Private-sector Participation in the Management of Potable Water in Mexico City, 1992–2002

Abstract

This paper is the result of a study that analyses the process of private-sector participation in water management in Mexico City. Because the concession to provide the service was not awarded to one single company, there are important differences in comparison with the experience of other cities, both in Mexico and in the rest of the world. The transfer of responsibility for the services was intended to be a gradual, three-phase process. Even so, the city government was to retain property rights over the infrastructure and would continue to set tariffs, while the companies would be paid, over 10 years, for each activity realized.

Notes

When the invitation was sent out to the private sector, there was practically no information in terms of the length of the network, the roll of users, structure and volume of consumption, levels of physical loss, billing and collection and costs, among other things. As a result of the lack of necessary financial and operational information, negotiation of the contract on a reasonable basis was simply impossible, according to one of the businessmen interviewed (Mexico City, August 2003).

The manner in which contractors were to be paid in each stage is described in The General Bases of Tender, clause four, section 4.6. Formula payments are described on pp. 34–35, subheading 4.6.3.1.

Number 5 of the subsection of Chapter III of the General Bases of Tender.

The collapse of the peso led to a 119% increase in the cost of type ‘A’ meters and 204% for type ‘B’. As a result, the 1995 target for installation of meters was cut back from 586 700 to 219 300. The plan contemplates the installation of both velocity and volumetric meters. The mechanism of the velocity meters (type ‘B’) makes them more resistant to the suspended solids in water than those of type ‘A’. The type ‘B’ meters are cheaper and the original aim was to install them in areas where the recovery of the investment in the more expensive apparatus appeared to be problematic (SF, 1997, p. 60 ).

According to a study by the Autonomous Metropolitan University (2000), some 12% of homes in the Federal District receive intermittent supplies of water and about 2% have no access to potable water.

According to borough officials in charge of potable water provision, a greater proportion of the population receives intermittent service than that declared by the DGCOH. The DGCOH, in assigning a volume for a particular zone, assumes that all the residents there receive water. Once the water reaches a neighbourhood, however, pressure is sufficient only to bring it to a fraction of all homes.

On this point, see Coulomb (1993).

On this issue, see Treviño (1999) and Avila (2003).