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HC cautions govts against privatising drinking water services

Last Updated: Sunday, February 16, 2014 - 00:52

Chennai: Citing example from Bolivia, the Madras High Court has cautioned governments against privatising fundamental sovereign responsibilities including providing drinking water to public.
While passing orders on disputes over restructuring the stake-holding companies recently, Justice V Ramasubramanian narrated the dangers of privatising essential constitutional duties such as providing drinking water to people and wondered how a company, which dragged Bolivia into international arbitration over privatisation of drinking water, was involved in new Tirupur area development scheme.

The state government`s ambitious Tirupur development plan envisaged several schemes including treatment and supply of potable water and treatment and disposal of sewage in the city, and it engaged consortium of international companies for the purpose.

"It is an irony of fate that Bechtel, which was a member of Aguas Del Tunari, the multinational consortium of private investors that was driven out of Bolivia, appears to be part of the consortium selected by Infrastructure Leasing and Financial Services Ltd for funding New Tirupur Area Development Corporation Ltd project.

"I do not know if anyone is aware of this fact and anyone is aware of what happened in Bolivia."

In October 1999, Aguas Del Tunari was awarded 40-year concession rights to provide water and sanitation services to residents of Cochabamba in Bolivia. It was to generate electrical energy and irrigation water for the region`s agricultural sector.

Following public outcry over 200 per cent increase in water rates, the company was thrown out of Bolivia. In November of 2002, Aguas Del Tunari demanded a minimum compensation of USD 50 million from Bolivian government and dragged it to the International Centre for Settlement of Investment Disputes(ICSID), a mechanism of the World Bank.

Nearly four years later in January 2006, Aguas Del Tunari agreed to drop their case in ICSID for a token payment from Bolivia, which had by then spent more than one million dollars on legal fees alone.

Noting that there could be no dispute over the fact that water supply to people was an obligation of the state, Justice Ramasubramanian cited a Supreme Court ruling which said, "The right to life is a fundamental right under Article 21 of the Constitution and it includes the right of enjoyment of pollution-free water and air for full enjoyment of life".

"Even internationally the obligation of the states to supply water to its citizens is well recognised," the judge said, adding, "admittedly, no law has been enacted so far (in Tamil Nadu). On the contrary, the enactment that was in force earlier- Tamil Nadu Ground Water (Development and Management) Act, 2003 - has actually been repealed recently".

The judge said the National Water Policy-2012 suggested that water could be priced to fully recover the cost of operation and administration of water resources projects.

Noting that operators in the private sector jumped into the fray to fill up the gap between resources and the unwillingness of the government, he said "None of the states appears to have drawn a lesson from what had happened in Bolivia and in Johannesburg".

The judge said after water supply was privatised in Johannesburg people became unable to pay their water bills.

"The private water supply agencies stopped supply of water, forcing residents to drink water from polluted rivers. This led to an outbreak of cholera claiming hundreds of lives and thousands of people getting hospitalised," the judge said.

First Published: Sunday, February 16, 2014 - 00:52
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