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Water industry watchers raise concerns about World Bank and Water Resources Group

November 7, 2011

Advocates for public water are troubled by the latest developments to encourage more  private sector participation in  global water supply and sanitation systems. 

On October 20, the World Bank launched a new partnership requiring that private companies be active in water projects to receive loans or grants from its 2030 Water Resources Group (WRG) Phase 2 Entity.

More troubling to policy experts with Corporate Accountability International (CAI), a nonprofit industry watchdog, is that the members of the WRG are primarily large international companies that are major players in private water provision, or users of water who have been called upon to improve water and sanitation by conserving their water use and ensuring that their wastewater is adequately treated, safely released and recycled as much as possible.

Nestlé Chairman Peter Brabeck-Letmathe will chair WRG Phase 2. Other prominent members include water giant Veolia and Coca-Cola.

“In order to be eligible for support from this new fund, all projects must ‘provide for at least one partner from the private sector,’ not simply as a charitable funder, but ‘as part of its operations,’” said Shayda Edwards Naficy, CAI’s senior organizer. 

Naficy said that this plan, like others administered within the World Bank and its International Finance Corporation (IFC), appears to have been completed without any provisions to prevent conflicts of interest when members or related companies are awarded contracts. 

Representatives from the World Bank did not respond to repeated requests for comment.

World Bank reports indicate that 34 percent of private water contracts are in distress or terminated before maturity, and in April, the IFC’s Compliance Advisor Ombudsman reported that 40 percent of complaints received from all regions and sectors were water-related, Naficy said.

Commenting on private involvement in public water, the Economic Development Board (EDB) of Singapore said in a recent article that “Despite a widespread crisis of confidence inspired by the failures of water-industry privatizations across the planet, private water companies’ profit margins remain impressive” in the global water market, which global financial services firm Morgan Stanley estimates has a value of about $316 billion USD.

“For PPPs (public-private partnerships) to entice the private sector, companies need to be assured of return on investments, because these are high and irreversible. According to the World Health Organization (WHO), there is a particularly high return on investment in clean water projects,” EDB reported. 

Naficy said CAI believes that the 2030 Water Resources Group’s strategy is “to insert the private sector into water management one country at a time, through a combination of industry-funded research and direct partnerships with government agencies.”

 

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