In 1995, a public-private partnership with mixed-ownership was set up to provide water supply and sanitation to Cartagena de Indias, a city of almost 900,000 people on the northern coast of Colombia, which serves as the capital of one of the country's departments (states), an economic hub and a popular tourist destination. The new mixed enterprise under the name of Aguas de Cartagena or AGUACAR, combined the resources of the public works department and Aguas de Barcelona, a Spanish water firm. Under a long term contract (26 years) AGUACAR assumed responsibility for O&M and partial investment; assets remained under the Municipality's ownership. Total financing cost of works was estimated at US$ 236 million (67% provided by AGUACAR and 33% by the Municipality / State).
Prior to 1995, water/wastewater service was operated by the Public Municipal Utility EPD. The utility was extremely unreliable and plagued with chronic inefficiency, excessive political interference, poor maintenance, poor service delivery weak commercial and financial management. Less than 70 percent of the city's households had water connections and less than 55 percent had sewage service. Between 1996 and 2006, following AGUACAR's management water supply coverage increased from 74% to almost universal coverage and sewer coverage went up from 62 to79 %. Cartagena achieved this expansion of coverage despite a jump in its population during that period with the arrival of poor rural migrants.
One of the key considerations is the mixed-ownership of the company which was able to achieve almost universal access to piped water despite the massive arrival of poor rural migrants in the city, end acute water rationing in the city, and the ability to turn a bankrupt utility into a model water company. The AGUACAR PPP is also an example of the pragmatic and gradual approach with extensive use of community bulk-supply scheme that allowed serving illegal migrants from the outset, while individual connections were installed gradually as settlements became legalized.
BUSINESS | CONSTRUCTION OBLIGATIONS | PRIVATE FUNDING | SERVICE DELIVERY | SOURCE OF REVENUE |
BUSINESS - Existing: The transaction entailed a public-private partnership with mixed-ownership set up to provide water supply and sanitation to the city of Cartagena in response to an unsustainable crisis due to the highly inefficient local utility (EDP) which was liquidated and existing services fully transferred to the new company AGUACAR.
CONSTRUCTION OBLIGATIONS - Refurbish: Under the contract AGUACAR assumed the responsibility of improving and expanding the quality of the service. In particular AGUACAR modernized the existing infrastructure for water and sewage and introduced automated control of processes and operations. However, assets remained the property of the municipality.
PRIVATE FUNDING - Finance: The transaction required upfront investment commitments of more than US$ 230 million to improve water service, to increase quality and coverage.
SERVICE DELIVERY - User: The project company assumed billing and collection, as well as customer service.
SOURCE OF REVENUE - Tariffs: Project revenues derived from existing customers. The company assumed billing and collection, as well as customer service.