U.S. Water News Online
SAN FRANCISCO -- Construction and engineering giant Bechtel
Corp. has dropped its $25 million claim against the Bolivian
government for canceling a water contract that caused deadly protests
over increased rates, a company spokesman said.
In exchange, the Bolivian government said the San Francisco-based
company and its international partners were not responsible for the
40-year concession contract ending less than a year after it was
signed to manage water and sewer service in Bolivia's third largest
Civil unrest swept through Cochabamba almost immediately after fee
increases hit the impoverished city 239 miles southeast of La Paz in
The issue became a cause celebre for activists around the world
and a public relations headache for Bechtel, a privately held company
that holds major contracts for reconstruction work in Iraq.
Thousands of Bolivians had protested water rates they said
increased by as much as 200 percent. A 17-year-old protester was shot
to death, and hundreds were injured in ensuing clashes with the army.
Bechtel disputes that fees rose that high and said the Bolivian
government agreed to an average increase of 35 percent to pay off old
debts and to expand service.
"The rates certainly triggered the disputes,'' said Bechtel
spokesman Jonathan Marshall. "The rates were written into the
contract and it's not something we sprung on Bolivia.''
A government-mandated fee roll back and customer refunds in
February 2000 failed to quell the violent protest, and in April of
that year the government canceled the contract with the consortium
Aguas del Tunari.
Bechtel and its partners then filed a $25 million arbitration
claim with the World Bank's International Center for Settlement of
A formal settlement announcement was expected to take place later
in the Bolivian city of Santa Cruz de la Sierra where the parties
were to sign a joint statement absolving both sides of liability.
But Bolivian government officials in the capital of La Paz said
they were unaware of any plans for such an event and had no further
"The Government of Bolivia and the international shareholders of
Aguas del Tunari declare that the concession was terminated only
because of the civil unrest and the state of emergency in Cochabamba
and not because of any act done or not done by the international
shareholders of Aguas del Tunari,'' the joint statement reads.
Bechtel and Italy-based Edison SPA were the largest individual
shareholders of the consortium, each owning 27.5 percent of Aguas del
Tunari. The Bolivian government owned 20 percent of the consortium.
Bolivian President-elect Evo Morales said he would create a
cabinet-level water ministry to expand access to limited water
supplies in the country.
"We are going to create a Water Ministry to provide what is an
essential service,'' said Morales.
Return to the
U.S. Water News' past archives page
Return to the U.S. Water
Use a comma to separate e-mail addresses:
Hi, I thought you might like to read this article.