PENANG, Malaysia (IPS) - -Plans to privatise water resource management in Malaysia have come under fire from a coalition of civil society groups that fear it will lead to higher tariffs and burden the poor.

The disquiet has emerged even as the legal framework for privatisation is being put in place. Parliament passed the Constitution Amendment Bill in January transferring supply and management of water away from respective states to the federal level, sparking criticism from Parliamentary Opposition Leader Lim Kit Siang.

''It is putting the cart before the horse for Parliament to proceed with the Constitution Amendment Bill 2004 without first being requested by the State Legislative Assemblies,'' as required under the Constitution, said Lim.

Two more bills - the Water Industry Bill and a bill to establish a regulatory National Water Services Commission -- are expected to be presented in Parliament by early April. These bills would pave the way for water resource management privatisation.

Already, a newly set up Coalition Against Water Privatisation comprising 26 civil society groups has handed in protest memorandums to Parliament and the National Human Rights Commission, Suhakam.

The coalition argues that the right to water is a basic human right, a common good that should not be subject to the profit motive.

It is a high-stakes battle. An official study has estimated that the total value of the water industry from 2000 to 2050 will soar from 51.6 billion ringgit (13.6 billion U.S. dollars) to 77 billion ringgit (20.3 billion U.S. dollars).

The protest here mirrors a similar campaign in neighbouring Indonesia, where civil society groups have asked Indonesia's Constitutional Court to review the Water Resources Act, which facilitates privatisation.

They argue that the legislation, passed last year as required by a World Bank loan package, compromises the Indonesian government's ability to ensure access to water for the poor. In December, the Constitutional Court annulled the Electricity Law, which promoted deregulation and privatisation in Indonesia's power industry -- a move that civil society groups regarded as a victory against the neo-liberal agenda of global financial institutions.

In Malaysia's case, part of the impetus for water privatisation appears to be coming from the Malaysian Water Partnership (MyWP), which consists of 67 institutional members, including government agencies, the private sector, and other interested ''stakeholders''.

MyWP is the national chapter of the Global Water Partnership (GWP), a pro-business think- tank funded by the European Union, the International American Development Bank and a string of European governments.

GWP, whose secretariat is in Stockholm, promotes integrated water resource management principles and public-private partnerships - euphemisms for neo-liberal privatisation. It was set up in 1997 by the United Nations Development Programme (UNDP) and the World Bank, whose own record on water privatisation has been dismal.

The European Union, for its part, has been using World Trade Organisation rules and the General Agreement on Trade in Services (GATS) to prise open national water services to foreign competition.

Only about five percent of the world's water is currently in private hands, but with increasing scarcity and the prospect of higher water tariffs, profit-motivated private firms have shown interest in taking over national water systems.

According to investigative journalist Greg Palast in his book 'The Best Democracy Money Can Buy', the real prize in the ''globalisation racket'' is in ''rapid low-capital takeovers of former state assets, concentrated in infrastructure where monopoly control virtually guarantees outsized profit.''

But the reversal of Bolivia's water privatisation in 2000 and the boycott against higher water bills there ''marked the first successful resistance to the globalisation blitzkrieg,'' noted Palast.

Civil society groups here worry that, given Malaysia's unhappy privatisation track-record, the exercise will lead to profiteering and hefty tariff hikes at the expense of taxpayers. Although a Parliamentary Select Committee is expected to solicit public views, cynics wonder if those views will be heeded.

The initial signs, however, do not look promising. Even before the regulatory framework could be set up, the Selangor state government last year hived off its debt-saddled water distribution unit, the Selangor Water Management Board (PUAS), to Syabas. Syabas is a private firm 70 percent owned by Puncak Niaga, which was already involved in privatised water treatment operations. In addition, the federal government will provide soft loans and grants to finance the replacement of old pipes.

Charles Santiago, a Malaysian economist belonging to the Monitoring Sustainability of Globalisation Group -- and one of the prime movers behind the Coalition Against Water Privatisation - argues that the whole agreement was highly flawed and that there was no transparency in the bidding process.

''You also need to agree on targets and benchmarks that the concessionaire company has to fulfil, and that is also supposed to be a transparent process,'' he told IPS.

The root of the problem can be traced to 1997, when the government separated the low-risk water treatment function - now handled by three private firms, including Puncak Niaga - and the high-risk distribution, pipeline maintenance and billing function, which was taken over by state-owned PUAS.

PUAS bought treated water from the three private firms and supplied water to consumers in the state. But the margin it earned from the purchase and sale of treated water was not enough to cover its costs and to replace old pipes. This contributed to a very high level of unaccounted water due to leakage and wastage, known as non-revenue water (NRW). Not surprisingly, PUAS racked up over two billion ringgit (526.3 million U.S. dollars) in debts and losses.

''The question is why did the government agree to such a model, when they already knew that the distribution component is where the political problems of disconnection and NRW arise,'' asked Santiago. ''It was the model design that was wrong - the government was culpable for PUAS incurring such high debts, in the way they designed the model.''

Added Santiago: ''The private sector cherry-picked the profitable part of the water supply chain whereas the government sector took the problematic and loss-making sector. That's why PUAS was incurring high debts from 1997 and Puncak Niaga never made losses in that period.''

R Sivarajah, a former senior technical assistant with 33 years experience in the Penang Water Authority (PBAPP), said water treatment plants are the easiest things to run. ''You don't have to worry about wastage and bill collection from customers. You are getting free water from the rivers; you just have to treat the water and you don't have to worry about the distribution,'' he told IPS.

Most of the losses are in the distribution systems, where almost half the water is lost underground, he noted. ''That's why everyone wants to privatise the water treatment plants.''

Public fears over tariff hikes are not without basis. In southern Johor state, the water treatment and distribution functions were also separated with privatisation.

A 40 per cent tariff hike in 2001 was followed by a 30 per cent increase in 2003 - contrary to state regulations allowing only a 30 per cent rise every three years, Santiago pointed out. Today, Johor has one of the highest water tariffs in the country. (END/2005)