No more corporate welfare for private water!!!

[Guest guest]

Mon, 11 Apr 2005 13:33:58 -0400

" Sara Grusky " <sgrusky

 

 

 

[WATERFORALL] No more corporate welfare for private water!!!

 

 

 

 

News from Public Citizen's Water For All Campaign

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Dear Friends,

Please sign on to the letter below from ECA-Watch, a group that

monitors the export-credit agencies. The letter is protesting an OECD

proposal that includes new credit incentives for private companies to

invest in water projects and dam projects as part of an overall

proposal

on renewable energy. Although the letter is written in rather wonky

language we hope you will sign-on. We want to make it very clear to

the

OECD that privatized water and big dams are not sustainable solutions

to

the energy crisis or to the urgent lack of access to clean and

affordable water suffered around the world. We are collecting

organizational sign-ons only! Please send your name, organization,

country to cmep before April 15th.

Copy of official letter on ECA-Watch stationery is attached.

 

 

Dear Sirs and Madams:

 

We are writing to express our deep concerns about current proposals

being discussed in the OECD's Participants to the Arrangement on

officially supported export credits.

 

Under the proposed changes, renewable energy and water projects would

benefit from greater repayment flexibility than they currently receive,

extending the maximum repayment term to 15 years from 12 years, and

raising the financial ceiling for local costs to 30% of the export

contract value from 15%.

 

We believe, for the reasons presented below, that it is critical that

participants in the Arrangement ensure that large hydropower and other

water projects are not eligible for the preferential terms currently

being discussed for renewable energy projects.

 

We welcome the intent of this initiative, namely poverty alleviation,

protection of the environment, technology transfer and the

encouragement

of truly renewable energy sources and sustainable development.

However,

we believe that the current proposals contain serious flaws. In

particular,

 

1. The proposals fail to address the current, market-distorting

preferential treatment given to non-renewable fossil fuel-based and

nuclear energy technologies by Export Credit Agencies (ECAs), which

itself is an obstacle to the adoption of renewables;

2. The inclusion of environmentally and socially high-risk

sectors,

namely large dams, undermines the very purpose of the proposals;

3. The proposal would cover not just power but also water

projects,

even though, in many countries worldwide, private transnational

investment in the water sector has been associated with serious

problems

and contributed to significant social conflict and unrest;

4. The local content proposals are insufficiently generous.

 

1. The Arrangement's current preferential treatment for fossil fuel

and nuclear energy-related exports. Removal of these special sector

understandings giving preferential terms for fossil fuel and nuclear

power is overdue and will increase the competitiveness of new/emerging

renewables by reducing market distortions that act in favour of

unsustainable energy technologies. In fact, the removal of this

preferential treatment is called for under the UN Framework Convention

on Climate Change (UNFCCC) and the Kyoto Protocol, which requires that

governments seek " progressive reduction or phasing out of market

imperfections, fiscal incentives, tax and duty exemptions and subsidies

in all greenhouse gas emitting sectors that run counter to the

objective

of the [Climate] Convention. "

 

2. The current proposal's inclusion of environmentally and socially

high-risk sectors, such as large dams. We are alarmed to see that the

definition of projects eligible for preferential financial terms and

conditions includes large hydropower projects -- and that the proposal

does not require such projects to comply with the recommendations of

the

World Commission on Dams (WCD). We believe that this seriously

compromises and undermines the proposal's stated intentions and

objectives.

 

Most hydropower projects have massive and irreversible social and

environmental impacts - including the extinction of fish species, the

sedimentation of reservoirs, the erosion of riverbanks and coastlines,

and the submergence of valuable floodplains. Further, the climate

impact

of methane emissions from large dam reservoirs, especially in the

tropics, can actually exceed those of natural gas plants generating

equivalent amounts of energy. The WCD report notes that large dams have

displaced 40-80 million people, and have " led to the impoverishment

and suffering of millions " . Most large dam projects have not succeeded

in re-establishing the economic livelihoods of the communities that

they

displaced. For all these reasons, large hydropower projects should not

be considered a renewable source of energy.

 

We insist that large hydropower projects (>10 megawatts) and those that

involve large dams (>15 meters high) should be excluded from the

preferential treatment of renewable energy projects in a revised OECD

Arrangement. If such projects absolutely must be included, they must be

obliged to comply fully with the guidelines of the World Commission on

Dams (WCD) if they are to receive preferential terms and conditions.

 

We note that the European Commission has confirmed in writing that the

reference in the EU Proposal to " international standards " includes the

recommendations of the WCD. If large dams must be included in the

proposal, required compliance with the WCD guidelines must be made

explicit; this will also avoid uncertainty and an un-level playing

field

regarding which standards are to be applied.

 

3. The proposed extension of preferential terms to other water

projects. In many countries around the world, transnational investment

in the water sector has been extremely problematic and contributed to

social conflict and unrest; we believe it would be best for ECAs not to

promote and become entangled in these controversies and conflicts.

Given water's importance for life itself, rather than use export

credits to provide new incentives for transnational private investment

in international water markets, OECD countries should use development

aid to support government efforts to meet the millennium development

goals and to fulfill their responsibilities to ensure clean and

affordable water for their citizens.

 

Indeed, the promotion of transnational private-sector involvement in

the water sector has become highly controversial due to a track record

that has included:

 

* Raising the price of water in low-income communities;

* Cutting off water to those unable to pay;

* Failing to extend the piped water network to poor communities;

* Raising the price of new connections to unaffordable levels;

* Failing to meet collective bargaining mandates and fair labour

standards;

* Undercutting local decision-making on water management; and

* Failing to meet contractual requirements to reduce water pollution

and contamination.

 

Given this track record we do not believe that using export credits to

provide new incentives for private transnational water investment is

the

correct vehicle to address the truly urgent need to ensure clean and

affordable water to the more than 1 billion people who suffer without

this vital natural resource.

 

4. Insufficient local content provisions. We are pleased to see an

increase in the allowed local content for projects; however, we would

call for an extension of the allowed ceiling to 50%, rather than the

proposed 30%, to facilitate the development of local markets and

technology transfer to recipient countries, under principles of fair

and

equal ownership.

 

 

The undersigned civil society groups continue to support the stated

objectives of the proposed changes to the OECD Arrangement.

 

However, we will strongly oppose any proposal that would open the door

to preferential treatment for socially and environmentally destructive

projects, like non-WCD compliant dams, under the guise of supporting

renewable energies and sustainable technologies.

 

Thank you for your attention to these concerns. We look forward to your

response.

 

Sincerely,

ON BEHALF OF ……………………….

 

 

 

Sara Grusky

Water for All Campaign

Public Citizen

Phone: (202) 454-5133

Website: www.wateractivist.org

 

 

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For more information on the Water For All Campaign please visit

http://www.citizen.org/cmep/