South Africa Water Update

Sent to : The Water Pressure Group - 31 October 2000
2 water updates from Sth Africa

The first is the privatisation of Joburg's water, which should go ahead today, to Suez Lyonnaise. The company is very proud because they say it is the biggest water management contract in the world and it will give them a foothold to privatise all the cities in South Africa. The info is below.

The second is the cholera epidemic which is getting worse since I last e-mailed you. It has claimed more than 4000 victims and killed 31 people. It is because the government has put an end to free water with it's GEAR policy. The other public sector union, Nehawu and the rural people's network are all in agreement with this. It's also below.

1. World's worst French multinational water company rumoured to be about to colonise Johannesburg's water

Council Exco is allegedly to endorse today the awarding of a 5year management contract of Joburg's water to Suez Lyonnaise Des Eaux. Suez-L beat two other bidders: Thames Water, and Vivendi/Rand Water Board. It is not known whether this is a 20 year contract or what it is.

Suez-Lyonnaise beat the other bidders because their bid was so low. A low bid is not good news however. There are 3 parts to the contract. The first is a fixed core management fee of R20 million (GBP 2 million) per 5 years. They pay that to the company. This is NOT for anything other than management. It is not for extending the infrastructure or anything like that. It seems a high price to pay for managers. Apparently that is the price you pay for international expertise. A lot of managers are going to be coming out from overseas.

The second part is a variable fee that will be paid for performance incentives, such as speedy responses to calls, control of pollution - R 25 million has been set aside by council for that.

The third part of the contract is a percentage of the total bid that was supposed to be set aside for further performance incentives. This third part is normally where they get their profit from. They would get paid this for financial improvements etc.

This part is normally the same as the amount set aside for performance incentives [20-25 million].

However Suez Lyonnaise has ignored this in their bid.


This means that they will make no profit at all! The only way for them to make a profit is

  1. to get clever lawyers to re-negotiate the bid afterwards (this has been done before and normally the municipality capitulates because they have spent too much money on the tendering process etc to turn back)
  2. to cut normal costs of labour, health and safety and others.
  3. this can easily be done in a completely unregulated environment

Also, Suez Lyonnaise does not have a local partner in the bid, other than WSSA which is their subsidiary operating in Queenstown, Fort Beaufort and Stutterheim.

There is also massive confusion as to how payments for water will be collected as Council is currently restructuring their revenue department. Some of the payments will be collected by the department and others by Suez-L. Insiders say that it is impossible for any company to make any profit at all from a management contract by asking for less than 0.9% of the bid as a performance incentive.

Suez Lyonnaise has done this before - bid low just to get the contract. The Head Office of PSI in Belgium just faxed me a copy of an article in "Der Potsdamer" a German paper. On 28 June this year they reported that Suez Lyonnaise Des Eaux had put their prices up in Potsdam massively. Thus the municipality had decided to take the water back. The prices were already 8.80 DM higher per cubic metre than in nearby Berlin, which until very recently had public water. Now they wanted to put up the prices another 1.3 DM. The PSI World Water co-ordinator says this is a very big increase.

This was only three years into the 20 yr contract. Thus the municipality had decided to take the water back. In order to do this, the city has to pay back the consortium what the consortium has paid so far - 4,9 million DM! Even with this disincentive for the municipality they still say it will be cheaper to pay them and get rid of them. The city says the constant price increases are clearly unsustainable. It is clear that they bid at a low price to get the contract and then charges shoot up.

Members of the working class: please help us kick out the company like the Grenoble council in France did. We require a massive amount of complaints to be sent to these council people:

EXCO Chair Kenny Fihla
Co-ordinator in office of the Mayor
Acting CEO Mavela Dlamini
Graeme Reid, Inner City Manager
Ketso Gordhan, City Manager
Makgane Thobejane, Labour Relations (former General
Secretary of Public Sector Union NEHAWU)
Roland Hunter, Chief Financial Officer
Pascal Moloi, Transformation Project Manager
Phindile Nzimande, Legal Adviser
Anthony Still, Transition Manager of Water Utility
Rest of the councillors:;;;;;;;;;;;;;;;;;;;;;

Please urge these journalists to take up the story:;;;;;;;;;;;;

2. The Cholera Epidemic in South Africa and the Government's attack on the Working Class

Joint Press Statement October 26th, 2000 3pm

Cholera epidemic definitely caused by GEAR policy

The Rural Development Services Network (RDSN) and the South African Municipal Workers Union (SAMWU) note with grave concern the growing number of people infected by cholera in Kwa-Zulu Natal. By today, over 3000 people had contracted cholera and 33 had died.

Many people were struck down with cholera after being disconnected from their water because they were too poor to pay R51 per month (about US$6 or 5 British pounds). The Minister is finally admitting that the water cuts, which are a result of our macro-economic policy GEAR, have caused the cholera.

Both SAMWU and the RDSN have been campaigning for a minimum of 50 litres per water per person per day for more than three years now, on the grounds that the poor cannot pay for basic services with money that they do not have. In this regard,

Nehawu said "we are deeply disturbed by media reports that the victims of cholera are the direct results of GEAR driven policies. It is alleged, (by an NGO called Rural Development Network) the community ravaged by Cholera had water under Apartheid until this year in August. The GEAR strategy of cost recovery for social services (notoriously imposed and driven by IMF/WORLD BANK in Africa and other third world countries) was introduced this resulted in people loosing previously free and clean water. The community could not afford the new system of paying for water. Barely a month without clean water then there is cholera outbreak."

SAMWU and the RDSN agree completely with Nehawu that the government's macro economic policy, Gear, must be blamed for the cholera epidemic. GEAR is primarily based on commodification of all services, and paying for anything you get. After four years of GEAR, the poor of South Africa are reeling with shock. 700 thousand of us have lost our jobs, tens of thousands of us are being evicted from our homes for not being able to pay arrears, our electricity is cut, we are dying of AIDS and cholera and 650 of us are dying every day from diarrohea because we don't have water, or it has been cut off. Therefore both SAMWU and the RDSN believe that Zweli Mkhize's statement that Nehawu comments were "immature" is completely out of order.

The awful truth of this particular cholera epidemic has been uncovered by the Rural Development Services Network:

The poorest in the community living in the cholera affected areas of Ngwelezane, close to Empangeni, have got water from just 9 communal standpipe taps since 1982. They have had to share these standpipes with the Madlebe Tribal Authority lands. The community paid a flat rate for all services up until 1997. The GEAR policy kicked in at this point. Meters were installed in those homes with water. The 9 free standpipes were identified as a source of income for the TLC, and this was then converted into a card based system. Community members who could not pay for water had no option but to draw water from the infected Mhlatuze river and other boreholes. The last cholera outbreak in the area happened in 1982 during the drought, but since the cost-recovery principles have been implemented cholera seems to be rampant.

It is now costing the Department of Water Affairs approximately R 450,000 per month to provide water to the affected areas. In contrast, the Operations and Maintenance costs which the Department tried to recover from the community would only have been R370,000 per annum.

The cholera epidemic is just one more tragedy that is highlighting the absolute folly of the GEAR policy, which is even a failure in economic terms. The short-term direct costs of treating diarrhoea patients are over R6 billion a year and total annual costs are estimated at over R17 billion.

Research has shown clearly that it is far cheaper to provide free running water and sanitation than treat the victims of waterborne diseases in hospital. SAMWU and the RDSN hope that if a moral argument cannot persuade government to provide free water without further delay, then an economic argument will.

For information from the Rural Development Services Network or

Please send letters to the Editor on the situation to these newspapers:
The Sowetan;
Mail and Guardian
The Star newspaper
Business Day    ; copy to
Daily News      
Sunday Times  
Natal Witness  

Sustauned campaign of Water | WB/ IMF South Africa | PGA