PHA-Exchange> PUBLIC SECTOR cooperative beat World Bank plan for water privatization in Bangladesh

[claudio at hcmc.netnam.vn]

 from Nance <nance-phm at netpratique.fr> -----

*PUBLIC SECTOR cooperative beat World Bank plan for water privatization 
in Bangladesh

*A story from the Public services website www.world-psi.org*

In 1963 the Dhaka Water and Sanitation Authority (DWASA) was created as 
a public sector utility to cater for potable water, sewerage and storm 
water drainage of Dhaka, the capital of Bangladesh. By the 1990s DWASA 
was financially and operationally inefficient, with high system loss. 
The World Bank (IDA) proposed a new loan, conditional on institutional 
reform, a privatization study and experimental privatization of revenue 
billing, collection and other activities.  The unions countered with 
proposals to test the supposed virtues of privatisation, and finally the 
IDA, DWASA, government representatives and trade unions agreed to test 
one Revenue Zone under the private sector and another under an 
employees' cooperative, for a trial period of one year.

The Employees Co-operative (EC) clearly out-performed both DWASA and the 
private contractors. In the EC zone, revenue increased substantially, 
and 'unaccounted for water' was reduced. The EC's success was based on 
buying integrity by doubling the salaries paid by DWASA; and exploiting 
the experience and knowledge of the workforce through participative 
decision-making. Consumer satisfaction also went up. The privatised EPC 
failed because of lack of past experience, a top-heavy management and a 
failure to draw on grass roots knowledge. DWASA's zones continued to 
fail because of bureaucracy, poor pay, attendant corruption and 
inefficiency.

The poor and slum dwellers also benefited from the EC, because the 
workers made normal household connections which DWASA rules normally 
prohibited. Under these rules, water could be supplied (at nominal cost) 
to very poor households, but only if they officially owned land in 
DWASA's area - since the majority did not, they had to resort to buying 
water from private vendors at more than 10 times the normal price. The 
EC connected many of these households, and collected charges at the 
normal household rate, bringing higher revenue to DWASA and cheaper and 
more reliable water to the poor.

This repeats what Henry Ford did in 1914, when he doubled autoworkers 
wages from $2.50 per day to $5.  Turnover of staff and absenteeism fell, 
while labour productivity at Ford rose by an estimated 51 percent that 
year.


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