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August 2005

After saddling Tanzania with US$145 million in World Bank debt and investing less than half of the contractually required amount,  Biwater’s contract was cancelled by the Tanzanian government in May. Subsequently, the Tanzanian government expelled two Biwater executives, setting diplomatic relations in a tailspin.

However, Biwater has already filed a case in the British High Court to get an injunction against the termination. Britain and Tanzania signed a bilateral trade agreement in 1994 and it is likely that Biwater will seek compensation from Tanzania by filing trade arbitration claims. Arbitration is done through secret panels and takes years to settle. Poor countries often settle cases in lieu of paying for many years of legal battles. However, since the contract has remained secret it’s unclear what legal standing the company still retains. Meanwhile, industry magazine Global Water Intelligence blames the World Bank for failing to step into the conflict and resolve wrangling between Biwater and the Tanzanian government. The magazine states: “It makes the Bank look as if it does not believe in its own dogma about the private sector.” Wouldn’t that be a pleasant wind of change? If the World Bank stopped believing its own dogma, perhaps it could go ahead and change its conditional lending to allow for local solutions and an end to corporate water takings.

Update

• On January 10, 2008, Biwater to pay $8 Million in Tanzania water privatization case. Read our press release.
  
• Download the press release by the Tanzanian Ministry of Water: DAWASA Awarded Tsh 15.8 billion in City Water Arbitration.