’s urban areas has seen little expansion and improvement over the years. Currently, the GWCL is able to meet only 62 per cent of the country’s urban water requirements.
Bartels says that under the arrangement, the GWCL will continue to own the assets and monitor their use, as well as accessing donor funding for major expansion works. It will raise local and external funding to improve water production and facility. Bartels says the PSP agreement will bring in foreign financial investment, modernised technology, management know-how, improved work culture and also make for interchange of expertise.
In addition, the Public Utilities Regulatory Commission (PURC) will still play its statutory role by regulating the price of water under the arrangement.«The PURC will also set performance targets and monitor the partners (GWCL and the private company) to ensure that they meet all benchmarks on production, distribution and quality standards», he indicates.
Emmanuel Nkrumah is a Water Engineer at the Water Sector Restructuring Secretariat. He believes that private sector participation in water utility services, is necessary to address the financial, operational and institutional constraints facing the GWCL.
Recent studies indicate that the urban water sector will require about 1.8 billion US dollars in the next 10 to 25 years, to increase coverage, officials in the water industry indicate. If things remain as they are, over the same period, access in the urban areas to a water supply could fall from the current 62 per cent to 38 per cent.
But under the PSP, it is believed urban water supply could improve from the current 62 per cent nation-wide to 80 per cent within five years and also facilitate accessibility and affordability of water in urban areas and reduce unaccounted-for water. Stephen Adu, PURC‘s Executive Secretary, dispels Ghanaians’ fears when he says that PURC‘s role will not change with the PSP initiative.
Any talk of privatisation of utilities, sends shivers down the spines of the people. They have bad memories of the social, political and economic consequences of IMF/World Bank Structural Adjustment Programmes. But Kwame Boakye, an entrepreneur, thinks private participation is crucial and the government should be allowed to pursue its objective. «Desperate situations call for desperate measures», he says.
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