Monday, February 05, 2007

Water for El Salvador -- competing visions

The current debate in El Salvador with respect to delivery of potable drinking water to all of its citizens, is the debate over whether or not water should be delivered by a government agency or a private contractor. Should the current government water administration, known by its acronym ANDA, be eliminated and replaced with contracts allowing private sector companies to be responsible for the distribution and sale of water?

The ARENA government, with its free market economic approach, wants to privatize water delivery:

According to the President of the national water agency, Cesár Funes, a water sector reform proposal will be introduced early next year. Under the proposal his agency, ANDA, would be downsized in favor of a newly created national water commission, to be called CONAGUA, which would establish a three-person panel to regulate water rates. Representation on that panel, according to the proposal, would come from the President, the Economy Ministry, and the National Association of Private Enterprise (ANEP, in Spanish) , a lobby of El Salvador’s most influential businessmen.

That provision had protesters piqued.... "We want to know why ANEP has representation and we, the people, don’t. Water should not be treated as merchandise," said Francisco Morán of ACAPb, Association of Communities Affected by the Northern Highway.Source

The privatization path is backed by organizations such as the Inter-American Development Bank, and opposed by SETA, the union for ANDA workers responsible for maintaining the water system.
SETA workers say that President Tony Saca is pushing a privatization proposal to comply with requirements couched in a 1998 loan from the Interamerican Development Bank (IADB). The loan provided money to “decentralize” ANDA, set up smaller municipal water companies and open them to public-private concessions. So far, 19 municipalities, representing 18,000 household water connections, are voluntarily experimenting with a variety of concession formats, which contract out water line maintenance and distribution to private companies.

SETA workers argue that concessions are stepping stone to full privatization. “The government is exacting an institutional sacking of ANDA to justify the need for concessions,” says Wilfredo Romero, General Secretary at SETA. He notes that ANDA’s 2006 budget is 15% lower than 2005. Funding is lower than any time in the 2000’s—an amazing fact considering that one-third of the country lacks water in the home.

According to the right-wing daily La Prensa Graphica (12/27/2005), the majority of this year’s cut—$13.3 million—came from the “investment” section of ANDA’s budget, a 37% slash from the 2005 level.(Source)

Various civil society organizations have been organizing protests against privatization and pushing their own legislation to require the government to continue to handle water distribution:
Hundreds of anti-water privatization activists gathered outside El Salvador’s Legislative Assembly this week to back legislation that would “increase [water] coverage, quality and sustainability and guarantee access… for low income families.” They presented a new proposal entitled “The Potable Water and Sewage Sub-sector Law” for legislative approval. The alternative proposal was developed by a number of civil society organizations in close consultation with communities struggling for access to clean water.

“This country has among the lowest levels of potable water coverage in Latin America. There is a serious water quality problem, constant shortages and what’s more, there are threats of water privatization. That’s why we decided to work in a collaborative way toward a Potable Water Law. It closes all doors to privatization,” said Armando Flores of the Consumer Defense Center.

Catholic-based Cáritas, the environmental group UNES, ASTAC and 17 other groups contributed to the development of the proposal.(Source)

At issue, they say, is state versus corporate control of a vital resource:

The UNES and Caritas proposal advocates for state—not corporate control of water, declaring, "The state should assume principle responsibility [for water], including financial responsibility, since water should not be converted into merchandise, or subjected to workings of the market."

The UNES/CARITAS plan places watershed care at the center of any water reform in El Salvador and calls for a holistic conservation plan aimed protecting rivers, aquifer and springs. It also calls for a government-regulated rate scale, which charges corporate customers at higher rates than households.(Source)

As I will discuss in coming days, both approaches have positives and negatives.


El-Visitador said...

""We want to know why ANEP has representation and we, the people, don’t."

Mathematically challenged? The other two reps are nominated by the Executive... and the Executive is elected by the people.

So the people will have 2/3 representation.

Walter (Los Angeles, CA, USA) said...

Ideologically challenged? Privatizing water is synonymous with price increases...the essence of capitalism’s survival. All those living in the "developed world" know this very well…shame on the Inter-American Development Bank for insisting on lending policies with such exploitative provisions. On the other hand, the issue of privatizing water speaks to the historic inability of the Salvadoran government to work the simplest of problems plaguing this country since its independence: provide water for its people. Privatizing is not the solution simply because the vast majority of Salvadorans are income-limited. The mighty dollar does not go very far in the Salvadoran market. Privatizing ANDA will only allow an opportunity for free-marketers to enrich themselves. Further, why is it the only solutions the government of El Salvadoran for solving life-long problems revolve around privatization schemes? Where is the Salvadoran ingenious they were known for in the mid-20th Century? I challenge the people to stand up for long-term solutions that will provide for Salvadorans of ALL incomes and needs.

gapgirl said...

Same sentiments here Walter. I wouldn't be surprised if the next big thing to happen in ES is severe dehydration of the population. Heavens forbid!

wally said...

"Privatizing water is synonymous with price increase." Maybe that´s so because the price structure of the government run water system was propped up with tax dollars to cover funding shortfalls, which means you were already paying higher water rates with the addition of your extra tax dollars, you just didn´t know it. Governments don´t run utilities efficiently or in a lot of cases, honestly. Profits are evil words to some people, but to make a profit demands that you watch expenditures, audit the books to make sure no one is stealing you blind, and hold administrators accountable. For various reasons, governments all over the world don´t do that well. A private contractor sees households without water as potential customers, a governmental agency sees it as an unfunded project. Good managers invest a certain amount of receipts in infrastructure, expansion, etc. because if they don´t, their competitors will pass them by. Government monopolies don´t have competitors, so they don´t have to worry about it. I wish it were different, that a government´s concern for the people it represents was the best motivating factor to do a good job, but the reality is that competition and the accountability of having to make a profit get things done more efficiently and with less corruption.

El-Visitador said...

Insightful comment by Wally.

If it were true that "business = higher price" vs. "government = lower price," then it follows that if we could buy everything from the government, everything would be cheaper! With our salaries, we could get more of evertyhing. We'd be happier!

So why don't we do it, if it is so bloody obvious? Oops! It's been done, it's called Maoist China, Stalin's Soviets, Castro's Cuba, Pol Pot's Cambodia, Kim's North Korea...

Sorry, did not quite work as expected.

Ahh, but you say you are not a Communist. You don't want everything to be controlled by the State.

Only a few industries. Like water. Like it is done someplaces in the US and Europe.

What you don't realize is that you are then imposing a bit of misery, a bit of Stalin, on that industry. Sure, life will go on, supported by the rest of the --private-- economy.

But you will have imposed misery, corruption, waste, abuse, unaccountability, and bureaucracy on those "few industries."

You will have your Perlas over and over.