Feature Stories WATER 46205 ISSUE 8 | March 2006 Local Solutions Improve Water Supply and Sanitation Services in Colombia T he government of Colombia has been a pio- In the early 1990s, WSS coverage was less than neer in adopting sound water sector policies. 70%. As Cartagena is one of the principle tourist It was among the forerunners of decentraliza- destinations in Colombia, it was imperative to im- tion. It established a legal framework that clearly prove the water supply situation, and also to resolve separates service provision from policy making, the problem of inadequate disposal of sewage. thus allowing private sector participation. The key to success in the Colombian water sector reform In 1994, a 26-year contract for the operation has been the development of homegrown solu- of the WSS system in Cartegena was awarded to tions, and at times, skillfully adapting models used a private company, Aguas de Cartagena, jointly elsewhere to the particular circumstances and cul- owned by the municipality (50%) and private part- ture of Colombia. As a result, Colombia has made ners (the main private partner, Aguas de Barcelona, substantial progress in the expansion of water sup- owning 46% and other private shareholders own- ply and sanitation (WSS) services. By 2002, urban ing 4%). The management fee for the operator was water supply access was 99%, rural water supply keyed to revenues. This created an incentive to coverage 71%. Sanitation access has also been improve billing and collections, as well as to reduce upgraded with urban coverage of 96% and rural leaks and to extend services. In 1999, the World coverage of 54%. Over the years, the World Bank Bank extended its assistance to Cartagena by pro- has supported Colombia through advisory work, viding US$ 85 million IBRD loan to partially finance capacity building and lending. Since 1988, the major sewerage, wastewater treatment and disposal World Bank has provided a series of loans with a facilities, as well as water supply infrastructure. By total value of over US$ 700 million to the Colom- 2005, 99% of the population in Cartagena had bian WSS sector. access to water supply and 95% had access to sew- erage. Over 1,000,000 inhabitants had received improved WSS services. Over eighty percent of the EARLY SUCCESS IN CARTAGENA: new connections were installed in poor neighbor- A MIXED OWNERSHIP COMPANY hoods. Services improved for existing customers. A 24-hour supply became the norm and nearly uni- In 1988, the World Bank supported the government versal metering was achieved. Customer relations of Colombia to implement the Water Supply and improved through greater transparency, more atten- Sewerage Sector Project with a US$ 150 million tion to service, more trust and better billing prac- IBRD loan. Colombia developed its own approach- tices. Customers now wait less time fixing service es to partnering with the private sector to deliver problems, and the number of customer complaints WSS services, under a scheme whereby a munici- declined significantly (see table). pality contracted operations under a long term lease contract to mixed ownership companies jointly BOGOTA: A TURNAROUND controlled by the municipality, an international pri- vate operator and local private shareholders. The PUBLIC UTILITY case of the city of Cartagena is a good example of a successful partnership. The Santafe I Water Supply and Sewerage Reha- bilitation Project supported the Bogota Water and Caribbean Sea Colombia at a glanCe moRe inFoRmation Project Appraisal Document, Colombia ­ Cartagena, Water Supply, sewerage and Environmental Manage- PANAMA Population: 45.3 million ­ 76% urban, 24% rural; Cartagena Water Supply, Sewerage, and Environmen- R.B. de ment Project, World Bank, June 1999 VENEZUELA 1.6% annual growth rate tal Management, Jesús Blanco Garcia and Menahem Pacific Libhaber, Energy and Water for Sustainable Living. Project Appraisal Document, Colombia ­ Water Sector Ocean Bogotá Surface area: 1,138,900 km2 COLOMBIA Reform Assistance Project, World Bank, September Life expectancy: 71.9 years Project Appraisal Document, Colombia ­ Cartagena, Water Supply, sewerage and Environmental Manage- 2001. Project Appraisal Document, Colombia ­ Water GNI per capita: US$ 2,000 ment Project, World Bank, June 1999 and Sanitation Sector Support Program, World Bank, ECUADOR B R A Z I L Human Development Index ranking: 69 of 177 countries February 2005 P E R U Project Appraisal Document, Colombia ­ Water Sector % below the basic needs poverty line: 64% Reform Assistance Project, World Bank, September % with improved water access: 92% 2001. Project Appraisal Document, Colombia ­ Water and Sanitation Sector Support Program, World Bank, % with improved sanitation access: 44% February 2005 FEATURE SToRiES Sewerage Company (EAAB) with a US$ 145 mil- Cartagena lion IBRD loan. EAAB did not change its status of indicators 1994 2005 public utility. However, the municipal administra- tions did not interfere with the running of the util- # of employees per 1,000 connections 15 2.3 ity. EAAB recovered itself from the deep financial % of domestic metering 30% 99% crisis in the early 1990s. The IBRD loan was part Unaccounted for water 60% 41% of a government rescue of the entity. Substantive Hours of service / day 7 24 average tariff increased revenues in real terms. After the recovery, EAAB has been able to obtain Response to complaints (days) 6 0.5 a credit rating and access the capital markets. This financial strengthening enabled the utility to implement an investment program between 1996 towns and another 30 percent in rural areas, where and 2003 amounting to about one billion dollars, water supply and sanitation coverage lags behind. with limited Bank financing (US$ 144 million or In 2001 the World Bank provided a US$ 40 mil- 14% of total investments). In 2003, EAAB hired lion IBRD loan in the form of the Water Sector Re- three private firms under five contracts to provide form Assistance Project to support the Colombian customer's services, including billing and collec- Government to develop a policy to improve WSS tion, and operation and maintenance of small services in smaller cities and towns, supporting the diameter water networks. EAAB signed a 20-year introduction of targeted subsidies for the poor, who Build-Operate-Transfer contract for the rehabilita- form the majority of the population. The new policy tion, and operation and maintenance of one of introduced transparent, performance-linked budget its water treatment plants. EAAB also established transfers from the central government to municipali- a sophisticated planning department and modern ties. It also promoted the contracting of small local management information systems. In the period entrepreneurs. The loan financed municipalities 1996­2003, EAAB provided services to two million that meet policy and pro-poor targeting criteria to additional (mostly poor) inhabitants of Bogotá. In extend service to the poor. In addition, the World less than a decade, EAAB had transformed itself Bank approved another IBRD loan of US$ 70 mil- into a financially viable utility able that provides lion for the Water and Sanitation Sector Support firstclass services to its customers. Project in 2005. The project was designed to im- prove the provision of water supply and sanitation EXTENDING THE SUCCESS services in Colombia, in a financially efficient and sustainable manner through the provision of capital TO SMALLER TOWNS investment subsidies for poverty-focused coverage AND RURAL AREAS expansion, and service quality improvement. The Project is expected to scale-up the involvement of As the performance of the utilities in large cities im- the private sector in medium-sized cities, through proved, customer satisfaction grew. Mayors of other the introduction of performance-based manage- cities became interested in reforming their utilities. ment arrangements with specialized operators; sup- Their political constituents are water consumers as port serviceimprovement related investment through well. The improvements in the large cities proved targeted capital grants in small and medium-size catalytic for scaling up sector reforms. By 2001, cities, and in some high poverty peri-urban areas approximately 91% of the urban population was of large cities, served by public utilities; and deliver connected to water supplies. However, about 30 appropriate water supply and sanitation investments percent of Colombians live in smaller cities and to Colombia's underserved rural areas. RELEVANT PROJECTS Water Supply and Santafe i Water Supply and Cartagena Water Supply, Water Sector Reform Water and Sanitation Sewerage Sector Project Sewerage Rehabilitation Sewerage & environmental assistance Project Sector Support Project Project management Project Project ID P006836 Project ID P006894 Project ID P0044140 Project ID P0065937 Project ID P082973 Water Feature Stories are published by the Water Sector Board of the World Bank. They are available online at www.worldbank.org/water and in hardcopy from whelpdesk@worldbank.org. 2