There's an article worth reading in today's New York Times by Juan Forero about problems in Latin America with providing for basic needs. Much of it focuses on the case of Águas del Illamani, a French-owned company that was providing water to among other areas in Bolivia, El Alto, a community consisting largely of the Aymara indigenous group. Public sentiment pressured the government to cancel the contract with Suez, the parent company of Águas del Illamani.
Consider this:
The Bolivian government had in fact welcomed Aguas in 1997 to turn around an inefficient public system that provided water to El Alto and the adjacent capital, La Paz. After it arrived, Aguas says it met its contractual obligations and expanded services, and even government officials concede that the company did an admirable job at first. Potable water, offered by the state water company to 152,812 households in the two cities in 1997, rose by 81,180 households in seven years. Sewage service was expanded to more than 160,000 households by last year from 95,995.
But eight years into its contract, Aguas ran into problems.
Profits were never as high as the company would have liked, since the former country people who flocked to El Alto, a mostly indigenous city of 750,000, were used to conserving and never consumed much water.
When company officials asked state regulators for permission to increase monthly fees, their request was rejected. But the company won permission to increase the hookup fees, to $450 from just over $300.
It was a fee most people here - where the average monthly wage is about $55 - could never hope to pay.
As the article notes, clean water is a problem in many poor communities in Bolivia "where a lack of clean water contributes to the death of every tenth child before the age of 5." I'm all for some privatizations. I think that the privatization of Companhia Vale do Rio Doce (CVRD) was a fine idea in Brazil. I don't think that the government should be in the business of mining and the expansion that CVRD has done since the privatization speaks to the wisdom of that move. I'm for the privatization of CODELCO in Chile for much the same reasons. In addition, with CODELCO, as 10% of the earnings are earmarked for the Chilean military which is a holdover from the Pinochet era, the money could be put to better uses. Chile's relations with its neighbors (with the exception of BOlivia are generally good.
When one starts talking of basic services such as water, however, the profit motive should not rule. There has to be a way for people to be able to get water affordably. About five years ago I was in the town of Catas Altas in Minas Gerais, Brazil. Catas Altas is near Caraça and Santa Bárbara and is surrounded by mountains. I went with some friends to sample the water as it came down from the mountain to the treatment plant. The inescapable feeling was that water is life and without it life will not exist. Without clean water children die. There has to be a better way.
By the way, if you're reading this and you live in Tennessee or North Alabama and you disagree with me, ask yourself if you'd like to trade that inexpensive TVA electricity for the rates I pay Con Edison. Your perspective can be different when the issue hits close to home.
There has to be some balance between publicly-ran water corporations and privatized corporations. In Cochabamba, after the "water war" victory, there are still many communities that have not received adequate service. Where can cities get the money to make the improvements and expand service? Sadly only companies that want to make a profit will be willing to be invest, but as things like the termination of the contract will make investment less likely, if at all.
Posted by: eduardo | February 24, 2005 at 09:19 AM