After widespread privatisation in the 1980s, 1990s and 2000s, many water services around the world began to be transferred back into public control. This ‘remunicipalisation’ has been welcomed by the Transnational Institute and like-minded organisations, who suggest that ‘remunicipalisation is here to stay’ (Lobina et al., 2014).
While I am sympathetic to this work on (and quest for) water remunicipalisation, my own research suggests that the picture is not always so clear-cut. Mozambique, where I am conducting field work on water supply politics, is cited as an example case of remunicipalisation. But my research actually points in the opposite direction. By this I mean that previously privatised and subsequently remunicipalised urban water supply services are back on the list to be privatised.
What’s more, in Mozambique, the water privatisation framework is being expanded to not only include large cities, but also small ones. Is water privatisation perhaps more durable than the trend of remunicipalisation suggests?
What is remunicipalisation?
Public Services International Research Unit (PSIRU), Multinational Observatory and Transnational Institute (TNI) published a report in 2014 titled Here to stay: water remunicipalisation as a global trend. The report lists 180 cases around the world of water remunicipalisation, defined in a related booklet as “the transfer of water services from private companies to municipal authorities”. Water remunicipalisation is thus the opposite of water privatisation (the transfer of water supply operations from a public to a private actor). Remunicipalisation follows the widespread implementation of water privatisation programmes in cities as diverse as Paris, Buenos Aires, Johannesburg and Kuala Lumpur during the 1980s, 1990s and 2000s.
A paradigm of ‘state failure’ in the delivery of public services, and a deep faith in market-based approaches by which basic services like water ought to be delivered, underpinned and drove the era of water privatisation. Neoliberal actors claimed that it delivered more efficient and transparent services, but in fact most cities faced outcomes such as rising water prices, a lack of transparency and the ‘cherry-picking’ of those neighbourhoods with the highest ‘willingness and ability to pay’.
This fuelled broad dissatisfaction amongst people and policy-makers, to the point where even the World Bank – one of water privatisation’s greatest advocates – engaged in a ‘rethink’ of its policies. One city after another decided not to renew, or to prematurely terminate, contracts with private water operators. This is when municipalities or other political entities took back control over their water services, a process thus described as remunicipalisation. Mozambique was no exception.
From water privatisation to remunicipalisation and back again in Mozambique?
Water privatisation in Mozambique had followed a course not unlike other low-income countries. In dire need of development finance, the Mozambican government entered into loan agreements with the World Bank and the IMF in the late 1980s and early 1990s. In return for loans, Mozambique adopted a policy package that included the design and introduction of a water privatisation framework for Mozambique’s main cities, including the capital Maputo. The framework envisaged a public water entity (called FIPAG) to invest in, and maintain, urban water infrastructure, and to outsource the water supply services to a consortium of private entities.
In 1999, a consortium of two multinationals, SAUR International, Águas de Portugal (AdP), and a group of domestic investors, started operating water supply systems in Maputo (on a 15-year contract) and four provincial capitals (for five years). SAUR left the consortium after only two years. AdP took over as consortium leader, but its shares were bought back by FIPAG (the public entity) in 2011, three years before the contract ended, because of discontent from both sides. FIPAG also took over AdP’s debts and paid for profits that AdP was expected to make until 2014. In this way, Mozambique’s privatised water supply services were remunicipalised.
Since this remunicipalisation, FIPAG has taken up both the role of investor in and maintainer of water supply infrastructure, as well as that of operator itself.
Despite this, the water privatisation framework of the 1990s has remained in place. Recently, FIPAG has been considering outsourcing water services to a private operator once again. The idea is not to tender operations in a single city, but in regions of Mozambique, thus combining several water supply systems in one and the same contract. High-level water bureaucrats are meeting potential private companies to assess interest. Amongst the parties interested in bidding is Águas de Portugal, the very multinational that left half a decade ago because of various complications.
An expanding water privatisation framework
Whilst it remains to be seen whether, when and how exactly these plans for Mozambique’s big cities are carried out, the same water privatisation framework is currently being implemented in the country’s small cities.
Another public water entity, AIAS, was established in 2009 to implement the same water privatisation framework in all (small) cities that do not fall under the mandate of FIPAG, totalling 130 around the country. AIAS, like FIPAG, is the asset manager of the water systems on behalf of the state. Donors provide finance to rehabilitate and extend obsolete water systems which often date from colonial times. AIAS then issues a tender for its operations. In these cases, it is not multinationals, but domestic entrepreneurs who submit bids and win tenders. Of the 130 cities and towns, some twenty have already gone through this process and are currently operated by a domestic private company.
What does this mean for urban residents?
The majority of those living in the peripheries (or sometimes even in the heart) of big and small cities are not serviced by the networks of FIPAG or AIAS, either because they cannot afford becoming connected or the network does not reach into their neighbourhoods.
A growing part of this population have come to buy water from one of their neighbours, so called small-scale independent water providers (SSIPs). SSIPs often charge a much higher price per
square cubic metre of water than the regulated private (or public) operators are allowed to charge.
People who cannot bear such costs, or who are out of reach of SSIPs, rely on hand pumps. When hand pumps are not available or broken, they use untreated water from self-dug wells or from any other source available in their (relative) proximity.
Not quite remunicipalisation…
The sketches above paint quite a different picture from that suggested by the term ‘water remunicipalisation’. Even though the public sector still has a major stake in water supply operations in the country, the discourse of water privatisation – whether expressed as Public-Private Partnership, Private Sector Participation or otherwise – prevails among some of the principal decision-makers in the water sector, including state bureaucrats and donors.
And it does not stop with discourse. As pointed out, AIAS and SSIPs are extending private water service provision in peri- and small urban areas and FIPAG considers doing the same in big cities. Neither is this process confined to urban areas only; small private water operators are also becoming increasingly active in rural areas in Mozambique.
Certainly, privatised water arrangements differ from place to place, as do their outcomes. This depends, among other things, on the size of the city, environmental conditions, the condition of the water infrastructure, the type of contract and the type of private actor. But the claim that the private sector is in retreat in water supply services, as ‘water remunicipalisation’ implies, seems premature –at least in Mozambique.
Why does water privatisation endure?
The topic of water privatisation (and closely related, commodification) has already gained massive attention in popular, professional and academic circles and literature. Now that we are experiencing a decline in the number of, and (putative) interest in, water privatisation programmes, the debate seems to have shifted to other related topics, such as the corporatisation or financialisation of water. Elsewhere, a mode of critique is supplemented by a more ‘positive’ outlook on how to build and promote alternatives to water privatisation and indeed, remunicipalisation.
I find these debates timely, interesting and important and I fully support the search for alternatives. But recent developments in Mozambique raise the question of why, despite previous failures and well-documented obstacles, water privatisation remains such an attractive strategy.
About the author
Chris Büscher has been conducting fieldwork in Mozambique as part of his PhD and has received support from the Governing the Land-Water-Environment Nexus in Southern Africa, which funds research, visiting fellowships and exchanges through a grant from the ESRC (Economic and Social Research Council) and the National Research Foundation (NRF) of South Africa.