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10.02.2009 Business & Finance

AVRL not interested in water privatization – Fact sheet

By gna

A fact sheet on the five-year management

contract between Aqua Vitens Rand Limited (AVRL) and Ghana Water

Company Limited (GWCL) says it is not the policy of AVRL to

participate in privatization of water.
It said the two entities that own AVRL, Vitens from Holland and

Rand Water from South Africa, were both public sector entities and

would not be interested in privatization of Ghana’s water sector should

the government even decide on that.
“The AVRL contract is not a privatization and it is not AVRL

corporate or social policy to participate in privatization or undertake

financial in investments,” the fact sheet said.

“Should the government of Ghana, at any point decide to privatize

the water sector Vitens and Rand will withdraw their staff and services.”

In spite of what the contract said and the several efforts on the part

of AVRL to explain that the contract only mandated them to manage the

urban water system to restore the financial stability of the water sector

and to assist GWCL to increase access to piped water, several critics till

date continue to insist that AVRL’s involvement in the water sector

constitutes privatisation.
“AVRL is a not-for-profit partnership between two state-owned

water companies, Vitens and Rand - both Vitens and Rand consider

their involvement in Ghana to be part of their overall corporate and

social responsibility, to support development of the water sector in

Ghana,” the document said.
An independent consultant’s report on the nature of the contract and

performance of the AVRL so far indicated that, “the main element of

this contract is a private sector participation (PSP) Management

Contract and not a privatization of water”.
The independent consultant, Timothy John Kingman, in his 14-page

December 2008 report noted that AVRL was not making any financial

investments into the water sector and was therefore not involved in any

commercial activity like setting of water tariffs to recoup their

investments and make profit.
“The Public Utilities Regulatory Commission (PURC) still has the

roles of economic and environmental regulations – as regards economic

regulation the principal role of PURC is in the setting of tariffs,” the

report said.
In terms of the staff composition of AVRL, the fact sheet noted that,

there were only seven expatriate staff members from Vitens and Rand

working at AVRL, saying that the senior management team comprised

of both expatriates and local Ghanaian experts.
Additionally 2,840 staff members of AVRL were seconded from

GWCL.
The fact sheet noted that under the management contract the

expatriate staff drew their emoluments and other benefits for the

five-year period from some US$11 million taken from a US$103 million

World Bank grant to support the Urban Water Development

Programme.
“World Bank gave the grant specifically because of the confidence it

has the ability of Vitens and Rand to restore some viability and

efficiency into the urban water management system based on their own

performance in their respective countries,” it said.

It said the expatriate staff did not benefit from the revenue generated

by AVRL in their operation, adding that it was only the local staff, most

of who were seconded from GWCL, who were paid from a base

operation fee taken from revenue generated from the operations of

AVRL.
Statistics on the performance of the urban water sector made

available to the GNA indicated a drastic increase in financial

performance between the pre- and post- AVRL period.

According to the statistics, net operating surplus (profits) at the end

of 2005 was GH¢1.9 million cedis but increased drastically to GH¢9.1 in

2006 after AVRL came onboard in June 2006. In 2007 it increased to

GH¢13.4 million cedis and last year it hit GH¢20 million cedis.

The fact sheet states that one of the major challenges of AVRL had

been to help anti-privatization organisations like Coalition of NGOs on

Water Sector (CONIWAS) to understand the development role of

AVRL.
Meanwhile, CONIWAS said recently that the involvement of AVRL

in the management of urban water constituted privatization and therefore

called on the new political administration to abrogate the AVRL contract

before it ended in November 2010.

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