As the Asian Development Bank (ADB) 45th Governors’ meeting takes place in Manila, a Philippine-based NGO raised a howl over the bank’s push for more public-private partnerships (PPPs), saying such policy thrust would only allow private sector to profit from critical services while letting the people shoulder the risks.
Ecumenical Institute for Labor Education and Research, Inc. (EILER) said experience with PPP shows that the private sector has reaped multi-billion gains even as the quality of service has deteriorated, proving that it is not really different from privatization.
Recently, the ADB has dubbed PPP as the solution to the region’s critical problems, including the water crisis, and called on governments to pursue more PPP projects. ADB president Haruhiko Kuroda also told reporters at the Governors’ meet that PPP is good “in mobilizing the private sector.”
“The ADB is living up to its tag of being the ‘anti-development bank’ by actively goading governments to pursue PPPs, which only place premium on private sector profits while grossly disregarding the people’s access to quality and affordable services,” said EILER executive director Anna Leah Escresa.
EILER described PPPs as “black hole of people’s funds since these projects suck public finance, particularly in the form of subsidies and fiscal guarantees, and impose onerous rates on consumers.”
Escresa said that based on ADB’s estimates, private sector profits in privatization and PPPs in developing countries reached $400 billion from 1990 to 2003. On the other hand, developing countries still face the same woes on infrastructure, education, water and power services even as the poor continue to finance the repair and improvement of these services.
“Decades of privatization and PPPs have only left the Asia’s poor struggling with problems on access to water, power, and other basic social services which governments should supposedly provide. Meanwhile, the private sector has already reaped more than what it invested in these projects,” said Escresa.
“A classic example is the Metropolitan Waterworks and Sewerage System (MWSS), which was put under PPP in 1997 through concession agreements. Since then, private concessionaires jacked up water rates supposedly to recoup the $158.14 million concession fee that they paid to the government, even as service interruptions frequently hound customers. Add to that the subsidies which the government paid to private foreign firms operating the water utilities,” Escresa added.
“The ADB has consistently promoted such private-sector led paradigm for service delivery while weakening the government’s role to ensure and regulate such services. Based on experience, such paradigm has resulted to disastrous consequences. What Asia’ poor need is a people-centered development,” Escresa said
Escresa also noted that PPPs can only generate low-quality, low-income and short-term jobs that cannot really address the deteriorating job situation in many developing countries, particularly in Asia.
“PPP merely offers palliative and short-term fix to the worsening unemployment across the Asia-Pacific region. After the projects’ completion, workers are thrown out into joblessness,” she said.