Background on the Case

In 2005, the government of Tanzania canceled a water privatization deal with British-based Biwater, just two years into a ten-year contract. The controversial contract had excluded the poorest neighborhoods from service. Biwater responded to the cancellation by filing a claim with ICSID.

The case has received significant publicity, especially in Britain, where the newspaper The Observer ran the headline “UK water giant to sue debt-laden Tanzania.” Biwater complained to ICSID that the Tanzanian government’s release of documents had stoked media and NGO scrutiny and criticism and asked for a ruling that the parties be barred from disclosing correspondence exchanged between them and refrain from disclosing copies of pleadings to third parties.

The Tanzanian government opposed these moves by Biwater and argued for greater transparency in the conduct of the case. However, the tribunal ruled that in the absence of agreement between the parties they should refrain from disclosing minutes, records, documents produced by the opposing party, witness statements, expert reports and correspondence between the parties. While many of the documents will remain secret, the tribunal did agree to accept an amicus curiae brief from affected civil society organizations. The case is scheduled to be heard in April 2007.

Interview with Mussa Billegeya, (Tanzania Association of NGOs- TANGO)

How do Tanzanians feel about the ICSID case that the British company Biwater has filed against the government for US$25 million?
It isn’t clear for many Tanzanians what exactly happened beyond the failure of the water company. Most people in Tanzania don’t know anything about ICSID. They might know about World Bank conditionalities and trade agreements – this is something we in Tanzania have grown used to – and exploited by. We know that the international financial and trade systems don’t work in our favor. But, when Tanzanians hear about the Biwater case in ICSID they feel that it’s part of the global operation that works against poor countries, that works against their sovereignty. While most people do not know about the specifics of he case, they know it’s part of the system working against poor countries.

What is Biwater trying to achieve?
After Biwater defaulted on the contract – I remember in one of their press releases from 2005 – they said that the government of Tanzania took the property from them. They said that the government cancelled the contract. Biwater is trying to tell the world that it’s a political move by the government against their company. What they really wanted is to win the support of the outside world, and present the case as if they did a good job in Tanzania. Their story is that the government was at fault, not Biwater. They want money that they claim they lost when the contract was cancelled. But the real story for Tanzanians and residents in Dar es Salaam is quite different.

What happened when Biwater took over the water system in Dar es Salaam?
The water system was leased to a consortium, led by Biwater, in 2003. The intention was to improve the system. But Biwater never performed well under the terms of the contract. They were supposed to increase revenue, but they couldn’t collect the water fees. They didn’t even pay the lease fee to the government. They owed around US$ 3.5 million to the government in 2005. They did not contribute to a collection fund that was meant for the poorest people. They were doing almost none of what they were supposed to do. Biwater was supposed to inject $8.5 million of capital but they fell far short of that.

 

What did it mean to people in Dar es Salaam?
All the local NGOs had spoken out against the privatization before it even happened. Everyone on the ground had spoken out against it. There was no evidence that water privatization was going to work. But there was nothing we could do. It was part of the conditions from the World Bank. People didn’t feel that the project belonged to them. For most of the people absolutely nothing changed. It seemed like a waste of money. Many people were only getting water 1-2 times a month. I remember that there was a large outbreak of water borne diseases as people couldn’t access clean water. Now that the system has been returned to the public there’s more oversight and regulation. And more people are getting water.

Read More

• Read the corporate profile on Biwater.
• Read all about the case Biwater Gauff v. Tanzania.