PUBLIC SERVICES INTERNATIONAL RESEARCH UNIT (PSIRU), Business School, University of Greenwich

PUBLIC SERVICES INTERNATIONAL RESEARCH UNIT (PSIRU), Business School, University of Greenwich, Park Row, Greenwich, London SE10 9LS, UK

PSIRU NEWSLETTER
DECEMBER 2013 No 1

The Public Services International Research Unit (PSIRU) investigates the impact of privatisation and liberalisation on public services, with a specific focus on water, energy, waste management, health and social care sectors. Other research topics include the function and structure of public services, the strategies of multinational companies and influence of international financial institutionson public services. PSIRU is based in the Business Faculty, University of Greenwich, London, UK.

Welcome to the first issue of the PSIRU newsletter. The aim is to provide information about where PSIRU researchers are presenting their research, which reflects a growing interest in public services, recent PSIRU reports, new developments in companies working in the five main sectors (energy/ health and social care/ municipal /water/ waste management) and proposed World Bank projects ‘in the pipeline’. Company updates and brief descriptions of ‘in the pipeline’ World Bankprojects are to provide information for PSI/EPSU affiliates and other interested groups.

There arefour sections:

Recent conferences and workshops attended by PSIRU researchers and visitors to PSIRU
New PSIRU reports
Recent mergers, acquisition and sales by multinational companies working in energy, health/ social care, municipal, water/ waste management/ water sectors.
Proposed ‘in the pipeline’ World Bank Group projects in the energy, health/ social care, waste management and water sectors.

HIGHLIGHT- REMUNICIPALISATION

There is a growing move towards re-municipalisation of water services throughout the world. This is due to widespread problems affecting water privatisation, the equal or greater efficiency of public water services and reduced prices due to elimination of excessive profits However, it is also due to the comparative advantage of the public sector in realising the human right to water and sanitation and achieving other social and environmental objectives. There is also a growing list of other utilities and public services which are returning to public sector provision, which PSIRU is documenting. PSIRU has compiled 86 examples of water re-municipalisation. The report is available here.

Events attended by PSIRU researchers

On 1 October 2013, a delegation from the Australian Services Union (ASU) visited PSIRU to discuss local authority developments in the UK and Australia as well as recent work on privatisation and public services in the water, energy and healthcare sectors.

On 4 December 2013, Prof.Leo Heller, from the Department of Sanitary and Environmental Engineering in the Federal University of Minas Gerais visited PSIRU to discuss public participation and the research and information needs of social movements.

Jane Lethbridge spoke at a fringe meeting of the Labour Party Conference on 24 September 2013, organised by ‘We Own it’, to discuss a proposed Public Service Users Bill and its inclusion in the Labour Party manifesto.

On 20 November 2013 Jane Lethbridge spoke to the European Affairs Committee of the Danish trade union, OAO, Copenhagen on ‘the British experience of public-private partnerships’.

Emanuele Lobina spoke on water remunicipalization in Europe at a conference organised on 21 September 2013 by the Italian Forum of Water Movements to support the campaign for remunicipalizing water in Turin, Italy. He also spoke at a workshop organised on 24 September 2013 by the Italian Forum of Water Movements to support the campaign for remunicipalizing water in the Lazio region, Italy.

On 10 September 2013 Emanuele Lobinapresented a paper on reassessing corporatization in the European water sector at an EU-funded workshop on New Public Management in Edinburgh.

Emanuele Lobina spoke on the merits of water remunicipalisation at a seminar organised by the Lazio regional government (the region including Rome), Italy on11 November 2013.

Emanuele Lobina spoke at a seminar organised by ‘Economistas sin Fronteras’ on ‘EconomíaCrítica y Crítica de la Economía’ held at the University of Grenada, Spain.

Emanuele Lobina spoke on ‘PUP in context:How do we define thePublic-Public Partnershipswe want to promote?’ at the Reclaiming Public Water Network’s strategy meeting, ‘The Future of Public Water’ Barcelona, 25-26 November 2013.

Emanuele Lobina spoke on ‘Lessons from the ACP-EU Water Facility’s Partnerships Initiative’at the Global Water Operators Partnership (GWOP) Congress and Global Water Operators Partnership Alliance (GWOPA) in Barcelona27-29 November 2013.

David Hall presented a paper on 'Services of general interest under regimes of fiscal austerity' for a conference'Beyond the Single Market – External and international dimensions of services of general interest in EU law' held at Erlangen University, Germany on 18 September 2013.

David Hall presented on 'Remunicipalisation' to a seminar at the European Parliament organised by GUE/NGL/FSE (European United Left/Forum Social Europe) on 'Reclaiming our commons, 'free trade' and trade union strategy under neo-liberalism' 17 October 2013.

Steve Thomasspoke at anESRC funded conference at Liverpool University ‘Going Nuclear Seminar Series; Event 2: The UK and Nuclear Energy – Taking Stock’ on 1 November 2013.

Steve Thomas chaired and spoke at a seminar ‘The future of energy policy briefing' organised by Policy Knowledge in London 6 November 2013.

Steve Thomas gave a Guest Lecture at EuroCollege, University of Tartu, Estonia on 'Nuclear power economics' in the Jean Monnet module on Energy and Environment on 18 November 2013.

Steve Thomas attended the Franco-British Council debate on European Energy Policy in Paris, 20 November 2013.

Steve Thomas was an invited speaker at King’s College Think Tank seminar: 'The Future of Nuclear Power’ on 26 November 2013.

Steve Thomas was an invited speaker at a conference organised by the Federation of European Progressive Studies (FEPS) in Budapest 'Sustainable Energy policy for consumers, the solution in European’ promoted by the Hungarian Socialist Party, MSZP on 10 December 2013.

Steve Thomas has been interviewed regularly on local and national radio stations to talk about UK energy pricing and nuclear power issues.

New PSIRU reports

CIVICA Profileby Jane Lethbridge

This report provides a profile of CIVICA, a company providing ICT and other management services such as ‘agile’ working, Electronic Data Management and workflow to local authorities and other public sector agencies in the UK, Australia, New Zealand, Singapore, Canada and the United States.The report is availablehere

Steria Profile by Jane Lethbridge

This report provides a profile of Steria, a French multinational company operating in local and central government sectors in the UK, France, Germany, the Nordic region and India. The report is available here.

Challenges of Digital Government by Jane Lethbridge and David Hall

This report examines how digitalisation has affected employment in the retail sector and how a group of countries - Singapore, Denmark, Germany and Japan - have approached the digitalisation of government services. The recent experience of digitalisation in UK government services is analysed as well as identifying issues faced by service users. The report concludes that training of civil servants is crucial for the success of digital government. The report is availablehere

Tax justice briefing Asia-Pacific region

by Jane Lethbridge

This report provides a briefing on tax justice in the Asia-Pacific region, highlighting the following issues: the importance of taxation, tax havens and off-shore finance, tax base erosion and profit-shifting (BEPS) and ways of addressing tax evasion. The report is available here.

Tax justice briefing on Africa by Jane Lethbridge and Sandra van Niekerk

This report provides a briefing on tax justice in Africa, highlighting the following issues: the importance of taxation, tax havens and off-shore finance, tax base erosion and profit-shifting (BEPS) and ways of addressing tax evasion. The report is available here.

International Financial Institutions and Energy Investments by David Hall, Sandra van Niekerk, Jenny Nguyen, Steve Thomas

This report examines the activities of the international financial institutions (IFIs) as they affect finance for the energy sector, through their preferences for private companies and insistence on eliminating price subsidies, and how investments to extend electricity networks and develop new electricity generation depend largelyon public finance. The report is available

here.

Renewable Energyby David Hall, Sandra van Niekerk, Jenny Nguyen, Steve Thomas

This report analyses the relative role of the public and private sectors in renewable energy, particularly the importance of the public sector, the restructuring taking place in high income countries and the opportunities in low income countries. The report is availablehere.

Liberalisation, privatisation and public ownership byDavid Hall, Sandra van Niekerk, Jenny Nguyen, Steve Thomas

This paper reviews the trends in privatisation and liberalisation in the energy sector, and the development of remunicipalisation and renationalisation in Germany and elsewhere. It is available here.

MNCs in Electricity and Gas 2013 by

David Hall, Sandra van Niekerk, Jenny Nguyen, Steve Thomas

This report provides updates on 29 multi-national companies active in the energy sector in Africa, Asia-Pacific, Americas, Middle East and Europe. The report is available here.

Recent company changes

Health care

Private equity company,Bridgepoint, has sold Terveystalo, the largest private hospital and healthcare chain in Finland, to EQT, a Nordic private equity company.[1]

UnitedHealth Group recently acquired a majority stake in AmilParticipações S.A., Brazil's largest health care company, providing health and dental benefits, hospital and clinical services, and advanced care management resources to more than 5 million people in Latin America. [2] [3]

Meanwhile, UnitedHealth Group is withdrawing from the UK market, especially primary care. Staff will be moved to Optum Health and Technology, another subsidiary working across Europe. [4]

Social Care

Medica has bought Senior Living in Belgium from Waterland, a private equity company. Analysts indicate that Medica paid €280-290m for the group.[5]

In December 2013, the Canada Pension Plan Investment Board paid €321m for a 15% in French nursing home group Orpea, bought from its founder Jean-Claude Marian. It also underwrote and took 30% of a share issue to finance new growth.[6]

Waste management

Cheung Kong Infrastructure (CKI), a large multinational group based in Hong Kong, has expanded into waste management with two major acquisitions in 2013. Italready owns electricity and gas distribution, transmission and generating companies in China/Hong Kong, the UK, Australia, New Zealand and Canada, and water companies in the UK.

In January 2013 it boughtEnvirowaste, one of the largestwaste management companies in New Zealand, for about USD$410 million.

In August 2013 CKIbought AVR,awaste-to-energy incineration business operating in Netherlands and Belgium,from theDutch waste group Van Gansewinkel, forSD$1.25billion.Van Gansewinkel, which is owned by private equityfirms KKR and CVC,continues to operate in other waste management activities, including refuse collection:in 2012 it cut 600 jobs - 10% of its workforce.[7]

Water/ Energy/ waste management

In March 2013, Veolia sold its water, wastewater and electricity services business in Morocco,operated by concession companies Redal and Amendis, to the private equity group Actis, for about €340 million. Veolia will continue to provide technical support for Actis under a 3-year management contract. The contracts have been strongly opposed by local people and unions. Actis is a private equity firm, originally created by the UK government, with no experience of the water sector, but has been widely condemned for its management of the Ugandan electricity distribution company Umeme.

The water operations of CGEP in Portugal, consisting of 4 concessions with 423 employees,were sold by Veolia in March 2013 toBeijing Enterprises Water Group (BEWG). BEWG is majority owned by the municipality of Beijing, China. This is its first significant overseas activity in the water sector.

Veolia has bought the 50% share of Proactiva previously held by the Spanish group FCC, and so Proactiva now becomes a 100%-owned subsidiary of Veolia. Proactiva operates in water and waste management inArgentina, Brazil, Chile, Colombia, Ecuador, Mexico, Peru and Venezuela. It's main water management contracts are in Guayaquil (Ecuador) - where there is a long-standing public campaign to terminate the contract - Mexico City (Mexico) and Lima (Peru) and waste management in Buenos Aires (Argentina), Caracas (Venezuela), São Paulo (Brazil) and Santiago (Chile).It hadsales of €541 million in 2012, and nearly 12,000 employees. [8]

The government of Berlin, Germany has bought Veolia’s 24.9% stake in the Berlin Water Company for over €600million. This completes the re-municipalisation of Berlin’s water. [9]

World Bank Group projects
‘IN PIPELINE’

The World Bank and Renewable Energy

Since ‘sustainability’ became a major element of the World Bank’s policy towards the energy sector, for example through the Sustainable Energy for ALL (SE4ALL) programme), [10]there has always been a large gap between the rhetoric of their support for renewables and where their funding actually goes. This gap between rhetoric and action is not unusual for the World Bank. Throughout the period from the mid-1990s to the early 21st century, the policy of energy market liberalisation talked about privatisation and introduction of competition, but in practice the introduction of competition was forgotten so that the companies were attractive purchases for private investors. The autumn 2013 edition of the Bretton Woods Observer [11]exposes in detail how investment in the energy sector is now very much directed towards financing natural gas-fired power plants, an option that is exposes developing countries to the volatile and unpredictable world gas market, potentially locking them into very expensive imports of fuel.

World Bank projects – in ‘pipeline’ not yet approved (value $100m or more)

*Indicates specific private sector involvement

** Institutional strengthening

Health

**Romania Health Sector ReformP145174 $325.00m. This project will strengthen prevention and health promotion, rationalize health service delivery, increase secondary specialized ambulatory services, and

promoteimprovements in treatment of the non-communicable diseases (NCDs) through use of clinical pathways.[12]

**Argentina Support to the Integral Strategy for the Prevention and Control of Non-communicable Diseases Project P133193 $450.00 Institutional strengthening for non-communicable disease prevention/ control.[13]

* Croatia Health System Quality and Efficiency ImprovementP144871$103.50 To support the limiting of publicexpenditure on health, promote competitiveness through outsourcing of medical and non- medical services as well as increasing use of EU funds.[14]

Energy

Russian Federation Energy Efficiency Financing Project P122492 $300.00 To improve the efficiency of energy use in Russia by scaling-up commercial lending by banks for energy efficiency investments in the industrial and public sectors[15]

* / ** Vietnam Transmission Efficiency Project (TEP) P131558 $500.00Main objective to strengthen transmission network and regulations as well as regional subsidiaries of EVN (the state-owned monopoly in electricity). The regulatory body (ERAV) will also be consulted in building an effective regulatory scheme for transmission and distribution. There is no sign, or not yet, of any private sector participation as transmission and distribution remain state-owned and state-controlled via EVN. [16]

Ukraine District Heating Energy Efficiency P132741 $250.00 Project to improve energy efficiency

*/** Serbia Public Enterprise Restructuring DPL 1 P127408 $200.00Toreduce the scope of state involvement in the enterprisesector by completing the privatization agenda and improving the performance of enterprises which arelikely to remain in the public domain in the near to medium-term.[17]

Water/ waste management

*Nigeria Irrigation and Water Resources Management Project P123112 $400.00 Creation of public-private partnership for irrigation management.[18]

Lebanon-Water Augmentation Project P125184 $125.00

India Bihar Flood Rehabilitation Phase II P127725 $250.00

*Vietnam Second Ho Chi Minh City Environmental Sanitation Project P127978 $450.00 The project includes a Wastewater Treatment Plant. A Design Build (DB) or a Design Build Operate (DBO) scheme is being considered where a private company will design and build the system.[19]

India Integrated flood and erosion management in NE region P128421 $150.00

**Indonesia Metropolitan and Urban Development Project P129406 $400.00 Institutional strengthening of municipalities and water resource management.[20]

China Anhui Yellow Mountain New Countryside Demonstration Project P129563 $100.00 Institutional support to improve service quality and income generating opportunities.

Ethiopia Pastoral Community Development Project III P130276 $110.00

**Sri Lanka Strategic Cities Development Project P130548 $150.00 Improvement in urban services and municipal institutional strengthening[21]

**Tunisia TN-Urban Dev. and Local Governance P130637 $100.00 Strengthen role of

local governments in planning, financing and delivering municipal facilities and services.[22]

China Huainan Coal Mining Subsidence Area Rehabilitation P133000 $100.00

China Guilin Integrated Environment Management P133017 $100.00

China Shaanxi Small Towns Infrastructure Project P133069 $150.00

China Sichuan Chongqing Cooperation: Guangan Demonstration Area Infrastructure Development Project P133456 $100.00[23]

* Bangladesh Municipal Governance and Services Project P133653 $410.00 –Criteria for success include cost recovery, private sector participation and economic rate of return of at least 12%.[24]

Sri Lanka Improving Climate Resilience P146314 $110.00 Reduce environmental risks & improving government capacity to respond to emergencies[25]

Jane Lethbridge

16 December 2013

PUBLIC SERVICES INTERNATIONAL RESEARCH UNIT (PSIRU)

Researchers: David Hall, Jane Lethbridge (Director), Emanuele Lobina, Prof. Steve Thomas, Sandra van Niekerk. PSIRU works with Public Services International (PSI), European Federation of Public Services Unions (EPSU), national public sector trade unions, social movements and alliances, NGOs and some European and international institutions.

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