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 city, Cochabamba.
Civil unrest swept through Cochabamba almost immediately after fee increases hit the impoverished city 239 miles southeast of La Paz in January 2000.
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 Investment Disputes.
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 information.
"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.
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