Development & Aid, Environment, Headlines, Latin America & the Caribbean, Poverty & SDGs

LATIN AMERICA: Wave of Water Privatisation Over; Coverage Challenge Remains

Gonzalo Ortiz*

QUITO, Mar 21 2011 (IPS) - Now that the wave of water privatisation of the 1980s and 1990s has let up, the main challenge facing water utilities in Latin America is expanding coverage of high-quality water services.

Indigenous women hauling water in Chiapas, Mexico.  Credit: Mauricio  Ramos/IPS

Indigenous women hauling water in Chiapas, Mexico. Credit: Mauricio Ramos/IPS

In Mexico, water has always been publicly controlled. Each state has its own water system, in charge of supplies and billing.

But in other countries, World Bank and Inter-American Development Bank recommendations in the last two decades of the 20th century drove the privatisation of water, whose management was handed over in concession to U.S. and European corporations.

However, the poor performance of these companies and soaring water rates rapidly triggered discontent.

One major turning point was the so-called “water war” in Cochabamba, Bolivia’s third-largest city, which broke out in early 2000 with protests against the private management of water services, which were run by the city until a few months earlier.

After receiving the concession from the government of Hugo Banzer (a former dictator in the 1970s who was elected president in 1997), Aguas del Tunari, a consortium led by U.S. water giant Bechtel, raised the minimum water rate to 20 dollars a month – in a country where the minimum wage is less than 100 dollars a month – and threatened to cut off service to customers who did not pay.

A state of siege was declared, but despite the brutal crackdown on the protests in which one demonstrator was killed and around 200 were injured, the uprising continued and the government was forced to cancel the contract.

Another watershed moment was 2006, when the government of Néstor Kirchner in Argentina revoked the concession granted to a consortium led by French utility group Suez, which supplied water and sewage treatment to Buenos Aires and the surrounding suburbs since 1993.

Kirchner cancelled the 30-year contract “for repeated failure by the consortium to meet its contractual obligations,” María Laura Lignini, the head of Espacio Aguas, a non-governmental group that advocates universal access to water and sanitation as a human right, told IPS.

To replace the consortium, the government set up the Agua y Saneamiento Argentinos (AySA) company to serve greater Buenos Aires, home to nearly 10 million people.

In Ecuador, with the exception of two cities – Guayaquil and Machala – water is in the hands of 60 city governments.

Guayaquil, the most populous city in the country, located in the west, granted a concession for drinking water and sewage services to Interagua, a consortium headed by a Spanish company, Proactiva Medio Ambiente. In Machala, in the southwest, the services are run by Triple Oro, made up of the city government and the Empresa Sudamericana de Aguas Oriolsa.

The 2008 constitution establishes that water is a national good for public use, which can only be managed by public or community-run enterprises. The transition of the two companies in question to the new legal framework has not yet been resolved.

“Since the neoliberal government of Sixto Durán Ballén eliminated the Instituto Ecuatoriano de Obras Sanitarias (water and sewage utility) in 1992 as a step previous to the privatisation of the service, this has been blocked by the resistance of the municipalities and the population itself,” Antonio Gaybor, the head of a civil society water rights movement, told IPS.

Since a draft law discussed by Congress in 2010 sparked roadblocks and protests by indigenous people and peasant farmers, “the bill has basically been shelved,” Gaybor said.

Water, a constitutional right

In July 2010, the United Nations declared access to water and sanitation a universal human right.

But several countries in Latin America had already enshrined the right to water in their constitutions. The pioneer was Uruguay which, parallel to the national elections of 2004, held a referendum in which Uruguayans voted to reform the constitution to make water a national asset for the public good.

The constitution now declares that “water is a natural resource essential to life” and that access to piped water and sanitation services are “fundamental human rights”. It also guarantees civil society participation at every level of management of the country’s water resources.

The referendum was promoted by civil society groups, trade unions and the left-wing Broad Front coalition, which won the elections that year and is still governing the country.

In Ecuador, the constitution that went into force in 2008 states that water is a fundamental human right and a strategic national asset for public use “that is inalienable, permanent, cannot be embargoed and is essential for life.”

Bolivia’s 2009 constitution also enshrines access to safe, sufficient, and affordable water as a basic human right.

Expanding coverage

Today, public water utilities in the region are making enormous efforts to live up to these provisions.

But the example of Cochabamba illustrates how some victories have been wasted. In that highlands city, nearly 50 percent of the population still has no running water, the poor must purchase water from tanker trucks at abusive prices, and the municipal water company is heavily indebted, due to cronyism and corruption.

In Buenos Aires, meanwhile, AySA is working to expand the water and sanitation grid, with the target of reaching universal coverage by 2020. Currently coverage of piped water stands at 87 percent and sanitation at 64 percent of the 9.7 million people in the greater Buenos Aires area.

Major public works are underway, like the Juan Manuel de Rosas water treatment plant, the Del Bicentenario sewage treatment plant and the Virrey del Pino reverse osmosis plant, in suburbs of Buenos Aires.

In Uruguay, the companies affected by the constitutional reform were the local branches of the Spanish firms Uragua and Aguas de la Costa, which provided water supplies in the southeastern province of Maldonado, and had racked up complaints for poor service and high rates.

“Under pressure to enforce the constitutional reform and because Uragua had failed to live up to its contractual obligations, OSE (the state water company) decided to revoke the contract,” Adriana Preziosi, a technical consultant to the utility’s management, told IPS.

Since the Aguas de la Costa contract does not expire until 2018, the state gained control over the service by becoming the majority shareholder.

Uruguay has achieved universal coverage of access to safe drinking water and sanitation.

In Ecuador, coverage of potable water is 96 percent in urban areas and 74 percent in rural areas.

But Ecuador and other countries in the region have two problems: water supplies are intermittent in many urban areas, and coverage levels and quality vary widely between rich and poor sectors.

In Mexico, 10 percent of the population has no piped water supply and 13.6 percent lacks sanitation, according to Conagua, the national water authority.

The biggest challenge facing public water companies is bringing high-quality water services to slums and dispersed rural populations.

In addition, water sources are often polluted, and there is competition for water supplies among different sectors, such as hydroelectric plants.

Technological achievements have also been shared in the region: compact water treatment units developed by the OSE utility in Uruguay have been installed in Quito and other cities in Ecuador.

The treatment units, used in eight other Latin American countries, the United States, the Democratic Republic of Congo and India, “are of excellent quality, and helped us resolve emerging problems,” Jorge Ribera, former operations manager at the Quito municipal water utility, told IPS.

* With additional reporting by Raúl Pierri in Montevideo, Marcela Valente in Buenos Aires and Emilio Godoy in Mexico City.

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