WORLD DEVELOPMENT MOVEMENT PRESS RELEASE
For immediate release: Thursday 1st December
UK water company to sue one of world's poorest countries
Campaigners today (Thursday 1st December 2005) condemned the UK Water company Biwater for suing Tanzania, one of the poorest countries in the world (1). News of the legal action has just been revealed. Earlier this year the Tanzanian Government kicked Biwater out, just two years into a $102 million ten year water privatisation contract, on the grounds that Biwater had failed to make even half the required investment or improve services in the Tanzania's biggest city Dar es Salaam. (2)
Benedict Southworth, Director of the World Development Movement (WDM) said: "This is an absolute disgrace, Tanzania is one of the poorest countries in the world, and now Tanzanian citizens are being punished for being the victims of a failed policy which they did not want. The privatisation, a condition of debt relief, seriously lacked legitimacy (3). Biwater failed to deliver, with people on the ground reporting that water delivery was getting worse in many areas, with empty taps and Biwater's use of bullying tactics which resulted in mass disconnections. (4)
"Biwater's involvement in the Dar es Salaam contract is insured by the UK Export Credit Guarantee Department (ECGD) so not only could the people of Tanzania but also the UK taxpayer end up footing the bill for this debacle! The UK Government bears a heavy responsibility as UK aid money was used to pay for pro-privatisation pop songs and pop videos in Tanzania, despite the overwhelming evidence exposing water privatisation in the developing world as an abject failure."
As activists in Tanzania mobilise in response to the news, WDM have today sent a letter to Biwater expressing their outrage at the legal action and have launched an online action.
Andrew Mushi from the Tanzania Association of Non-Governmental Organisations, today said: "We are in full support of our government in cancelling the Biwater contract and we think it is very unfair of Biwater to sue our government because the burden of paying for this legal case will fall on the people of Tanzania. We are going to start up a campaign to oppose the privatisation of water supplies in our country and for an end to this legal case against us."
Contact: Jo Kuper Press Officer 020 7274 7630 / 07939 245 864 - firstname.lastname@example.org
Notes for editors
1. The announcement was found on the website for ICSID - International Centre for Settlement of Investment Disputes: Biwater Gauff (Tanzania) Limited v. United Republic of Tanzania - Water and sewer services concession agreement. Registered November 02, 2005.
2. According to the Government of Tanzania, City Water (the joint venture company involving Biwater) should have invested $8.5 million during the first two years, but as of May 2005, only $4.1 million had been invested. Announcing the decision (Friday 13 May 2005) Water Minister Edward Lowassa said: "The water supply services in Dar es Salaam and in the neighbouring places have deteriorated rather than improving since this firm took over some two years ago.The revocation was made following persistent complaints by city residents over incompetence of the firm."
3. Tanzania is one of the most heavily indebted countries in the world, its external debt stands at $7.5 billion (World Bank). From 1996 to 1999 privatisation of Dar es Salaam's water was a condition of the IMF's Enhanced Structural Adjustment Facility and from 2000 to 2003 it was a condition of an IMF Poverty Reduction and Growth Facility. Continued restructuring and privatisation of public utilities was part of Tanazania's conditions for getting debt relief under the Heavily Indebted Poor Countries initiative.
4. For further details see ActionAid - Tanzania is the 164th poorest country in the world (out of 177). 60 per cent of the population live on less than $2 a day (UNDP Human Development Report 2005). At least 27 per cent (9.8 million people) of Tanzania's population do not have access to safe water. (World Bank) 40 per cent of children under five suffer from diarrhoea as a result of drinking unsafe (Unicef)
5. Biwater's contract was strongly supported by the UK's Department for International Development (DfID) who gave British consultancy Adam Smith International £273,000 of UK taxpayers aid money to produce public relations materials including a pro-privatisation pop song to persuade a sceptical public of the benefits of privatisation.
6. WDM have sent a letter to Larry Magor and launched an online email action
7. There is no mention of the case on Biwater's website. According to ICSID where the case will be heard Biwater's papers were received in August 2005. This contradicts Biwater's statement in a letter to WDM (October 13 2005) that a reference to them suing on the Radio 4 programme, You and Yours (05 September 2005) was "speculation" and that they were "continuing to review our options but no final decisions have been taken as yet."
Campaigns Policy Officer
World Development Movement
25 Beehive Place
London SW9 7QR