November 9, 2004

Plans to privatise water firms scrapped

Malawi has scrapped plans to privatise its two water firms, at a time when water is becoming increasingly crucial in poverty alleviation and regional integration in Southern Africa. Malawi's Privatisation Commission (PC), the agency in charge of sale of state enterprises, said that an agreement had been reached to keep assets of Blantyre and Lilongwe Water Boards intact. The two state-run firms had initially been lined up for sale in 1996 according to a Divestiture Sequence Plan of the commission, which lists state enterprises for sale. According to Sauti Maziko Phiri, executive director of the commission, an outright sale of the two water boards had been ruled out. Instead, the government would keep the core assets and invite private sector to run selected services, which the state was failing to maintain, he said. Phiri said that the private sector would be engaged under lease contracts with the objective of improving the precarious financial position of the boards, improve their ability to manage water resources and minimise losses of water along the distribution channel. To ensure that consumers were not subjected to high tariffs by the leaseholders, formation of an independent regulator - the Malawi Water and Energy Regulatory Authority (Mwera) – had been proposed in Parliament. Mwera would act as a referee in the water and energy sector.
Fears of increases in the price of water have been raised by trade unions and consumer rights activists. "If water is privatised, the poorest of the poor will suffer because they will not afford it," says Thomas Banda, chairman of the Malawi chapter of Public Services International (PSI). PSI is a global union, which represents the world's water workers. Some 54 percent of Malawi's population of 11.7 million people lives below the poverty line of one dollar a day, according to the World Bank. Campaigners' fears have been justified by various studies, which say the price of water, would rise in the next 10 years against the backdrop of envisaged supply shortages in the 13-member Southern African Development Community (SADC). The studies singled out Malawi and South Africa which would experience water shortages by 2025 and would not meet their population growth. (IPS)

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