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08.10.2004 Press Review

EDITORIAL: Government losing the argument over PSP

By Public Agenda

Lies, and attempts to dribble Ghanaians in pursuit of disaster

(Public Agenda) --All callers but one, into the discussion segment of Joy FM's Morning Show on Tuesday, were unanimous in their condemnation of the revised Private Sector Participation plan for Ghana's water sector. They called on the government to secure the required investment for rehabilitating the sector and challenged it to task the present Ghanaian management under a performance contract to deliver the desired results.

A particular caller, denounced the government's decision on the basis of Ghana Airways' failed Management Contract, executed by Speedwing of the U.K., who at the time of their departure sometime in 1996 had piled up a debt of about ¢23 billion.

The callers had phoned into the programme to contribute to a an insightful discussion, on the controversial management contract policy, by a panel made up of Emmanuel Nkrumah, Enimil Ashong, both of the Water Sector Restructuring Secretariat, and Alhassan Adam of the National Coalition Against Privatisation of Water.

Nkrumah had opened his submission with a justification of the policy on the grounds that donors had complained of not getting their money's worth of funding for the water sector, and had therefore requested for an improvement in the management of Ghana Water Company. He went on to assure Ghanaians that under the management contract, Ghanaians would be better served and waste in the system would be reduced substantially.

Nkrumah's position was however contested by Alhassan, who pointed out an apparent deception of the Ghanaian public, on the part of Nkrumah, who he said was creating the impression that the problem of the sector was purely a management thing, when from the onset of civil society protestation against the programme, Ghanaians had been told by the same Secretariat that, it was one of investment, which was the reason the company was packaged for lease. Alhassan also pointed out that, the government was misleading the public into thinking that it had shelved the lease plan for the sector, when they know very well that, the draft framework document has a clause which allows for reverting to the lease arrangement, 42 months into the management contract.

On the question of transparency, the Water Sector Restructuring Secretariat sought to create the impression that, the water sector reform process had been participatory, by announcing that a tripartite committee had been constituted to draft the contract document. Nkrumah named the membership of the committee as Public Utilities Workers Union (representing the workers), Consumer Association (representing consumers), and legal practitioners. This again, was sharply rebuffed by Alhassan, who disclosed that the contract had already been drawn by Alex McPhail and his team at the World Bank, and that it was deceptive to suggest that the group was going to draft the document.

It is also not clear, how much information the Consumer Association has about the process to be able to engage meaningfully in it. It does appear that, the Association, whose rootedness within its constituency is somewhat doubtful, is being manipulated to serve government's purpose of obtaining what it would want to showcase as civil society approval of the process.

Also intriguing were some serious contradictions by the government's people that emerged during the discussions. Nkrumah rather confidently assured listeners that under the Management Contract, there shall be no tariff increases. The assurance however is at variance with an earlier concession by the Executive Secretary of the Public Utility Regulation Commission (PURC), Steven Adu, that, there will be increases, but would not affect the poor so much. Set against explicit clauses in the draft framework document, which provides for tariff increases, it becomes clear, who is being economical with the truth.

At least four major multinational companies, according to Weekend Agenda sources close to the Bank, have expressed interest in bidding for the contract. These are: Biwater, Suez, Vivendi (now called Veolia) and Saur.

According to the World Bank's Project Appraisal Document:

• $6.5 million of a recently approved $103 million World Bank facility for the project will go directly to pay the private sector company that wins the bid. $2.5 million will go to technical assistance largely contracted to foreign private consulting firms.

• $11 million will go toward the severance payment programme that will be needed to serve the thousands of Ghana Water Company employees who will lose their jobs.

• Water tariffs (rates) will be increased 20% in real Dollar terms, first time in 2005, and secondly in 2013.

• Automatic quarterly water tariff adjustments will be made to cover fluctuations in the cedi-to-dollar exchange rate. This is to cover outstanding debts that must be paid back in dollars.

• Water tariff increases of approximately 30% to 40% will be necessary to service loan project debts.

Information available to the Weekend Agenda, which was also disclosed by the NCAP representative on the programme, is that, the Guardian newspaper (U.K.) has published in its 27 September edition, a damning report of Tanzania's experiment with a British water multinational, under similar arrangement. The company in question is Bi-water, and the result of their involvement in water management in Tanzania, is that, many poor households have been denied access to safe drinking water, as tariffs have escalated.

In Senegal, there are a number of serious problems with the contract, especially disputes over the government' responsibilities and assessment of the initial condition of the water system, which the provider claimed was the reason it failed to reach specified improvement targets, but Senegalese water officials have dismissed the provider's claims as baseless.

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