The Privatization of Water Services in Cartagena

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  • Good evening everyone, I’m Lisa Nagy. As you know, my colleagues and I have been hired by the Mayor’s office here in Cali, Columbia to analyze options for the reform of the municipal water and sewage system in Cali. Our recommendations are based on the key challenges and the successes faced by the city leadership of Cartagena, Columbia, which is a case very similar to Cali’s.
  • The Privatization of Water Services in Cartagena

    1. 1. The Privatization of Municipal Services Challenges and Opportunities: A Case Study of Cartagena de Indias Prepared for the City of Cali, Colombia April 24, 1998 Lisa Nagy, Ryan Black, Carlos Rymer, Elyse Hottel, Alejandro Gomez Palma
    2. 2. Agenda <ul><li>Traditional Public Ownership </li></ul><ul><li>Public Ownership Reform </li></ul><ul><li>Privatization: Mixed Capital Company </li></ul><ul><li>Sustainability of Mixed Capital Company </li></ul><ul><li>Recommendations for Cali </li></ul>Traditional Public Ownership Public Ownership Reform Mixed Capital Company 1961-1992 1992-1994 1995-1998
    3. 3. Traditional Public Ownership <ul><ul><li>Political Interference </li></ul></ul>1961-1992 <ul><li>Service Inefficiencies </li></ul><ul><ul><li>70% received water </li></ul></ul><ul><ul><li>Untreated sewage deposited into Bay/Lagoon </li></ul></ul>Fiscal Mismanagement <ul><li>Administrative & Operational </li></ul><ul><ul><li>Over-diversification </li></ul></ul>
    4. 4. Public Ownership Reform <ul><li>Issues : Breakdown of Traditional Model </li></ul><ul><li>Retirement buy-out and contract negotiations </li></ul><ul><li>Liquidation of Empresas Publicas Distrales </li></ul><ul><li>Introduction of Mixed Capital Company </li></ul><ul><ul><li>Analysis : </li></ul></ul><ul><ul><li>Union demands </li></ul></ul><ul><ul><li>Reform abandoned too quickly </li></ul></ul><ul><ul><li>Bid process affected </li></ul></ul>1992-1994
    5. 5. Privatization: Mixed Capital Company <ul><li>Issue : Quality of Service vs. “Control” </li></ul><ul><li>Ownership redistribution </li></ul>1995-1998 86% 46% 50%
    6. 6. Privatization: Mixed Capital Company <ul><li>Issue : Quality of Service vs. Control </li></ul><ul><li>Ownership redistribution </li></ul><ul><li>Eliminated union influence </li></ul><ul><li>Improved efficiency </li></ul><ul><li>Analysis : </li></ul><ul><li>Acted in public interest </li></ul><ul><li>Service regulation </li></ul>1995-1998
    7. 7. <ul><li>Issue : The Need to Expand Services </li></ul><ul><li>Expansion of services - $60 million USD shortfall </li></ul><ul><li>Conditioned IFC offer, IDB loan – $24 million </li></ul><ul><li>Relinquishing “control” over Acuacar </li></ul>Sustainability of Mixed Capital Company 1998 and beyond <ul><li>Analysis : </li></ul><ul><li>IFC loan </li></ul><ul><li>Alternative Funding </li></ul>
    8. 8. <ul><li>Mixed-Capital Company and O&M contracts </li></ul><ul><li>Need visible results before raising tariffs </li></ul><ul><li>Professional and specialized service delivery </li></ul><ul><li>Transparency and accountability </li></ul><ul><li>Community outreach and empowerment </li></ul>Recommendations Municipality of Cali
    9. 9. Municipality of Cali Recommendations (cont.) <ul><li>Medium and long-term ROI (15+) </li></ul><ul><li>Employee training, education and incentives </li></ul><ul><li>Continuous improvement </li></ul><ul><li>Cooperation with state and federal agencies </li></ul>
    10. 10. Questions?

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