Johannesburg Privatises Water to World's Worst Multinational
SAMWU Press Statement, 14 February 2001
Source of information
The South African Municipal Workers Union condemns today's
public launch of Johannesburg Water Pty Ltd, which privatised the city's water
to one of the world's worst multinational companies, Suez-Lyonnaise. This took
place at a time when Alexandra residents have been forcibly removed from the
Jukskei river to areas where there are no services rather than getting the
clean water they thought they were voting for.
Suez-Lyonnaise/Johannesburg Water must share the blame for the violence, injuries and trauma that Alex residents were subjected to yesterday. The company's only response to the threat of cholera in Alexandra was to check up on the few chemical toilets in the area. The company showed no sign that they would install even basic taps needed by Jukskei residents in order to escape cholera. Neither council nor the company have released any detailed plans for extending water to the poor of Johannesburg. It seemed that the company won the contract on the basis of their vague promise to "improve services rendered" to customers.
The track record of Suez-Lyonnaise across the world is abominable. They have drastically increased water charges in every city or town where they have a contract. In Paris, France water is privatised to a 'partnership' between the city of Paris and Suez-Lyonnaise. Auditors have now been brought in to investigate excessive water prices. The auditors have reported so far that "the administrative, legal and financial arrangements are characterised by an absence of financial transparency". The report estimates that the company 's "true profit margin is two and a half times the officially reported figure".
The council's smokescreen set up of the privatisation as a public utility is also not likely to deter Suez-Lyonnaise from making a massive profit. EMOS, the water company in Santiago, Chile, was privatised in 1999 to Suez-Lyonnaise, which appoints 4 out of 7 directors of the board, giving it a guaranteed management control, despite only holding 42% of the shares. And the state is guaranteeing EMOS a profit margin of 33%.
In Grenoble, France in 1996, a former mayor and a senior executive of Lyonnaise des Eaux (now Suez-Lyonnaise) both received prison sentences for receiving and giving bribes to award the water contract. Rostock in eastern Germany privatised its water and sewage systems for 25 years to Eurawasser, (owned 50% by Lyonnaise des Eaux). Two years later water charges in Rostock were increased by 24%, and sewage levies by 30%.
The union believes that all these experiences are likely to be repeated here. SAMWU is highly suspicious that former Council spokesperson, Jameel Chand, has now been employed at Johannesburg Water. This means that there could have been an improper relationship between council staff and the company when it was still one of several prospective bidders.
SAMWU has been blocked from seeing any of the contract documents. The experience in Fort Beaufort, Eastern Cape, with Suez-Lyonnaise's subsidiary in South Africa, WSSA, is that a secrecy clause has been built into the contract which prevents any member of the public from seeing the contract without the explicit approval of Lyonnaise des Eaux'."2.2.2: Confidentiality: the documentation contained herein has been developed exclusively by the operator (WSSA) and shall not be disclosed to third parties without the written approval of the operator." The union believes this is unconstitutional and not in the interests of the public or of workers.