Gov’t, GNP move to privatize tap water services

Posted on : 2008-08-25 14:23 KST Modified on : 2019-10-19 20:29 KST
Civic organizations express concerns about price hikes, though the gov’t says it will still take responsibility for setting water prices
 this January.
this January.

The ruling Grand National Party and the government are moving to allow private companies to provide tap water services on commission. In addition, they are planning to diversify the management of tap water services, allowing regional governments to take over operations from individual local governments. However, civic organizations have expressed the concern that, if private companies begin providing tap water services, prices will go up.

GNP spokesman Cha Myung-jin said on August 24, “In order to provide better, cheaper tap water, the Ministry of Environment is preparing a bill to diversity the management of tap water services and allow for direct management by public and private companies on commission.”

According to the bill, named the “Act on Improvement of Services and Competitiveness in Tap Water and Sewage,” the government plans to allow groups of local governments to offer tap water services, which are currently provided by individual local governments. The bill would also allow the government to diversify tap water service by allowing local governments, public companies, the Korea Water Resources Corp. and private companies to offer the services on commission. In addition, if a local government were to commission a private company to manage its tap water services, the bill would require that the local government obtain professional management assessments and survey area residents before the commission arrangement is made. The bill is slated to be submitted for National Assembly approval by the end of next month.

However, sensing public fears that privatization of tap water services will drive up prices, the GNP has emphasized that the plan does not constitute a privatization program. Lim Tae-hee, the GNP’s chief policymaker, said, “Privatization means that ownership and shareholdings are transferred to a private company. This time, we are making rules that will allow private companies to be commissioned to provide tap water services. If management of the companies becomes more efficient as a result, water prices will decrease because it will solve water leakage problems.”

GNP spokesman Cha said, “Originally, in June, the Ministry of Environment’s bill included a clause that would have allowed private companies to buy as much as a 50 % stake in tap water businesses. However, the clause was deleted after rumors of a price hike began to circulate. Water prices will be set by the government, not by private companies.”

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