Water co-operatives – a more effective solution?

Forming a water co-operative may be a better solution for large cities in low-income countries than calling in private operating companies, says a study by the School of Public Policy at Birmingham University.

The study examined the only major urban water supply and sewerage co-operative in the world. Known as SAGUAPAC, the Cooperativa de Servicios Públicos ‘Santa Cruz’ Ltda has provided water since 1979 to the people of Santa Cruz, the largest city in Bolivia, with a population of 1m. All 96,000 of its domestic customers are automatically members of the co-operative.

The city is divided into nine water districts, where customers elect members to the administrative board of SAGUAPAC. This board appoints the general manager and approves tariffs. Customers also elect a separate supervisory board that monitors the performance of the administrative board. The Birmingham study found that SAGUAPAC is one of the best-run water companies in Latin America, measured by criteria of efficiency, equity and effectiveness. It has:

– a low level of unaccounted-for water

– a low number of employees per 1000 water connections

– efficient accounting:100 percent of all connections are metered

– a 96% bill collection efficiency rate

– 80% water coverage, despite rapid population growth

– a 24 hour supply of clean water.

The study report identifies two key reasons for SAGUAPAC’s superior performance:

1 – Its co-operative structure shields management from undue political interference, especially with regard to hiring, firing, and the awarding of contracts. The general manager has been in post since 1986, in sharp contrast to the norm in Latin America where managers of state or municipal water companies are regularly removed when a new political leadership takes office.

2 – The co-operative structure also means that SAGUAPAC is not bogged down with legal delays in tendering procedures and the administration of external loan finance that bedevil water companies belonging to the public sector. This mean that it can implement investment projects much faster and more efficiently than other companies.

According to the UK development research reporting service, ID21, powerful interests are vested in concealing the advantages of a co-operative model for urban water supply management. SAGUAPAC is highly regarded by the World Bank and internal Bank documents have praised it for its utilisation of two major Bank credits. Yet, says ID21, under pressure from powerful French companies, the Bank does not promote the co-operative model, either in Bolivia or elsewhere.

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