Keywords

These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

On January 17, 2000, just as the protests against privatization in Cochabamba were beginning to flare up, seemingly a world apart and gently tucked away from media attention, the Socialist government of Cuba under Fidel Castro made a 25-year commitment to entrust the operation of the drinking water supply of its capital Havana to a private water company. On April 1st, just days before the foreign employees of the private water company in Cochabamba had to flee in the midst of riots, the private Spanish company Aguas de Barcelona , a subsidiary of the French water giant Suez , began operating the water supply of Havana. How did this situation come about?

When the Soviet Union collapsed, the Cuban economy went through a deep crisis known locally as the “Special Period”. Deprived of subsidized oil and gas supplies, as well as of a guaranteed market for its sugar exports, the economy tanked. Agricultural and industrial production dropped, public transport was severely restricted, there were widespread power outages, and food rationing was intensified.

Poor Service

During this time, the quality of the drinking water deteriorated. While 73 % of Cubans had access to piped water at their premises, due to power outages, poor maintenance and leakage in the network, the supply became increasingly intermittent. Some municipalities in the Havana metropolitan area did not receive any water for days, never knowing when it would be turned on again. When it came, some houses just received a few drops. Due to shortages of chlorine, water supplies were not systematically disinfected. The residents were supposed to be supplied by public tanker trucks, but their movements were hampered by the fuel shortages. When the trucks arrived, long lines formed. At the height of the crisis, 90,000 people in Havana depended on tanker trucks for their water supply.

Enter the Tourists

To generate foreign exchange earnings, the government opened the country up to tourism during the 1990s. Tourism was initially restricted to enclave resorts, built with the help of private foreign investors. One of these investors was the Spanish firm Martinon , based in the Canary Islands, which helped to develop the resort Varadero. To build and operate the water supply system for the tourist resort, Martinon had teamed up with the private water company Canaragua, the Aguas de Barcelona subsidiary that ran the water supply on the Canary Islands.

Havana Goes Private

Impressed by the ability of the private sector to deliver, in 1997, the Cuban government quietly asked the two companies to help in modernizing the water supply for the three worst-affected municipalities in the Havana metropolitan area. Just as at the Varadero resort, the private companies were not only asked to invest in infrastructure, but also to operate it. The private companies were not paid by the water users, but by the government, which saved precious foreign exchange because it was able to reduce the fuel costs needed for the fleet of tanker trucks once the piped water system worked properly.

Satisfied with the performance of the private company, the communist government went one step further. In February 1999, a Cuban delegation was invited to Barcelona where it signed a framework agreement that foresaw the creation of the mixed company Aguas de la Habana , jointly owned by the Cuban state through its National Institute for Water Resources along with Aguas de Barcelona and the Martinon Group. The company was formed on January 17, 2000, and on April 1, the new mixed company began to operate. At the same time, the new company signed a 25-year contract, which was kept secret, to operate the water and sewer system for 8 of the 15 municipalities in Greater Havana, with the option to expand the geographical scope of the contract at a later date.

Loans and Quasi-free Water

Some of the investments made by Aguas de la Habana were financed by soft loans from the Spanish International Cooperation Agency , which increased its engagement in Cuba as part of EU efforts to gradually open up the political and economic system of the country. The Spanish loan financed the first ever major rehabilitation of the Albear aqueduct, built in the nineteenth century to supply Havana.

Residential water supply in Cuba was free until 1997. At that time, the government introduced a residential water tariff of 4 Cuban pesos per month, equivalent to 0.17 cents in US currency, one of the lowest water tariffs in the world, equivalent to 3.4 cents per month for a consumption of 20 m3. Hotels and foreign embassies are charged much higher tariffs, but for the majority of Aguas de la Habana ’s customers, water is quasi-free. Water privatization and quasi-free water only fit together because the government pays for the costs of the water supply, including the fees of the private company. Socialism and private water thus go well together in Cuba.

Conclusion

As of 2004, Aguas de Barcelona had reported significant progress. 95 % of the city’s residents that had to be supplied by tanker trucks before the private contract now received tap water, according to the company. The continuity of supply had increased from 7 to 10 h per day. However, water distribution losses are still estimated at 50 %, and more than 100,000 residents of Havana still suffer from an intermittent supply, a challenge beyond the reach of improved operations, and something that can only be solved by significant investment of capital.