Aid agency slated over power projects

Anti-poverty campaigners have accused the Government of using taxpayers' money to support overseas electricity privatisation projects that result in higher power prices for some the world's poorest people.

In a report published today, War on Want says that Globeleq, a wholly owned subsidiary of the Department for International Development's private sector promotion arm, CDC, has paid hundreds of millions of pounds to US power firms that wanted to withdraw from the developing world. Two companies, AES and El Paso, are said to have gained more than $1bn (£536m). Globaleq paid AES $448m for two plants in Bangladesh and a further $337m for a power station in South Africa and stake in a Tanzanian plant. El Paso received $250m for holdings in central America and South Asia.

Louise Richards, the chief executive of War on Want, said: "DFID's mandate is to reduce poverty. But the promotion of privatisation through initiatives like Globeleq hurts poor people. We call on the Government to stop advancing the privatisation of public services and to help developing countries build genuine solutions to poverty." She said that privatisation of electricity sectors in poor countries had failed to expand coverage and had often led to sharp increases in tariffs.

Since Globeleq took over the national grid in Uganda last year, domestic electricity prices had risen by 70 per cent, War on Want said.

DfID and Globaleq rejected the findings of the report, which they described as poorly researched, although Globeleq acknowledged that electricity prices had risen.

DfID said Globeleq had played a major part in keeping the lights on in poor countries when the rest of the energy market has failed. A spokesman added that while DFID owned CDC, it had agreed as a matter of policy not to interfere in CDC's or Globeleq's decisions about investments or development.

Globeleq said that increases in prices were due to reforms of the electricity industry by local governments rather than because of its intervention. Stephen Morisseau, its vice-president for corporate affairs, said price increases were often linked to the phasing out of industry-wide subsidy. "I will accept that tariffs have gone up but I will not accept that the costs of generating the power went up," he said."We run some the most efficient power plants."