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Cochabamba Water War

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The Cochabamba Water War was a conflict which developed in Bolivia between a private water provider, Aguas del Tunari. a subsidiary of International Waters Ltd, a subidiary of Bechtel Corporation, and its customers in Cochabamba. It is one of the more publicized incidents of conflict over privatization of water systems.

The water system before privatizationEdit

Prior to privatization, water was provided by SEMAPA which, at a relatively low cost, provided water to the homes of the well to do, commercial establishments and agriculture. Its rate structure was, according the the Bechtel Corporation, the opposite of the usual rate structure designed to conserve water. Rather than the unit cost rising as more water was used, it fell, thus high volume users, including wealthy residential users, received large volumes of water at low cost in a relatively arid region. About 60 percent of the community was served, but often with inadequately treated water. Service was irregular and revenues were inadequate for maintenance or expansion of the system. Many obtained water from water trucks, Tanqueros.[1]

Following the collapse of the privatization scheme, control was returned to a reorganized SEMAPA, but the prior problems continue due to lack of capital and the inability of poorer potential customers to support an expanded system..

PrivatizationEdit

Prior to this incident Bolivia had, with the encouragement of the World Bank, privatized a number of nationalized companies and public companies. According to the Environmental News Service the World bank made privatization of the Cochabamba water system a condition of receiving further aid from the World Bank for water development. The water system was offered for bid in 1999. Aguas del Tunari was the only bidder. After extensive private negotiations a contract for a concession was signed September 3, 1999. The consortium took over operation November, 1999.

Terms of the concessionEdit

Operation of the concession by Aguas del TunariEdit

When Aguas del Tunari took over the concession 60% of the water which entered the system was being lost to leakage and pilferage. Also service was sporatic. Immediate improvements made in the first few months reduced this figure to 30%, resulting in more reliable service. However, more reliable service had the unfortunate effect of increasing water use. Combined with a modest rate increase affecting high volume users, increased reliability resulted in substantially higher bills for some customers.

Misicuni dam projectEdit

The Misicuni dam project, a projected reservoir, was made a part of the project at the insistence of a local politician.

Aguas del TunariEdit

Aguas del Tunari was a joint venture between International Waters Ltd (55%), Abengoa of Spain (25%) and 4 local investors each with 5%. Befesa and Edison of Italy are cited by some sources.

International Waters Ltd, a subidiary of Bechtel Corporation, had a 55% share in the venture. United Utilities (Northwest Water) is involved as a "strategic partner". Former Bolivian President Jaime Pasamora was a partner.[2]

The aftermathEdit

After Aguas del Tunari personnel fled Bolivia April 10, 2000, the contract was declared forfeited by Bolivia. Recourse was had to the International Centre for Settlement of Investment Disputes, but before a hearing was had, according to a Bechtel Corporation press release of January 19, 2006, the case was settled. The settlement assigned the cause of failure to perform the contract on both sides to a state of emergency due to civil unrest and awarded no damages to either party[1].

The matter continues to be considered an example of the victory of popular forces over globalization as promoted by the World Bank and international corporations[2].

NotesEdit

  1. "Cochabamba and the Aguas del Tunari Consortium" The facts according to the Bechtel Corporation, March, 2005
  2. "New British empire of the dammed" article by Gregory Palast on zmag.org

External linksEdit

January 19th, 2006

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