Bechtel didn't answer any of the Guardian's detailed questions regarding the Interagua contract, and only provided a three-page letter originally drafted to the World Bank in December 2007, that paints a rosy scene of productivity and accomplishment in Guayaquil.
"At present, over 2.1 million residents of Guayaquil (84 percent of the population) are connected to the municipal potable water system, and more than 90 percent of the customers have 24-hour per day, uninterrupted service." The letter goes on to state that coverage is expanding with new connections, water quality meets public health standards, prices have decreased, and procedures are in place to help customers who have higher than average bills.
"There are things that have improved, yes," said Emily Joiner, who spent last summer in Ecuador and is author of the book Murky Waters, a history of water issues in Guayaquil published by the Observatory in 2007. But the bottom line is that citizens pay for the service, but they can't drink the water.
"You still don't drink the water anywhere in the city at any time," said Joiner. People buy bottled water or boil it. "Bottled water is expensive, as a percentage of income," she said.
Whereas water service was previously priced more like a progressive income tax, with the lowest consumers paying the lowest rates, Interagua has flattened out the rate structure and now big water consuming businesses are paying the same as residents. "It's pricing some families out of the market," Joiner said. "It's great for business. It's not great for people who don't have enough water to bathe or wash their clothes."
The Observatory would like the water system turned back over to the government. The local authority, which once ran the water service and is now charged with overseeing Interagua, fined the company $1.5 million for not meeting goals for expanding service. According to Joiner, there's been no follow-up on whether the company is meeting those goals now.
The Observatory also filed complaints with the World Bank, which attempted a settlement, but, according to Joiner, representatives from Interagua refused to sit down at the same table as Cardenas. "The process stalled," Joiner said. "Interagua said the issue had become too politicized. César [Cardenas] has a reputation for rabble-rousing, and at the time he was lobbying for constitutional amendments outlawing privatization. Interagua considered it negotiating with a hostile party."
A new constitution was passed in September that does, in fact, outlaw privatization, but still allows existing contracts to be honored if they pass a government audit.
In the meantime, the local rumor is that Bechtel is arranging to sell Interagua to another company. Bechtel wouldn't confirm this, and no one could say more beyond what was reported in speculative articles in Guayaquil's local newspapers.
It wouldn't be the first time Bechtel bailed on an international water contract. In what was part of a massive privatization of a variety of Bolivia's national services, in 1996 the World Bank granted the city of Cochabamba a $14 million loan to improve water service for its 600,000 citizens. Like Ecuador, there were strings attached: a future privatization of the city's water service. It was sold to Aguas del Tunari, the sole bidder also a subsidiary of Bechtel. Almost immediately rates increased by nearly 200 percent for some families. In January 2000, people stopped paying, started rallying, and the water war began.
Led by La Coordinadora for the Defense of Water and Life, organizers shut down the city, physically blockading roads and demanding the regional governor review the contract. The battle went on into February, resulting in injuries to 175 people and the death of one.