Utility Privatisation through the Lens of Human Rights

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This article is based on an article in Poverty In Focus Number 18, August 2009 (International Policy Centre for Inclusive Growth IPC-IG) by Julia Kercher, Poverty Practice, Bureau for Development Policy, UNDP. It explains why and how a human rights framework must guide the design and implementation of private utility provision.

Contents

Introduction

Efforts to privatise basic services can have serious human rights consequences. While the human rights framework does not “prohibit” privatisation, it must guide the design and implementation of privatisation arrangements. In the past, the “human rights agenda” and the “development agenda” went separate ways. Development assistance was officially treated as apolitical charity, heavily influenced by geopolitics. The human rights discourse was political and materialised mostly as a gesture to ratify human rights treaties, such as the Convention on the Rights of the Child in 1989. There was a tendency for communist countries to highlight economic, social and cultural rights and for capitalist countries to prioritise civil and political rights (hence the adoption of two separate human rights treaties in 1966: the International Covenant on Civil and Political Rights (ICCPR) and the International Covenant on Economic, Social and Cultural Rights, (ICESCR). Much of this only changed after the end of the Cold War.

Privatisation: Impact on Human Rights

By ratifying one of the key international human rights treaties, the ICESCR, governments pledge to realise four dimensions of human rights in delivering basic services: their availability, physical and economic accessibility, acceptability and quality. But reality is often different. For instance, Bolivia’s “water war” in Cochabamba attracted significant attention for human rights reasons. The government followed the World Bank’s recommendation that no subsidies should be given to ameliorate the increase in water tariffs. Tariffs increased by as much as 200 per cent. For some, this translated into bills that amounted to 20–25 per cent of household monthly income. Privatisation, moreover, did not adequately protect their customary uses of water, such as for agriculture. Widespread protests and civil unrest ensued, which eventually led to the cancellation of the concession. Did the Bolivian government violate its people’s economic rights?


The sharp increase in water tariffs made it difficult for many Bolivians to economically access (afford) water. Households were cut off from the water supply altogether, so people may not have been able to physically access water. By disallowing customary indigenous uses, the arrangement did not ensure that water was supplied in ways that are culturally acceptable. Privatisation arrangements can also affect water quality, such as when close monitoring by a regulator is lacking. Signatory states also have three kinds of obligations: to respect, protect and fulfil human rights. While the obligation to respect requires that the state itself refrain from interfering with the enjoyment of people’s human rights, the obligation to protect requires a state to prevent third parties from interfering with those rights. The obligation to fulfil requires states to actively strengthen people’s ability to meet their own needs and, if individuals or groups cannot provide for themselves in exceptional cases, to provide the realisation of those human rights.


In the case of the privatisation of basic services, the emphasis of a state’s obligation is on protecting the human rights of people relative to private actors. The relevant UN committee thus stresses that “where water services […] are operated or controlled by third parties, States […] must prevent them from compromising equal, affordable and physical access to sufficient, safe and acceptable water” (CESCR, 2002, p. 9). Human rights, therefore, provide a yardstick to guide the adequate delivery of services.

Human Rights: Guiding Privatisation

A state’s main obligation in privatisation processes is to protect people’s human rights—in the case of water, for example, by preventing third parties from adversely affecting equal, affordable and physical access to enough safe, acceptable water. With this in mind, a number of practical steps can be suggested from a human rights perspective to guide the private provision of basic services.

Undertake an impact assessment

Where such assessments have been undertaken on water privatisation projects, they have been able to systematically identify risks, for instance with regard to accessibility and quality of the water supply; examples include the Argentine cases documented by Rights and Democracy (2007).

Consider alternatives through genuine public participation

Governments that have guaranteed the right to water in their constitutions, as South Africa does, are open to involving the private sector but require local governments to first consider public alternatives, including community-managed schemes, social privatisation or internationally-financed schemes (COHRE et al., 2007).

Negotiate loan conditions with lenders

This is often politically difficult, given many countries’ dependence on support from donor institutions. The renationalisation of utilities in Bolivia, however, shows clearly that civil society pressure can open up space for governments to (re-)negotiate concession contracts.

Regulate private actors through legislation and the design of service agreements

In their duty to protect, states must regulate third parties to ensure that privatisation does not lead to a decline in access to utilities by the poor. For example, they need to ensure:

  • Economic accessibility: Poor households should not be disproportionately burdened with water expenses compared to richer households (CESCR, 2002).
  • Physical accessibility: Marginalised populations such as indigenous people and deprived urban populations should obtain equal access (and also to obviate the danger that providers might “cherrypick” the most lucrative customers).
Monitor compliance of private actors and ensure access to remedies

The draft guidelines on the right to water presented to the UN Sub-Commission on Human Rights (UN, 2005) call for the establishment or the authorisation of independent institutions such as human rights commissions or regulatory agencies to carry out monitoring activities in a manner that ensures full transparency and accountability. In addition, the guidelines stress that everyone should have access to administrative or judicial procedures in order to complain about acts or omissions in contravention of the right to water and sanitation.

Conclusion

In summary, using a human rights framework as a guide is not only a matter of legal obligation for states that have signed the relevant human rights treaties. It is also vital for setting and raising standards of a life in dignity across countries.

References

CESCR (2002). General Comment No. 15: The Right to Water. Geneva, UN Committee on Economic Social and Cultural Rights. UNHCHR website, <http://www.unhchr.ch/tbs/doc.nsf/0/a5458d1d1bbd713fc1256cc400389e94/$FILE/G0340229.pdf>


COHRE et al. (2007). Manual on the Right to Water and Sanitation. Geneva, Washington, D.C., Berne and Nairobi, Centre on Housing Rights and Evictions, American Association for the Advancement of Science, Swiss Agency for Development and Cooperation, United Nations Human Settlements Programme. COHRE website, <http://www.cohre.org/store/attachments/RWP%20-%20Manual_final_full_final.pdf>


Rights and Democracy (2007). Human Rights Impact Assessments for Foreign Investment Projects. International Centre for Human Rights and Democratic Development. Montreal. Rights and Democracy website, <http://www.dd-rd.ca/site/_PDF/publications/globalization/hria/full%20report_may_2007.pdf>


UN (2005). Draft Guidelines for the Realization of the Right to Drinking Water and Sanitation. UN Sub-Commission on Promotion and Protection of Human Rights. Geneva. UNHCHR website, <http://www2.ohchr.org/english/issues/water/docs/SUb_Com_Guisse_guidelines.pdf>.

See also

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