The Corporate Takeover of Water in Ecuador

It is a well kept secret that Bechtel won a contract to privatize the water in Ecuador's largest city, Guayaquil, just months after the massive citizen protests that threw Bechtel out of Bolivia.

In October 2000, a local Bechtel subsidiary, Interagua, signed a 30-year concession contract to run the water and sanitation services in Guayaquil. The privatization process was promoted by loans from the Inter-American Development Bank and a guarantee from the Multilateral Investment Guarantee Agency (MIGA), a World Bank agency.

Now, more than six years later, the residents of Guayaquil are demanding damages from the company for water contamination, an end to water cut-offs, and a return to local, public control.

On Sept. 28 residents in Guayaquil gathered in front of the offices of the undersecretary of the economy to protest the contract. On Oct.18 thousands gathered to proclaim that water is a human right, demanding that their "water debts" are forgiven and that their water services are reconnected. A local advocacy organization, the Observatorio Cuidadano de Servicios Publicos (Citizen's Observatory of Public Services), is seeking to stop the water cut-offs through legal action.

One in six people in the world lack access to clean and affordable water and thousands of children die of water-borne diseases every day. Corporations like Bechtel seek to profit from providing water, often elevating the narrow interests of their companies and its shareholders above social and environmental goals.

Around the world, privatization has led to large rate hikes and poor service, while failing to solve the problem of lack of access, leaving the poorest communities with no water services at all. This is now the situation in Guayaquil, where there are hundreds of documented complaints due to the appalling service of Bechtel's subsidiary, Interagua. The citizens of Guayaquil are demanding accountability from the company. The Ecuadorian regulatory agency ECAPAG recently fined Interagua $1.5 million for contractual violations. Some of the problems that face the residents of Guayaquil include:

• Repeated residential water cut-offs for up to 12, 24, 36, or more hours at a time;
• Residential water cut-offs of senior citizens and other low-income residents due to inability to pay;
• Failure to extend services to specific neighborhoods, especially low-income residents;
• Failure to meet contractual obligations for rehabilitation and expansion of services;
• Public health problems such as respiratory problems, skin rashes, asthma, and diarrhea due to lack of wastewater treatment;
• Environmental contamination due to lack of wastewater treatment;
• Hepatitis A outbreak in June 2005, investigated by local authorities (Commission for Civic Control and the Public Defender's office) who concluded that the water was "not apt for human consumption."

The Failure

In 2006, Bechtel's total revenue amounted to $20.5 billion and Interagua's operations in Guayaquil earned $300 million in revenue. Despite these profits, Interagua did not initiate the rehabilitation programs it had promised. Concerns and complaints mounted over broken pipelines, floods due to malfunctioning sewage systems, exorbitant water rates, poor water quality, and environmental damage due to the lack of wastewater treatment during this first five-year period.

Lack of investment in storm drainage forced many residents to suffer the health effects of constant flooding. In 2002 the company was treating only 5 percent of the sewage and releasing the rest, including fecal material, and domestic and industrial waste directly into the local river, Guayas.

The health department began to issue reports documenting health problems that children were experiencing in communities located north of the city, such as Acuarelas del Río and Guayacanes, where the sewage was being released. The health problems included skin rashes, asthma, and gastric problems such as diarrhea.