Appendix 8 “Aguas de Tunari, Go Home!”: towards a critical evaluation of the contract for drinking water in Cochabamba
This paper analyses the Cochabamba water contract signed in October 1999. It argues that key elements in this contract led to the Cochabamba water wars. The paper analyses four elements of the contract: the technological aspects, socio-economic factors, legal and formal aspects. It begins by discussing the role of the World Bank in re-structuring SEMAPA and includes a discussion of the debates around the viability of the Misicuni Multiple Dam proposal as a new source of water for SEMAPA. It also discusses the quality of the existing network and issues such as run off waters and environmental risk.
The discussion of social economics issues focuses on the exclusive nature of the contract highlighting the problems this causes for users of alternative water systems. The implications of Law 2029 for these users and irrigators is also discussed. Next the tariff structure and mandate to extend the network are examined and debates over the area of the concession and the financial investments through which the consortium was established are also examined. The main conclusions are that:
The contract formed part of the government’s strategy to privatise resources with the support of the World Bank whose loans were dependent on adopting such a model.
The contract, as written, did not secure the construction of the Misicuni Multiple Dam project
Under the concession the new company did not have to take any responsibility for work and investment that would not yield a profit, therefore environmental and social concerns were subordinate in the contract
The contracts was designed to ensure a quick profit for the consortium with minimum investment
Access of the poorest groups to water was not guaranteed in the contract, the principle of monopolies and full cost recovery mitigated against such a goal by limiting alternative systems and allowing high tariff increases.
With the support of law 2029 and SIRESE, the contract introduced mechanisms that meant that the control over the decisions taken by concessionaire company would be limited. Confidentiality clauses further made accountability difficult. The financial model channelled complaints in such a way that did not guarantee that they would be dealt with locally and effectively
Legal irregularities and contradictions between different types of legislation were evident and worked in favour of the concessionaire company.
“AGUAS DEL TUNARI, GO HOME”: ELEMENTOS PARA UNA CRITICA DEL CONTRATO DE CONCESION DEL AGUA POTABLE EN COCHABAMBA1