June 13, 2002

TANZANIA: Water privatisation scheme critized

The government of Tanzania has raised a credit to fund the US$ 145 million upgrade of the Dar es Salaam Water and Sewerage Authority (DAWASA), needed to sell off the company at a lower price. Civil society organisations fear that the privatisation deal, one of the conditions allowing Tanzania to receive HIPC debt relief will produce higher water bills or even become another corruption trap.

The African Development Bank (ADB) has just signed an agreement with the Tanzanian government for a loan of approximately US$ 47 million. The missing US$ 98 million is coming from the World Bank and the European Investment Bank and Agence Française de Développement. ADB claims that the project will make affordable clean and safe water to the Tanzania's poor but critics maintain that the proposed investment is essentially to ensure that DAWASA is attractive to potential buyers.

The International Monetary Fund (IMF) has insisted on privatising DAWASA for about five years but the process of selecting the private operator has been plagued by scandal and controversy. The first bidding process was stopped after two French companies, Saur International and Vivendi were rejected. Now the government says privatisation of DAWASA will be "done in two stages." Loans totalling US$ 145m will be committed during the first stage. DAWASA will then be leased to a private operator for 10 years. The winning bidder will contribute only US$ 6.5 million towards the 'costs of meters and standpipes' - prompting the governmental US Commercial Service to describe DAWASA as one of the most "significant investment opportunities" in Tanzania in its latest country report.

8 companies have made their submissions in the re-bid process, including 3 from France, Germany and the UK. This may explain the co-financing from the European Investment Bank and Agence Française de Développement; institutions not normally engaged in Tanzania. After the first stage, "the privatisation status of DAWASA will then change from lease to concession", says the Tanzanian water ministry. The privatisation of Tanzania's water company comes hot on the heals of last month's scandal over the Tanzania Electricity Supply Company (Tanesco). A small South African engineering firm, NET Group Solutions won the contract only to be exposed as lacking the capacity to handle Tanzania's national electricity grid. Then scandal turned to farce when the East African Newspaper revealed that the firm's Tanzanian partner was a company owned by President Benjamin Mkapa's brother-in-law, which included 'primary school childeren as directors!' After the scandal, the government rejected a parliamentary demand to reveal the details of Tanesco's management contract. The privatisation process now continues in secret with full compliance by the IMF and World Bank, the ADB and the European Investment Bank and Agence Française de Développement. (SOUTHERN LINKS LONDON PRESS RELEASE)

Full report can be read :http://www.afrol.com/News2002/tan006_dawasa_private.htm

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