By IPS Correspondents
BARRANQUILLA, Colombia, Oct 31 2003 (IPS)

Six years after its transfer to private hands, CORELCA, Colombia’s third leading electric company, has come under fire for its high rates and breakdowns in its distribution network.

The privatisation of CORELCA (Corporación Eléctrica de la Costa) improved coverage and customer service, but brought worse setbacks, including failures in service delivery and higher rates, which are out of reach for the poorest sectors of the population.

"No one is free of the high rates or breakdown in services," which affect quality of life for the poorest and richest alike, says an official from the Office of the People’s Defender (Ombudsman) in the northern department of Atlántico, one of the seven served by CORELCA.

Angel Cervantes lives in Me Quejo, a poor outlying neighbourhood of Barranquilla, in the north, and did not used to pay for the electricity he used via an illegal connection, like the rest of the people in the district.

Since the privatisation in 1997, CORELCA placed an electrical meter next to the door to his house and sends him a bill each month "for as much as 50,000 pesos (around 17.5 dollars)", a sum he cannot afford with his wages as a fruit vendor.

Architect Carlos Prieto lives in Los Alpes neighbourhood, in northern Barranquilla, and CORELCA charges him 300,000 pesos (105 dollars) a month – approximately equal to a minimum monthly salary – for electrical consumption "in a house in which I live with only my wife and young son, and with the usual: a television, a computer and the basic electrical appliances," he told Tierramérica.

In the lower income neighbourhoods there were several injuries and one death during the past year resulting from the clashes associated with the street blockades set up in protest against high energy rates and frequent blackouts.

The government began the process of privatising CORELCA based on the results of studies conducted by the Ministry of Energy and Mining and by the World Bank, which gave the state-run enterprise poor marks for administrative, operational and financial efficiency, including serious deficiencies in billing and collection.

Electrical "leaks" and billing problems were costing the company 7.1 million dollars a month, and operating costs were more than 30 percent of revenues.

According to the national electrical finance agency, in the 1990s the government transferred 1.1 billion dollars to CORELCA, not counting interest or other costs.

Privatisation was a quick way to resolve the energy crisis that had led the country to daily rationing of up to 12 hours, says Jacobo Acosta, the first director of CORELCA and credited with the company’s improved management in the 1980s.

"The government decided to call on the private sector to invest," he said in a Tierramérica interview. "Curiously, we were once again in the same situation as 30 years ago, when the public services were provided by private companies."

According to Acosta, the "mixed participation" of government and private enterprise allowed Colombia to pursue energy development. He says it is vital to maintain the state’s presence in the sector, for one thing, to subsidize electrical services for the poorest.

Article 365 of the 1991 Constitution establishes that public services are inherent to the social ends of the state, which has the duty to ensure these services are provided in an efficient manner to all of the country’s inhabitants.

The article also states that public services will be subject to the juridical regimen established by law, and can be provided by the state – directly or indirectly, by partnerships or private entities.

According to business consultant Jorge Medina, this constitutional mandate opened the way for the privatisation process in Colombia’s electrical industry at the end of the 20th century.

Or, more accurately, the country returned to the situation of the late 19th century, when electrical services were the result of private investors’ efforts, as they set up the first companies for generating, distributing and marketing electricity.

The Comptroller General of Colombia (CGR) says the privatisation of CORELCA is a demonstration of how directionless the privatisation processes in Colombia are.

CORELCA was initially "a company with enormous technical solvency… that not only consolidated itself as an energy producer," but also provided resources for processes of development and self-management in the region, says the CGR.

CORELCA was one of the largest integrated electric companies in the country. It was made up of a thermal energy plant, a transmission network and eight distribution firms serving the Caribbean coastal region.

But the enterprise’s solid footing crumbled "in a prolonged history of setbacks" due to the lack of foresight by its administrators, adds the Colombian national accounting office.

According to defenders of privatisation, the electricity sector overall faced bankruptcy and administrative negligence that produced an unfavourable economic, technical and operational situation.

In this context, the industry was unable to take necessary actions in response to the climate phenomenon known as El Niño, which produced droughts in Colombia in 1991 and 1992, leading to electricity rationing.

To confront the crisis and prevent its effects from spreading, the government decreed on Apr. 23, 1992 a state of economic and social emergency and authorised the capitalisation and restructuring of several state enterprises and the mobilisation of more than 3.0 billion dollars towards the energy sector.

>From another perspective, the privatisations of CORELCA and other companies in the energy sector are the result of the neoliberal economic model that was consolidated in the 1990s, Amylkar Acosta, president of the Colombian Society of Economists and expert in energy issues, told Tierramérica.

This process" indiscriminately opened up economies to the detriment of the most vulnerable sectors of the population," Acosta said.

(* Yadira Ferrer is an IPS correspondent. Originally published Oct. 25 by Latin American newspapers that are part of the Tierramérica network. Tierramérica is a specialised news service produced by IPS with the backing of the United Nations Development Programme and the United Nations Environment Programme.)

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