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Energy privatization leaves poor in the
dark
By Marwaan Macan-Markar
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.
(Inter Press
Service)
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