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12.02.2009 General News

Water will not be privatised in Ghana -AVRL


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 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, 2840 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 about 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 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. GNA