In October 2000, just months after the people of Bolivia threw Bechtel out of Cochabamba, this very same company signed a water privatization contract in Guayaquil, Ecuador a city of almost 2 million inhabitants. The Inter-American Development Bank provided several loans to promote and support the privatization process in Guayaquil and the World Bank provided political risk insurance and guarantees that help to protect the company against potential political upheaval and domestic unrest. Bechtel’s water company, International Water Services, became the major shareholder in a company called Guayaquil Interagua, and as the sole bidder for the concession won a 30-year contract to manage the water services in Guayaquil.

The company promised to invest US$1 billion over the 30-year concession period, connect 55,000 new users and increase coverage to 90% for water and 60% for sewerage treatment. However, due to the abysmal service and lack of maintenance, investment and expansion of the service, complaints began to mount over the next 6 years.

In 2002 the press reported that the company was only treating 5% of the sewerage and releasing the rest, including fecal material and domestic and industrial waste, directly into the river. The health department began to issue reports in the press documenting health problems that children were experiencing in communities to the north of the city such as Acuarelas del Río y Guayacanes because of their proximity to where the sewerage was released. The health problems included skin, respiratory and gastric problems such as rashes, asthma and diarrhea.

Complaints also mounted as the company began to install meters in 2003. Water fees rose and users also claimed they were billed outrageous amounts that did not correspond to the amount of water they were using. Soon hundreds of people were lined up in front of the Client Services area of the company each day to complain about the bills they were receiving.

By 2005 organizations such as the Observatorio Cuidadano de Servicios Publicos (Citizen’s Observatory for Public Services) were documenting the repeated contractual violations of Interagua and demanding that action be taken. The violations include repeated cut-offs of the water services for more than 24 hours. Cut-offs of more than 24 hours consecutively are illegal unless the company provides alternative sources of water for the residents. In some areas Interagua has cut the water for 23 hours a day for days and weeks at a time in order to evade the responsibility of providing an alternative water source. Lack of investment in storm drainage has forced many residents to suffer the health effects and structural damage to buildings of the constant flooding.

Interagua has repeatedly violated consumer laws that prohibit billing based on average consumption rates instead of actual rates of water consumption. Consumer laws also protect users from discrimination. Many documented reports have shown that Interagua prioritizes its response to middle-class and upper-class water users while ignoring complaints from poor users. Interagua has also refused to make public the information regarding water quality. Due to all of these reasons the Citizen’s Observatory for Public Services is calling on the regulatory agency ECAPAG to implement the appropriate laws and regulations and to fine Interaguas for US$1.5 million for non-compliance with its contractual obligations.

Read More

• Workers Contest the Process of Privatization in Guayaquil, Ecuador.
• Bechtel: From Cochabamba to Guayaquil, history repeats itself in English or Spanish.
• Letter to Bechtel Concerning Guayaquil, Ecuador in English or Spanish.