Proactiva Aguas de Monteria

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In October 1999 the municipal government of Monteria, Colombia, awarded a 20 year concession contract for its water and wastewater services to private operator Proactiva Aguas de Monteria (FCC). The concession consisted of the financing, extension, rehabilitation, maintenance, and operation of the water and sewage treatment infrastructure in the city. Monteria had a population of 300,000 and was the capital of the Cordoba Department. At the end of 1999 the company had 30,000 water connections and its coverage rates were 76.1% for water and 28.2% for sewage services, with network losses in excess of 55%. Service continuity was also a problem, as water was only running for an average six hours per day. Proactiva Aguas de Monteria was created by Proactiva Medio Ambiente, a group formed by subsidiaries of French Vivendi (known as Veolia Environnement as of 2003) and Spanish Fomento de Construcciones y Contratas S.A. (FCC). The concession was awarded through a competitive international tender in 1999 (auction no. 02-MM-LP-99). Three consortia submitted bids: Proactiva Aguas de Monteria; Union Temporal Surtigas del Caribe, in association with Azurix (Enron); Consorcio de Aguas del Sinu. Proactiva was declared the winner based on a combination of the lowest tariff expressed as the lowest average monthly bill, and the highest number of sewerage connections over the first two years. The concession contract specified operational targets, not investment amounts for the duration of the contract. The concessionaire also committed to build more than 4,500 new sewerage connections over the first two years of the concession. Service continuity was to be improved to 24 hours per day within three years. By the end of the concession coverage rates were projected to reach 90% for water and 80% for sewage services. The investment program was expected to cost more than $70 million. The concessionaire was to contribute with $3.6 million, the National government would provide another $3.3 million, while the bulk of the funding would come from tariffs ($30 million) and the local municipality ($33.25 million). Proactiva offered a tariff 18% lower than the municipality ceiling, at $0.32 per cubic meter for water and $0.24 per cubic meter for sewage services. None None