The two keynote speakers at the working group called "attracting investment" - both from the private sector --outlined basic criteria important to outside investors, but diplomats from poor countries and Nongovernmental organization (NGO) representatives questioned some of the basic assumptions in public/private partnerships designed to provide clean water for the poor.

Manuel J. Alvarinho, president of the water supply regulation council of Mozambique, said the basic problem is, " The (water) companies are global. The international financing agencies are global and the only one who is not global is the recipient country.

"Many time I see agencies working on the side of the company, working for the sake of global business. The exercise here is to diminish the risks, but the risks are government risks, country risks.

"We need to create a global regulatory framework. If an operator is not doing a good job in one country it is easy for him to just leave the country. A poor country like mine has no influence on global operators, he said"

Keynote speaker Rodney Short of Clifford Chance of Frankfurt, said, "If companies just walk away from something they are not going to cover their investments."

"If however, the reason they walk away because it is the breach of their obligations, then ultimately the company will have no choice," he said.

Mike Muller of a coalition of South African NGOs and labor groups said, "What happens if we play the game right, and the answer is wrong? What happens if a company looks at a country and says 'given the level of resources there is no business for us'?"

"Let us be very clear. We cannot expect private enterprise to solve that problem. But how do we mobilize finances to bridge that gap, to meet the needs of the poor.

"I wouldn't want to come away with the impression that if we somehow get it right, the investments are there. The investments will not be there. Keep this in mind or we will lose the point of the conference," he said.

Short said, "There is a way the private sector can help here. Where there is no expectation of profits, governments can seek proposals, request bids where the decisive factor is the smallest government subsidy." And Albert Fry of the World Business Council for Sustainable Development suggested that governments "cross subsidize" for poor areas, "with the government making up the differences in shortfall from poor areas with slightly higher prices for rich areas."

But, said Mitzi Gurgel Valente da Costa, of Brazil's foreign ministry environmental division, " if subsidies are supposed to be for the poor, and we suggest governments should subsidize foreign operators, what we are saying is that developing countries who do not have enough cash will have these finances flow away from their countries."

On the other hand, if governments were " to subsidize their own (public) systems internally, then their subsidies would flow back to their own economies," she said.

In a chat with Conference News Daily after her remarks, the Brazilian delegate said, " you cannot fault the private companies. That is the way it should be. They make profits but the question is do you have public funds to subsidize this. They send the money out."

Michael E. Curtin of the US-based, Bechtel Enterprises, said, "Governments are sovereign. They are not defenseless. They make the decision to invite private capital in or exclude private capital coming in. There are plenty of investment advisors; banks, multilateral banks and institutions that can help government make that decision. It is a bilateral contract."

But Abdoulaye Sene, of the Senegalese mine, energy and water ministry, said, " it is exaggerated to say that we are involving in a contest in which governments are absolutely sovereign.

"Privatization is something they don't choose. They don't choose the time or the modalities. Often things take place where governments have a weak hand. There are three major players, the private sector which generally has multinational dimension, multinationals which are strong and the finally the country which is the weakest. It is essential to refocus the debate at least as far as the weakest countries are concerned.

" An international regulatory context is what is needed.

"Often in privatization a country has two strategic partners but we are not even sure that there aren't actual ententes going on. The banks, are they assisting us in order to assist another private partner in another country? It is not that transparent at all.

"In the context where partners are of different strength we might think of an international regulatory framework. At times there have been doubts in our minds as to the positions of certain important development partners who obviously had clear preferences for certain privatization schemes."

Anthony Al Kolb, Medecins Sans Frontieres, said, "Sovereignty is threatened when there is preconditionality on aid."

Simon Trace, of Water Aid said the amount of money brought in by foreign companies is sometimes overstated.

"There needs to be a note of realism here of exactly how much private sector is going to bring in. Generally it is about nine percent on average, " he said.

Anwer Sahooly, of Yemen's ministry of water and electricity, said "We have to encourage all private sectors, donor countries and international organizations, to enter into a dialogue," to ensure uniformity and efficiency of aid.

Lance Veotte, of the South African municipal workers Union, said " I am amazed to see how business and financial institutions pushing their positions eloquently, even though we her hear that this is not in the interest of the poor.

He said that in Natal, South Africa a pre-paid meter system cut off 300,000 people during a cholera outbreak.

"Prepaid meter systems should be outlawed around the world," he said.

In his keynote address Short, said, "One thing private sector cannot do is operate without a transparent regulatory regime, and if there is one job for host governments, and I believe should be done on government level not local authority, it is to establish and maintain a transparent regulatory regime"

"The private sector needs an investor friendly environment. Don't change the rules halfway through the project. Changing laws is something, which they don't like, " he said.

"The risks," he said "are expropriation or intervention by government. There is a long history by some government of private sector being brought in and the government starts fiddling. The private sector doesn't like that and it wants out.

"Clearly nonpayment is an issue, and particularly as regards to water, is an issue whether you want the private sector to takeover the collection and billing. If the government is the entity that bills land collects life will be a lot easier."

There are, he said, water specific risks, including public heath.

"If you get it wrong, you get it seriously wrong, " he said.

The solutions, he said include bidding transparency.

"Negotiated deals are something that is always disliked by host government and certainly the private sector," he said.

"A well structured water project," he said, "is one in which you can identify the revenue stream, with an objective which can be planned to be met, and can be punished if they don't, and a fair allocation of risk between public and private sectors."

But Trace, of Water Aid, said all the criteria outlined by Short would serve equally well for public corporations.

Jon Lane, a water consultant in Blantyre Malawi, and a facilitator for the meeting, said 'there is an unequal relationship with developing countries with limited dealing with private sector come to the table with very sophisticated high level lawyers. We need to help governments in those situations."

He called for a system of " financial frameworks that will apply universally, and will prove useful for the public sector."

Steve Baseby of Thames Water, London, said of some development projects, "The trouble is they are always making up the legal system as they go along. If there is an issue it is the need for getting expert advice to the governments. There are a number of experts around some in this room. A major problem is getting western expert advice in before the process starts. Being western, they want to be paid.

But Desmond Akawor of Nigeria said the private enterprise (representative) now believes he is the only person to do the work because of his efficiency."

Jistin A. Musa, a farmer and a member of the Sierra Leone water corporation said, " We know how the private sector can be less than ethical when it comes to signing contracts. " We agree with Senegal" on the need for a global system applicable in all countries, he said.

Speaking for American private interests, Fry suggested the potential combinations of public and private funding were almost limitless, and added, "We, too want a regulatory framework but not one that is so rigid as to prevent the use of creative partnerships."

Zaal Lomtadze, the deputy minister of environment for Georgia, and the conference chair, closed the meeting by taking note of the repeated calls for a global system and said that sentiment would be reflected in reports to the World Summit on sustainable development to be held in Johannesburg next year.