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PSIRU Reports Report number: 2000-02-U-SA-lg.doc






Igoli 2002- Some worldclass questions




Author(s): David Hall


Date: February 2000





Commissioned by: SAMWU, PSI Southern Africa

Funded: PSI

Presented at: Johannesburg press conference February 2000

Published:

Notes:





Introduction 4

Restructuring through participative democracy: examplesfrom 4 continents 5

A narrow vision 5
Igoli 2002 - limited world view 5
Restructuring through democracy 5
World view, not utopias 5

Latin America 6
Porto Alegre (Brazil) 6
CLAD 6

North America 7
Winnipeg (Canada): Unicity and participation 7
New York State (USA): management-union cooperation systems 7
Montreal, Canada: a 'vast debate' rejects water privatisation 7Asia 8
Kerala (India): participative planning 8
Thailand: democratic planning controls 8

Europe 9
Variety of experiments 9
Malung (Sweden): trade union restructuring initiatives 9
The UK : reappraising the contracting culture 9
♦ Ending tendering 9
♦ Ending the ‘internal market’ 10
DfID: recommending the participatory approach 10
♦ Corporatisation and democracy,privatisation and the poor 10
♦ Use staff, not consultants 11
♦ Restructuring needs years 11

Water: management contracts and accountability 12

Privatisation by contract 12

Privatisation by management contracts: international problems 12
Problems with management contracts: international experience 12
Puerto Rico: managed by Vivendi 1995-1999 12
♦ Sucessful for thecompany 13
♦ 'Deficiencies in maintenance, repair, administration, operation and finance' 13
♦ Deficit increases, government subsidies rise, under private management 13
♦ Inequality 13
♦ Environmental damage 13
♦ ’A political slogan to solve everything’ 13
Trinidad: deficit increases under private management 14
♦ Severn Trent go home 14
Budapest 15
Cartagena 15Bankruptcy and disillusion 16

The Igoli water company: problems of accountability 16
Unanswered questions 16
♦ Contract terms 16
♦ Supervision and regulation 16
♦ Coordination with other agencies 16
♦ Igoli water company – problems of accountability 16
Management board - arbitrary collection, vested interest 16
No provision for citizen involvement 17
No provision foropenness 17

Municipal water organisations: examples of protection against abuse 17
Protections against abuse 17
Restrictions on ownership 18
Restrictions on dividends 18
Restrictions on other activities 18
Accountability: councillors as management board 18
Workers council 18

Problems With Privatisation 20

General issues 20
Water privatisation: not normal, common problems,no use to the poor 20
Energy - public sector power, private darkness 21
♦ Rio de Janeiro - power cuts after privatisation 21
♦ Auckland (New Zealand) - power cuts after commercialisation 21
♦ Buenos Aires - power cuts after privatisation 21
Privatised buses - multinational failures in Africa 22
♦ Malawi 22
♦ Kenya 22

Multinationals with problems 22
CINergy 22
♦credit rating no better than Johannesburg City Council 22
♦ trading risks 23
♦ Withdrawal from the UK 23
♦ Job cuts 23
Vivendi 23
Thames Water 23
More multinationals, more problems 24

Conclusions 24
Notes 25



Introduction

The Igoli 2002 plan for restructuring the municipal services of Johannesburg, drawn up with the help of management consultants, declares thatit aims to make Johannesburg "a world-class city". The plan centres around the introduction of business practices, making council work a series of contractual relationships, and emphasises the urgency of implementing these proposals. In particular, the management of the water service is, as a matter of urgency, being contracted out to a private company.

But there is international experience...
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