Privatised water contract cancelled in Tanzania

Announcing the decision to cancel the contract, 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.”

Initially part of an IMF Structural Adjustment Programme – conditions placed on the country with which it had to comply in order to receive debt relief – the contract was awarded in 2003 to City Water and involved UK firm Biwater International, Germany’s Gauff Ingenieure and local investor, Superdoll Trailer Manufacturers Ltd.

The privatisation was meant to bring about major investment and improvement in the city’s aged water supply network, most of which has been in place since the 1950s. It was backed by the UK Dept for International Development who helped produce PR material including a pop video and song, to persuade the Tanzanian public of the merits of the deal.

According to the Government of Tanzania, City Water should have invested US$8.5 million during the first two years. However, so far only US$4.1 million has been forthcoming. The Government has said City Water will have to forfeit the money it has invested so far.

A new company, Dar es Salaam Water and Sewerage Corporation (DAWASCO) is being formed to take on the contract.

The facts of the case have been contested by Biwater, however. A spokesperson for the company told edie news that they had not been officially informed of the termination of the contract but had simply heard the statement by the minister.

Edie news was told that the CEO of Biwater was in Tanzania now trying to talk to DAWASCO to get clarification but that, so far, there had been no response.

The spokesperson said that the company had invested in numerous refurbishment programmes since the contract started and more clean water was available to the population than at any time before.

City Water itself has also issued a press release stating that the contract is still in existence and seeking clarification from minister Lowassa. The firm is taking legal action to uphold the terms of the contract.

Development campaigners, however, welcomed the decision to cancel the contract and called on the UK government to stop supporting water privatisation in developing countries: “This is yet another example of water privatisation failing to deliver clean water to poor communities,” said Peter Hardstaff, Head of Policy at the World Development Movement. “It is a scandal that the UK aid budget, money that should go to reduce poverty, was used to push water privatisation in Tanzania.”

He also warned Biwater not to pursue the Government of Tanzania through international courts: “The people of Tanzania must not be punished for being the victims of a failed policy which they did not ask for in the first place. We will oppose any attempt by Biwater to sue the Tanzanian Government.”

This case provides yet another example that the central claim made by supporters of water privatisation, that it is the only way to get the necessary investment, is a myth.”

By David Hopkins