Tanzania is awarded nearly $8 million in dispute over failed water privatization

18 January 2008

A UK tribunal ruled in favor of the government after finding that water services deteriorated following a controversial, non-competitive privatization process backed by the World Bank. A separate case brought by the company against Tanzania worth $20 million is being decided behind closed doors at a World Bank court.

The Guardian reports that an international tribunal threw out a claim by British water company Biwater against the Tanzanian government over a breach of its contract to provide water and sewage services in Tanzania’s capital, Dar es Salaam.

According to The Guardian, a panel in London ordered Biwater to pay nearly $8 million in damages and fees Dawasa, the state water utility in Dar es Salaam. The case was brought under rules of arbitration established by the UN Commission on International Trade Law (UNCITRAL). The panel ruled in Tanzania’s favor after it “found that water and sewerage services had deteriorated” since Biwater took control of the city’s water supply in 2003 in a controversial, non-competitive privatization process backed by the UK government and the World Bank. In 2005, Tanzania cancelled its contract with Biwater after it failed to meet its obligations to provide water to the city.

In a press release produced by the World Development Movement (WDM), policy officer Vicky Conn asserts that “the evidence clearly shows that water privatisation has been a disastrous policy for poor people around the world, but the World Bank insisted on imposing water privatisation in Tanzania in return for much needed debt relief.”

Meanwhile, a separate case arising from the same dispute is still pending at the International Center for Settlement of Investment Disputes (ICSID), an international arbitration body attached to the World Bank. The Guardian reports that Biwater’s suit against Tanzania for the sum of around $20 million will be decided behind closed doors in The Hague, and that a ruling could come within weeks.

Resources

• Tanzania wins £3m damages from Biwater subsidiary by Ashley Seager, The Guardian, January 11, 2008 (Guardian website)
• Tanzania wins legal battle against British water company, World Development Movement, January 11, 2008 (WDM website)
• Biwater to pay $8 million in Tanzania water privatization case, Food and Water Watch, January 10, 2008 (FWW website)
• Tanzania declares victory in contractual dispute with water services company by Damon Vis-Dunbar and Luke Eric Peterson, Investment Treaty News, January 11, 2008 (IISD website)
• Water Privatization in Tanzania webpage, Food and Water Watch (FWW website)