A controversial UK firm is at the centre of a growing row over Nelspruit's water privatisation, report Eddie Koch and Sharon Hammond

A BRITISH firm linked to a secret clique which ran the United Kingdom's Conservative Party's controversial aid-for-trade programme in the Third World is at the centre of a growing row between organised labour and the government over plans to privatise municipal water services in Nelspruit.

The South African Municipal Workers' Union (Samwu) this week announced it will begin a week-long series of protests on May 1 to oppose efforts by foreign companies to "buy" South Africa's water supply services from local authorities - a move it believes will lead to job losses and tariff hikes.

The union says plans to privatise water and waste services in Nelspruit are part of a wider scheme by the British company, Biwater, and other multinationals to obtain lucrative contracts to control municipal water in South Africa.

In a bizarre twist to the controversy, Sanco Holdings - the investment company run by the South African National Civics Organisation (Sanco) - has teamed up with Biwater to bid for commercial rights to manage Nelspruit's water. The consortium is tipped to win the tender.

The partnership appears to put Sanco Holdings - headed by former Congress of South African Trade Unions militant Moses Mayekiso - in direct conflict with organised labour and in an alliance with conservative British capital on the issue.

Reports in the British Independent newspaper show Biwater was among a select group of civil contractors and defence manufacturers which benefited from a secret network that controlled the supply of British aid and arms to, and trade with, overseas countries initiated at the start of former prime minister Margaret Thatcher's rule.

The network, an inner circle of senior civil servants, government and industry figures, effectively decided how the Britain Aid and Trade Provision Programme (ATP) - aid money to help finance contracts from overseas governments - should be allocated, and how contracts for arms sales should be won.

Biwater was among five companies which accounted for almost 43% of the ATP budget between 1978 and 1992. Its contracts included projects in Malaysia, Sri Lanka and Thailand - some linked to efforts by the British government to sell advanced defence equipment to these countries. Biwater has also been a generous supporter of the Conservative Party - one of 18 companies which gave the party directly or through a middleman organisation more than œ6-million between 1979 and 1993. Mayekiso was unavailable to comment about Sanco Holdings's consortium partner.

Meanwhile, though Samwu has "declared war against privatisation", its members in Mpumalanga appear to be taking a more cautious stance, waiting to see if the plans will generate advantages or job losses for the workforce.

Samwu's Nelspruit secretary, and employee of the town council, Louis Mthisi, said earlier this week that his organisation wanted the council to explain what it meant by "privatisation" before deciding on a course of action.

"They [the council] say it's not really privatisation but delegated management. Now, do they mean that all assets will go to the private company that wins the tender or that the water and sewage will only be managed by the company?" asked Mthisi.

Nelspruit council spokesman Etienne Garnett-Bennett said a decision about which of the eight bidders should win the tender for the town's water management had been postponed. This is probably to allow more time for the union movement and the civic organisations to explore and discuss issues surrounding water privatisation.

The council has asked the unions to elect representatives to a committee that will decide which bidder should be awarded the contract.

The chairman of Cosatu's local branch, Michael Nkosi, has also added to confusion at rank-and-file level by saying local residents and workers will probably support privatisation. "Where we live there is no water supply. We believe service would be better from a private company," he said.

Members of the Independent Municipal and Allied Trade Union could also be affected by the possible privatisation of services delivered by Nelspruit's water and sewage department. But representative William Spencer said: "We don't approve of privatisation but understand the council cannot provide the services the public expects until 10 or even 20 years down the line."

Samwu's national leadership is adamant that planned protests will go ahead, and that these will be supported by its members in the Nelspruit area. The union says international experience showed workers lose jobs, water prices rise and quality drops when private companies take over concessions to manage municipal supplies.

Samwu is demanding a moratorium on all negotiations between local authorities and the private sector over privatisation of municipal services. The union wants "restructuring of the public sector" to be dealt with only through the National Labour Relations Forum.

The Department of Water Affairs and Forestry cannot, in terms of the Constitution, intervene in decisions taken by local authorities over how to manage their water.

But the department is trying to ensure that municipal water is managed efficiently and in the interests of the poor by promulgating regulations that will lay down a basic set of standards and guidelines for local government. "The proposed water services Bill will give national government a mechanism to promote the public interest in cases like this by requiring local government to go through a structured procurement and planning process in the public interest," said department deputy director general Mike Muller.

The outcome of the Nelspruit debate will have crucial implications for municipal water management around the country. Several multi-nationals, including Biwater and French-owned Lyonnaise Des Eaux, see Nelspruit as a place to test the waters before moving on similar bids in Cape Town, Johannesburg and other big cities.