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Bogotá's fight for public water

Maria Teresa Ronderos

1st March, 2004

How the Colombian capital Bogotá defied the World Bank and the multinationals, refused to privatise and turned its water services into the best in the country

Residents of the more low-lying areas of the Colombian capital Bogotá used to perform a rather strange ritual before going to work. They would dress in old, ragged clothes and rubber boots and wade through the flooded and muddy streets of their neighbourhoods until they reached friends’ homes on dry land, where they would change into their suits and dresses for work.

The cause of this rush-hour costume change was a scarcity of drainage sewers. What few sewers existed often backed up because their outflow pipes were below the level of the Bogotá River, into which the pipes emptied, and the streets would be flooded with sewage.

Bogotá is a fast-growing city of 7 million people that is spread across a broad plateau, the Sabana de Bogotá, 2,600 metres above sea level in the Andes. High forest-green mountains frame the Sabana. The city gets most of its water from tropical highlands about 4,000 meters above sea level, which act as a natural sponge – sucking moisture out of the clouds and mists. The water drains to rivers and lakes, from where it is channelled down into the city.

Each year, the city’s population grows by about 180,000. The new residents include people seeking jobs or refuge from war-torn rural areas. Many settle in ever-expanding slum areas on the southeastern slopes of the sprawling metropolis, sometimes on land as many as 400 metres higher than Bogotá. Others invade the flatlands to the west, areas below the level of the river and which have no access to public services.

For public utilities, keeping pace with such rapid and disorderly growth and meeting the difficult challenges posed by a high-altitude city have been costly. By 1993 Bogotá’s public sewer and water company, the Empresa de Acueducto y Alcantarillado de Bogotá (EAAB), was practically bankrupt. Staffed with political cronies who often changed with each new government, it didn’t have the professional management needed to run a large utility. So in the early 1990s, the World Bank began recommending privatisation as the solution to bad public management.

What happened next rattled the foundations of World Bank policy and challenged the privatisation mantra that only big multinationals have the expertise and capital to deliver clean drinking water efficiently and at affordable prices.

Convinced that water is a public resource, the city of Bogotá bucked the privatisation trend, turned its back on the World Bank’s money and transformed the city’s water service into the most successful in Colombia.

Political revolution

In the late 1990s Bogotá underwent a political revolution, with voters electing new independent and progressive governments.

Against World Bank advice, the current and previous mayors of Bogotá, Enrique Peñalosa and Antanas Mockus, decided the public’s interest would be better served by strengthening the EAAB than by privatising it.

Now the EAAB is the most successful utility in Colombia, an example of a crippled company that turned itself around. In 1993, 78 per cent of the people of Bogotá had clean drinking water and 71 per cent had sewers. By the end of 2001, 95 per cent had water services and 87 per cent had sewers.

The EAAB’s success came despite continued pressure to privatise from the World Bank. In August 1998 utility officials and Bogotá’s then mayor Peñalosa met in Washington with World Bank officials to discuss new credit for financing the EAAB expansion plans.

The bank’s representatives explained that their policy was to approve new loans to those water utilities that dismantled subsidies and privatised. They argued that private companies were more efficient than public companies, which they said were slower and more cumbersome in making decisions. They also said it was easier for poor countries to get fresh capital for such projects from the private sector.

Tendering contracts to private firms to run water systems would, the World Bank said, enhance competition and lower costs. ‘[Peñalosa] said he firmly believed that the state had an obligation to the inhabitants of the shantytowns to offer them water and sanitary services, and that no private company would accomplish this task,’ recalls Carlos Sandoval, who was present at the meeting as Bogotá’s then finance secretary.

Keeping the World Bank at bay

Even after the turnaround in the performance of the EAAB, the World Bank still insists that the company should be privatised. Menahem Libhaber, the World Bank’s chief water and sanitation engineer in Latin America, says that its costs are too high. ‘The salaries are huge. The employees get a lot of benefits – health and education, which is OK. I’m for socialism. But this is very expensive. People cannot pay the water bill. The company needs private sector involvement.’

Bogotá’s water utility would be a major prize for private investors. The EAAB has $1.5 billion in assets, and is the largest landowner in Bogotá. If privatised, all these lands could be developed and built upon. That would include the unique tropical highlands, the source of most of Bogotá’s drinking water.

Unlike private companies, which pay big dividends to shareholders, the EAAB reinvests its profits. In 2001, it spent about $180m in public works – mostly in poor neighbourhoods. That represented 40 per cent of all water-sector investment in Colombia. Despite the large investments, the company maintains a healthy balance sheet. The Colombian subsidiary of the international credit rating agency Duff and Phelps awarded the utility an AA+ debt rating: the second highest rating possible. The key to the EAAB’s improvement, says Peñalosa, has been a clear vision of the importance of keeping it strong and public.

The company’s officials acknowledge that success has not come without a certain amount of hardship for the poor. Rates for the poorest residents of Bogotá have risen by 422 per cent in the last seven years, while those for the richest have risen by only 83 per cent. This is partly because the Colombian national government began in 1995 to cut subsidies that meant the poor used to pay only about 5 per cent of the real cost of their water.

Even so, Bogotá’s water services are subsidised by 78 per cent for the city’s poorest residents and by 24 per cent for the middle class. The subsidies are financed partially by the wealthy, who pay 87 per cent to 167 per cent more than the real cost of their water. By 2005, as required by law, only the two poorest strata of Colombian society will receive subsidies – of 50 per cent and 40 per cent, respectively – in their water bills.

Water conservation has also been a major EAAB priority. A campaign begun in 1997 to save water has reduced consumption to an international low. Average consumption has stabilised at about 109 litres per person per day. By comparison, the average per-person consumption in the US is 578 litres per day; in the UK it is 334 litres a day. The low level of consumption has reduced the need for major investments to improve and expand treatment plants, tunnels and pipes to transport more water from sources far in the mountains and to treat it.

Among its main projects, the EAAB invested $38m in the fiscal year 1999-2000 on constructing water tanks, a treatment plant, pumps and 37 kilometres of pipelines to supply potable water to 350,000 additional people. The company’s goal is to reach 100 per cent of the Bogotá population by 2010.

The EAAB is also building the Cundinamarca Channel, which will take the run-off and sewage from hundreds of neighbourhoods in west Bogotá and lift it through an elevation plant to the level of the Bogotá River. The project should end the flooding of streets in low-lying areas. No more forced dressing in the homes of friends on higher ground.

One thing that the EAAB won’t prevent is the interest of the corporations. The stench of the sewers may have gone, but the smell of money remains.

Maria Teresa Ronderos is the editor-in-chief of Semana, Columbia's leading news-magazine.

She wrote this article for the International Consortium of Investigative Journalists, a project of the Center for Public Integrity.

This article first appeared in the Ecologist March 2004

 

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