Modernization of the water utility company of Bogotá (Colombia): an example of public and private participation for solving management problems of water companies in developing countries

A common characteristic of water utility and wastewater companies in developing countries is management problems and limited commercial vocation. In the biggest Latin American cities there is a level of infrastructure enough for providing a substantially better service than the one currently supplied to their badly served customers. For years decisions have moved between two extremes: public management – usually corrupted with playing politics and inefficiency problems, and privatization – sharply criticized by many, and which has shown tendencies to inequality that leave it far away from earning panacea status. This paper is intended to expose the advantages of a novel model in which a state-run company with commercial management problems, the EAAB, solves its limitations by keeping the ownership of its assets and successfully incorporating the participation of better practices from other specialized operators, one of which is a state-owned player, EEPPM. This scheme demonstrates how the service indicators of a system serving eight million inhabitants in the Colombian capital improved significantly with state-owned assets and private participation, without giving in to privatization pressures or stagnating in the usual inefficiency typical of public management in developing countries. This is proposed as a replicable experience that can be used in medium and large cities in other countries with similar management problems, with certain adjustments to fit the solution to the specific cases. This is also a practical case for conducting a comparison of competitiveness within a city, of interest for regulatory entities and investigators on the potential of comparative efficiency in a traditionally monopolistic industry.