Issued by: Department of Water Affairs and Forestry
GUIDELINES ON PRIVATE SECTOR INVOLVEMENT IN WATER SUPPLY RELEASED
"Private sector partnerships in the water sector should be established in an open and transparent fashion and not by stealth" says Professor Kader Asmal, Minister of Water Affairs and forestry. He made this statement when he released his Department's guidelines to local government on the involvement of the private sector in the provision of water services today (Wednesday 25th September).
He said he was releasing the guidelines ahead of proposed water services legislation to be introduced in Parliament next year, because he had learnt of a number of cases where local authorities were considering long term contracts which could substantially prejudice the interests of their residents as well as those of communities adjacent to them. The issue had been discussed in meetings with provincial MECs for local government who had encouraged him to go public.
The guidelines are, says Professor Asmal, largely a matter of common sense "but it is common sense based upon extensive consultation and international experience".
Three key conditions are given for greater private sector involvement, specifically the handing over of services to private companies for 20 - 30 year long concession contracts.
First, is competition, since international experience has shown that competitive bidding is essential for the full benefits of private sector involvement to be reaped.
The second is transparency; consumers and workers must be told what is happening. this will ensure that unnecessary conflict between labour and management is avoided and that public vigilance contributes to the achievement of the best possible deal for consumers.
The third condition is coverage; it is important to ensure that poorer areas and problem areas are included with the attractive areas, geographically as well as functionally. "There must be no 'cherry-picking'" says Professor Asmal.
No contract for service provision should be entered into solely through negotiation with a single company say the guidelines, and Professor Asmal notes that a number of local authorities are considering such alternatives "although it would be invidious to name names at this stage".
There must first be a competitive bid process in which a reasonable number of suitably qualified companies are given an equal chance to present offers for the provision of services. This applies to partnership arrangements in which joint companies are established as well as to straightforward contracts.
A further important point is that contracts for service provi- sion by the private sector should support government's broad policy goals. These include the promotion of employment equity in the workplace and achieving greater participation by formerly disadvan- taged groups in the economy. In addition, specific goals for the conservation and protection of South Africa's scarce water resources must be addressed.
Professor Asmal emphasised that, in terms of the Constitution, local authorities had a Constitutional right and duty to take the necessary steps to provide services to the population in their areas of jurisdiction. "I am also however responsible, in terms of the Constitution to see to the effective performance by municipalities by regulating the exercise of municipalities' executive authority in the area of water services."
While the Guidelines, which were being sent to all local govern- ments, do not have the force of law, the members and officials of any local authority which enters into a contract which does not comply with the Guidelines are advised that they will be personally liable to explain their decision not to follow them should the terms of a contract be questioned. As an extreme measure, the permits which entitle local governments to use public water could be reconsidered.
Meanwhile, Prof Asmal dispelled the idea that Water Boards, which fall under his supervision, are candidates for privatisation.
"The water boards, which are public utilities, have in general proved their ability to be able to unite the best of private sector efficiency and public sector goals. While they will continue to engage the private sector for the execution of individual projects, they are not at present on government's list of agencies for re- structuring. What we will do is to ensure that their new governance structure makes them more accountable to the communities which they serve."
Professor Asmal said that he was not dogmatically opposed to private sector involvement in water service provision. The Depart- ment of Water Affairs and Forestry was committed to using all instruments to achieve the goal of assuring all South Africans' access to basic water services he said. As evidence of this, the Department would be providing practical support to local authorities which requested help and guidance in negotiating such contracts.
This followed an initiative by Rand Water which was, in coopera- tion with the Department, establishing an advisory unit which could advise local authorities on private sector partnership initiatives as well as on other measures to improve efficiency of service provision he said.
In addition, the Department would be involved in scrutinising and advising on pilot private sector partnership projects which were being proposed to the Department of Constitutional Development for implementation under its Municipal Infrastructure Programme.
Contact: M Muller Tel: (012) 299 2011
25 September 1996