Key issues on the human right aspects of water privatization (1) #lawtalk
Tuesday, April 27, 2010 Mohamad Mova Al'Afghani
This paper by Phillip Turri nicely summarizes the key issues of Private Sector Participation on the water services sector. The first issue I would like to raise here is the problem of universal coverage. Companies are, by default, a profit making entity, protected under corporate and commercial law. Extending access to areas with low purchasing power may mean that there is less money to be put on dividends.
This triggers a legal problem: would directors be in breach of their fiduciary duty to shareholders, if they decide to extend the network to unprofitable areas? The answer should be "yes", unless the default corporate law is reformed or is derogated by sectoral rules. In any case, shareholders will have the standing to sue the directors for this alleged breach of the fiduciary duty.