Brasilia, 05 April 2011 - Providing universal access to basic utilities is justified on human rights grounds and also because of the positive externalities involved. Adequate provision of water, sanitation and electricity contributes to the achievement of the other Millennium Development Goals (MDGs). Access to these services, however, is still unequal in the developing world. Services do not adequately reach the poor. For instance, in Latin America, on average 91 percent of population has access to safe drinking water, though this figure can be as low as 70 percent in urban and 51 percent in some rural areas. Sanitation covers 87 percent of the urban population, but in some countries coverage in rural areas is equivalent to those rates found in sub-Saharan Africa, where only 37 percent of the population have access to sanitation. In this region, about 56 percent of households have access clean water and electricity consumption stands at 594 kwh per capita (as compared to consumption of over 4,000 kwh per capita for developed countries).
Privatization of water, sanitation and electricity services have not expanded access by the poor in a number of developing countries. On the contrary, privatization has led to the increase in tariffs in many countries that have gone through prizatizations in the last decades. Private companies are hesitant to make the substantial investments needed in infrastructure and distribution systems without assurances that they will receive adequate rates of returns on their investments. In some notable and troublesome cases, the disputes over water and electricity contracts have resulted in termination and the return of administration by the public sector. Water and electricity tariffs make up high proportion of household income - well above the 3-5 percent benchmark. Basic services, more often than not, cover only urban centres.
The article Political Economy of Contractual Disputes in Private Water and Sanitation: Lessons from Argentina by Hulya Dagdeviren (University of Hertfordshire, UK), help us explore the consequences of privatization of basic services in Argentina and provide other developing countries with an opportunity to assess the risks of such actions. Her paper examines the causes of the contractual disputes in the water and sanitation sectors and the resulting reversal of the privatization process. The evidence has been gathered from four major case studies in Argentina. The discussion is based on the evidence contained in the legal submissions made by the Government of Argentina and the disputing companies to the International Centre for the Settlement of Investment Disputes.
Hulya Dagdeviren was a visiting scholar at the International Policy Centre for Inclusive Growth (IPC-IG) and contributed to a work programme on access to basic services in the developing world. The programme contributed to the policy dialogue among different developing countries, such as Argentina, Brazil, Bolivia, India, Ghana and South Africa, around innovative approaches to expanding access to water, sanitation and electricity and policy failures related to privatization.
MORE:
- Equitable Access to Basic Utilities: Public versus Private Provision and Beyond - Poverty in Focus magazine with articles presented in the International Workshop on Equitable Access to Basic Services, held in São Paulo in partnership with the David Rockefeller Centre for Latin American Studies at Harvard University.
- Private Sector Participation in African Infrastructure: Is it Worth the Risk?
- Utility Provision: Contract Design in the Interest of the Poor
- Equitable Access to Basic Services: Who will Guarantee it?
Country studies and evaluations:
- Reforming Without Resourcing: The Case of the Urban Water Supply in Zambia
- Lessons from the South African Electricity Crisis
- Privatising Basic Utilities in Sub-Saharan Africa: The MDG Impact
- Access of the Poor to Water Supply and Sanitation in India: Salient Concepts, Issues and Cases
- Privatisation and Renationalisation: What Went Wrong in Bolivia’s Water Sector?=
