The Corporate Takeover of Water in Ecuador

By Sara Grusky, International Relations Center. Posted November 9, 2007.

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.

Along with overflowing sewage and illegal dumping, unsafe tap water has also contributed to the serious health crisis. Residents complain about the "nauseating" and "unbearable" odor coming from the tap water. Interagua has refused to make public information regarding water quality.

In June 2005 over 150 children were infected with Hepatitis A from drinking dirty tap water. The outbreak was concentrated around the western suburbs of Guayaquil where 76 percent of residents described their water as cloudy and foul-smelling. Interagua denied responsibility for the outbreak but studies have shown that it was a combination of the nonfunctional sewage system and poor water quality that contributed ultimately to the outbreak of Hepatitis A.

The Commission for Civic Control and the Public Defender's office declared that Interagua held some responsibility for the Hepatitis A outbreak and concluded that the water was "not fit for human consumption."

But problems persist including repeated cut-offs of water service that last for more than 24 hours, which is illegal unless the company provides alternative sources of water for the residents. In some areas Interagua cut the water for 23 hours a day in order to evade the responsibility of providing an alternative water source. In addition, the company continues to cut off water services when consumers accumulate too much debt.

Taking Back Control

Guarantees and loans provided by the World Bank and the Inter-American Development Bank have ensured a profitable investment for one of the world's most influential corporations, Bechtel. But, similar to the experience of many other cities across the world, water privatization has not solved water problems in Guayaquil.

Instead, Bechtel has delivered water not suitable for drinking, refused to expand access to services, cut off water to those unable to pay, and neglected responsibilities to provide wastewater treatment compromising the local environment and public health.

The Observatorio Cuidadano de Servicios Públicos is working tirelessly to document Bechtel's contract violations. The group -- which brings together numerous civil society organizations in Guayaquil to monitor and help improve public services -- has exposed the constitutional, legal, and contractual violations of Interagua and is working to ensure that action is taken. They will continue to organize and demand that water and other public services be locally and publicly owned, controlled, and managed with active citizen oversight and participation.

The recognition of water as a human right and the push for citizen oversight and participation in public services is also being acknowledged and supported on an international scale. The United Nations Committee on Economic, Social, and Cultural Rights adopted the human right to water on Nov. 26, 2002 and the United Nations Development Program's Human Development Report of 2006 calls on all governments to enshrine the right to water in enabling legislation.

The human right to water is indispensable for leading a life of human dignity. Everyone should have secure access to sufficient safe water and sanitation to meet their basic human needs. To ensure that safe and affordable water is available to the 1.2 billion people across the globe that currently do not have proper access, international financial institutions and aid agencies need to abandon failed policies and stop pushing countries to privatize water services. Governments need to involve residents in solutions and recognize the human right to clean and affordable water.

              

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Sara Grusky is a senior organizer with the Water for All Campaign at Food & Water Watch. She works with communities and organizations across the Americas that are working to replace corporate control of their water resources with local democratic control.

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