La negociacion del nuevo quinquenio con Aguas del Illimani : y los paceños se enteraron?

The need to negotiate the next five years of the contract by January 1st 2001 was stipulated in the terms of the original contract under clause 10.5. The paper starts by outlining three factors influencing the negotiation of the second phase of the Aguas de Illimani concession.

The Cochabamba water wars stimulated a similar social movement in El Alto that protested against Aguas de Illimani in November 2000 and questioned the legitimacy of the privatisation agenda in Bolivia. It also created a climate of insecurity among private sector investors, leading to an intervention by International Finance Corporation (associated with the World Bank) to restore confidence in the sector.

As a result of the Cochabamba water conflict a new law for water and sanitation (ley 2066) was passed. This law recognised uses and customs, incorporated mechanisms of public consultation over the fixing of tariffs, and modified the indexation of tariffs. Aguas de Illimani, refused to recognise this new law arguing that their contract had been signed under different legislation.

The negotiation occurred in an election year when water issues were politicised and the government feared passing further legislation and implementing new laws.

The paper goes onto analyses the Aguas de Illimani proposal to raise tariffs by 25% and questions the 100% coverage rates for targets set for the first 5 years. The paper questions this coverage figure by claiming that:

No geographical criteria were attached to coverage targets

Increased coverage occurred through densification in existing covered areas rather than new connections in uncovered areas

New connections in poor areas occurred through the World Bank’s condominial system despite criticism by local organisations

Debate occurred over the service area (the area currently served by the concession) and the larger area of the concession which includes outlying neighbourhoods in poor municipalities. Aguas de Illimani focuses on the served area whereas the neighbourhood organised wanted the service extended to the whole concession area

Local organisations participated in some public meetings but participation was largely token evidenced by the fact that the relevant local organisations did not know the agreement for the second five year period had been signed.

The local organisations did not have the same access to information as the Cochabamba activists. They were thus poorly prepared for negotiations and open to political clientalism during election time.

(Author's abstract)