Economics Paper on Water Made Private in Cartagena, Columbia

Water and sewerage supply in Cartagena has faced all sorts of problems. Being an industrial center, experiencing rapid urbanization and population, it would have been thought that the government would arrest the situation beforehand. On the contrary, the officials corrupt the resources meant for that issue, thereby denying most of the residents in the city the most precious commodity, water. In this case, recommendations of ownership and economic regulations are proposed for the potential administration of the water delivery to Cartagena city.

To identify the benefits and price of private and public ownership of water supply in the past in Cartagena, it would be good to identify the problems the residents suffered before the system was restructured. The previous company suffered unceasing incompetence, corruption, adverse pressure from unions, financial misuse, and reduced service quality. For this reason, mayor Paniza thought of establishing a new company that would serve the residents better. To make the company more efficient, a private machinist was mandated to assume the administration of the company with immediate effect (Erml 26).  As a result, water and sewerage services had unbelievably improved thereby profiting residents in the city from better consumer services, improved water and sewerage quality with more water supplies.

Several attempts had been made to improve the former company and a lot of capital was invested in it. It was realized that none of the efforts made things better. Instead, the situation of water and sewerage worsened. Having experienced consistent failures and demands from the state government, the leadership of the city, with the advice of the World Bank, decided to make the company private. This was made a success by creating a mixed capital corporation which would break the level of corruption evident in the previous companies. Though this would be an expensive operation, it was worth for the residents of the entire city (Henry 41). Privatization was effected under the operation and management agreement to the private investor who would be in charge of managing the company.

After negotiations, a company called Aguas de Barcelona was awarded the bid and Aguas de Acuacar was given the operation and management contract. The mixed company’s characteristics and organization had features like it would be managed by shareholders whose ownership of the company’s stock would be a hundred percent. The board of directors was reshuffled having the mayor himself as a board member. Major decisions affecting the company were to be initiated by the company’s general manager. Above all, the board approved the annual budget for the company to eradicate any chances of corruption.

For the future supply of water and sewerage I would recommend privatization of the company as the best owner of the company since under a private manager and the company and the new board of directors, the residents are sure to have efficient supply of water, treating of sewerage and prevention of environmental degradation like it was witnessed before (José 87). This measure would ensure that funds are not mishandled, time is not wasted and water is supplied to all residents in the city in time. Better still, the annual approval of capital and close watch of its usage would save the city and the company the problem of misallocation of funds. This means that in future, the city will not suffer insufficiency as it did before.

 

 

Work cited.

Erml, Christa C., José A. Gómez-Ibáñez, and Henry Lee. Aguas de Cartagena: The Privatization   of Water in Cartagena, Colombia. Harvard University, John F. Kennedy School of     Government, 1999