Tanzania, Dar es Salaam: government scraps water privatisation contract

The Tanzanian government has terminated a 10-year contract with City Water, claiming the company had made less than half the required investment and failed to improve services. The cancellation was announced by Edward Lowassa, minister for water and livestock development.

City Water, a joint venture of Biwater International (UK), Gauff Ingenieure (Germany) and local firm Superdoll Trailer Manufacturers Ltd., began operations on 1 August 2003. The dispute began after the company pressed the government to review the contract, claiming that operating conditions were different from what it had expected, Lowassa said. The government, however, hired independent consultants who determined that there was no justification for review of the contract, Lowassa added. The government has formed a new firm, the Dar es Salaam Water and Sewerage Corporation, to replace City Water.

The cancellation of the contract was welcomed by the anti-privatisation campaigners of the World Development Movement (WDM). Initially part of an International Monetary Fund (IMF) Structural Adjustment Programme, the privatisation was made a condition of Tanzania receiving debt relief by the World Bank, WDM said.

Biwater is taking legal action over the cancelled water contract. Although City Water admits works were behind schedule, it said it had offered to invest a further US$ 5 million (EUR 4 million) in 2006.

Related news: Tanzania, Dar es Salaam: taps run dry as prices soar in water privatisation, Source, 21 Oct 2004

Source: David Hopkins, Edie, 27 May ; Sukhdev Chhatbar, AP / ENN, 25 May 2005 ; IRIN, 18 May 2005 ; WDM, 18 May 2005

Keywords

• Financing