Abstract:
In 1992, Mayor Gabriel Garcia Romero confronted a situation all too familiar in developing countries--an inadequate and under-capitalized water system. Only 28 percent of Cartagena's households had reliable drinking water. Thirty percent were not hooked-up to the system, and the remaining 42 percent had access, but their supply was frequently interrupted. Less than half the population had sewerage services, and there was no wastewater treatment--a problem with serious implications for public health. The water system had not been maintained adequately for more than a decade, and losses were estimated at 52 percent of the total supply. Only a percentage of the customers received bills, and many of these were never collected. Prices remained below cost, so even if the bills were collected, revenues would not have covered expenses.
Learning Objective:
The objective of the case is to familiarize students with issues that often emerge in the development, negotiations, and implementation of a municipal water concession contract and to discuss options for managing those issues.
