We have done it again! This country has
made a deal with a British company to manage our water, without informing the
Guyanese people as to what exactly all of the conditions of the contract are.
The United Kingdom today is one of the strongest economies in the European Union; only
3 other western European nations have trillion dollar economies like the UK.
Against the background of the high value
of the sterling currency, British manufacturing and industry has been declining
due to the very expensive cost of British goods.
Today Britain is not as highly an industrialised nation as it was in the past; it
has evolved as a leading trading power and financial centre. The GDP of the UK today, composed by sector, is 1.7%
agriculture, 24.9% industrial and 73.4% services. While industry continues to
decline in importance, insurance, Banking and business services account for by
far the largest proportion of the UK's GDP.
So here is a country which has evolved
from an industrialised nation in the 40's and 50's to a country whose products
are too expensive for it to compete with the other industrialised nations on
the planet today.
British companies therefore have looked
to the poorer countries of the world to sell their expensive goods. Anyone with
one functioning brain cell will say that it is totally ridiculous, how can it
make sense for the most expensive goods to be channelled to the poorest
countries in the world.
Tonight I will tell you, by an actual
example in this country, how it is done.
Late in November 2002 our Minister of Water
announced that we had obtained a grant of 3.2 million pounds sterling [5.1
million US] from the British Government
to execute a 38 million US dollar loan from the IDB to rehabilitate our water
system. Two British companies bid on the rehabilitation of our water system but
the company that bid 3.5 million US were not given the contract, it was awarded to Severn Trent Water
International for 5.1 million US.
Amid much fanfare Mr. Baksh announced
that there will be stiff penalties for any poor performance by this company, if
they do not deliver on the conditions of their contract.
The main targets of the operation will
be to reduce the non revenue water [water that is delivered but does not earn
revenue] since at the present time, Guyana Water Inc. is  only capable of
collecting 62% of its revenue. So over the next five years Severn Trent must
increase this 62% to 90%. And  75 % of all water delivered is unaccounted
for due to losses, theft etc., Trent is supposed to reduce this amount to 25% in the five years.
These short falls are currently met from
the consolidated fund.
Trent must also ensure that water is available 24 hours a day. This 5.128
Million US dollars will be used to pay five persons to occupy the most
senior positions in Guyana Water Inc. the Managing Director, the Operations Director,
the Customer Services Director, the Hinterland Manager and the Corporate Planning
Director. Eight support staffers from Trent will come in from time to time to work for short stints.
Baksh keeps telling us that we will not
have to find this 5 million US dollars over the next 5 years to pay Trent, but he
is not being exactly truthful; we will have to find 5 million US to, say, rehabilitate
roads from our own resources since the British will not give us another 5
million to do that. Grant aid is not infinite and it is dishonest to be telling
the public that it will not cost us anything; this grant aid money could have
been used for other things rather than to try to deliver water at an economical
cost, an impossible dream when Power and Light is taking almost 67% of the total
cost of delivering our water.
Baksh also told us that metering will be
an important aspect of the operation since metering will lead to conservation.
So Trent's mandate is to get
meters to 85% of the consumers over the next 5 years.
All of this is OK so far, even though
there are some flaws, the cost of electricity being the main one [how is Trent
supposed to get GP&L to drop the current oppressive electrical rates] and
paying 5 men from Trent one million US Guyana dollars a year, whilst the rest
of the Guyanese are starving is another, but the IDB loan for 38 Million US dollars
7.22 Billion G dollars, recognises that competent British technocrats will be
administering this 38 million US loan for this rehabilitation of the water
system to be done by Trent, so guess where most of the materials including pipes,
joints, meters, pumps, filtration systems, overhead tanks [if they have any
sense] etc will come from?
So that's the scam, they give you a
grant for 5.128 million US but we will end up buying 38 million US dollars in
British pipes, meters, pumps etc, the most expensive in the world, to do the
work. Current estimates tell us that British goods can be as much as 35-40% higher
than other countries. As I have told you no one has seen the entire contract,
so we don't exactly know how much we will have to buy from the British for the
rehabilitation of the water system. That is the part of the equation that did
not, nor will not, see the light of day.
This brings me back to my original statement;
the poorest countries are being forced to buy the most expensive goods.
The local representative of Severn Trent
is Cemco a company which has strong ties to the PPP and Severn Trent is a
private British company operating in the international arena, and they know how
these things work.
Severn Trent Water is one of the largest
water undertakers in the UK
with customers totalling 9 million. This is a company which is very profit
oriented, in December 2001 they called for a shake up in the regulation of
water prices after reporting reduced profits, the chairman of the company is reported
to have said that the British waterundertakers' profits are being undermined by
the low return on capital the company is allowed to make, if it complies with
the regulators capital targets, since it reduced their profits from 114 million
to 104 million sterling. In December 1999 this company cut its workforce by
1100 people blaming regulators for forcing a 14 percent reduction in water
rates. In 1995 this company was taken to court, the first time in the history
of British jurisprudence, for supplying water unfit for human consumption. In
2001 they were again in court for dumping sewage waste on a farm and in
waterways in the UK.
In December 2002 a water main belonging
to Severn Trent burst and led to the disconnection of 1800 households from their
gas supply, MP Mr. VAZ told the British Parliament there, that the gas supplier
National Grid Transco PLC had to pay 250,000 sterling in statutory damages to
their customers and 200,000 sterling pumping the water out of their gas mains,
but Trent had refused to pay one penny in compensation notwithstanding that
their profits were 357.4 Million Sterling and that the leak was their fault. Additionally
it took them several hours to turn off the water main which was leaking into
the gas supply. This was December 2002 the middle of winter and resulted in al
lot of freezing Brits. Trent has
still refused to pay compensation.
So ladies and gentlemen we are dealing
with a company which is not noted for its philanthropic agenda, this is a
highly motivated, highly profit oriented company and we must watch them
We entered this contract with Severn
Trent even though they bid 5 million US and we turned down another UK company with exactly the same bona
fides who would have done the same job for 3.5 million US. But as I told you Trent knows how to play the game and their local representatives Cemco
have the political connections to let them do it.
What we do know is that Trent will raise the price of water
delivery before they even sit in their offices; they have already announced it,
without apparently being accountable to do so by the public Utilities
commission. Begging the question as to whether Guyana Water Inc. will ever be
regulated by the PUC.
Mr. Baksh must understand that the
Guyanese people are very poor now after years of economic privation; he is
judging their ability to pay based on his obviously inflated income, but not
everyone has access to the treasury as Mr. Baksh does, so he will have to
modify his thinking.
Dr. Jagan was very explicit on this
question, fix the water system first and when everything is regularised, you
then calculate your costs of delivery and set water rates to recover those
Of course Dr. Jagan was talking about
GEC but his point was well made, increasing rates now when losses are as high
as 75% and collections are as low as 62% is patent nonsense, since a few will
be paying for the water of all. Surely this cannot be right or just.
The entire contract and the conditions
of the loan must be made available to the Public this is not Baksh's country,
it is ours, yours and mine, and we want to see it, have we learnt nothing from