The Guardian December 4, 2002


Stop the sale of the world's water!

US Congress Representative Jan Schakowsky is circulating the following 
letter to US Treasury Secretary O'Neill urging that he instruct the US 
Executive Directors of the World Bank and the IMF to oppose the water 
privatisation project in Ghana.

The Honourable Paul O'Neill
Secretary United States Department of Treasury
1500 Pennsylvania Ave., NW
Washington D.C. 20220

Dear Secretary O'Neill:

We are writing to urge you to instruct the US Executive Directors of the 
IMF and World Bank to oppose the current "Private Sector Participation" 
(PSP) proposal being promoted for the urban water sector in Ghana. The plan 
is opposed by a broad coalition of Ghanaians because it would increase the 
cost of water for the people of Ghana.

We also urge you to instruct the US Executive Directors to oppose loan 
conditions in Ghana mandating increased cost recovery for water.

These conditions have already raised the price of water for the poor in 
Ghana.

Ghana should receive loans that do not have onerous conditions.

Mr Secretary, on October 8 at the Global Millennium Water Initiative 
Symposium you stated that "water is life. Nothing is as essential  or as 
fundamental to us-as water."

You went onto state it is a goal of yours to ensure that all people have 
clean water.

We share your goal and we commend your efforts to increase access to clean 
and affordable water around the world. Unfortunately we believe that IMF 
and World Banks policies in Ghana have in fact, been counter-productive to 
that goal.

Clean and affordable water is becoming less accessible for the vast 
majority of Ghanaians.

Increased cost recovery is often part of the regulatory reform imposed by 
the World Bank prior to water privatisation. Most Ghanaians earn less than 
$2 a day and the rising cost of water forces families to make impossible 
trade-offs between purchasing food, clothing, medicine, paying school fees, 
or buying a bucket of water.

Conditions attached to IMF and World Bank loans in May 2001 required a 95 
percent increase in water tariffs in Ghana. Another 40 percent tariff 
increase was imposed in August 2002 and other tariff increases are likely 
before and after the privatisation proposal is implemented.

Tariff increases are borne unequally by poor populations because their 
relatively smaller incomes already go disproportionately to pay for water 
and because they are often outside the piped system.

For those without piped water, tariff increases are magnified as they are 
passed on by the tanker truck operators and other intermediary buyers and 
sellers.

Purchasing three buckets of water a day in Ghana can cost between 10 
percent and 20 percent of the average daily income.

World Bank policies of increased cost recovery for water are removing much-
needed income from the pockets of the poor. This contradicts the poverty 
reduction mandate of the institution.

A broad coalition of Ghanaian organisations, including teachers, doctors, 
nurses, trade unions, women's and human rights organisations, NGOs, 
students and others have stated their opposition to the World Bank-backed 
PSP proposal and delivered a memorandum to this effect to their government.

Eminent individuals from renowned organisations in Ghana  the Christian 
Council, the Trade Union Congress, the Civil Society Council of Ghana, the 
Ghana Catholic Bishop's Council and the African Association of Universities 
 invited an international delegation to study the proposal for 
privatisation via PSP in the restructuring of the water sector.

The report of the International Fact-Finding Mission on Water Sector Reform 
in Ghana found serious shortcomings in the privatisation proposal and 
concluded that other options should be sought. The key shortcomings 
identified are:

* increased cost recovery will reduce access by low-income consumers;

* proposed investment priorities and lack of capital are likely to make 
significant expansion to low-income and unserved areas unlikely;

* the separation of water and sanitation services reduces opportunities to 
address public health problems;

* there is no attempt to address the excessive prices borne by those 
dependent on tanker trucks;

* there is no plan for ensuring access to low-income consumers;

* the lease formula may encourage transfer pricing which could lead to 
higher consumer prices;

* IMF loan conditions, in particular the recommended implementation of an 
automatic tariff adjustment mechanism, interfere with an independent 
regulatory function; and

* the great majority of citizens and civil society organisations, who will 
be directly affected by the PSP proposal, were unaware of its basic 
components and were not involved in the decision-making process.

Again, we urge you to take immediate action to instruct US Executive 
Directors to oppose the World Bank's water privatisation proposal in Ghana 
and to oppose loan conditions promoting increased cost recovery for water.

Access to water is a basic human right and should not be denied to people 
simply because they are poor.

* * *
Public Citizen's Water for All campaign at http://www.citizen.org/cmep/water

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