How Civil Society helped block secret plot by Lagos Govt., World Bank to privatise water

The announcement sent a collective sigh of relief to the water corporation staff and civil society activists. After months of negotiation on how to privatize the water supply in Lagos, between the World Bank and the Lagos Water Corporation, the bank has called off the talks.

But before the bank’s decision, activists and civil servants had mounted pressure on the water company against such a move, which they said would raise the cost of having access to water beyond the reach of ordinary Lagosians.

The Corporation’s staff, who stood to lose their jobs, went a step further to threaten to do “everything to frustrate” the move.

Last month, the World Bank issued a statement announcing a breakdown in talks between its International Finance Corporation and the Lagos Water Corporation.

“Contrary to recent reports, IFC has not signed any agreement with the Lagos Water Corporation (LWC),” the bank said in the statement. “LWC expressed interest in working with IFC and we had a number of discussions on how we might be able to assist the company. In the end, IFC decided not to advise LWC. We continue to support the government and people of Nigeria in achieving their development goals.”

Shrouded in secrecy

The latest round of negotiations between the bank and the LWC to design a water privatization scheme in the state began 18 months ago.

With public outcry on the danger of such a move, the LWC maintained that it was not going into privatization, just discussions on how to optimize water supply to Lagosians.

But details of their negotiations were kept away from the public, including civil society groups who had pushed for information disclosure.

In October last year, a rights advocacy group, the Environmental Rights Action/Friends of the Earth Nigeria (ERA/FoEN), said it made attempts to obtain information relating to the negotiation but continually met brick walls.

“Despite the World Bank’s 60-day disclosure policy, the Lagos contract had not been disclosed on the bank’s website and had been hidden from civil society,” said Akinbode Oluwafemi, Director of Corporate Accountability, ERA/FoEN.

With pressure from Nigerian groups, hundreds of other civil society bodies and activists across the United States began calling and sending out messages to the World Bank demanding full disclosure of the project.

“Our investigations indicate that the IFC is currently being paid by the Lagos government as an official advisor to develop a plan for the city’s water privatization,” Mr. Oluwafemi said.

“And this advisory contract is undisclosed by both the World Bank and the Lagos government, and both the privatization the IFC is designing and the advisory contract itself are being carried out in secrecy, without public participation and input from Lagosian stakeholders.

“This lack of transparency leaves residents with very little information about important developments that will affect them directly.

In December, our source’ Freedom of Information request for details of the negotiations with the World Bank also met a brick wall. An official at the LWC headquarters at Ijora declined to answer questions put to him and promised to e-mail answers or arrange an interview with the Group Managing Director, Shayo Holloway.

He did neither.

Lagos State has two major waterworks at Iju and Adiyan, providing a combined supply of 115 Million Gallons Per Day for the 20 million residents, according to information on LWC’s website.

Expansion of other waterworks – micro and mini waterworks – spread across the state has been ongoing for years, and provision of tap water is still limited to a fraction of the population.

The corporation says its current installed capacity is 210 million gallons per day, whereas the actual water demand in Lagos is 540 million gallons per day.

Most residents solve their water needs through self-help, patronizing water vendors, digging wells, or sinking boreholes in their homes.

No Privatization Plans

Before the World Bank announced its decision to shelve talks with Lagos State government, the LWC management had continued to insist that it had no plans to privatize the corporation.

Mr. Holloway said, in a statement December, that the Lagos State government was only trying to partner with the private sector “in a bid to increase water supply and alleviate poverty”.

“According to Engr. Holloway, PPP (Public Private Partnership) is not Privatization. Privatization involves the sale of government-owned asset to private investors, while PPP involves fresh injection of private capital into the efficient management of government-owned assets,” said the statement published on the corporation’s website.

“In order to meet the demand gap as well as the Millenium Development Goals (MDGs) 2015, LWC has developed a Lagos Water Supply Master Plan (2010 – 2020) which outlines the infrastructure development programmes into short, medium and long term phases.

“By year 2020, water demand is expected to be 733 million gallons per day, while the water production will be 745 million gallons per day, leaving us with the excess of 12 million gallons per day. The need to bridge the gap has necessitated the involvement of the private sector by way of injecting more capital to improve efficiency of existing state-owned assets.”

The LWC refused to make public the nature of its partnership with the “private sector.”

But according to information obtained by our source, the water corporation’s plans involved a concession of the state-owned major water works to private investors who would produce water and sell to the government. And the government would then sell to the final consumer.

Dissatisfied workers

On December 17, the corporation’s workers’ union, the Amalgamated Union of Public Corporations, Civil Service Technical and Recreational Services Employees, AUCPTRE, held a meeting with the management where they aired their disagreement with the planned “partnership”.

Tomiwa Odusanwo, the chairman, AUCPTRE branch of LWC, insisted that the management was planning to privatize the corporation.

“You cannot know my management beyond me,” Mr. Odusanwo told our source in an interview in January.

“We were not carried along. The funny thing is that we heard it over the news, read it in newspapers, and because we have seen how it was recorded in other African countries, even in western world.”

“The Iju and Adiyan water works are going to be in concession as well. There are some foreign investors now, in their master plan for 2010-2020, that those investors will use their money and construct mini water works.”

At a workers’ meeting at the LWC headquarters in Ijora, Mr. Odusanwo and his colleagues were unanimous that they won’t go the way of the staff of the recently privatized Power Holding Company of Nigeria, PHCN, who protested for months over the non-payment of their severance benefits.

“The management of Water Corporation, presently, are after capital projects. They are not after welfare of the staff or anything that will benefit the staff. That is why we are saying no to that privatization,” said Mr. Odusanwo.

“Because presently now the corporation is owing pension, gratuity, plus pension to PENCOM close to N1 billion. As I speak to you now our deducted pension was not remitted adequately to our PFA (Pension Fund Administrator).

“The corporation is indebted seriously. So with privatization, many of us will be laid off without going home with a penny and that will be so disastrous for us.”

The involvement of the World Bank and its investment arm – the IFC- in water schemes across the world has not exactly been a success story.

Recently, many cities that, in expectation of availability of affordable potable water, signed a two decade or longer water concessions with private investors, have terminated the contracts and returned their water systems to the state.

According to Transnational Institute, an organization that studies global needs, 180 communities and cities across the globe, from Accra to Kuala Lumpur, have returned water provision to public control in the past ten years.

In January, the IFC announced it had no ongoing water concession projects in Africa, after about 30 per cent of its water investment in Africa over the past two decades resulted into a failure.

“Like in Manila, in Ghana, World Bank corporate partners attempted to privatize and profit from water,” said Mr. Oluwafemi.

“Poor service, limited access and chronic quality problems forced the Ghanaian government not to renew a bank-backed contract for a private corporation to manage the country’s water.

“Around the world, the IFC advises governments, conducts corporate bidding processes, designs complex and lopsided water privatization contracts, dictates arbitration terms, and is part-owner of water corporations that win the contracts it designs and recommends, all the while aggressively marketing the model to be replicated around the world.

“Not only do these activities undermine democratic water governance, but they constitute an inherent conflict of interest within the IFC’s activities in the water sector, an alarming pattern seen from Eastern Europe to India to Southeast Asia.”

In Lagos, commercial sale of water by individuals is big business, with a 20-litre jerry can selling for N20 in most areas in the metropolis.

However, the cost of the water provided by the LWC comes at a cheaper rate, depending on the location.

In Dolphin Estate, Victoria Island, for instance, a flat pays a monthly rate of N800 for water while a duplex is billed N2, 400.

Water rates on the mainland costs even cheaper.

In Surulere for instance, a flat is charged N500, while a duplex is N800 monthly. At the Ojota axis, where there are a lot of single room apartments (popularly known as ‘Face-me-I-Face-You), a room is N100. A flat is N500, and a duplex N800.

According to civil society groups, water privatization negates the 2010 United Nations recognition of water as a fundamental human right.

“If the IFC was successful in securing a large-scale water PPP in Lagos, it would mirror that of the electricity sector privatization, which has imposed sky-rocketing electricity bills without delivering improved service,” Mr. Oluwafemi said.

“The IFC’s track record in the water sector is frightening: prices sky rocket, utility workers lose their jobs, water quality suffers, low-income communities have their water shut off, governments incur devastating debt, and public sovereignty is threatened by undemocratic arbitration.

“Privatization is not the solution for Lagos: it leads to corporate profits and has never provided universal access.
 

Additionally, if the IFC deal (had sailed) through, it would have opened the doors for several contracts for water corporations to take over the water system, and bidding by 2015.