1998-2000: Bechtel Subsidiary Wins Bolivian Water Supply Contract; Prices Doubled

Aguas del Tunari, a subsidiary of the privately-owned US corporation Bechtel through International Water, purchases a 40-year concession to operate the public water system of Cochabamba, Bolivia after the country is pressured by the World Bank and IMF to privatize its water services in return for a $25 million loan. It had been an apparent easy win for Bechtel, whose bid was the only one considered for the contract. Despite promises that the privatization of Cochabamba’s water would not send prices skyrocketing, that is exactly what happens. In December of 1999, Aguas del Tunari doubles the price of water and as a result, water bills in some households jump to over $20 per month. This is devastating to Cochabamba’s poor, many of whom earn monthly wages of about $67. But the privatization scheme is not limited to just the privatization of water services. The World Bank also pressures the Bolivian government to pass several other laws protecting the interests of the water company. One law pegs the cost of water to the US dollar in order to eliminate the company’s exposure to changes in the Bolivian currency’s exchange rate. Another law grants water privateers exclusive rights to Bolivia’s water. Now, Bolivians would have to pay for every drop of water they use, even if it comes from their own wells or is rainwater they collect on their own property. And to protect Bolivia’s creditors from the risk of Bolivia defaulting on the loan, the World Bank prohibits the government from using a portion of the aid money to help the poor pay for their water. Angered by the water privatization, Bolivians take to the streets. Hundreds of demonstrators are injured and one youth is killed during the protests. Finally, in April 1999, the company leaves Bolivia. Bechtel will later attempt to sue the Bolivian government for $25 million for breach of contract. [Z Magazine, 4/24/2000; PBS Frontline, 6/2002; Pacific News Service, 11/11/2002; Democracy Center, 9/15/2005]