[A-List] Asia: growing resistance to privatisation

["Michael Keaney" <michael.keaney@xxxxxx>]

Energy privatization leaves poor in the dark
By Marwaan Macan-Markar
Asia Times, November 8 2002

BANGKOK - A small but growing number of Asians are forging new alliances to
resist further attempts by the region's governments to privatize the energy
sector.

In countries such as India, Sri Lanka and Thailand, employees of
government-run electricity utilities have been going on strike and
placard-carrying citizens have been holding demonstrations outside
government offices. In Thailand, for instance, a recent demonstration
attracted more than 3,000 people from 24 unions and democracy groups to a
protest rally here, in the Thai capital. In the Philippines, public interest
groups as well as political parties - such as the left-leaning Bayong
Alyansang Makabayan (New Nationalist Alliance) - are the leaders of such
protests.

"There are many troubling factors about [energy] privatization," said Subodh
Wagle, a ranking member at Initiatives in Health, Energy, Learning and
Parenthood (Prayas), an Indian-based non-governmental organization. Not
least, Wagle said, is the "secrecy, haste, opacity and lack of sound
analytical foundations" that mark the decision-making process leading to the
privatization of energy, often undertaken by governments in a bid to expand
coverage of services and plug inefficiencies.

Activists' best example of corruption linked to privatization is the manner
in which the failed US energy giant Enron gained a foothold in India's
Maharashtra state to supply power through a subsidiary, under circumstances
disadvantageous to the state. This was achieved through secret negotiations
that violated India's Electricity Supply Act. The Enron contract was finally
suspended last year.

But activists see other problems with the privatization of energy. "The
decision of privatization and reforms are based on the wrong diagnosis,
which puts all the blame for the current performance and financial crises at
the door of public ownership," Wagle said, adding that this "leads to wrong
prescriptions, which focus on the change of ownership".

Since the 1990s, Asian governments have been letting the private sector take
on the provision of electricity as well as water services. Often, this is
part of economic reforms that equate the entry of the private sector and
competition with efficiency and a way to put an end to the huge financial
losses of state electricity enterprises. Thus, the private sector can bring
more capital and provide more efficient services.

But activists say the supposed benefits must be weighed against the larger
public good. Profit-oriented ventures may appear to be more efficient and
more able to prevent the theft of electricity. For example, it is estimated
that more than half the electricity supplied to the Indian capital of New
Delhi is siphoned away or stolen, which is why corrupt politicians and
officials fought the privatization of the capital's power utility in July.
However, critics say the private sector often increases prices and do not
have the state obligation to give more access to the poor.

Before the privatization trend came about, "the government was the planner,
developer, financier, manager, producer and distributor of electric power",
stated Thomas Smith, a social scientist at Dubai's Zayed University, in a
paper at a recent seminar here on the privatization of power. But the
International Monetary Fund, the World Bank, the ADB and US development
agencies provided "Asian policy-makers with strong arguments supporting
deregulation and privatization", he added.

Privatization policies leave the public vulnerable, said Nepomuceno
Malaluan, senior analyst at the Manila-based public advocacy organization,
Action for Economic Reforms. "The results for the public are high
electricity rates, high probability of private market power, loss of control
over environment regulation and lesser consumer protection."

"The biggest sources of disaster for Philippine power-sector privatization
has been the private sector fundamentalism of the Asian Development Bank
[ADB] and the World Bank and an unaccountable Philippine government,"
Malaluan argued. The consequence is evident in the Philippines today, where
more than 55 percent of power plants are in the hands of the private sector.
This percentage will increase due to a June 2001 law declaring that power
generation "is not a public utility operation", said Malaluan.

In Thailand, the state-owned Electricity Generating Authority of Thailand
(EGAT) supplies 64.5 percent of power needs and the private sector supplies
the remaining 35.5 percent, said Suphakij Nuntavorakarn, a Thai researcher
specializing in energy and electricity policy. "Privatization in Thailand up
to now has happened to power generation only. [Electricity distribution] is
a state-owned enterprise."

Currently, close to 99 percent of villages in Thailand receive electricity,
a success story not shared by Sri Lanka, India or some of the other
developing countries across Asia. In fact, activists believe that
privatization will make it even harder for many Asian countries to catch up
with other nations such as Thailand, saying the inroads made by the private
sector into state-run utilities will mean less people having access to
electricity.

Thailand has 1,352 kilowatt-hours of electricity consumption per capita,
while Singapore has the highest per capita consumption of electricity in
Southeast Asia at 6,541kW-h per capita (kWhpc), according to the United
Nations Human Development Report for 2002. The Philippines has 454kWhpc and
Myanmar, on the lower end of the scale, has 71kWhpc. In South Asia, the same
report says, India has 379kW-h of electricity consumption per capita, Sri
Lanka has 255kWhpc and Nepal, on the lower end, with 47kWhpc.

"A price increase is unavoidable under privatization," said Asoka
Abeygunawardana, an electrical engineer at the independent Energy Forum of
Sri Lanka, an independent organization pushing renewable energy technology.
"Hence the poor and the lower middle class will find it difficult to
purchase from the national grid."

"There is no possibility that the shift to private ownership would lead to
increased access to the Indian public. The private companies - driven by the
logic of profits - have no real incentive to reach out to these people,"
said Wagle.