Japan enacts law to enable private firms to operate water supply services

The National Diet, the bicameral legislature of Japan, has enacted a law that enables private firms to operate water supply services.

Several local governments are struggling to make earnings from aging facilities. This revised Water Supply Act aims to boost municipal water services through privatisation.

According to the Ministry of Health, Labor and Welfare, one third of local governments are not able to make sufficient earnings through water bills to cover operating costs.

With the country’s declining population, the situation faced by the local governments is only expected to become more worse.

About 15% of the total number of water pipes has crossed the maximum life of 40 years in the year through March 2017. Replacement of all water pipes is expected to take 130 years given the present pace of work, reported The Japan Today.

According to the new Act, local governments are encouraged to team up with private entities through a private finance mechanism that enables their facilities to be operated by the private firms for a period of up to two decades.

Critics of this Act believe that privatisation of water supply utilities would lead to higher bills as well as reduce quality of water supply.

As per a survey conducted by a Dutch research group, 267 cities of 33 countries opted to revert to public water services following privatisation.

Takushoku University professor of environment policy studies Yoshiki Seki was quoted by The Japan Today as saying that water bills tend to increase following privatisation due to monopolisation of distribution facilities.

Several local governments including Miyagi Prefecture and the city of Hamamatsu are currently looking at teaming up with private firms.