Get Red Pepper's email newsletter. Enter your email address to receive our latest articles, updates and news.

×

Britain’s global power empire

What is the British government doing promoting electricity privatisation in the developing world? John Hilary reports on the government-owned multinational power company Globeleq

November 1, 2006
4 min read


John HilaryJohn Hilary is executive director of War on Want.


  share     tweet  

When is a private company not a private company? Answer: when it’s wholly owned by the UK government and forms part of our overseas aid programme. No one may have heard of the power company Globeleq, but it’s doing its best to keep alive the dream of electricity privatisation in a world that is increasingly turning away from the private sector.

Globeleq was set up in 2002 by the Department for International Development (DFID) as part of the government’s strategy of ‘promoting the private sector in the developing world’. The company remains wholly owned by DFID through its private sector promotion arm CDC, formerly known as the Commonwealth Development Corporation.

Globeleq now has operations in the energy sectors of 16 countries in Africa, Asia and Latin America, and is actively pursuing further acquisitions in its bid to be ‘the fastest growing power company in the emerging markets’.

Globeleq has indeed grown fast. The company’s rapid expansion has been made possible because other multinational power companies have been keen to exit developing country markets as a result of the problems associated with energy privatisation.

However, this means that vast amounts of aid money supposedly earmarked for development purposes have been given instead to US power companies wishing to pull out of the developing world. Two such companies – AES and El Paso – have benefited to the tune of over US$1 billion between them in this way.

In this way Globeleq is keeping alive a private sector presence in situations where other companies have abandoned the market. This is in line with DFID’s broader aim to sustain the private sector in cases of market failure, but it raises serious questions in light of DFID’s overall mandate of poverty reduction. The involvement of multinational power companies in the energy sectors of developing countries has been deeply problematic, as the poor have often found themselves excluded from access to privatised electricity. Far from solving the problems of poverty, electricity privatisation has often exacerbated them.

There are currently 1.6 billion people around the world without access to electricity, roughly a quarter of the world’s population. Two thirds of these are in Asia, with most of the rest in sub-Saharan Africa. The International Energy Agency estimates that it will be necessary to roll out electricity services to a further 600 million people by 2015 if the world is to meet the top line UN millennium development goal of halving the proportion of people living on less than a dollar a day.

Yet privatisation of the electricity sector has not been successful in expanding coverage to poor communities. In fact, privatisation has led to sharp increases in the tariffs charged to consumers, and these increases have often raised prices beyond the reach of the poor. The arrival of multinational companies such as AES, Enron and EDF in developing countries during the 1990s saw dramatic price increases in electricity. When the Indian state of Maharashtra opened its power sector to Enron, for example, the state electricity board soon found itself forced to raise tariffs to farmers by a crippling 400 per cent to meet the added costs.

Electricity privatisation has proved hugely unpopular in many of the countries in which Globeleq operates. In Arequipa, southern Peru, mass protests erupted when the government attempted to privatise two electricity companies in 2002, with two people killed and 150 injured. Months of demonstrations against electricity privatisation in the Indian state of Andhra Pradesh left three people dead and thousands arrested.

Yet DFID continues to promote the privatisation of public services through Globeleq and other such initiatives. This not only conflicts with DFID’s own poverty reduction mandate, but it also undermines the ongoing work to build alternative models of energy provision, such as public sector and community- based services that are affordable and accessible to all.

The government has acknowledged the problems caused when developing countries are required to hand over public services to multinational companies.

Why, then, does it own a private power company that aims to take over energy services in the developing world?John Hilary is director of campaigns at War on Want. A full report on Globeleq is available at www.waronwant.org/globeleq

Red Pepper is an independent, non-profit magazine that puts left politics and culture at the heart of its stories. We think publications should embrace the values of a movement that is unafraid to take a stand, radical yet not dogmatic, and focus on amplifying the voices of the people and activists that make up our movement. If you think so too, please support Red Pepper in continuing our work by becoming a subscriber today.
Why not try our new pay as you feel subscription? You decide how much to pay.

John HilaryJohn Hilary is executive director of War on Want.


Working class theatre: Save Our Steel takes the stage
A new play inspired by Port Talbot’s ‘Save Our Steel’ campaign asks questions about the working class leaders of today. Adam Johannes talks to co-director Rhiannon White about the project, the people and the politics behind it

The dawn of commons politics
As supporters of the new 'commons politics' win office in a variety of European cities, Stacco Troncoso and Ann Marie Utratel chart where this movement came from – and where it may be going

A very social economist
Hilary Wainwright says the ideas of Robin Murray, who died in June, offer a practical alternative to neoliberalism

Art the Arms Fair: making art not war
Amy Corcoran on organising artistic resistance to the weapons dealers’ London showcase

Beware the automated landlord
Tenants of the automated landlord are effectively paying two rents: one in money, the other in information for data harvesting, writes Desiree Fields

Black Journalism Fund – Open Editorial Meeting
3-5pm Saturday 23rd September at The World Transformed in Brighton

Immigration detention: How the government is breaking its own rules
Detention is being used to punish ex-prisoners all over again, writes Annahita Moradi

A better way to regenerate a community
Gilbert Jassey describes a pioneering project that is bringing migrants and local people together to repopulate a village in rural Spain

Fast food workers stand up for themselves and #McStrike – we’re loving it!
McDonald's workers are striking for the first time ever in Britain, reports Michael Calderbank

Two years of broken promises: how the UK has failed refugees
Stefan Schmid investigates the ways Syrian refugees have been treated since the media spotlight faded

West Papua’s silent genocide
The brutal occupation of West Papua is under-reported - but UK and US corporations are profiting from the violence, write Eliza Egret and Tom Anderson

Activate, the new ‘Tory Momentum’, is 100% astroturf
The Conservatives’ effort at a grassroots youth movement is embarrassingly inept, writes Samantha Stevens

Peer-to-peer production and the partner state
Michel Bauwens and Vasilis Kostakis argue that we need to move to a commons-centric society – with a state fit for the digital age

Imagining a future free of oppression
Writer, artist and organiser Ama Josephine Budge says holding on to our imagination of tomorrow helps create a different understanding today

The ‘alt-right’ is an unstable coalition – with one thing holding it together
Mike Isaacson argues that efforts to define the alt-right are in danger of missing its central component: eugenics

Fighting for Peace: the battles that inspired generations of anti-war campaigners
Now the threat of nuclear war looms nearer again, we share the experience of eighty-year-old activist Ernest Rodker, whose work is displayed at The Imperial War Museum. With Jane Shallice and Jenny Nelson he discussed a recent history of the anti-war movement.

Put public purpose at the heart of government
Victoria Chick stresses the need to restore the public good to economic decision-making

Don’t let the world’s biggest arms fair turn 20
Eliza Egret talks to activists involved in almost two decades of protest against London’s DSEI arms show

The new municipalism is part of a proud radical history
Molly Conisbee reflects on the history of citizens taking collective control of local services

With the rise of Corbyn, is there still a place for the Green Party?
Former Green principal speaker Derek Wall says the party may struggle in the battle for votes, but can still be important in the battle of ideas

Fearless Cities: the new urban movements
A wave of new municipalist movements has been experimenting with how to take – and transform – power in cities large and small. Bertie Russell and Oscar Reyes report on the growing success of radical urban politics around the world

A musical fightback against school arts cuts
Elliot Clay on why his new musical turns the spotlight on the damage austerity has done to arts education, through the story of one school band's battle

Neoliberalism: the break-up tour
Sarah Woods and Andrew Simms ask why, given the trail of destruction it has left, we are still dancing to the neoliberal tune

Cat Smith MP: ‘Jeremy Corbyn has authenticity. You can’t fake that’
Cat Smith, shadow minister for voter engagement and youth affairs and one of the original parliamentary backers of Corbyn’s leadership, speaks to Ashish Ghadiali

To stop the BBC interviewing climate deniers, we need to make climate change less boring
To stop cranks like Lord Lawson getting airtime, we need to provoke more interesting debates around climate change than whether it's real or not, writes Leo Barasi

Tory Glastonbury? Money can’t buy you cultural relevance
Adam Peggs on why the left has more fun

Essay: After neoliberalism, what next?
There are economically-viable, socially-desirable alternatives to the failed neoliberal economic model, writes Jayati Ghosh

With the new nuclear ban treaty, it’s time to scrap Trident – and spend the money on our NHS
As a doctor, I want to see money spent on healthcare not warfare, writes David McCoy - Britain should join the growing international movement for disarmament

Inglorious Empire: What the British Did to India
Inglorious Empire: What the British Did to India, by Shashi Tharoor, reviewed by Ian Sinclair

A Death Retold in Truth and Rumour
A Death Retold in Truth and Rumour: Kenya, Britain and the Julie Ward Murder, by Grace A Musila, reviewed by Allen Oarbrook