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Water and Power Sector Reforms and Privatization in Sri Lanka Presentation to Practical Action Dilee


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Title: Water and Power Sector Reforms and Privatization in Sri Lanka Presentation to Practical Action Dilee

Water and Power Sector Reforms and
Privatization in Sri LankaPresentation to
Practical ActionDileepa Witharana 19th
May 2005
Water Power Sector Reforms Privatization
Influencing policy by facilitating dialogue with
policy makers (Micro-level short-term policy advo
Power Crisis Electricity Reforms
Influencing policy through campaigns of alliances
of interested parties (Macro-level long-term poli
cy advocacy)
GATS Critique on British Model SBM
Objectives of the 3rd stage (January December,
  • Original proposal
  • Water (study) Power (study)
  • (to study the current status of water and power
    sector reforms and the aspect of privatization to
    develop an advocacy programme at the end of the
    study period)
  • Final agreement
  • Water (study) Power (study advocacy)
  • (since ITDG has already investigated the power
    sector to a certain extent)

Power sector reforms
Water reforms
Liberalization of Water and Electricity Services
Outputs by March
  • Framework for the study advocacy
  • Documentation of the water reforms so far
  • Comparison of water policies
  • Update on electricity reforms and GATS
  • Documentation of key features of the water and
    electricity reform debates
  • Brief survey of the IFIs in reforms
  • A comprehensive study and advocacy plan for the
    coming months

Framework for the study advocacy
Micro-level short-term goals Macro-level long-ter
m goals
Liberalization of Electricity and Water Services
  • Interests
  • of
  • marginalized
  • WTO
  • IFIs
  • International Consultancy Firms

Local conditions
The Process of Water Reforms in Sri Lanka
  • 1980

  • Over 26 Drafts of Water Policy
  • Over eight Drafts of Water Resources Bill

Opposing principles of water management
considering water as a fundamental right for all
living beings and accepting water to be a
property belonging to all living beings with
states playing the role of a trustee safeguarding
this right
considering water as an economic good derived by
the fact that water is a limited useful resource
and hence accepting market mechanisms as the most
suitable method of managing water.
Water Policy Documents taken for comparison
  • i.National Water Resources Policy and
    Institutional Arrangements, April, 2000
  • (Economic good, WRC)
  • ii.The section on Water Supplies, Sewage and
    Sanitation in Poverty Reduction Strategy Paper
    (PRSP), 2002
  • (Economic good, WRC)
  • iii.Local Water Resources Use, Conservation and
    Development (Draft), August, 2004
  • (Fundamental right, Department of Irrigation)
  • iv. National Water Resources Policy (Draft,
    English Version), November, 2004 (Economic good,

  • WRC policies
  • Original principles from outside
  • Top-bottom approach
  • Backing from powerful financial research
  • Conflicts with the constitution
  • Thought and written in English
  • Irrigation Dept. policies
  • Origin within the country
  • Bottom-top approach
  • Backing from traditions and public
  • Actual mechanisms of water management, not clear
  • Thought and written in Sinhala

Issues of disagreement
  • Method of expressing water rights
  • Transferability of rights
  • Degree of private sector participation
  • Place of paddy farmer and the rural cultural life
    with farming (paddy) as the center
  • Institutional arrangement for water management

The Process of Electricity Reforms in Sri Lanka
  • 1993 2005
  • 1993-2000 Study reports proposing Single Buyer
    Model as the restructuring model
  • 2002 Electricity Reform Act, No.28 of 2002
  • 2002 Public Utility Commission Act, No.35 of
  • 2004 Scheme for Reorganization of the
    Electricity Industry in Sri Lanka The Gazette
    of the Democratic Socialist Republic of Sri
    Lanka Extraordinary, No. 1321/21, January 02,

Major Issues in Reform debate
  • Will unbundling eventually lead to privatization?

  • Is unbundling the answer to the current power

The current position of Electricity Reforms
  • Unbundling and privatization is challenged by the
    CEB unions and the JVP
  • The government is going to introduce a new reform
    Act to the parliament with the consultation of
    the unions
  • Government is going to loose a loan of US 60m
    from ADB if reforms are not implemented

Some of the reform models proposed..
Single State Company
Model (Engineers Union)
Decentralization of CEB by
strengthening provincial o
perations (a civil society prop
Present Institution
with reforms along administrative
(other CEB Unions)
  • World Trade Organizations (WTO) next Ministerial
    Conference is scheduled to be held in Hong Kong
    in December 2005.
  • Offers by Sri Lanka for GATS negotiations
    communication services, financial services and
    tourism and travel related services (Initial
    conditional offers TN/S/O/LKA, 2003)
  • By December 2004, Sri Lanka was requested to open
    fifteen sectors such as accountancy,
    architecture, construction, foreign-service
    providers, etc.
  • Sri Lanka too has made twenty-five requests to
    other countries asking local service providers
    access to foreign markets

Regional civil society initiatives concentrating
on WTO negotiations
  • Initiative 1
  • NGOs representing the South East Asian region
    working out a mechanism to ensure that common
    interests of civil society of the region would be
    represented in GATS negotiations
  • (SL partner IPS)
  • Initiative 2
  • An alliance of Asian peoples movements, mass
    organizations, networks, NGOs and activists are
    strategizing to counter the ongoing negotiations
    in the WTO
  • (SL partner MONLAR)

IFIs Role in Electricity and Water Reforms
  • Influence national policy in the following ways
  • Loan conditionality
  • Reform-related technical assistance
  • IFI research and training activities (e.g. most
    of the data as well as analytical tools to
    conceptualize policy reforms and their impacts on
    development, poverty and inequality are provided
    by the IFIs)
  • Other mechanisms (mechanisms that require
    countries to adopt certain policies to be
    eligible into receive loans or grant
    disbursements. e.g. the Country Policy and
    Institutional Assessments (CPIAs)

IFIs Role in Electricity and Water Reforms
  • Institutions playing major roles
  • World Bank
  • Asian Development Bank
  • Japanese Bank for International Cooperation

Proposed plan for the rest of the year
5 Studies
2 advocacy workshops / conferences
1 or 2 Study tours
Updates/follow ups
  • Implications/impacts of water reforms on
    marginalized communities (implications-Sri Lanka,
    Impacts-countries practicing reforms) 5 month
  • decentralization as a basis for electricity
    reforms (under this optimization of the
    generation plan is done, instead of the least
    generation cost planning. This is expected to
    provide a case for decentralized energy options)
    6 month study
  • Role of WTO (GATS), IFIs, International
    consultancy firms in the liberalization of
    services in Sri Lanka and in the developing world
    6 month study
  • Mechanisms of indigenous water management for a
    national water policy 6 month study
  • Impacts of electricity reforms on marginalized
    communities world experiences

Advocacy workshops
  • On water policy Addressing the interests of
    marginalized in water reforms
  • a WRC policy
  • b. Irrigation Department policy
  • On electricity reforms Power crisis and reform
  • Note Exact topics, format, contents and
    participation will be decided according to the
    developments in the country at the time of

Study Tours
  • Indian electricity reforms (for a group of
    officials, union representatives, politicians,
    media, NGOs working on energy)
  • Civil society monitoring of reforms in Asia
    Pacific region

Updates / follow-ups
  • follow-up activities of the workshop on Analysis
    of Power Crisis held in 2003 (e.g. national
    energy policy formulation, rural sector energy
    provision, off-grid electrification, mechanisms
    to feed consumer concerns to PUCSL, etc)
  • Updates on GATS, Electricity and Water Reforms,
    CPC privatization

  • Policy makers
  • Civil society organizations
  • Politicians
  • Academics
  • Media
  • Trade Unions

Immediate global trends A few personal thoughts
  • The center of the world is shifting towards Asia
  • Neo-liberalism, however, will provide the logic
    for global governance
  • (promotion of individual against the collective,
    free access for global capital to all goods and
    services in the universe, diversity within grand
    uniformity, weakening / disappearance of nation
    state, etc)
  • Space for policy formulation within the
    boundaries of nation states (specially in the
    developing world) is shrinking

Are we reaching the end of history???
  • No, there is a possibility of the world going
    through a period of instability But this,
    however, will open up thousands of creative
    avenues to proceed to the future..
  • National forums for short-term micro level
    policy advocacy will disappear gradually and
    public participation in future policy advocacy
    will also be seen more in international forums.
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