Top 10 reasons why privatization of DCWD will fail

Jun. 07, 2007

DAVAO CITY — With two-thirds of the worlds population expected to run short of fresh drinking water by 2025, water has come to be known as the oil of the 21st century.

Multinational corporations and their local corporate partners are parlaying the misery of our water-starved regions into profits for their stockholders and executives. And, when cash-strapped communities are unable to make necessary water upgrades, private companies persuade them to sell off their public water systems. But time and time again, these privatization schemes have failed.

Locally, the Board and management of Davao City Water District (DCWD) is now pushing through with the plan to avail a PhP 100-million loan from the Local Water Utility Administration which they claim to be used for the Comprehensive Mainline Replacement Program (CMRP).

The people of Davao must be vigilant to this onerous deal for this is part of the grand scheme to privatize public water utility system. We cant let corporate control our water. Our water is not for sale. Water is life and a human right. Lets forge our solidarity and partnership in fighting corporate theft of our water.

Here are 10 reasons why privatization fails:

1. Rates Increase
From Lexington, Kentucky, to Felton, California, and Cochabamba, Bolivia, to Manila, Philippines (MWSS), corporations have consistently raised customers rates after taking control of public systems often making water unaffordable to the poor.

2. Water Quality Suffers
The private water industry intensively lobbies government regulators to block higher water-quality standards which corporations view as costly nuisances.

3. Customer Service Declines
Customer service is often slashed when private corporations take over. Since German conglomerate RWE bought their system, run by American Water, residents of Felton, California, complain it can take months for service calls to be answered.

4. Profits Leave Communities
Corporations are free to funnel profits out of communities and into the pockets of distant shareholders and corporate executives, instead of reinvesting money into the water system.

5. Corruption Breeds, Accountability Diminishes
Privatization lacks the transparency on which our democracy depends. Several corruptions scandals have erupted from water privatization deals that enticed publicly elected officials. DCWD Board and management are accused enjoying of lavish lifestyles with questionable allowances and perks. Corporations are ultimately accountable to their shareholders, not their customers. They often win exclusive, long-term contracts. And they have a monopoly over information, holding private meetings.

6. Financing Costs More
Unlike public financing, corporate loans have higher interest rates and are not tax-free, which force customers to pay more for repairs, upgrades and other maintenance.

7. Jobs are Lost
Corporations often cut costs in benefits, such as healthcare, retirement benefits massive layoffs like what happened to the thousand of employees retrenched in MWSS. Understaffing jeopardizes customer service and water quality. French conglomerate Veolia bought out experienced workers after taking over Indianapolis water system in 2002.

8. The Poor Lose Access
Water privatization is often a condition for poor countries to receive loans from the World Bank and International Monetary Fund. In Argentina, Bolivia and elsewhere, lucrative corporate contracts have led to higher rates for those lucky enough to still have piped water, while excluding red-lining neighborhoods with no service.

9. Water Can be Exported in Bulk or Bottled
Transporting water from water-rich countries to water-poor countries, or bottling water for richer consumers, can create huge profits for corporations but carry disastrous consequences such as over-extracting aquifers or watersheds that can never be restored.

10. Reversal is Difficult
Once a government agency privatizes its water system, withdrawing from the deal borders on the impossible. Proving breach of contract is complicated and costly. In Argentina, the Philippines, Tanzania and elsewhere, water multinationals sued for millions of dollars when contract termination was threatened. This could happen anywhere.


Please forward this e-mail. Let us forge our solidarity and partnerships in advancing water for the people and nature. Thank you very much.

A Public advocacy concern from the Water activists of Davao City

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