In its recommendations, PricewaterhouseCoopers notes, "Given the termination of several private sector agreements in the water sector recently, e.g. Manila, Buenos Aires, Atlanta, etc, it will be important to gauge the interest of potential private sector investors and determine the project structure accordingly".
Although most of these problems related to the exorbitant tariff hike, pwc has sought further concessions for the private sector. Why, it had asked local authorities to raise tariff even before the privatisation process began. Accordingly, Delhi Jal Board raised tariff by over 100 per cent.
It wasn't for concessions that the agreements were terminated, but for high prices. Water privatisation in the Filipino capital Manila was given to two companies—Manila Water and Maynilad in 1997. The mncs raised tariff by 300 to 700 per cent. The Philippines government said no to further raising of prices in 2002. Maynilad pulled out in December that year.
In Tucuman, Argentina, where a subsidiary of the French company Vivendi entered into a 30-year agreement in 1995, the contract was terminated in just three years with consumers refusing to pay bills. In Argentinian capital Buenos Aires, Degremont's parent company Suez terminated its contract in 2002 after nine years when profit margins collapsed with the country's economic turmoil. Incidentally, Suez has a presence in Delhi through Degremont.
And if you thought it was just Third World peculiarities that led to the undoing of water privatisation, the US too has seen failure. In January 1999, United Water, a subsidiary of Suez, had signed a 20-year management contract with Atlanta city. It was terminated within four years for lack of performance.
