The Tariff Policy of the Potable Water Regulatory Commission and the Human Right to Water

The Tariff Policy of the Potable Water Regulatory Commission and the Human Right to Water

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By Oscar Gutiérrez Reyes

It is known that in large cities and small towns the phenomenon of disconnected, suspended and cut off occurs. Thousands of families who cannot pay the rates that companies charge today and who are forced to do without the service, to NOT enjoy home drinking water to cover their basic domestic needs, even if they have a network and meter.

The water referendum reached a figure of more than two million 100 thousand signatures of support and the Registry certified that 2.0 million 039 thousand were valid to continue the process of the initiative, which generated joy and higher levels of commitment among organizations and people committed to constitutional reform.

Our task now is to confront those who argue that, if the free vital minimum is applied, the companies that provide the aqueduct and sewerage service would go bankrupt, and that if it is the State that assumes the payment of that free vital minimum, public finances would be destabilized. It is also essential to refute those who argue that the referendum promotes the culture of non-payment and that the provision by public companies or organized communities prevents the important and indispensable presence of private capital, including that of multinationals, in the development of the sector and in the extension, improvement and quality of the service.

Let us analyze one by one the arguments put forward by the opponents.

About the free vital minimum

Let's start by explaining that a right, to be a right, must be based on access to it without conditions or restrictions. For the right to be guaranteed, access must be guaranteed. In the case of drinking water, the only way to achieve this is by establishing a free vital minimum. What would be defined -through a General Law- would be the number of cubic meters that Colombian households receive per month. In our proposal: at least twelve cubic meters-month.

Other human needs - which are also fundamental rights - are enshrined in the constitutional and social order of many nations, for example, access to free and compulsory education.

In order to go to the root of the explanation that supports the need for the Free Vital Minimum, it is essential to analyze how rates are set today in public services, what economic policy needs they respond to, what interests prevail behind their formulation, who they privilege and who, primarily, they affect.

The rate system of Law 142

An initial consideration.

The rise in the rates of home public services is explained by the application of the neoliberal policy of opening and privatization that is imposed on the country by this and previous governments and as a result of the agreements of the so-called "Washington Consensus". The constitutional reform of 1991 and the issuance of Laws 142 and 143 of 1994 and their regulatory decrees, led to the change of the state conception that services "are services" to the new one that "they are businesses", displacing the public by the private and replacing the state monopoly by the private monopoly, mainly foreign.

This change, promoted by US imperialist capitalism through the World Bank and other multilateral credit organizations, had the objective of finding new sources of investment and capital accumulation. The provision of services is no longer a right of citizens, to become a business and users are no longer users to become customers. This meant that the priorities of attention to the population in services so essential for their standard of living and well-being were reversed, becoming more important the rate of profit and the return and accumulation of capital of the investor, than the quality, coverage and access through rate subsidies.

Today, in Colombian legislation, families belonging to strata 1, 2 and 3 retain - have - some subsidies for minimum consumption in the aqueduct and sewerage services, cleanliness, electricity and gas. In telephony they practically disappeared. In the particular case of AAA services, these are the responsibility of the municipalities, even if they are not provided through public companies. Stratum 1 has a subsidy that must be equivalent to 70% of the value of minimum consumption, from 2 to 40% and from 3 to 15%. Stratum 4 does not have a subsidy and stratum 5 and 6 have the obligation to contribute to the payment of the subsidies of 1, 2 and 3. This system, known as “cross subsidies”, which is evidenced is that through Law 142 The State excluded itself, got rid of the obligation, contained in the legislation before the referenced Law, to pay, deliver, contribute to the maintenance of public service companies so that they could provide the service to users with less income, including and in many cases with subsidies greater than 150% of the value of the benefit. This happened in many companies and that is why, before their privatization process, the State transferred resources to them for their support in exchange for expanding coverage to the poorest sectors of the population and improving the quality and continuity of the service. provision of the service.

For this reason, when Law 142 determined the subsidy ceilings for users in strata 1, 2 and 3, in reality what it did was set the goal by means of which the subsidies to those same users were cut. The responsibility to subsidize remained in the 5 and 6 strata and in the industry and commerce that from the application of the Law, would pay contributions but that, in the case of commercial and industrial monopolies -unregulated users-, the they evade or charge consumers in the final price of the products. In the case of small and medium-sized -regulated users- they generally come out of the reduction in their profits. In this way, the State got out of its obligation to subsidize the poor and transferred it to citizens with “better income”. "Let the rich subsidize the poor" was the slogan of the privatizers.

But as the municipalities are not the same in their development, nor in all of them there is stratum 5 and 6 and that of industry and commerce is little and weak, the municipalities, -from the transfers of the General System of GSP Participations- allocate the resources to attend the subsidies that the poorest receive today.

This new scheme defined in Law 142 caused that the rates that are set for the payment of the service, not only adjusted to the new scheme defined for companies by the Potable Water and Basic Sanitation Regulation Commission, but also did on the basis of overcoming what the state agencies call The Tariff Lag. In this way, since the first resolution of the CRA came out defining the new formula for calculating the rate, users have seen and above all felt in their pockets the continuous and excessive rise in rates.

According to data provided to Senator Jorge Robledo by the MAVDT Ministry of the Environment, Housing and Territorial Development, and others more disseminated by the Comptroller General of the Republic and by research centers or specialists on the subject, the rate hikes are outrageous. Let's look at the data for some cities. *

Between 1995 and 2007, basic consumption aqueduct:

Stratum 1Stratum 2Stratum 3Stratum 4

Sewers basic consumption:

Stratum 1Stratum 2Stratum 3Stratum 4

* Data taken from Senator Jorge Robledo's debate to the Ministry of the Environment. Fifth Commission of the Senate, May 20, 2008.

These data show that the rate hikes were intended to make the management of the country's aqueduct and sewerage systems attractive and profitable for private companies and foreign monopolies, as proposed and approved in Law 142. and in the constitutional reform of 91.

But the rise in rates not only seeks to end the "rate lag", but is linked to the new formulas for calculating the rate, formulas defined by Law 142 and prepared and approved by the CRA, for periods of five years and that are mandatory for companies, whether public or private.

The new rate formulas

In Title VI, Chapter I, Articles 86 and following of Law 142, the rate regime and the rate formulas and practices are defined, which are applied to users. The essence is to guarantee the profitability of the companies that provide the services. In order to achieve this goal, the rate formulas must guarantee the recovery of the costs and expenses of the operation, including the expansion, replacement and maintenance of the service, as well as adequately remunerate the capital of the investors who own the assets. the company.

The law also specifies that for the elaboration of the formulas that define the criteria that fix the final rate to the user, the criteria of simplicity, transparency, profitability, solidarity, distribution, economic efficiency and financial sufficiency will be taken into account. Of all the above criteria, the one that finally decides the composition of the formula is that of financial sufficiency, even if it is in contradiction with that of economic efficiency. And although the Constitutional Court, through a 2003 ruling, indicated that no criterion will have priority over the others, it is clear that the formulas are designed to guarantee the profitability of capital and facilitate the presence of national or foreign private monopolies. Through the concession contracts, the private parties have taken for themselves a good part of the immense public heritage present in the aqueduct and sewerage systems.

But in addition to the above, the new rate formulas allow companies to charge a charge per consumption unit, a fixed charge, a charge for connection contributions, charges for reconnection and reinstallation, environmental charges and charges for late payment of the invoice. And as if that were not enough, the company may request the revision of the rate formula, as well as the user is allowed to increase the rate, when they must make investments that do not have a guaranteed rate of return or when the costs in any of the indices of prices considered by the formula, is higher than 3%. Every time this happens, the company can automatically raise the rate to the user. Finally, companies are given the possibility to freely set the rate.

On these bases, the CRA issued Resolution No. 287 of 2004 and is ready to issue the one that will govern from 2009 to 2014. In several cities of the country it has held hearings with users and service providers and it is clear that the new The resolution will retain, essentially, the rate formula that today covers users. Moreover, in the document "Bases for the five-year review of the rate formula for aqueduct and sewerage services", the CRA states that the objective pursued with the review is that "together we can build methodological adjustments that, in terms of of costs and rates, contribute to the consolidation of the sector, in terms of more and better services for all Colombians, under the premise of quality services at reasonable rates, which adequately reflect efficiency costs and a balanced return to operators ”.

The foregoing is clear, to consolidate the sector, that is, to continue the policy of guaranteeing the presence of private operators, with more users paying reasonable rates -and here it would be worth asking users how reasonable the rates they pay are- and that give a balanced return to the operators. It is certain that the operators are not dissatisfied, the profits of the companies prove it. In short, a formula that guarantees the continuity of privatization, increases the presence of foreign monopolies and the strengthening of a few national economic groups in the sector.

And here the question is: What about the disconnected? It is known that in large cities and small towns the phenomenon of disconnected, suspended and cut off occurs. Thousands of families who cannot pay the rates that companies charge today and who are forced to do without the service, to NOT enjoy home drinking water to cover their basic domestic needs, even if they have a network and meter.

And in the face of this serious problem, what does the new rate formula say? Does the new rate formula solve the problem of hundreds of thousands of disconnected people? Perhaps with the explanation given by the CRA on how they will calculate the new rates, the problem of drinking water supply for millions of Colombians will be solved? No way. The existence of this problem is not even considered in the reference document.

Is a rate formula that leaves thousands of families out of service fair? Is a rate formula that guarantees the Internal Rate of Return -TIR- of the capital fair, even if millions of Colombians are out of service? Is a rate formula that guarantees the profitability of the companies fair, but on the basis of cutting expenses on food for Colombian families?

This is really where the problem lies. The statistics say that they have coverage of 98% and more, but the statistics also indicate that in cities like Bogotá, for example, the number of those suspended from the service increases progressively. According to the Corporate Management of Customer Service -Commercial Support- of the Aqueduct and Sewerage Company of Bogotá EAAB, in 1998 50,402 users were suspended, in 1999, 130,907, in 2000, 227,326, in 2001, 311,922, in 2002, 318,067 and In 2003, 476,617, for 2006 359,969 users were suspended, in 2007 412,377 and until September of this year there are 276,501. The same or similar situation occurs in the rest of the cities of the country.

And, given the reality indicated, what good is the new rate formula? That is why those of us who defend the Water Referendum point out that the operation of the companies must not only be non-profit, which implies that they are state-owned or managed by organized communities, but that they must be subsidized by the State, in order to that all Colombians can be guaranteed the free vital minimum, the right to have household drinking water, regardless of whether or not they have money to pay for it.

It is not a question then of promoting the culture of non-payment but of recognizing the poverty and misery that accompanies thousands of Colombian households. And to also recognize that the State, in order to be democratic, must guarantee a minimum, in this case vital, of well-being for its population. What democracy can pride itself on being such if it is not even capable of guaranteeing drinking water to its population?

On the bankruptcy of companies and the non-viability of the State guaranteeing the Free Vital Minimum

It is also said that if companies guarantee the vital minimum they will fail and, as the argument is refuted by pointing out that the State must come with sufficient economic resources to guarantee this right, it is decided to say that, then, the State would fail, they would make crises public finances, spending would overflow, priority tasks for citizen security would not be addressed and even, they argue, would affect democratic security and the stability of institutions.

The first thing to note is that in Colombia water for human consumption is only 12% of total consumption. And the one that is delivered through the aqueduct systems, according to the Superintendency of Public Services and based on the total invoiced for the year 2006 was 1,188 million cubic meters. Of those, 80% corresponds to residential consumption, that is, 950 million cubic meters. The other 20%, which are invoiced by companies, is consumed by industry, commerce and the official sector.

According to the superintendency also “Between 2005 and 2006 there was an increase of 3.7% in consumption, being stratum 5 the one that reported the highest growth with 12.4% followed by stratum 6 with 5.5%. However, the users who consume the most are located in strata 1, 2 and 3 with 63.4%. " And it is logical that this is the case because the subscribers to these strata are the majority of the population. If the number of subscribers, which is 5 million 301 thousand, were divided by the total number of meters consumed by the residential sector, it would give us an average of 179 cubic meters / year. Fourteen cubic meters average month.

But, as the population actually subscribed to the aqueduct service - according to a figure from the public services superintendency already mentioned - is 5 million 301 thousand residential subscribers, the number of cubic meters to be delivered - to cover the CMVG - would be 63 million 612 thousand cubic meters / month, which calculated at the prices already indicated, would cost annually between 660 billion and 768 billion.

Where would the resources come from to pay the CMVG

The resources necessary to cover the free vital minimum would have several sources: On the one hand, the profits of the companies from the sale of water to the industrial, commercial and official sectors. Sectors that also would not have the large contributions that they pay today. On the other hand, the financial returns that companies have today, mainly large ones, which are real cash boxes with very little remuneration from the Banks.

They would also be supplied, as they do today, with part of the resources that the nation transfers through the SGP for drinking water and basic sanitation. And if it were to fail, they would come from the national budget, from the taxes that all Colombians pay. Missing that according to the calculations made by the CNDAV, would not be more than 350 billion pesos. It should be remembered that state spending is greater than 120 billion pesos.

Let's look at the numbers

The utility per cubic meter of water distributed by companies is, by law, between 9 and 12% of the value invoiced to stratum 4. Yes, according to the calculations of the SSP, the companies invoiced 20% of the 1,188 million of cubic meters, to commerce, industry and the official sector, that would give us that they sold 288 million M / 3. And if the average commercial price is 950 pesos M / 3 and the utility in the metro is 12% that would give us 108 pesos, the 288 million M / 3 would give a profit of 31,104 million pesos / year.

According to calculations by Aurelio Suárez and Iván Cardona, the financial returns of the companies today are in the order of one hundred billion pesos. Returns that would be contributed to the Fund that would be created by Law for the attention of the CMVG and that would be in charge of the collection and remittance to the companies of the Vital Minimum value.

Transfers from the General Participation System to territorial entities are 16.5 billion pesos. Of these, 5.4% correspond to the Potable Water and Basic Sanitation sector, which is close to 900 billion. Of these transfers, at least 30% would be transferred to the Fund for Financing the Minimum Vital Free. 300 billion. The sum of the three previous items would give us 430 billion pesos that if the cost of the free Vital Minimum is between 660 thousand and 760 million pesos, it would mean that the nation would have to contribute between 230 and 330 billion pesos. That would be, barely, one sixth of the budget that Acción Social manages today for the presidency of the republic.

Now, it is necessary to understand that the implementation of the CMVG can be developed in stages, first covering strata 1, 2 and 3 and then the other strata. The important thing in any case is to point out that this proposal is totally valid, that it does not generate any risk for companies, much less for the finances of the State and that, on the contrary, it addresses one of the main aspects related to the welfare of the population.

Is Foreign Investment Necessary?

Finally, let us analyze the criticism made of the referendum on the idea expressed by President Uribe in the meeting with the Indigenous Minga in María Cauca, in which he argued that the private sector -read multinationals- could not be excluded from the Potable Water sector . The first thing to note is

that private investment in the sector barely reaches 15% of total investment. The second is that this investment is not in infrastructure but in business administration. The third thing is that national and world experience shows that multinationals do not invest in infrastructure, because the return on capital is slow and the profit rate is low. World Bank studies prove it. National experience also teaches it. Multinational capital has been present in the sector for several years, however, it does not make significant investments. This is so much so that the State was forced to draw up and develop programs that, like the Departmental Water Plans, make up for the lack of investment from private companies.

Why doesn't private capital invest in sanitary infrastructure? Because, contrary to other sectors in which private capital buys companies, -of course that they are sold at a contempt- in that of drinking water and sewerage, their interest is only in the management, administration, and concession of the systems. This is where the pulp of the business is. No multinational, in any country in the world, buys healthcare systems, much less invests in them. This is clear in the departmental water plans where the State and the users make the investments, while the private ones aspire to the profits in the management of the aqueducts. This is, without a doubt, a policy contrary to the national interest and the income of users.

These reasons allow us to affirm that the presence of national or foreign private capital is not necessary for the development of the sector. On the contrary, the only thing that helps their presence is to generate new costs that end up being reflected in the rates to consumers. That is why our insistence that the aqueducts be managed by the State or organized non-profit communities.

We trust that the reasons given will help the necessary discussion that all social and political sectors of the country will have to give on this issue, if, as we hope it happens, the water referendum is approved by the Congress of the Republic and submitted to the approval or denial of Colombians.

Oscar Gutiérrez Reyes, National Coordinator of the League of Public Service Users, Manizales, December 2008. Sent by MOIR, Colombia, and

Video: UN Special Rapporteur for Human Rights to safe drinking water and sanitation (July 2022).


  1. Kealan

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  4. Crannog

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