Groups hit ADB formula for privatization of gov’t assets

Cause-oriented organizations led by the Freedom from Debt Coalition hit the Asian Development Bank (ADB) yesterday for its continuing policy which supports the privatization of public utilities and basic services.

The group of civil society organizations, known as the Philippine Working Group on the ADB scored the bank for paying lip service to "helping the poor" through its poverty reduction programs. These programs are forms of structural adjustment programs that were discredited in the 1980s and 1990s for bringing more poverty to poor Southern countries.

"The ADB continues with the tradition of adhering to market-based system of policies and without second thought, shoving private sector fundamentalism in all sectors not exclusive to the economy," the group said in a statement.

The group said the ADB’s prescription of privatizing power and water industries brought more misery rather than benefits it earlier promised.

"With ADB funds backing Congress and the Executive branches, the Electric Power Industry Reform Act (EPIRA) was passed which privatizes power generation, supply, and transmission. Since then, power rates have risen to unprecedented levels. This is contrary to claims of private sector efficiency leading to cheaper costs," the group said.

On the water services front, the group said "at present, water is four-times the original government price, while quality of service has not changed and at best, has been kept at minimum."

"The Philippines has fallen victim to these conditionalities. After decades of prescribing, nay imposing structural adjustment programs, the ADB continues its adherence to market-based policies. Further, the bank applies the same private sector fundamentalism to all social service sectors without any second thought," the group said.

It added while the ADB speaks of "water for all" it treats water as a mere economic good, accessible only to those who can pay. At present, water is four times the original government price and yet, the promised quality of service has not been achieved.

The power sector suffered the same fate in 2001, when ADB loans backed the passage of the law privatizing power generation, supply, and transmission. Since then, power rates have risen to unprecedented levels. This is contrary to claims of private sector efficiency that supposedly leads to cheaper costs, the group pointed out.

Also, water and power privatization has failed because it is flawed in the first place, as the provision of these basic services is better served and protected by the public sector, the working group said. Within this month, if everything will be in place, the national government hopes to privatize the transmission assets of the National Power Corp. (Napocor) to raise approximately more than $2 billion for the government.