The Tanzania Water Privatization Problem
At 11.30am on June 1 2005, three British expatriates were detained by the police in Tanzania. Cliff Stone, Michael Livermore and Roger Harrington were the senior managers at City Water, a consortium responsible for managing Dar es Salaam's water supply. After being held for several hours, the men were served with notices describing them as "undesirable immigrants" and told to leave the country.I do not know the privatization scheme of Dar-es-Salam water service, but it appears to me that they are using a leasing scheme, where the authority retains ownership of the infrastructure (plus doing some administrative work) and the private operator runs the water treatment, extend network, and in this case, do the billing.
There is one contractual issue that I would like to highlight in this Dar-es-Salam case:
City Water repeatedly complained to the Tanzanian water ministry that its bid was based on flawed information supplied by Dawasa. According to a subsequent World Bank report, signed by the bank's then-president, Paul Wolfowitz, City Water stopped paying its monthly fee for leasing Dawasa's piping and other infrastructure in July 2004, less than a year into the contract. The company was also insisting that its operating fee be raised.
Asked by Dawasa to assess if this was justified, auditors PricewaterhouseCoopers and the British engineering consultants Howard Humphreys rejected City Water's arguments. (Biwater, for its part, directs blame at Dar es Salaam's water authority, saying that Dawasa had "barely started" big capital-works projects on which rehabilitation of the system depended.)
Some lessons for government's lawyers:
- Make sure the client makes proper disclosures
- Find a way to get around with the clause that puts the burden of liability on the client's shoulder, for giving inaccurate information
- Put a clause that the counterpart is also responsible for their own judgement, in addition to information supplied by the client
- Find a win-win solution if a case on imperfect information arise, in any event, avoid the Court