September 1998
IMF Loan to Bolivia Requires Privatization
The International Monetary Fund (IMF) approves a $138 million loan for Bolivia to help the country control inflation and bolster economic growth. In compliance with IMF-drafted "structural reforms" for the nation, Bolivia agrees to sell off "all remaining public enterprises," including national oil refineries and Cochabamba's local water agency, SEMAPA.
After closed-door negotiations, the Bolivian government signs a $2.5 billion contract to hand over Cochabamba's municipal water system to Aguas del Tunari, a multinational consortium of private investors, including a subsidiary of the Bechtel Corporation. Aguas del Tunari was the sole bidder for the privatization of Cochabamba's water system.
On October 11, Aguas del Tunari officially announces that it has been awarded 40-year concession rights to provide water and sanitation services to the residents of Cochabamba. The consortium also announces that it will generate electrical energy and irrigation water for the region's agricultural sector. The major shareholder of Aguas del Tunari, Bechtel subsidiary International Water Ltd., claims that water delivery coverage and sewage connection will increase by at least 93 percent by the fifth year of private water management in Cochabamba. That same month, the Bolivian parliament passes Law 2029 (the Drinking Water and Sanitation Law), which allows for the privatization of state drinking water and sewage disposal services. In effect, the law would make residents pay full cost for water services in Cochabamba.