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Japan enacts law allowing private firms to operate water services

The Diet on Thursday enacted a controversial law allowing private companies to run water supply services, with many public businesses falling into the red in the country, despite concerns about higher water bills and deterioration in quality.
The revised Water Supply Act is aimed at bolstering municipal water services as many local governments are struggling to update aging facilities and secure earnings amid a shrinking population.
But critics are worried that the law, which paves the way for local governments to sell the rights to manage water supply services for as long as 20 years, would effectively lead to privatization, which could prove unsuitable for making reliable responses in times of disaster.
According to the Ministry of Health, Labor and Welfare, one third of municipal governments managing water supply services were unable to cover running costs with water bills, and the situation is expected to worsen further due to the country's declining population.
In the year through March 2017, 15 percent of the total water pipes in use had exceeded the maximum durable life of 40 years set by law. At the current pace of pipe replacement, it will take 130 years to complete renovation of all the water pipes.
The law will encourage cooperation among local governments and introduce the concession system -- a private finance initiative in which facilities owned by public entities are run by the private sector.
Six local governments including Miyagi Prefecture and the city of Hamamatsu are already considering introducing the system.
In other countries, privatization of water supply businesses has often led to higher bills and poorer water quality. According to a survey by a private Dutch research group, at least 267 cities in 33 countries decided to resume public water services after making them private.
According to Yoshiki Seki, a professor of environment policy studies at Takushoku University, water bills tend to rise after privatization as distribution facilities are often monopolized by the supplier.
The city of Paris concluded a concession contract in 1984 with major French water suppliers Veolia and Suez but water bills saw a 3.5-fold increase over about 25 years, according to Seki.
Opposition parties criticized the welfare ministry for not studying the law's potential impact well enough, arguing it has researched only three cases abroad of privatized water supply services that eventually returned to being public.
Mizuho Fukushima of the opposition Social Democratic Party also claimed the government is engaged in "unfair practices" as a female policy research member in the Cabinet Office's unit dealing with the matter was seconded from the Japanese arm of Veolia.
The opposition camp argued the government "is trying to sell off (public) water businesses for the profit of a foreign company."
A woman in her 70s who joined a citizens' rally against the legislation said the de facto privatization of public facilities is "problematic as taxpayers' money has been spent on them."
"We should not seek efficiency in matters which are directly linked to our lives," she said.
Prior to the enactment, the bill had cleared the House of Councillors on Wednesday and the ruling bloc railroaded it through a lower house panel later that day.


© KYODO
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