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Fight over water privatisation in South Africa

By Anna Weekes, Green Left Weekly (http://www.peg.apc.org/~greenleft)
16 March 1999

JOHANNESBURG - Attempts by the African National Congress government to privatise the water of Dolphin Coast municipality in kwaZulu-Natal province, in breach of a national agreement, has met with strong resistance from the South African Municipal Workers Union (SAMWU).

In May, the winning bidder for a 30-year privatisation contract of Dolphin Coast's water was announced at a glitzy press conference by the minister for constitutional development and provincial affairs, Mohamed Valli Moosa. The contract came as a shock to all but the inner circles of the department and the Dolphin Coast municipality.

Union resistance to the project mounted rapidly. SAMWU was already engaged in a national anti-privatisation campaign in conjunction with Public Services International, a federation of 20 million public sector workers around the world.

PSI immediately condemned the privatisation and provided a painstakingly researched report on the winning bidder, French transnational SAUR International.

The report revealed that SAUR had been fined by the French Fair Trade Council in July 1997 for an illegal agreement with other companies to secretly share a public works contract. In Gdansk, Poland, within two years of SAUR taking control of the water system, prices were drastically inflated and the city council was forced to renegotiate a new, secret contract.

In the meantime, the Congress of South African Trade Unions (COSATU) had concluded the Municipal Services Partnership Framework Agreement with the Department of Constitutional Development (DCD) and the South African Local Government Association. The agreement set up a "sectoral forum". The forum was supposed to convene a special meeting in February to discuss the Dolphin Coast case, as well as the privatisation of water in Nelspruit, the capital of Mpumalanga province.

The framework agreement, consistent with national legislation such as the Water Services Act, states that the public sector is the preferred deliverer of services. The agreement also stated that before any public-private sector partnership is considered, "local government must be given the opportunity to ensure the effective functioning of such service delivery" and government decisions about prioritising needs and allocating resources must be made "on the basis of the social need, not on the basis of profit". There were also provisos that a full cost-benefit analysis must be done in every case put forward for privatisation.

The Dolphin Coast deal had done none of these. It was clear that it had to be thrashed out in the sectoral forum. However, before this could happen, SAMWU read in the press late in January that the contract with SAUR had been concluded with the full backing of DCD officials.

SAMWU and COSATU accused DCD of making a mockery of the agreement; DCD responded by saying that COSATU had been notified that the contract would go ahead and it had taken the federation's non-response as agreement. The COSATU national executive described the DCD's claim that COSATU "sat on the contracts and failed to respond" as a "deliberate misrepresentation of facts. It took months to get copies of the contracts and to ascertain their compliance with the framework [agreement] ... We reject the claim that the minister acted in the absence of an appropriate response on our part. He was fully aware of the steps to be followed to finalise the pending contracts."

New research from PSI told of an investigation in France into SAUR and two other companies for corruption and the operation of cartels. The companies allegedly agreed upon a system for misappropriation of public funds, and were paying a levy of 2% from all contracts won to the four major political parties in the region.

Dolphin Coast workers held a mass meeting on February 25 to discuss their next step. Council management has made vague promises that no jobs will be lost, but there have been no one formal meetings with the SAMWU.

Joseph Moloisane, provincial SAMWU chairperson, complained, "People from government come here to meet management but they don't bother to spend even five minutes with the workers".

Council management claims it is not bound by the framework agreement because local government is autonomous, in terms of the constitution. SAMWU feels that there is no point in having a national agreement if it binds only the union and not the municipalities.

A group of lawyers have offered their services on a voluntary basis to the union. It is possible that the matter will be taken to the Constitutional Court as a first test case enforcing water legislation. The outcome will determine whether water services in South Africa are extended through a transformed local government or are rapidly privatised over the next year by multinationals waiting in the wings.