Water Privatization Adds Insult to Injury in Puerto Rico

On June 18, 2018, Puerto Rico's Public-Private Partnerships Authority began the process of privatizing part of the Puerto Rico Aqueducts and Sewers Authority (PRASA) through a 15-year deal to design, build, finance, operate and maintain metering, billing and customer service projects. National advocacy organization Food & Water Watch is opposing the move to privatize Puerto Rico's water system yet again as the island braces for a new hurricane season even as it continues to suffer the effects of Hurricane Maria last year.

"While the water system urgently needs repairs and upgrades following the destructive Hurricane Maria, privatization is not the answer," says Wenonah Hauter, executive director of Food & Water Watch. "Responsible, public control of the system is the best way to ensure that every person on the island has access to safe and affordable water and that PRASA operates in the service of the people, not in the service of profits."

Food & Water Watch points out that private financing through public-private partnerships is expensive. As a result of the profit demanded by Wall Street and corporate water operators, privatization will lead to excessively high water bills for households and businesses already struggling to rebuild in the wake of the climate disaster. A Food & Water Watch survey of rates by 500 water systems showed that privatized systems typically charge 59 percent more than publicly owned systems.

"With the privatization of Puerto Rico's water authority, we expect Wall Street profiteers and corporate water operators will seek to extract wealth without addressing the long-standing issues with the commonwealth's water system," said Hauter.

There is evidence in the bid from the government of Puerto Rico would seek to crack down on "illegal" access to water, a troubling sign that the bid is focused on profits, not remedying the systemic issues plaguing the water system that is hampering accessibility to safe, clean drinking water for all Puerto Ricans.

Rural areas of Puerto Rico in particular are still experiencing unreliable and unsafe water service and are in need of urgent help. But, public-private partnerships are widely acknowledged to not work for poor and rural communities. Even Senator John Barrasso from Wyoming has said public-private partnerships "do not work for rural areas." Private water companies often cherry-pick service areas to avoid serving low-income communities where low water use and frequent bill collection problems could hurt corporate profits.

Puerto has privatized its water system twice before and both efforts failed. In 2002, Puerto Rico decided against renewing a $145 million annual contract with a subsidiary of Veolia (then Vivendi), which had operated the water and sewer systems since 1995. A government commission found the company had accrued $695 million in operational losses, $6.2 million in fines, and more than 3,000 operational, maintenance and administrative deficiencies. In 2003, the company had to pay $58 million in fines and damages after legal action by the waterworks authority. The authority had accused the company of environmental negligence, including dumping untreated wastewater, and failure to pay electricity bills and employee wages on time.

Then, in May 2002, Suez announced a "historic" 10-year, $4 billion deal -- an arrangement that was even shorter-lived. After 18 months on the job, Suez demanded an extra $93 million from the government, alleging it was given false information about the size of the water system. Local officials disagreed and accused the corporation of poor performance.

At a time when many Puerto Ricans often must boil their water before drinking, it is misguided and inappropriate to embark on yet another massive privatized overhaul of the system, says Food & Water Watch. "PRASA can't afford another privatization failure now," said Hauter. "It should instead focus on basic services and ensure that every Puerto Rican has access to safe public water."

Instead of pursuing privatization, Food & Water Watch recommends that the Federal government forgive PRASA's debt, provide increased access to grants and other assistance from the Drinking Water State Revolving Fund program, and fully fund a just recovery in Puerto Rico. It is also advocating for a swift and urgent transition off fossil fuels starting now to avert the worst of the climate chaos ahead.