The Intricate Relation of Autonomy and Performance in The Water Sector

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The Intricate Relation of Autonomy

and Performance in the Water
Services Sector
Case Study: Bolivia
Afnn Agramont Akiyama
WM-WSM.16-25
Student Number: 46359
April, 2016
The Intricate Relation of

Autonomy and Performance in
the Water Services Sector
Master of Science Thesis

by
Afnn Agramont Akiyama
Supervisors
PhD, Margreet Zwarteveen
Mentors
MSc, Mireia Tutusaus
Examination committee
PhD, Margreet Zwarteveen
MSc, Mireia Tutusaus
MSc, Hielke Wolters
This research is done for the partial fulfilment of requirements for the Master of Science degree at the
UNESCO-IHE Institute for Water Education, Delft, the Netherlands
Delft
April 2016
Although the author and UNESCO-IHE Institute for Water Education have made every effort
to ensure that the information in this thesis was correct at press time, the author and UNESCOIHE do not assume and hereby disclaim any liability to any party for any loss, damage, or
disruption caused by errors or omissions, whether such errors or omissions result from
negligence, accident, or any other cause.
Afnn Agramont Akiyama 2016.
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0
International License.
Abstract
Throughout the history of water supply sector, different approaches have been practiced to
tackle the lack of access to safe drinking water and adequate sanitation. The 1977 United
Nations Water Conference of Mar del Plata declared 1980s as the water and sanitation decade.
During this period the focused of international development agencies and national governments
was to invest in water and sanitation infrastructure to provide water and sanitation services to
the population. However, the results are questioned due to the lack of sustainability of the
services (O'Rourke, 1992). At the end of this decade, the approach shifted from hardware
interventions to models based on innovative managerial and institutional arrangements
(Schwartz, 2008b), delivering two approaches: The Private Sector Participation and the New
Public Management. The private sector participation incorporated the private capital for the
water supply services, this in order to extend the services. However, the 15 years of private
sector participation generated little expansion of the water services (Jones & Hardstaff, 2005).
On the other hand, the new public management proposed the mimicking of the private sector
in public water utilities (Schwartz, 2008a). However, in order to copy the practices of the
private sector it was required to acquire the autonomy that private organizations hold. As a
result, the autonomy of public water services operators gained attention. Many studies focus on
the relations of autonomy and performance of public organizations, in its majority reflecting a
positive correlation. For instance, Ayub & Hegsted, (1986), studied this relation on 13 different
countries; their results present a positive correlation of autonomy and performance of public
organizations. (Ayub & Hegsted, 1986). Moreover, Lioukas et al, (1993), argues that the lack
of autonomy, through the state control, produce negative consequences to the performance of
public organizations (Lioukas, Bourantas, & Papadakis, 1993). However, there is little research
regarding the autonomy-performance relation over the water services sector. Braadbaart et al.,
(2007) studied the relation of managerial autonomy and performance of 23 different public
water utilities, the results express a positive association (Braadbaart, Van Eybergen, & Hoffer,
2007). Nonetheless, the authors focused on the autonomy hold by the head manager of the water
organizations, which does not highlight the complexities associated to the water services sector,
this in terms of the relations of the water utilities and their context. This research presents an
analysis of the correlation between autonomy and performance of the water utilities located in
largest cities of in Bolivia: La Paz, Cochabamba, and Santa Cruz. Moreover, it presents a
chronological review of the water services of these cities, revealing that the different reforms
over the local water services reproduced water operators holding different levels of autonomy.
Finally, it is concluded that for the Bolivian water services sector, the autonomy and
performance of the water utilities do not follow a direct correlation. Furthermore, it is argued
that beyond autonomy, elements as water resources availability, legitimacy, and the political
context have an influence over the water services sector, as well as, the performance of the local
water utilities.
ii
Acknowledgements
iii
iv
Table of Contents
Abstract
Acknowledgements
i
iii
List of Figures
viii
List of Tables
ix
Introduction
1.1. International water and sanitation decade
1.2. Privatization in the Water Sector
1.3. New Public Management
1.4. Autonomy and performance in the water services sector
1
1
2
3
4
Literature Review
2.1. Autonomy in Public Organizations
2.2. Autonomy and Performance of Public Organizations
2.3. Research objectives
2.4. Research questions
5
5
11
11
12
Methodology
3.1. Research Design
3.2. Conceptual framework
3.3. Case Study
3.4. Data Gathering Methods
3.5. Analysis of Results
3.6. Limitations
13
13
13
14
15
16
17
Results - History of the Bolivian Water Services Sector

4.1. Introduction
4.2. La Paz Water Services
4.3. Cochabamba Water Services
4.4. Santa Cruz Water Services
18
18
18
23
26
Results - Organizational structures

29
29
33
37
Results - Financial Dependencies

6.1. Financial Autonomy
40
40
40
43
vi
44
Results - Legal Framework

7.1. Legal Autonomy
46
46
46
47
47
Results - Regulatory Framework

8.1. Interventional Autonomy
48
48
Results - Performance of Water operators

9.1. Performance in the Bolivian Water Services Sector
9.2. Category 1, Reliability of water resource
9.3. Category 2, Supply stability
9.4. Category 3, appropriate management of the system
9.5. Category 4, Environmental Protection
9.6. Category 5, Economic and administrative sustainability of the system
49
49
50
53
54
57
58
Discussion
10.1. Performance and autonomy of water utilities
10.2. Water Resources, Politics, and Legitimacy of the Bolivian water services
providers.
62
62
Conclusions
74
References
78
67
vii
List of Figures
Figure 1: Private Sector Participation water projects from 1990 to 2001. Source: (Izaguirre, 2003).................. 2
Figure 2: Private sector investments in Billion US Dollars. Source: (Izaguirre, 2003)......................................... 2
Figure 1: Bureaucratic Autonomy framework. Source: (Caughey, Chatfield, & Cohon, 2009) ......................... 10
Figure 2: Conceptual Framework.................................................................................................................... 14
Figure 3: Analysis of results scheme ............................................................................................................... 17
Figure 4. - SAMAPA Organizational Structure February 1966 ......................................................................... 30
Figure 5: Aguas Del Illimani Organizational Structure 1997. Source: (Laurie & Crespo, 2007). NOTE. - On 2001,
after Cochabamba water war, the shareholders composition of Aguas Del Illimani suffered
modifications. ........................................................................................................................................ 31
Figure 6: EPSAS S.A Organizational Structure ................................................................................................. 32
Figure 7: EPSAS 'Intervened' Organizational Structure ................................................................................... 33
Figure 8: SEMAPA Organizational Structure 1967 ........................................................................................... 34
Figure 9: SEMAPA organizational structure 1972............................................................................................ 34
Figure 10: SEMAPA organizational structure 1972 .......................................................................................... 34
Figure 11: Aguas Del Tunari Organizational Structure .................................................................................... 35
Figure 12: SEMAPA Organizational Structure 2000 ......................................................................................... 36
Figure 13: SEMAPA Organizational Structure 2016 ......................................................................................... 37
Figure 14: SAGUAPAC Organizational Structure 1973 ..................................................................................... 38
Figure 15: SAGUAPAC Organizational Structure 1979-2016 ............................................................................ 39
Figure 16: KPI - Current Performance of the Water Source ............................................................................. 51
Figure 17: KPI - Efficient Use of Resource ....................................................................................................... 52
Figure 18: KPI-Continuity of Rationing ............................................................................................................ 53
Figure 19: Potable Water Service Coverage .................................................................................................... 54
Figure 20: KPI - Distribution System Unaccounted Water Index ..................................................................... 55
Figure 21: KPI - Potable Water System Pressure ............................................................................................. 56
Figure 22: KPI - Groundwater Extraction Incidence ........................................................................................ 57
Figure 23: KPI- Collection Efficiency Index ...................................................................................................... 58
Figure 24: KPI - Investment Implementation Index......................................................................................... 59
Figure 25: Average Unit Cost .......................................................................................................................... 60
Figure 26: KPI - Staff Efficiency ....................................................................................................................... 61
Figure 27: Water Services Reforms and Autonomy Dimensions ..................................................................... 68
viii
List of Tables
Table 1: Autonomy dimensions. Source: Verhoest et al., (2004) ...................................................................... 8
Table 2: Research methodology and data collection ...................................................................................... 16
Table 3: International funding available on 2007 ........................................................................................... 41
Table 4: National Government requested funds by EPSAS ............................................................................. 41
Table 5: International Funding Available for SEMAPA on 2008....................................................................... 43
Table 6: National Government Funds requested by SEMAPA ......................................................................... 43
Table 7: SAGUAPAC Investment Projects........................................................................................................ 45
ix
CHAPTER 1
Introduction
The following chapter traces the origins of the autonomy in the water services sector, this in
order to understand its relevance. Furthermore, this chapter describe the different reforms
applied to the drinking water and sanitation sector. The chapter follows the next structure: First,
the water and sanitation decade is presented. Second, there is a discussion on the privatization
era and the results achieved. Third, the new public management approach is described, and with
it, the autonomy in the water services sector is introduced.
1.1. International water and sanitation decade

In late 1970s alarming figures of population lacking access to water and sanitation services, in
association with water born disses, focused the attention to the drinking water and sanitation
sector at international arenas. It was estimated that in developing countries just 43% of the
population had access to drinking water and 25% to sanitation (WHO, 1981). As a result, the
United Nations Water Conference of Mar del Plata 1977 proposed a plan of action to solve the
problem of access to water services. The plan set out a series of actions implemented by national
governments, as well as international organizations, that would guarantee universal access to
water and sanitation by 1990 (Biswas, 1978). In order to implement this action plan countries
translated this goal into their national plans.
The results of this decade did not reach the proposed targets of the United Nations. Some argue
a significant progress (Najlis & Edwards, 1991) and some question the results achieved
(O'Rourke, 1992). At the same time, it seems to be a common agreement when questioning the
sustainability of the efforts performed (Cairncross & World-Bank, 1992; Najlis & Edwards,
1991; O'Rourke, 1992). The interventions promoted during this period were mainly geared to
the development and investment of new water infrastructure. However, there is evidence that
the investment in infrastructure booked meagre results. Consequently, some argued that the
future challenges of providing universal access to water would necessarily have to include and
consider institutional and financial arrangements, besides overcoming hardware and technical
challenges (Cairncross & World-Bank, 1992).
Since the Water and Sanitation decade did not bring the desired outcomes, other approaches
were considered to improve the water services sector. At the end of the decade the attention
shifted from the technical dimension to models based on innovative managerial and
institutional arrangements (Schwartz, 2008b), conveying in two approaches: The Private Sector
Participation and the New Public Management.
Introduction
1.2. Privatization in the Water Sector

Due to the poor performance of public
water utilities during the 1990s, the
main
international
funding
organizations promoted reforms to
involve
the
private
sector
participation in different forms, this in
order to enjoy the efficiency
associated with the private practices.
The discourse behind the desired
private sector participation it was the
associated increase of efficiency,
extension of services, capital
investment and the budgetary
alleviation to national governments
(World-Bank, 2005).
Figure 1: Private Sector Participation water projects from 1990 to

2001. Source: (Izaguirre, 2003)
However, some argue that water is a unique resource linked to cultural, religious, ecological
and economic dimensions and that it cannot be regarded just like any other resources. Moreover,
some suggest to consider water as a common resource (Bakker, 2007). Despite the approval or
rejection from different movements, as shown in Figure1, the private sector participation settled
its presence during this decade with more than 200 projects.
Furthermore, as shown in figure 2,
major investments were allocated to
developing countries pursuing to close
the gap of population without access to
water and sanitation. Around 40
billion1 US dollars were designated to
the water sector worldwide during the
period of 1990 to 2001, these funds
divided among 203 projects in 43
countries (Izaguirre, 2003) . However,
less than 3% were allocated in NorthEast Africa, Sub-Saharan Africa and
South Asia countries.
Figure 2: Private sector investments in Billion US Dollars. Source:

(Izaguirre, 2003)
The outcomes from the private sector

participation era can be questioned
since just a few successful interventions are evident. In 15 years of private sector participation
only 600,000 connections were been added (Jones & Hardstaff, 2005) and if considering public
investments 250,000 can be attributed to the private sector (Prasad, 2006). Moreover,
1
Including Private Sector investments and Official Development Assistance.
Introduction
memorable concessions failed due to controversial causalities, to mention some of them: the
concession contract of Cochabamba 2000 known as the water war, La Paz 2005 and Buenos
Aires 2005 (Schwartz, 2008b). Currently less than 5% of the total population is served by
private operators (Budds & McGranahan, 2003). While Private Sector Participation in the water
sector was practiced around the world during the 90s, at the same time, The New Public
Management approach was exercised. Following we will develop more regarding this approach.
1.3. New Public Management

The New Public Management approach was introduced to the water services sector during the
1990s. This approach was embraced due the poor performance of publicly owned water
utilities. The new public management brought new ideals of institutional arrangements,
described by some as an approach mimicking the private sector (Schwartz, 2008a, p. 159).
The new public management is characterized by the following elements:
Increasing the level of autonomy of public water utility
This element consist of distancing the public organization from the control of government
elected officials. Some argue that to increase the level of autonomy of the water utility can be
possible when the legal status of the water utility is reformulated. Three types of government
organization can be recognized: Ministry or department, corporatized utility and government
owned public limited company.
The separation of regulatory functions
Since the drinking water, provision has a monopolistic nature, the water services sector has
been consistently regulated in order to protect the interests of the consumers. However, it is
known that the agencies performing the role of regulators also acted on the operations of water
utilities conveying to what is known as the poacher-gamekeeper2 problem. As a result, the new
public management approach in the water sector is characterized by the separation of roles in
two different forms: Contracts stipulating specific performance targets and government
regulatory agencies monitoring the performance of the water operator.
Creating quasi-competition
Competition is seen as having a positive impact in the industry of service delivery. However,
the monopolistic nature of the water utilities limit the environment for competition. To stimulate
the competition in the water sector some reforms were implemented and one clear example is
exercising benchmarking among the public water utilities.
Increase of tariffs aiming at cost recovery and customer orientation
Most of the public water utilities have funded their projects through government resources; as
a result, there is a notorious lack of customer orientation in the sector. Considering the source
of funding (government), the conduct and behavior of the organization is indirectly influenced
in order to please their source to secure further financial support. However, when shifting the
Referring to someone who opposed people in authority in the past but who now has a position of authority
themselves.
2
Introduction
source of funding from governments to water users is possible to develop a more customeroriented behavior. Nonetheless, it would require an increase of water tariffs.
Output oriented accountability
The accountability of water utilities was traditionally linked to process rather than outputs. The
New Public Management approach suggests shifting the utilities for holding accountable for
the outcomes produced. Nonetheless, this element implies the acquisition of certain level of
autonomy in order to focus the objectives.
(Schwartz, 2008b)
When analyzing the different New Public Management characteristics identified by Schwartz,
(2008), is possible to reflect regarding the importance of autonomy under this approach,
considering that four out five characteristics have as requisite the element of autonomy.
Moreover, the mimicking of the private sector implies to acquire the characteristic autonomy
that the private sector hold.
1.4. Autonomy and performance in the water services

sector
Braadbaart et al., (2007) explored the relation of managerial autonomy and the performance of
water utilities. The results expressed a positive association of managerial autonomy and
performance of water operators. To articulate this study, the authors developed an autonomy
index in order to assess the level of managerial autonomy of water operators.
Nonetheless, it can be argued that managerial autonomy does not reflect the autonomy of the
whole organization (Verhoest, Peters, Bouckaert, & Verschuere, 2004). Furthermore, it is
limiting the attention on the individual autonomy of the head manager of the organization
simplifying existing complexities associated with the relations between the water services
organizations and its external environment and network. Moreover, these relations can
influence the behavior of the water utility influencing its performance.
Introduction
CHAPTER 2
Literature Review
2.1. Autonomy in Public Organizations
The academia unravel diverse theories and frameworks proposed to understand the autonomy
of public organizations. The following section present some of the proposed understanding
regarding autonomy of publicly own organizations.
Principal-Agent Autonomy
Under this line of thinking, the principal-agent autonomy arises from the principal agent
dilemma. Is possible to exemplify the principal-agent dilemma from different scales of
bureaucracy. At the national scale, the principal (the National Government) delegate a specific
task to a specialized agency (a decentralized water utility). At the organizational level, the
principal (a manager) hires an employee (agent) to perform a specialized task, which cannot be
accomplished by the principal because of the lack of expertise or time. Consequently, a complex
chain of principal-agent relations is generated through the different levels of bureaucracy.
Furthermore, the dilemma arises when, due to the information asymmetry, the agent do not act
on the principals best interests (Breton, 1995). This because of the lack of incentives.
Moreover, traditional bureaucratic organizations (Webbers bureaucracy) focus on the internal
processes of the organizations, as a result, these organizations tend to hold this problem which
compromise the performance at different levels of the public organizations.
The new public management approach suggests the decentralization of public organizations
into quasi- autonomous units, the promotion of competition, the shift to private oriented
practices, to decentralize the managerial authority, the output oriented practices, the efficient
use of resources and to measure and standardize the performance of the organizations (De
Arajo, 2001; Hood, 1995; Osborne, McLaughlin, McLaughlin, Osborne, & Ferlie, 2002).
However, in order to follow these principles a certain level of autonomy has to acquire by the
agency.
In this sense, the principal-agent autonomy can be understood as when the principal (National
Government) delegates autonomy to the agents (agencies), this in a form of a formal
contract. The contract delineates the agent (agency) self-discretion, at the same time specify the
agents space to decide about the actions that should be taken to achieve results, this based
on the goals and objectives of the organization. However, there are more complexities
associated when analyzing principal-agent relations, this since the existence of informal
relations out of the scope of the contract. This informal relations can influence the contractual
principal-agent relationship and consequently the autonomy of the agent (agency) (Carpenter,
Literature Review
2001). These informal relations can influence the decision making of agents (agencies) and
distance them to the organizations objectives.
Autonomy beyond formal arrangements
Carpenter, (2001), recognized the element of informal relations that the formality of a contract
cannot capture. Furthermore, he proposes that to understand autonomy the attention should be
focused on the public agency, this since the actions of the agency would reflect the product of
informal and formal arrangements. At the same time, the author defines autonomy of public
organizations (bureaucratic autonomy) as when politically differentiated agencies take
sustained patterns of action consistent with their own wishes, patterns that will not be checked
or reversed by elected authorities, organized interests, or courts (Carpenter, 2001, p. 14). At
the same time, the author identified three necessary elements to achieve an autonomous
condition:
First, the author identified the Differentiation as one of the characteristics of an autonomous
public organization. This characteristic is defined as the agencys capacity to hold its
preferences insulated from the external actors interests. In other words, an autonomous agency
can define objective preferences without been influenced by foreign players, this since
external actors might hold interests that differ on the organizations desires and preferences.
Second, the Organizational Capacity is defined as the process of turning the organizations
preferences in effective actions, this through the organization internal policy definition. At the
same time, the author recognize that these two first elements, differentiation and organizational
capacity, are constraint to the organization internal culture.
Third, the Legitimacy of public organizations is the last variable identified by Carpenter, (2001),
as constraint to the autonomy of these agencies. The legitimacy of public organizations is
explained as when the agency find the mechanisms to convince the citizens and government
officials (principle) of its unique ability. This in order to gain recognition and support towards
the agency and its policies. Moreover, this quality can allow the agency to shape the preferences
of the population and government officials, this since the agency holds expertise in the
specific field. No bureau survives, unless it is continually able to demonstrate that its services
are worthwhile to some group with influence over the resources to keep it alive. (Shafritz &
Hyde, 2015, p. 239). Meaning that public organizations should find the mechanisms to convince
the population and influential actors of its unique ability, which would guaranty its existence.
Moreover, the legitimacy limit the interference of external actors over the public organization.
Multi-dimensional Autonomy
Verhoest et al., (2004) proposed an understanding of autonomy in which partial attention is
focused on the agency and partial attention focus on the relations of the principal (national
government) and the agent (public agency). The authors framed two types of autonomy types
of autonomy: First, the internal autonomy of the organization, which incorporates the
organization decision-making at the managerial level, as well as, the development of the
organizations policies. This type of autonomy aligns with Carpenter, (2001), view, which
suggests focusing on the public organizations to capture informal and formal relations. Second,
the autonomy as the constraints on the use of the organizations internal decision-making. This
Literature Review
incorporates the structural, financial, legal, and interventional constraints on the organizations
internal decision-making. In this sense, the author defined six dimensions of autonomy:
managerial and policy autonomy, as the internal autonomy of the organization, and the
structural, financial, legal, and interventional autonomy, as the constraint to the internal
organizations decision-making.
As previously explained, the first group of autonomy incorporate the Manageniral and Policy
autonomy dimensions. The Managerial Autonomy is understood as the organizations level of
managerial discretion over inputs. For instance, budget allocation, salary scales and staff
selection among others. This discretion and capacity of decision-making is held by the
organizationss managers. Policy autonomy is defined as room granted to the organization in
order to develop and select their own policy instruments.
The second group of autonomy embrace the structural, financial, legal and interventional
autonomy. First, Structural autonomy, is understand as the influence of elected officials
(political actors) over the public organization. This influence can be assessd based on the the
public organization distance from the National Government or other bureaucratic
organization. For instance, a department part of a ministry would hold low structural
autonomy. This since the structure of the organization is instrinsic to the National Government.
On the other hand, a public organization in which the board of directors is composed by nonelected officials hold large structural autonomy. This since this structure allow the organization
to not be subordinated to a different bureaucratic organization and/or politicians.
Second, Financial autonomy is understand as the financial burden the public organization have
on its own budget. Public organizations highly depedent on public funds tend to hold low
finnancial autonomy. This since, public organization providing these funds can decide over the
funds allocation, which contraint the organization internal decision-making.
Third, Legal Autonomy: Verhoest et al., (2004), defined the legal autonomy in terms of the legal
status in wich the public organization is entitled to operate. For instance, organizations holding
a public legal status, are subject to the public law, which ussually embrace complex
procurement procedures, among other complexities. On the other hand, organizations entitled
to the private law ussually hold higher self-discretion.
Fourth, Interventional autonomy, this dimention denotates the level in which the public
organization has freedom from supervision and/or punishment by government ellected officials
and/or government agencies. For instance, an organization without supervision and reporting
requiarements tend to hold higher autonomy. This is because the internal organization decisions
are not constraint to the supervision. On the other hand, an organization strictly supervised
under specific regulations do not have the room for self-discretion.
It is important to remark that within the conceptual framework proposed by Verhoest et al.,
(2004), there is dependency from the first branch (Managerial and Policy Autonomy) over the
second (Structural, Financial, Legal and Interventional Autonomy). Carpenter, (2001), also
align with the first group of autonomy, in which is suggested to focus attention to the agency
itself. Furthermore, this conceptual framework of Autonomy is valuable to understand the
principal (National Government) and agent (public organization/agency) relations.
Literature Review
Furthermore, based on the complexities of the water services sector, might be more relevant to
focus attention on the principal-agent relations. This in order to understand the interaction of
the water utility and its context. Table 1. - provide further detail of the possible principal-agent
arrangement based on this framework.
Table 1: Autonomy dimensions. Source: Verhoest et al., (2004)
Dimension
Managerial
Autonomy
Policy
Autonomy
Structural
autonomy
Minimum Level of
autonomy of agency
Management
decisions are taken
from central
government
Low Level of
autonomy of agency
The agency take
managerial decisions
concerning strict
procedures set by
central government
(High operational
managerial autonomy)
High Level of
autonomy agency
The agency develop its
own procedures based
on guidelines set by
central government
Maximum level of
autonomy agency
The agency have
decision making
regarding all aspects
of management (High
strategic managerial
autonomy)
The decisions
concerning primary
production structure
and content, policy
instruments, and
objectives are taking
by central
government. The
agency my not
decided in the
application of general
rules and do not have
the right to set general
rules
The agency head is
appointed and is
directly accountable
to central government.
There is no
supervisory or
counselling board.
The agency can decide

on primary production
structure and content
with on the policies,
norms and objectives
set by central
government. (High
operational policy
autonomy )
The agency decides

over with policies to
use and output norms
based on goals and
norms set by the central
government. The
agency head can decide
on individual
application of general
regulations
The agency can

decide over all
aspects of policy:
objectives, policy
instruments, and
processes. The
agency is allowed to
issue general
regulations (High
strategic policy
autonomy)
Central government
appoints the agency
head. He is accountable
to central government
and counselling board.
The members of the
counselling board are
appointed by central
government and they
can be resigned at any
time
The agency is primarily
financed by central
government. A minor
part of its budget comes
from other funding
organizations, product
sale, or loans. The
agency have to cover a
minor extent of the
deficit
The agency has distinct
status within the central
government, this based
on delegation from
central governments
executive authority. The
agency do not have
legal personality
The agency head is

appointed and evaluated
by the counselling
board. Majority of
central government
representatives
composes the
counselling board. They
can be resigned at any
time
The agency head is

appointed and
evaluated by the
supervisory board in
which the
representatives of
other forces different
than the government
have the majority of
vote
The agency is primarily

financed by sources of
income distant to the
central government.
However, small part of
the funding comes from
central government.
The agency is
responsible for the
majority of deficit itself
The Agency has its own
legal personality on the
bases of public law and
it is created by
parliamentary act
The agency is fully

financed from
sources away from
the central
government. The
agency have full
responsibility to
cover all deficits
itself
Financial
Autonomy
The agency is full

funded by central
government, do not
have responsibility on
deficit itself , do not
have the ability to get
funding from product
sales and/or loans on
the capital market
Legal
autonomy
The agency is part of

the central
government without
any differentiation.
Literature Review
The agency has a

legal personality on
the bases of private
law
Interventional
Autonomy
Central government
supervise operations
of the agency under
strict norms.
Divergence of the
norms results in
severe sanctions and
central government
intervention.
different from the

central government.
Central government
requires detailed
reporting by the agency,
based on explicit norms.
Divergence results in
substantial sanctions
and possible
intervention by central
government
Central government
requires limited
reporting from the
agency. The agency can
be subject of audits and
evaluations. Sanctions
and interventions are
only possible after
consultation of the
agency. There is a
narrow space for
sanctions and
interventions.
There are no
reporting
requirements from
Central government
to the agency. The
agency is not subject
to evaluations and
audits. Central
government cannot
sanction or intervene
the agency
However, some authors argue that Verhoest et al., (2004) understanding of autonomy is limited
to formal and legally specified autonomy (Caughey et al., 2009). Furthermore, Caughey et al
(2009), argue that the multidimensional conceptual frameworks of bureaucratic autonomy are
limited to the formal legally defined autonomy and is away from the real autonomy that should
capture the influence of informal arrangements over the public organizations.
Day to day Autonomy
Caughey et al (2009) propose an understanding of autonomy of public organizations
(bureaucratic autonomy), in which the formal and informal arrangements between the principal
(national government) and agent (the public organization) are reflected on the organizations
day-to-day practices. The authors understanding of autonomy aligns with Carpenter, (2001), in
which is suggested to focus attention over the public organization, this in order to capture the
informal-formal arrangements. For instance, a delegation agreement can stipulate that the
organizations policies are under the competency of the ministry. However, in practice, the
organization might be defining its own policies, this out of the formal agreement.
The author argues that the autonomy of organizations is reflected on the day-to-day practices
within the organization as well as their interaction with its environment (population, political
actors, and other organizations). Moreover, the authors present a definition, which incorporate
two sub-concepts: First, the Independent goals formation, understand as autonomous
preferences collectively recognized and endorsed by the members of the public organization.
Second, the Capacity to achieve desired outcomes, understand as the agencys capacity to
implement their goals and objectives. However, this second branch depend on the public
organization resources and independence of external constraints.
Moreover, the authors explain the resources as financial, political support, public image, human
resources, and physical resources, among others, necessary to accomplish the organizations
objectives. At the same time, Caughey et al., (2009), define external constraints in three forms
in which the public organization can be limited of an autonomous behavior. First, the public
organization can be prevented of implementing a plan or perform an action by external actors.
Second, the public organization start the implementation of project, however, the legislation is
modified in order to stop the public organization activities. Third, the public organization
Literature Review
implement a plan or perform an action without any prevention and reversal consequence,
however, in some cases the public organization can be punished by an external actor.
External constraints
Independent Goals and
Objectives formation
Resources
Capacity to achieve goals and

objectives
Autonomy of Public Organizations
Figure 3: Bureaucratic Autonomy framework. Source: (Caughey, Chatfield, & Cohon, 2009)
Autonomy of Public Organization - Summary

Carpenter, (2001), recognized the existence of informal relations that influence the principalagent formal autonomy, moreover, his definition implies that to understand the autonomy of a
public organizations it is necessary to focus attention over the public organizations. This in
order to capture informal arrangements. Furthermore, Verhoest et al., (2004), present a
multidemtional approach to understand two types of autonomy, the internal organizational
autonomy and the external autonomy which constraint the organizations self-discretion. This
second autonomy is based on the distance between the public organization and the National
Government. This approach is critized by Caughey et al., (2009), claiming that a
multidimensional approach lack of tools to capture informal arrangements. Consequently,
Caughey et al., (2009), aligns with Carpenter, (2001), to focus attention of the public
organizations day-to-day practices, and at the same time, suggests to recognize the existence
of informal arrangements.
The previous approaches of autonomy have elements that might help to understand the
autonomy of the water and sanitation sector. Furthermore, the water services sector usually
present complex relations with its environment and political context. Consequently, Verhoest
et al., (2004), approach might be useful when trying to understand the complexities associated
to the water services sector. Furthermore, it is as well important to recognize the existence of
informal arrangements between water organizations and the public authorities, this suggested
by Caughey et al., (2009) and Carpenter, (2001).
Literature Review
10
2.2. Autonomy and Performance of Public Organizations

Large body of research has been done to study the relation between autonomy and performance
of public organizations (Christensen, 1999; De Arajo, 2001; Dunsire, Hartley, & Parker, 1991;
Huber & McCarty, 2004; Pollitt, 1993; Pollitt, Birchall, & Putman, 1998; Svendsen, 1993; Ter
Bogt, 1997; Verhoest et al., 2004). Ayub & Hegsted, (1986) performed a study on 13 different
countires, in wich public organizations showed a positive correlation between autonomy and
performance. Moreover, the author identified three key influential elements with regard to the
performance of this organizations: the dregre of competition in which the organization is
exposed, the degree of financial autonomy and accountability mechanisms (Ayub & Hegsted,
1986). Moreover, Lioukas et al, (1993), argue that the lack of autonomy of the public
organizations, through the state control, produce negative consequences to the performace of
this organizations (Lioukas et al., 1993).
Braadbaart et al., (2007) studied the relation of performance and managerial autonomy of public
water utilities, in which the results show a positive association (Braadbaart et al., 2007). To
understand autonomy the authors develop an autonomy index to assess the level of managerial
autonomy of public water utilities. However, some argue that autonomy of a public organization
cannot be atributed solenly to the managerial autonomy (Verhoest et al., 2004). Furthermore,
the author articualted the research throught a quantitative research methodology, which lack of
details on the complex principal-agent relation of the water services sector. At the same time,
the political context and the external environment might have an influence over the autonomy
of the water organizations as well as its performance. However, this has not been explored yet.
2.3. Research objectives

The following is the main research objective:
To understand relation of autonomy and performance of the three largest water utilities
of Bolivia.
In order to answer the main research objective the next are the specific objectives:
To understand the relations and interactions of the water services organizations and
the local context.
To identify the factors that influence the autonomy of the water services providers.
To identify the factors that influence the performance of the water utilities subject to
study.
Literature Review
11
2.4. Research questions

Following the research objectives, the next is the main research question:
What is the relation between autonomy and performance of the water utilities EPSAS in
La Paz, SEMAPA in Cochabamba and SAGUAPAC in Santa Cruz?
In order to answer the main research question the next sub-questions will narrow down the
research:
Which actors interact with the water utilities EPSAS, SEMAPA, and SAGUAPAC? How
these actors influence the autonomy of the water utilities under study?
What factors influence the autonomy of the water utilities under study?
What factors influence the performance of the water utilities under study?
Literature Review
12
CHAPTER 3
Methodology
3.1. Research Design
Previous research on the field of autonomy and performance of water services organizations
utilized a quantitative research methodology. However, this approach do not highlight the
complexities associated to the water services sector. Braadbaart et al., (2007), develop an
autonomy index to assess the managerial autonomy of water organizations. At the same time,
the authors performed an statistical analysis of the association between the autonomy index and
the performance of 23 water utilities. Despite, this analysis lack of understanding of the
complexities associated to the water services sector. This because the water services sector is
subjected to interaction with the political context, the local population, and its environment.
This research employs a qualitative research methodology, this in order to capture the complex
relations presented in the water services sector. Furthermore incorporated three main steps: the
literature review, the data collection, and the analysis of results. First, the literature review
allowed a better understanding of autonomy of public organizations. Furthermore, provided the
foundation for the conceptual framework. Second, the data collection incorporated primary and
secondary data sources. Third, the analysis of results was based on the comparison basis of the
three water utilities selected as the case study.
3.2. Conceptual framework

This research is articulated through the second group of autonomy dimensions proposed by
Verhoest et al ., (2004). This since the financial, structural, interventional and legal autonomy
dimensions allow to highlight the complexities associated to the water services sector, this in
terms of the relations of the water utility, public officials and the network in which the water
utility operates.
The financial dimension highlight the water utility dependencies on public funds. Which at the
same time bring an understanding of how public funds are distributed to the water services
sector. The interventional autonomy dimension carry out elements of the regulatory framework,
which allows identifying the regulatory mechanisms, as well as how the government agency
responsible for the water services supervision interact with the water utilities. The structural
autonomy dimension describe the composition of the water utilitys board of directors. This to
understand the distance between the water utility and political elected actors, at the same time,
provide an understanding of the influence of political elites over the water utilities. Finally, the
legal autonomy introduce the distinct legal personalities of water utilities; moreover, bring
elements on how the legal framework influence the water operators autonomy. These
Methodology
13
autonomy dimensions provide an understanding of relations between the water utility and its
context. Moreover, it provides a better recognition of the water utilitys network.
At the same time, the conceptual understanding of autonomy of Carpenter, (2001) and Caughey
et al., (2009), is incorporated in this research. This since the water services sector it is usually
subject of interaction with the political context, which enhance potential informal relations that
influence the autonomy of the water operators. Consequently, this research focus attention to
identify and understand informal arrangements on the relation of the water utilities and their
context.
Interventional
Autonomy
Structural
Autonomy
Financial
Autonomy
Legal
Autonomy
Figure 4: Conceptual Framework
3.3. Case Study

This research utilized a case study, this in order to capture the complexities associated to water
services sector. The case study selected is the Bolivian water services sector, considering the
water utilities of La Paz, Cochabamba, and Santa Cruz as the sample. The sample selection is
endorsed by the institutional heterogeneity among these three water utilities. For instance, the
water utility of La Paz is under the management of the National Government, this through the
National Water Regulator. The water utility of Cochabamba is governed by the Municipality of
Cochabamba, this through a board of directors under the presidency of the Mayor of
Cochabamba. In addition, the water utility of Santa Cruz is under the governance of the water
users, this through a water utility with a form of a water services cooperative.
Methodology
14
At the same time, these water utilities operate under the same legal framework, which is the
Bolivian water law 2066. In addition, the water utilities of La Paz, Cochabamba, and Santa
Cruz are under the supervision of the same Government Agency, the National Water Regulator.
The National Water Regulator clustered these three water utilities under the same category,
element that allows having a level of comparison among these three water operators.
Furthermore, these three water utilities are located in divergent geographical regions. This
since, La Paz is located in the Bolivian Andes while Cochabamba is in the valleys and Santa
Cruz in the Bolivian lowlands. This presents a heterogeneous cultural and environmental
scenario that enrich the analysis of the complex relations of the water services providers and
their context.
3.4. Data Gathering Methods

The data required to develop this research was collected through primary and secondary data.
The primary data embraced fourteen interviews. These interviews were conducted to the public
official representatives from the Vice-Ministry of Drinking Water and Sanitation, and the
Bolivian National Water Regulator3. At the same time, interviews were directed to staff from
the financial, legal, and technical departments of the water utilities EPSAS in La Paz, SEMAPA
in Cochabamba and SAGUAPAC in Santa Cruz. Furthermore, an additional interview was
directed to staff from the National Association of Water Utilities, which is the agency
representing the Bolivian Water utilities. Finally, in order to capture the perception of the water
users, the last interview was conducted to a locally recognized water activist and academic.
The secondary data embraced three types of documents: scientific papers focused on the case
study, water utilities annual reports, local newspapers, the national law gazette archives, and
the National Water Regulator performance report. First, the scientific papers provided relevant
information regarding the privatization era of the Bolivian water services. Furthermore,
provided information of the transition of managerial approaches performed from neoliberal
period to the post-neoliberal era of the Bolivian water services. Second, the annual reports
provided information with regard the funding dependencies of the different water utilities
embraced in this study. Third, the local newspaper gave evidence of the conflicts, internal
scandals, and corruption publicly exposed. Fourth, the laws gazette allowed identifying the
drivers behind the different water services reforms, at the same time, how these reforms affected
the structures of the different water operators. Fifth, the National Water Regulator performance
report provided the information and the technical framework to understand efficiency of water
operators in Bolivia.
Autoridad de Fiscalizacin y Control Social dela Agua y Saneamiento (AAPS)
Methodology
15
Table 2: Research methodology and data collection

Research Question
Criteria
Source
Methodology
Who are the actors that interact
Structural
Legal Department - Managers
Interviews
with the water utility, and how
Autonomy
(Water utility)
these actors influence
the
autonomy of the water utilities

under study?
Financial Autonomy
National Water Regulator
Interviews
National Association of Water Utilities
Interviews + Secondary
(ANESAPA)
Data
Financial Department
Interviews
(Water utility)
Annual Reports
Secondary Data
(Water Utility)
Legal Autonomy
Legal Department
What Factors influence the
(Water Utility)
data
autonomy of the water utilities
under study?
Interventional
Autonomy
What Factors influence the
performance
of
the
data
Interviews
(Water utility)
Press and National Decree Magazine (Gaceta)
Secondary data review
data review
water
utilities under study?
What is the relation between
(ANESAPA)
Legal Department
Performance
autonomy and the
Annual Reports
Interviews
Water Regulator
performance of the water

utilities under study
Data
Data
3.5. Analysis of Results

For the analysis of results, the information gathered it was first clustered on the financial,
structural, legal, and interventional autonomy for each water utility. Then the performance
information was subject to scrutiny. Then the results of structural, financial, legal and
interventional autonomy was compared against each water utility. Finally, the performance
results were compared with the structural, financial, legal, and interventional autonomy of each
water utility, this in order to correlate the performance of the different water utilities and their
autonomy based on the different dimensions.
Methodology
16
Bolivian Water Services Sector

La Paz Water Utility
Cochabamba Water Utility
Santa Cruz Water Utility
EPSAS
SEMAPA
SAGUAPAC
- Structural Autonomy
- Interventional Autonomy
- Financial Autonomy
- Legal Autonomy
- Legal Autonomy
- Legal Autonomy
- Performance
- Performance
- Performance
Figure 5: Analysis of results scheme
3.6. Limitations
As already mentioned in the previous section, this research focus on analysis of elements that
delimit the internal autonomy of the water operator: structural, financial, legal, and
interventional dimensions. However, this research do not capture the internal autonomy of the
water operator itself. This since it would require a detailed analysis of the internal decisionmaking mechanisms and the development of the company policies. Future research is required
to understand these elements. Furthermore, regarding the performance of the water operators,
it is just considered the drinking water supply, discarding the wastewater treatment processes.
Methodology
17
CHAPTER 4
Results - History of the Bolivian Water

Services Sector
4.1. Introduction
Through the history of the Bolivian water services is possible to identify 4 different periods in
which the National Government performed water services reforms at the local level, this in the
main cities of Bolivia; La Paz, Cochabamba and Santa Cruz. Prior 1965, the main water services
of Bolivia where under the arm of the Bolivian National Government, in which the agency
responsible to provide the water services was the Ministry of Planning and Liaison. However,
from 1965 to 1973, the National Government decentralized the water services, generating
decentralized municipal/government public water utilities. Later on, from 1997 to 2000, the
National Government, aligned with a new political agenda, incorporated the private sector
participation in the Bolivian water sector; however, this arrangement was introduced just to the
cities of La Paz and Cochabamba. Nonetheless, the local population rejected the privatization
of water services, this due the increase on water tariffs, among other elements. Consequently,
from 2000 to 2007, the National Government recovered the privatized water utilities, and
developed an innovative model of governance in which the water users participation was
incorporated. Finally, on 2013, the National Water Regulator intervened the water utility of La
Paz, this since the poor performance of the water utility compromised the population water
services. Following is an historical review of relevant events regarding the water services in the
Cities of La Paz, Cochabamba, and Santa Cruz.

The Municipal Autonomous Potable Water and Sewer Service Company (SAMAPA)
Prior 1966, the water services of La Paz were under the responsibility of the National
Government (El Alto and surrounding cities were not developed at the time). However, in 1966,
to develop the water network expansion and the creation of a new water treatment plant, the
Municipal Government of La Paz in coordination with the National Government, negotiated a
source of funding coming from the Federal Government of Germany. This funding had the form
of a loan and it was subject to some stipulations and conditionalities. Among them, it was the
creation of a decentralized autonomous company. For this reason the Municipal Autonomous
18
Potable Water and Sewer Service Company (SAMAPA) was created on April 20th of 1966 under
the Presidential Decree4 07597, in which is stated:
For the regular and rational supply of potable water and sewerage services, is
imperative to create organizations equipped with the necessary management
autonomy in which its reflected the interest and input of the public and private
capital, for the general order necessities satisfaction.
It is faculty of the State coordinate and overview the development of the public
services through the Executive Power bodies;
Then, the Ministries Council, decree: Article 1. - To create the Municipal
Autonomous Potable Water and Sewerage Service (SAMAPA), stablished in the
city of La Paz, having indefinitely term and complete self-management capacity,
and to exercise all acts subject to its juridical life under the norms subject to the
present decree and the bylaws dictated under their organic statute
(Presidential Decree, 07597).
The Creation of SAMAPA in 1966, was one of the conditionalities of the agreement between
the Republic of Bolivia and the German Federal Government, the reason was that, at the time,
the municipal government nor the National Government, were considered reliable payers.
Moreover, the German Federal Government tried to guarantee the payment of the loan through
the mechanism of a decentralized water company.
Considering that, the Agreement of 4th of February of the present year with the Bolivian
Republic, the Federal Government of Germany granted a credit for 14,000,000 German
marks, for the improvement and expansion of the potable water system of the La Paz
city, through the Kreditanstalt fr Wiederaufbau de Frankfurt, Main.
The management of the infrastructure to be implemented with funds coming from this
loan, as well as the tariffs collection, interests and amortizations of the loan, will be
under the responsibility of an special entity that will be called Municipal Autonomous
Potable Water and Sewer Services (SAMAPA)
Aguas Del Illimani S.A. - SUEZ
During 1990s, the National Government introduced an institutional reform with new socioeconomic implications, this was following neoliberal goals based on the market and private
sector involvement also including the concept of community participation through the new law
of Popular Participation (Law, 1551). During this period, the main Bolivian companies were
privatized (gas and oil, tele communications, rail transport, national airlines and others) (Laurie
& Crespo, 2007). The deficient infrastructure, inequity and insufficient management in the
water services sector pointed to privatization as the solution for the three largest cities: La Paz,
Cochabamba and Santa Cruz (Laurie & Crespo, 2007), this approach was supported by the
World Bank and other international donors (Hailu, Osorio, & Tsukada, 2012). In Fact, The
World Bank provided seven loans worth a total amount of 77 Million dollars to reformulate the
4
Authors translation
19
national legal framework and facilitate the involvement of international private companies in
Bolivia. From these seven loans, three were destined to the water sector (Kruse & Ramos,
2004). Consequently, the National Government rearrange the institutional framework of the
water service in La Paz. This through the Presidential Decree 24573, which approved the
delegation of the water services of La Paz to the private operator Aguas del Illimani S.A.
Company partially owned by the SUEZ- Lyonnaise des Eaux Group, the largest water
multinational corporation at the time, who awarded the concession and signed a 30 years
contract5 (Hailu et al., 2012).
However in 2005, the neighborhood associations of La Paz and El Alto initiated protests against
the private operator Aguas de Illimani S.A., these protests were directed to the rejection of the
increased tariffs and the low service coverage in these cities (La Prensa 06/02/05). Furthermore,
the neighborhood associations of La Paz and El Alto maneuver to incorporate to their protests,
grassroots organizations from 7 different states of Bolivia. This other organizations joined the
neighborhood associations of La Paz and El Alto to support their request towards the National
Government, to dismiss the contractual agreement between the State of Bolivia and the Water
Corporation (La Haine, 25/02/05). As a result, the concession contract was reviewed by the
National Water Regulator (SISAB6). And later on, the contract was rescinded (DS, 28365),
event that finally driven to the water services reform in La Paz.
Social-Public Water and Sanitation Company S.A. (EPSAS S.A.)
In December 2006, the National Government requested to the National Treasury to issue
National Bonds for a value of 5.5 million dollars to the Regional Development National Fund
(Presidential Decree, 28985), this in order to buy the shares of Aguas del Illimani S.A. to
dismiss the private company from the La Paz water services. On January 2007, the National
Government through the Ministry of Water created the transitory Social-Public Water and
Sanitation Company INC. (EPSAS S.A.). At the same time, the National Government shifted
the management of the water services from the private operator Aguas Del Illimani S.A. to the
recently created water company EPSAS S.A. Furthermore, this management shift did not cancel
the concession contract but transferred the concession from Aguas Del Illimani S.A. to EPSAS
S.A. In fact, the tax registration number is still the same, and the concession contract is still
under the same clauses.
The transitory company EPSAS S.A. was initially created to operate for the period of 6 months,
period in which a new company with a new inclusive organizational structure, participative
approach, self-management and mechanisms of political shield aimed to be developed7 (PIEB,
25/01/2013). Nonetheless, the goal of developing a new management model failed and the
The transparency of this process can be criticized for four main reasons: First, Aguas Del Illimani was the only
bidder during this process of concession. Second, the lack of participation and inclusion of society (the
contractual process was just between the government and the Aguas Del Illimani). Third, the government
increased the water tariffs in these two main cities by 57.7% before signing the contract. Forth, the 20% increase
of tariffs in the contract between the opening of the bidding and making the contract public (increasing in 3.6
Million dollars the yearly revenue) (Laurie & Crespo, 2007).
6
Superintendencia de Saneamiento Bsico
7
Information collected by the Bolivian Digital Research News Paper in interview with Julian Perez, human
water rights activist. http://www.pieb.com.bo/sipieb_nota.php?idn=7739
5
20
company operated for a total period of 5 years and one month. In order to tackle the initial goal
of including social participation in the Company EPSAS S.A., the National Government
rearrange the governance of the company and include representatives of the Neighborhood
federations of La Paz and El Alto.
On 2011, the union employees of EPSAS S.A. publicly exposed a legal claim incorporating 18
cases of internal corruption at the company. Furthermore, this cases of corruption linked a
company awarded with 38 contracts for a total amount of 3.5 million dollars, and an EPSAS
S.As employee (Pgina7, 3/08/11). Consequently, this scenario resulted in protests by the
neighbors of El Alto. For instance, Romulo Venegas, former president of one of the
neighborhoods in El Alto, in an interview with a local radio station declared:
There is corruption in EPSAS, they told us that EPSAS is public, lie, they are private,
they are profiting like Aguas del Illimani8, even worst, they are stealing, not foreign
people but Bolivians, they are stealing and living from it (Radio Tipiri 08/2011)9.
On 2012, two board members faced charges for forgery and extortion (La Razn, 29/01/2012).
Under this situation, the Mayor of La Paz requested the intervention of EPSAS expressing that:
This is further evidence of the catastrophic situation of EPSAS, and we have been
claiming this since last year. We need the intervention of the company which is
generating not only embarrassment but is threating the people of La Paz (Agencia
Boliviana de Informacin, 16/03/12)10
EPSAS intervened Back to 1965
On April 1st, 2013, through the administrative regulatory resolution AAPS/224/2013, the
National Water Regulator cancelled the special transitory authorization given to EPSAS S.A.,
and assumed the management of the company. The National Water Regulator endorsed this
decision based on EPSAS S.As poor performance, moreover, the National Water Regulator
claimed that the water services were compromised11. Furthermore, the National Water
Regulator showed evidence of internal corruption in EPSAS S.A., declaring that, after an audit
of the company there was a total loss close to 20 million dollars and a total debt of 6 million
(Datos Bolivia, March 2013)12. The Vice Minister of Potable Water and Sanitation stated that
this period of intervention was scheduled to last 6 months. At the same time, explained that this
period would embrace 3 phases: First, the shift from the private status of the company to public
enterprise aligned to the national regulations and laws13. Second, the re-engineering of processes
Transnational Corporation awarded with the concession contract during the privatization in Bolivia.
http://elaltobolivia.blogspot.nl/2011/08/realizan-mitin-de-protesta-denunciando.html
10
http://fmbolivia.com.bo/noticia79566-Alcalde-de-La-Paz-Luis-Revilla-pide-intervenirEPSAS.html?utm_source=dlvr.it&utm_medium=twitter
11
The National Water Regulator explained that the main reason for the intervention of EPSAS S.A. on 2013 was
due the water service was under risk.
12
http://www.datos-bo.com/Bolivia/Actualidad/Intervencion-de-Epsas-revela-Bs130-MM-en-perdidas
13
At the time, EPSAS .S.A was operating under a concession contract. However, on 2009, a new National
Constitution was enacted. This National Constitution prohibited the privatization nor concession of the water
services.
8
9
21
and procedures. Third, the design of a new management model. However, the initial period of
six has been extended three times, allowing the company to continue intervened by the National
Water Regulator for 3 years, from March 2013 to the present time14.
Moreover, internal conflicts and corruption denunciations continued during the intervention
phase of the company EPSAS. One of the first actions during the first period of intervention it
was the dismissal of 15 members of the employees union board, which leaded in strikes on
behalf of the employees (EJU Noticias, 13/04/13)15. The Vice Minister of Potable Water and
Sanitation argued that the union employees was responsible of the management instability since
they had the power to appoint managers and sub-management positions (Kyros Bolivia,
01/01/13)16. It should be remarked that the employees union initiated the corruption
denunciations that initially induced the intervention of the company.
Later on, 17 Months after initiated the intervention, an audit shown an overpayment of
employees, and at the same time, ghost employees receiving salaries based on the payrolls of
the company (El Da 06/10/14, El Diario, 22/10/14)17. These events caused the shift of general
management interventors three times over a period of 3 years. On the other hand, department
managers argued that this period of intervention it has been positive to the company and brought
a stable environment and a better image. Currently, the National Water Regulator, and the
municipalities served18 by this company are working on the development of a new management
model for the water services of the metropolis. Nonetheless, SAMAPA still own the main water
infrastructure of La Paz, and still figure, in legal documentation, as the owner of the assets given
under a concession contract to Aguas del Illimani, that later changed the name to EPSAS S.A.
La Paz water services summary
Finally, through the history of the water services in La Paz is possible to identify five different
bodies holding the management of these services: First, prior 1965, the management of the
water services is under the control of the National Government. Second, from 1965 to 1997, the
decentralized public municipal company SAMAPA held the management of the water works.
Third, from 1997 to 2007, the private operator Aguas Del Illimani S.A., arm of the multinational
Suez S.A., was the company holding the control of the water services in La Paz. Fourth, from
2007 to 2013, EPSAS S.A., a private company owned by the State is the water operator proving
these services. Last, on 2013, EPSAS S.A. is intervened by the National Water Regulator;
moreover, the National Water Regulator is holding the management of the water services
nowadays.
First intervention from March 2013 to April 2014, Second intervention from April 2014 to September 2015,
Third Intervention from September 2015 to the present.
15
http://eju.tv/2013/04/denuncian-masacre-blanca-en-la-intervenida-epsas/
16
http://kyrios.com.bo/noticia/regiones/gobierno-denuncia-que-el-sindicato-de-epsas-ten%C3%ADa-el-poderde-cambiar-gerentes
17
http://www.eldia .com.bo/index.php?cat=1&pla=3&id_articulo=156080
http://www.eldiario.net/noticias/2014/2014_10/nt141022/nacional.php?n=61&-denuncian-pago-de-sueldosilegales-en-epsas
18
The main municipalities supplied by the company are La Paz and El Alto. Moreover, small municipalities like
Viacha, Achocalla, Mecapaca, Laja, and Palca are also partially supplied by EPSAS S.A.
14
22

In analogy with La Paz, prior the privatization decade, the events followed a similar pattern.
However, in the post-neoliberal period in Bolivia, the events differed, this since the National
Government returned the management of the water services to the Municipal Potable Water,
Sewage and Storm Drainage Service (SEMAPA), company responsible of the water services
provision to the city of Cochabamba nowadays.
Municipal Potable Water, Sewage, and Storm Drainage Service (SEMAPA)
Prior 1967, the water services provision to the city of Cochabamba was under the responsibility
of the Bolivian Central Government. The first reform of the water services sector in
Cochabamba is the decentralization of the water services management. On July 1967, the
Presidential Decree 08048 instructed the creation of the Municipal Potable Water, Sewage, and
Storm Drainage Service (SEMAPA). In contrast with La Paz, this first water company was a
private/public enterprise. However, on November 24th of 1972, a second reform, through the
Presidential Decree 10597, instructed the rearrangement of the company. This rearrangement
consisted in dismissing the private sector participation of the company. As a result, the new
water company was the equivalent of a municipal decentralized public water utility.
Then, the Ministries Council, decree: Article 1. - To Authorize the creation of the
Municipal Potable Water, Sewage and Storm Drainage Service (SEMAPA), as a
Mixed Economy Company19, with a legal address in the City of Cochabamba,
having indefinitely term and complete self-management capacity, and to exercise
all acts subject to its juridical life under the norms subject to the present decree and
the bylaws dictated under their organic statute
Aguas Del Tunari Consortium Bechtel
On September 1999, the National Government, through the Presidential Decree 25413,
accepted the proposal of the multinational Aguas Del Tunari Consortium. The Bolivian
National Government, aligned with a neoliberal ideology at the time, signed a 40 years
concession contract for 2.4 Billion dollars (Finnegan, 2002), and delegated the water works of
Cochabamba to the new multinational water operator, this under a concession modality.
Moreover, the concession contract incorporated the multi-purpose dam project called
MISICUNI. Furthermore, the motivation behind the involvement of the private sector was the
influence of the World Bank over the Bolivian National Government, this through significant
loans destined to modify the legal and institutional framework to allow the international private
participation (Kruse & Ramos, 2004).
19
Referring to public-private enterprise.
23
The Ministries Council Decree: Article1. - To approve the report of the negotiation
commission of June 8th, 1999, referring to the negotiation with the Aguas Del Tunari
Consortium Art 2. - To accept the final proposal of the Aguas del Tunari
Consortium of June 3rd, 1999 and to award this company the water use, the public
potable water and sewer service for the city of Cochabamba, the irrigation water supply
and the electricity generation, under the execution context of the multiple project
Misicuni, this under the final proposal framework and report of the negotiation
commission, approved in the previous article
(Presidential Decree, 25413)
However, an increase of tariffs that averaged 50% (increased of 43% in the poorest
neighborhoods) enhanced the creation of the Coordinadora del Agua y de la Vida20, local
grassroots organization which led the population protests and requested the rescission of the
concession contract with Aguas del Tunari Consortium (Shultz & Draper, 2008). Moreover,
under the promulgation of the new Water Law 2029 on February 2000, protests increased, this
since this law granted exclusive rights to the concessionaries over the water services concession
area (Assies, 2003). Furthermore, this law was considered a threat to the local farmers who
joined the protests against Aguas del Tunari Consortium (Shultz & Draper, 2008). These two
elements triggered the event known as the Cochabamba Water War. On April 2000, as result
of clashes between protestors and the Bolivian Army, a high school student died, this incident
exploited the fury of the population, and under this circumstances the Police informed to the
Aguas Del Tunari Consortium executives that their safety could not be guaranteed anymore
(Finnegan, 2002)
Consequently, in April 2000, under the environment of protests and local strikes, the executives
of the Aguas Del Tunari Consortium left the City of Cochabamba. This factor allowed the
National Government, which was under the pressure of the grassroots organizations, to call an
Abandonment of Contract. Under this legal figure, the Bolivian Government cancelled the
contract with the international consortium. As a result, the National Government returned the
management of the water services to the previous company SEMAPA. At the same time
delegated the institutional reform of SEMAPA to the Coordinadora Del Agua y la Vida.
SEMAPA incorporating Social Control
The Coordinadora del Agua y la Vida aimed to develop an innovative companys
governance which incorporates elements of democracy, participation and transparency, this
through a model called of social control (Driessen, 2008). The model of social control
embraced three main elements: First, at the company structural level, the Coordinadora Del
Agua y de la Vida requested 14 Citizen Directors to be included in the administrative council,
this in order to have the representation of the 14 different districts of the city. Nonetheless, the
request was rejected by the members of the administrative council at the time. Second, the
creation of technical committees, in which the technical expertise of SEMAPA could interact
with the community in order to supervise and evaluate the projects at local level. However, this
initiative was rejected by the General Manager of the company. Third, the creation of water and
sanitation committees, this with the purpose of developing projects proposals at the community
20
Water and Life Coordinator
24
level, and at the same time, to evaluate municipal proposals. However, an already stablished
neighborhood governance structure challenged the creation of this institution. This because the
Grassroots Territorial Organization (OTB) was officially holding the representation of the
different neighborhoods at the time. Moreover, the Grassroots Territorial Organization was
well known for developing political alliances with the National State and Municipal
Government (Driessen, 2008).
The Social Control model, finally approved by SEMAPAs administrative council, did not
include the elements initially proposed by the Coordinadora del Agua y de la Vida. Moreover,
did not incorporate the necessary institutional reforms to incorporate the participation of the
water users in the governance structure of the company. At the same time, lacked of
mechanisms of social control to ensure transparency. At the end, the social control model
approved, was a simplification of the original version, in which the main contribution it was the
incorporation of 4 Citizen Directors to the administrative council, these chosen in general
elections of the water users of Cochabamba (Driessen, 2008). However, the participation of
these Citizen Directors did not improved the conditions and performance of the water utility.
Moreover, in September 2005 the Coordinadora Del Agua y la Vida, in coordination with other
social movements, announced a second water war in Cochabamba, arguing the presence of
internal corruption and nepotism in SEMAPA (CMI, 30/09/05). This event alarmed the
National Authorities to act and initiate an investigation. The results proved loses for 600
thousand dollars (Los Tiempos, 24/07/2007) and unraveled the internal corruption of the
company; based on acts of anti-economic behavior, dereliction of duty and harmful contracts
to the state; some of these were directly linked to the Citizen Directors at the time (Opinion,
05/02/12). As a consequence, on August 2008, the company lost a loan for 5 Million dollars
coming from the Andean Development Corporation, which it was destined to the development
of water infrastructure to provide water services to the South Zone, which is the poorest
neighborhood of Cochabamba (Los Tiempos, 18/10/08).
In December 2008, a new General Manager was appointed. Consequently, four department
managers were dismissed on January 2009, forcing the company to pay more than 70 Thousand
dollars in social benefits (Los Tiempos, 06/01/2009). Later on May 2009, 150 employees were
dismissed, this decision was made by administrative council arguing an overemployment by
the company (ABI, 01/05/09). However, in June the company hired 124 new employees (Los
Tiempos, 18/06/2009). Consequently, the employees unions initiated protests against the
administrative council and requested to incorporate the employees dismissed (ABI, 01/05/09).
Later on September 45 employees took control of the main facilities for 12 days, requesting the
incorporation of the 150 employees dismissed.
SEMAPA back to 1972
There is a fourth, rearrangement of the Cochabamba water services; however, this is not legally
endorsed. In 2009, the municipal government informally dismissed the social control
representation of the administrative council. Consequently, the Company shifted to be under
the control of the Municipal Government as it was on 1972. The water utility General Manager
officially announced the dismissing of the Citizen Directors representation in the administrative
council. This arguing an illegal behavior of the representatives in the past and a judicial order
25
(Opinion, 09/04/14). At the same time, the Mayor of Cochabamba, expressed that the elections
for Citizen Directors required funding not justified since just 5 thousand people, participate of
this elections (Los Tiempos, 19/04/12). However, a social organization called Supervisory
Committee of the city requested to the mayor to call for Citizen Directors elections, and also,
demanded the modification of the company statutes to include 14 Citizen Director
Representatives to provide representation to all the districts of the municipality (Los Tiempos,
21/04/12). Nonetheless, the demands were not followed, even when, in the company statutes is
stipulated that the Citizen Directors have representation at the administrative council.
From 2014 to 2015, there was an active turnover of the SEMAPA Executive Managers, in
which four managers held this position in a period of one year; moreover, the current general
manager can be recognized as a political actor at the local and national level. He participated
of the elections for Mayor of Cochabamba on 2004, and was part of the legislative assembly on
2004. Furthermore, he was a member of the negotiation commission at the parliament on 2008
and national senator candidate on 2008 (El Diario, 15/10/14). On 2015, more denunciations of
corruption in SEMAPA were publicly announced, in which 14 employees of this company are
under legal charges to facilitate the award of construction contracts to family members (Agua
en Bolivia, 10/12/15)21.
Cochabamba water services summary
Finally, through the history of the water services in Cochabamba there are four entities, which
provided these services: First, prior 1967, the water services provision is under the direct
control of the National Government. Second, from 1967 to 1999, the municipal public
decentralized water utility took control of the provision of these services22. Third, from 1999 to
2000, the water services provision is under the private operator Aguas Del Tunari Consortium.
Lastly, on 2000, the management is returned to SEMAPA, this under a new governance model
including social participation. However, this social participation was informally dismissed on
2009. SEMAPA is the current water operator, which is governed by the Municipality of
Cochabamba.

The Santa Cruz de la Sierra water services provision is currently under the management of the
Santa Cruz Potable Water and Sewer Service (SAGUAPAC). This water company initiated, in
analogy with La Paz and Cochabamba, as public company. However, it shifted status to a water
cooperative; and nowadays is managing the Water Services of Santa Cruz for a total period of
37 seven years under this model.
Santa Cruz Potable Water and Sewer Service (SAGUAPAC)
http://boliviaagua.blogspot.nl/2015/12/semapa-procesa-15-por-favorecer-con.html
From the period 1967 to 1972, the company held a mixed private status in which incorporated the private
sector in the structure of the company. However, there is no evidence of an actual private participation during
this period. Consequently, the management of the company from 1967 to 1999 was under control of the
municipal government of Cochabamba.
21
22
26
Prior 1973, the water services provision it was under the tuition of the National Government
through the Santa Cruz Public Works Committee. However, on May 1973 under the
Presidential Decree 10844, The National Government decentralized the Santa Cruz Potable
Water and Sewer Services, this under the following guidelines:
The Ministries Council decree: To create the Santa Cruz Potable Water and Sewer
Service (SAGUAPAC) as a Public Service entity, with a legal address in Santa Cruz de
la Sierra, with limitless duration, with financial and administrative autonomy and
independent patrimony; It will be entitled to all acts of legal life subject to the provisions
of this Decree and the rules to be stablished in its Organic Statutes and Internal
Regulation
Furthermore, the creation of this autonomous company is a product of conditionalities
motivated by the Inter-American Development Bank. This international funding organization
provided the funds for the development of infrastructure in the city of Santa Cruz. These funds
were subject to contractual conditionalities, and among them, the decentralization of the water
services in Santa Cruz.
it is duty of the Supreme Government, to create the necessary administrative and
technical agencies, with complete autonomy, to attend these indispensable public
services, along with the contractual commitment acquired with the Inter-American
Development Bank when receiving the credit destined to the improvement of the potable
water and sewer system for the Santa Cruz city
SAGUAPAC Water Services Cooperative

In 1979, a wave of regional services cooperative culture, coming from the telephone services
founded in 1960 and electrical services in 1962, motivated the administrative council of
SAGUAPAC to adjust the status of the water company. On July 1978, this administrative
council assumed the decision to shift its status from an autonomous public water utility to a
services cooperative model, which was the model used by other services companies in Santa
Cruz. At the same time, the administrative council maneuver to get the National Government
endorsement through the Presidential Decree 16139, enacted on February 1st, 1979.
The Ministries Council decree: Article1.- To authorize the transformation of the
current potable water service SAGUAPAC into a Cooperative of public services, with
the basic objectives of: a) The construction of potable water and sewer infrastructure,
pavement and other services required by the community b) The operation, maintenance
and general management of the infrastructure and services c) The recovery of the
investments and any other which would be compatible with the new legal personality
27
The cooperative model of Bolivia is framed by the national constitution and the National
Cooperative law, which follows six values:
Solidarity; is the collective interest, that allow to promote and develop practices of
mutual assistance and cooperation among the associates and from these to the society.
Equality; the associates have equal rights and liabilities to access to the benefits
provided by the Cooperative, without the existence of preferences and privileges toward
any associate in particular. Reciprocity; mutual provision of goods, services, and work
for common benefit, developed between the associates, among cooperatives and their
network, in harmony with the environment. Equitable distribution. All associates
should equitable receive, the surplus, benefits and services granted by the cooperative,
in relation to the services utilized or participation in work. Social purpose; Primacy of
social interest over individual interest. Non-profit of associates; Exclusion of activities
of speculative purpose, so that profits do not accumulate to enrich the associates.
(Cooperatives General Law, Law356)
The SAGUAPAC water cooperative was developed under a water users governance structure,
which excluded the participation of Municipal and National Government officials. Moreover,
prohibits the participation of individuals with a political background. Under this water users
governance structure the water utility SAGUAPAC had the control of the water services of the
city of Santa Cruz over the past 37 years without disruptions.
In contrast with La Paz and Cochabamba, neither internal nor external scandals can be found
in the archives of the local newspapers. Florence Btricey (2015), performed an analysis, from
1979 to 2013, of the main local newspaper El Deber which is classified as one of the 15 most
influential at the National Level (Galvn, 2011). During the period 1979-2013, it is possible to
find 58 articles referring to SAGUAPAC, among them, the majority reflect a positive image of
the company. Btricey argues, that not just the performance and technological capacities are
reflected in the local media. Moreover, there is a systemic discourse in which elements of
identity with the local population, history recalls, emotionalisation and personification are used
(Btrisey, 2015). These elements are evidence of SAGUAPAC customer orientation, using the
local media to communicate with the population and legitimize its existence. Moreover, to
receive the recognition of the local actors involved in the water sector.
Santa Cruz water services summary
Finally, it is possible to identify three different entities managing the water services for the city
of Santa Cruz: First, prior 1973, the National Government held the control of the water services.
Second, the decentralized public company SAGUAPAC was the responsible of the provision
of the water services. Finally, the water cooperative SAGUAPAC is the water services holder.
28
CHAPTER 5

Different organizational structures governed the water services of the main cities of Bolivia: La
Paz, Cochabamba, and Santa Cruz. These structures shifted through the history of the water
services. At the same time, is possible to align these different organizational structures with the
periods of local water reforms performed by the National Government. Finally, the different
organizational structures generated different relations with political actors at the local and
national level, which influenced the structural autonomy of the different water companies.

The Municipal Autonomous Potable Water and Sewer Service Company (SAMAPA)
On April 20th 1966, along with the creation of the Municipal Autonomous Potable Water and
Sewer Services (SAMAPA), the Presidential Decree 07597 defined the organizational structure
of the recently created company. This mandate incorporated the composition of the
organizational structure of SAMAPA. At the same time, defined the governance structure of
the company delegating the presidency of the administrative council of the company to the
mayor of the La Paz Municipality. The structure of the SAMAPAs administrative council,
equivalent to the board of directors, it was initially composed by: the Mayor of the city of La
Paz as the president of the council, three representatives from the municipality of La Paz, one
of the National Central Bank, one of the Friends of the City Society, one of the State Chamber
of Industry and Commerce and the General Manager.
Through the time, the structure of the administrative council of SAMAPA suffered partial
modifications through presidential decrees and/or internal statutes reforms 23, this allowed
including or dismissing the representation of different organizations considered stakeholder
through the different periods of the company operations. However, the municipal Government
of La Paz remained the main actor at the SAMAPAs administrative council.
For instance, one of the most relevant one is the Decree Law 12547 of June 1975, which incorporate
government agencies as part of the Administrative Council.
23
29
SAMAPA Administrative Council

Mayor of La Paz
President
Municipality of La Paz
3 Representatives
National Central Bank

1 Representative
State Chamber of Industry and Commerce

Representative
Friends of the City Society

Representative
General Manager
Head Manager
(Appointed by the board
of directors)
Department
Manager
Department
Manager
Department
Manager
Department
Manager
Figure 6. - SAMAPA Organizational Structure February 1966
Aguas Del Illimani S.A. - SUEZ

As mentioned in the previous section, from 1994 to 2000, Bolivia experienced a wave of
international private involvement over public companies, wave motivated by the World Bank.
Consequently, on April 1997, the Presidential Decree 24573 authorized the involvement of
the international private sector in the water services of La Paz and El Alto. As a result, on July
1997, the national government, through the water superintendence, granted the concession of
water services to the private company Aguas Del Illimani S.A.
During this period, Aguas Del Illimani S.A., a private firm responsible of the management of
the services; in which the structure of the board of directors was composed by the main
shareholders of the company under the following composition: Lyonnaise des Eaux - France
35%, Arousa Galilea Bank - Argentina 10%, Sociedad Comercial del Plata Argentina 18%,
Bolivian Investment Corporation Bolivia 20%, Meller S.A. Argentina 12%, and National
Consultant Bolivia 5%.
30
Aguas de Illimani Shareholders Composition

Lyonnaise des Eaux
(France) 35%
Sociedad Comercial del Plata
(Argentina) 18%
Meller S.A.
(Argentina) 12%
Arousa Galilea Bank

(Argentina) 10%
Bolivian Investment Corporation
(Bolivia) 20%
National Consultant
(Bolivia) 5%
Head Manager
Department
Manager
Department
Manager
Department
Manager
Department
Manager
Figure 7: Aguas Del Illimani Organizational Structure 1997. Source: (Laurie & Crespo, 2007). NOTE. - On 2001,
after Cochabamba water war, the shareholders composition of Aguas Del Illimani suffered modifications.
Social-Public Water and Sanitation Company S.A. (EPSAS S.A.)

On 2005, the protests motivated by the neighborhood associations of El Alto and La Paz,
exerted pressure over the National Government to terminate the concession contract with the
multinational private operator. In addition, on January 2007, The National Government created
a new company. This new company EPSAS S.A. initiated operations under a new
organizational structure in which the Neighborhood associations were incorporated at the
administrative council of the company, this in order to include the element of social control.
The EPSAS S.A Board of Directors was composed by representatives from the Ministry of
Water, the Municipality of La Paz, and Municipality of El Alto, neighborhood associations
(FEJUVE) of La Paz and El Alto and the National Water Regulator.
The board of directors of EPSAS S.A. followed a dynamic turnover from January 2007 to
March 2013, in which 3 to 4 different boards had control over the company. However, the
different boards of directors were under control of the National Government. This because the
Ministry of Environment and Water owned the shares of the company. Moreover, the
Neighborhood Association of El Alto had a well-defined political alliance with the National
Government (ABI, 11/01/10). At the same time, the Neighborhood Association of La Paz did
not recognized its representative at the Board of Directors of EPSAS S.A. (La Razn,
29/01/2012), it is speculated that the appointed representative of the Neighborhood Association
of La Paz had a political alliance with the National Government.
31
EPSAS S.A. Board of Directors

Ministry of Environment and Water
La Paz Municipality
El Alto Neighborhood Association
El Alto Municipality
La Paz Neighborhood Association
Head Manager
(Appointed by the board of directors)
Department
Manager
Department
Manager
Department
Manager
Department
Manager
Figure 8: EPSAS S.A Organizational Structure
Moreover, this turnover and political influence affected negatively the operations of the
company, this since there was a high level of interference from the Board of Directors over the
decision making process at the managerial level24. Which publicly exposed internal conflicts
and corruption in the local media. Under this scenario, the National Water Regulator officially
intervened EPSAS S.A.
EPSAS intervened
The intervention on behalf of the National Water Regulator over the EPSAS S.A. consisted on
the rearrangement of the organizational structure of the company. This rearrangement
dismissed the companys Board of Directors. Consequently, the National water Regulator
assumed the management of the water company, appointing a new General Manager called
the interventor who represents the National Water Regulator at the managerial environment
of the company. At the same time, The National Water Regulator is a decentralized
operational arm of the Vice-ministry of Potable Water and Sanitation Services, which is part of
the Ministry of Environment and Water, an executive arm of the National Government.
24
This stated by one of the head managers of the company who requested anonymity
32
Vice Ministry of Potable Water and Sanitation Services

Head Manager
(Appointed by National Water Regulator)
Department
Manager
Department
Manager
Department
Manager
Department
Manager
Figure 9: EPSAS 'Intervened' Organizational Structure

Municipal Potable Water, Sewage, and Storm Drainage Service (SEMAPA)
On July 12th, 1967, beyond the creation of the Municipal Potable Water, Sewage, and Storm
Drainage Service (SEMAPA), the Presidential Decree 8048 incorporated the organizational
structure of the company, as well as, the governance structure. In which is established a public
private mixed enterprise, this in order to capture private capital into the water utility.
This company had in its organizational structure in which its administrative council was
composed by the Cochabamba Municipal Mayor as the president of the council, three
representatives of the Cochabamba municipality, one representative of the State Industry and
Commerce Chamber, one representative of the State Neighborhood Association and one
representative of the Private Sector Shareholders.
However, on November 24th of 1972, the Presidential Decree 10597 stablished the restructuring
of the company, shifting its status from a public private mixed enterprise to a municipal
decentralized public company, dismissing the private sector representation in the administrative
council. At the same time, a new organizational structure was stablished, in which the
administrative council was composed by the Mayor of the Municipality of Cochabamba as the
president, a representative of Ministry of Liaison and Planning as vice-president, one
representative of the Ministry of Public Health and Social Welfare, one representative of the
State Industry and Commerce Chamber, one representative of the Neighborhood Association
and the General Manager which does not have a right to vote. Through the history of the
company, presidential decrees combined with internal statutes reforms have partially modified
the organizational structure of the company. However, the Municipality of Cochabamba
remained the main protagonist.
33
SEMAPA Administrative Council

Mayor of Cochabamba
President
Cochabamba Municipality
3 Representatives
State Industry and Commerce Chamber

1 Representative
State Neighborhood Association

1Representative
Private Sector Shareholders

1 Representative
Head Manager
(Appointed by the board of directors)
Department
Manager
Department
Manager
Department
Manager
Department
Manager
Figure
SEMAPA Organizational
Organizational Structure
Structure 1967
1967
Figure10:
1: SEMAPA
SEMAPA Administrative Council

Mayor of Cochabamba
President
Ministry of Liaison and Planning
Vice-president
Ministry of Public Health

Representative
State Industry and Commerce Chamber Neighborhood Association

Representative
Representative
General Manager
Head Manager
Department
Manager
Department
Manager
Department
Manager
Department
Manager
Figure 12: SEMAPA organizational structure 1972

Figure 11: SEMAPA organizational structure 1972
34
Aguas Del Tunari Consortium Bechtel

On September 1999, pursued by the significant loans provided by the World Bank, the Bolivian
National Government reformed the Cochabamba water services, and enacted the Presidential
Decree 25413, in which the management of the Cochabamba water services is transferred to
the Aguas Del Tunari Consortium. This new company initiated operations under a new
organizational structure composed by the company shareholders. The shareholders composition
of Aguas del Tunari Consortium incorporated the following companies: Bechtel Enterprise
Holding from the United States 27.5%, United Utilities from the United Kingdom 27.5%,
Abengoa from Spain with 25%, Petricevic from Bolivia 5%, SOBOCE from Bolivia 5%,
Compaa Boliviana de Ingeniera 5% and ICE Agua y Energa from Bolivia 5%.
Aguas Del Tunari Shareholders Composition

Bechtel Enterprise Holding
(USA) 27.5 %
United Utilities
(United Kingdom) 27.5%
Abengoa
(Spain) 25%
SOBOCE
(Bolivia) 5%
Petricevic
(Bolivia) 5%
CBI
(Bolivia) 5%
ICE
Bolivia (5%)
Head Manager
Department
Manager
Department
Manager
Department
Manager
Department
Manager
Figure 13: Aguas Del Tunari Organizational Structure
SEMAPA incorporating Social Control

The increased water tariffs of the new private operator Aguas del Tunari Consortium, among
other elements, result in local protests against the private water company and the National
Government, event that finally end in what is known as the Cochabamba Water War.
Consequently, the national government returned the management of the water services to the
previous company SEMAPA, however, delegated to the grassroots organizations
Coordinadora Del Agua y la Vida the institutional reform of SEMAPA. The delegation
result in negotiations with the Municipal Government to redefine the organizational structure
of the company, this because the Coordinadora lacked of legal instruments to perform such
institutional reform. However, the Coordinadora maneuver to be temporary include at the
administrative council of SEMAPA.
35
The Coordinadora del Agua y de la Vida, proposed to redefine the organizational structure
of the company, this through the incorporation of 14 citizen directors at the administrative
council. However, the company SEMAPA was still under the legal control of the municipal
government, which rejected the petition. Finally, the organizational restructure of the company
result in the inclusion of four water users at the administrative council, these called citizen
directors.
SEMAPA Administrative Council (2000)

Mayor of Cochabamba
President
Cochabamba Municipality
One representative
Citizen Directors
four representatives
Union Employees
Representative
Head Manager
Department
Manager
Department
Manager
Department
Manager
Department
Manager
Figure 14: SEMAPA Organizational Structure 2000
SEMAPA back to 1972

Along with the internal conflicts of 2009, the organizational structure of the company suffered
a modification, in which the Citizen Directors where informally dismissed from administrative
council of SEMAPA. Currently the structure of the administrative council of SEMAPA is
composed by the Mayor of Cochabamba as the president, one representative of the State
Government, one of the Municipality, one of the Ministry of Environment and Water and one
representative of the Cochabambas Professionals Association and the General Manager who
does not have the right to vote.
36
SEMAPA Administrative Council 2016

Mayor of Cochabamba
President
State Government of Cochabamba
Representative
Ministry of Environment and Water
Representative
Municipal Government
Representative
Professionals Association
Representative
General Manager
Head Manager
(Appointed by the Mayor)
Department
Manager
Department
Manager
Department
Manager
Department
Manager
Figure 15: SEMAPA Organizational Structure 2016

Santa Cruz Potable Water and Sewer Service (SAGUAPAC)
On 1973, the National Government decentralized the water services under the condition ants
stipulated by Inter-American Bank, which facilitated the loan destined to the development of
water infrastructure for the City of Santa Cruz. The Presidential Decree 10844 enacted on 1973,
beyond the creation of the decentralized public Company SAGUAPAC, defined the
organizational structure of the company in which the administrative council was composed by
the following members: The president of the Santa Cruz Public Works Committee as the
president of the council, a representative of the Ministry of Urban Development and Housing
as Vice-president, and representatives from the Municipal Government of Santa Cruz, Ministry
of Public Health and Social Prevision, the Federation of Private Entrepreneurs, the Pro-Santa
Cruz Committee in representation of the users, and the general manager of SAGUAPAC
without the right to vote.
37
SAGUAPAC Administrative Council 1973

Santa Cruz Water Works Committee
President
Ministry of urban development and housing
Vice-president
Municipal Government
Representative
Ministry of Public Health

Representative
Federation of Private entrepreneurs

Representative
Pro- Santa Cruz Committee

Representative
General Manager
Head Manager
Department
Department
Department
Department
Figure 16: SAGUAPAC Organizational Structure 1973
SAGUAPAC Water Services Cooperative

A wave of regional cooperative culture, coming from the telephone services founded in 1960
and electrical services in 1962, influenced the administrative council, which on July 1978
decided to shift the status of the company to a services cooperative model. Decision endorsed
by the National Government through the Presidential Decree 16139, on February 1979.
Since 1979, the organizational structure of SAGUAPAC has in its highest hierarchy the General
Associates Assembly. This entity cluster water users, locally called socios, of the nine
geographical districts of the city and its governance model follow a bottom-up approach. Since
Santa Cruz is geographically delineated by nine districts (neighborhoods), each district have its
own council composed by seven elected socios: the president, vice-president, two board
members, and two delegates. From each district council, 3 members, the president and 2
delegates, participate of the General Associates Assembly, this finally integrated by 27 socios
in total. From these twenty-seven members of the General Associates Assembly, nine are
elected to shape the administrative council and another six the supervisory council. The role of
the administrative council is to define policies and projects for the water company and the
supervisory council to audit and supervise the behavior of the administrative council. Moreover,
in order to renew the administrative council and the supervisory council without compromising
the continuity of their policies and projects, the third part of the councils is turnover every two
years, which represent three members of the administrative council and two of the supervisory
council. At the same time, the company, based on their statutes, shielded the participation of
38
politicians inside its structure through the requisite of 5 years of not been a candidate in any
public election and/or have occupied a public position.
General Associates Assembly

(27 Socios/water users)
Supervisory Council
Administrative Council
Head Manager
Department
Manager
Department
Manager
Department
Manager
Department
Manager
Figure 17: SAGUAPAC Organizational Structure 1979-2016
39
CHAPTER 6

6.1. Financial Autonomy
In relation with the financial autonomy dimension of the water companies of La Paz,
Cochabamba and Santa Cruz it is possible to classify the financial behavior of these companies
in two sub-dimensions, the operations and the projects development. The operations of these
three companies is self- funded, showing evidence of high level of financial autonomy under
this sub-dimension. On the other hand, the projects and development of infrastructure have a
different pattern. Each of these water utilities have a different level of dependencies and use
different strategies to fund investment projects.

The water utility of La Paz, since its creation, developed different dependencies to fund their
projects and infrastructure. It is possible to identify three different periods of financial
dependencies in the history of the company. The First period, along with the public autonomous
water utility status of SAMAPA, reflect a strong relation with international funding agencies
and European Governments. These international bodies funded most the infrastructure during
this period in which the company was financially responsible of the payment of their loans. At
the same time, the water utility negotiated this funding with the Bolivian National Government
endorsement as the guarantor. In 2002, the National Government negotiated with the
international funding agencies and international governments granting a debt relief. However,
the government maneuver to collect the debt payment from SAMAPA to the Central
Government; in other words, The National Government was the one relief of the international
debt. On the other hand, the water utility SAMAPA still had to pay the debt, now directly to the
National Government. The national government argued that those funds were already destined
to the social participation program, part of the decentralization plan initiated during the 90s.
The second period goes along with the privatization era in which the role of international
funding agencies and private operators set presence in Bolivia. At the first stage during this
period, the National Government negotiated funding coming from the World Bank, destined
for the development of infrastructure. This under the logic of providing proper infrastructure to
the future private operators, the National Government assumed the financial responsibility for
the payment of this loan. At the same time, the new development of infrastructure, once the
concession contract it was signed, it was responsibility of the private operator. However, the
infrastructure investments made by the private operator during this period is highly questioned
(Laurie & Crespo, 2007).
40
During the third period, the water company developed a strong National Governments
financial dependency. Table 3 present a total amount of 31.5 Million US Dollars of international
and National funding available to fund water projects in La Paz in 2007. In addition to this
external funding, the company had the capacity to fund another four to 5 million dollars of own
resources available for investments. (Mundial, 2011). However, the entire international funding
available, donations and loans, was managed by the National Government, in which this
appeared as the main financial contributor of EPSAS S.A. At the same time, the National
Government is the direct responsible of international debt for the development of water
infrastructure in La Paz.
Table 3: International funding available on 2007
Donor Organization
Total Amount (Million Dollars)
BANDES (Development Bank)
5.50
The Netherlands
2.40
Canada
1.00
PASAS (Food Security Support Program)
5.00
Catalan Community
0.10
Japan
5.00
National Treasury
9.70
World Bank (Climate Change National Program)
1.40
Japanese International Cooperation Agency
0.50
Spain
0.50
Others
0.40
Total
31.50
SOURCE: (Mundial, 2011) from (Pando and Rude, 2009)
In fact, the infrastructure developed during this period 2007-2016 comprised a high
governments financial participation. Some of the infrastructure developed during this period
comprehend the improvement of the wastewater treatment plant of Puchukollo, El Alto. Project
for 8 million dollars from which 88% is financed by the National Government and 12% by the
Municipal Government of El Alto (Bolpress, 24/08/14). La Paz improvement and expansion of
the water services system project. This project incorporate three sub-projects: First, a 45 meters
dam construction for a total cost of 20 million dollars. Second, the construction of a water
treatment plant for 8 Million dollars. Third, 83 km water distribution system for 17 Million
dollars. Making a total investment of 45 million dollars from which 86% is funded by the
National Government, and 14% by the municipality of La Paz (Vice-presidency, 28/01/16)25.
Moreover, the total amount for projects submitted to the Ministry of Environment and Water
sum 69 million dollars26 as described on the Table 4.
Table 4: National Government requested funds by EPSAS
http://www.vicepresidencia.gob.bo/El-vicepresidente-inspecciono-la-construccion-del-sistema-de-aguapotable-de
26
http://www.epsas.com.bo/epsas/pdf/proyectos.pdf
25
41
Projects Submitted to the Ministry of Environment and Water EPSAS. S.A.
Total (US$)
Extension of the sanitary sewer system district 12, Phase 3- El Alto
2,506,767.28
Extension of the sanitary sewer system district 8, Phase 3- El Alto
6,198,789.07
Main sewer Urb. Solidaridad-Mirador and secondary network Urb. Atalaya El Alto
Relocation of the sewage outfall. Av. Estructurante San Salvador Neighborhood El Alto
Sanitary sewer system district 14 - El Alto
Sewer system Kellumani La Paz
649,473.88
Renewal sewer system Retamani La Paz
439,923.05
Communities Carpani- Kenuma- Sunturuta Eco-latrine Project
138,135.60
Community Chochechiwani Eco-latrines Project
42,178.71
10
Community Jampatury Chico Eco-latrines Project
17,925.99
11
Community Joconake Eco-latrines Project
15,817.06
12
Community Lorokota Eco-latrines Project
81,194.21
13
Community Palkoma Eco-latrines Project
94,902.32
14
Potable Water District 7 El Alto
15
Improvement and expansion of the potable water system district 2 phase I - Laja
446496.07
16
Improvement and expansion of the potable water system district 2 phase II - Laja
246,412.12
17
Improvement and expansion of the potable water Jupapina La Paz
452,096.07
18
Potable water construction Los Pinos District 4 La-Paz
97,789.07
19
Improvement of the water system Carpani, Kenuma and Sunturuta
100,088.13
20
Improvement of the water system Choquechihuani
34,177.71
21
Improvement of the water system Hampaturi Chico
17,784.71
22
Improvement of the water system Joconake
14,569.59
23
Improvement of the water system Lorocota
49,514.48
24
Improvement of the water system Palcoma
60,874.54
25
Improvement of the water system Chinchaya
26
Chuquiaguillo potable water treatment plant construction
8,221,497.23
27
Chuquiaguillo potable water distribution system
17,780,810.78
28
IWRM Hampaturi River La Paz Dam Construction Component
18,982966.38
29
Minor expansion of the potable water system District 8 Section A - El Alto
299489.54
30
Minor expansion of the potable water system District 8 Section B El Alto
299,476.69
31
Main distribution line improvement District 9 Section A El Alto
299,208.67
32
Main distribution line improvement District 9 Section B El Alto
299,475.73
33
Minor expansion of the potable water system District 7 - El Alto
299494.61
34
299,427.84
35
Minor expansion of the potable water system District 7 and 14 - El Alto
292,998.80
36
299,493.99
171,060.36
107,248.93
6,497,520.17
3,198,479.29
68,618.96
Total
69,122,177.84
SOURCE: EPSAS S.A.
42

The Cochabamba water services followed a similar pattern as in La Paz, in which the company
develop a high financial dependency on international and national agencies to fund their
projects. For instance, the Table 5 present the different international and national agencies
providing funding to the company for the development of water projects on 2008 (Mundial,
2011). However, the same year SEMAPA lost a loan for 5 million dollars, a national deputy
argued that the public company lost this credit due to the negligence of the general management
of the company since they did not follow the procedures stipulated in the agreements signed
with the Andean Development Corporation (Los Tiempos, 19/08/08).
Table 5: International Funding Available for SEMAPA on 2008
Funding organization
Total Amount Million US$
International Development Bank
State Government of Cochabamba
Andean Development Corporation
Japanese International Cooperation Agency
14
Total
31
Source: (Mundial, 2011) From (Pando y Rude 2009)
In 2012, the Engineering National Association publicly announced that SEMAPA have six
incomplete projects that could benefit 200 thousand people in the south zone, the poorest district
of Cochabamba. The projects incomplete comprehend: the water storage tanks for the south
zone, the Taquia water treatment plant, the Sinergia-Barrilete adduction system, Valle
Hermoso water and sewer system, the Japanese project from Japan to the South and the
Metropolitan water and sanitation plan. Moreover, the president of the Engineers National
Association affirmed that the storage tanks built in the south are white elephants because there
is no water to be storage at the south zone. Furthermore, the company did not build the main
pipelines to fill the tanks (Opinion, 13/10/12). At the same time, this organization questioned
why the company did not implemented projects already approved and funded by the France
Government for 4.5 million dollars and the Inter-American Development Bank for 16 million
dollars.
In 2013, the municipal government of Cochabamba transferred 4.7 million dollars to SEMAPA.
This funding it was destined for the development of water infrastructure. The projects embraced
the construction of the main pipeline feeding the main water treatment plant of the company
for 3.5 million dollars, the water distribution system for the Calatayud market for 72 thousand
dollars, and sewer system for the Calatayud market for 137 thousand dollars. At the same time,
the national Government through the Ministry of environment and Water assigned 1.85 million
dollars for the potable water system for the districts 8 and 9. Moreover, the same year the water
company requested funding to the National Government for almost 70 million dollars as
described in the table 6.
Table 6: National Government Funds requested by SEMAPA
43
Project
US Million
dollars
Potable water and sanitation system renewal, Casco Viejo, Phase I
8.49
Potable water and sanitation system renewal, Casco Viejo, Phase II
17.45
Waste water treatment plant extension and improvement, Alba Rancho
10.94
Potable water and sanitation system construction, East zone of the district 14
2.88
6 Water wells in El Paso zone
0.91
Potable water network improvement, OTB Concordia
0.27
Potable water system network extension, Bisa urbanization
0.22
Sanitation system construction, Mancomunidad de OTBs y Juntas Vecinales Sub-Distrito 12
1.43
Potable water system construction, District 8 and 9
11.91
10
Renovation of the potable water and Sanitation system, Casco Viejo
8.49
11
Raw water adduction system, Misicuni PTAP Cala Cala
6.52
TOTAL
69.84
Source: SEMAPA s Web Page
Furthermore, the National Government did not funded the list of projects presented by
SEMAPA to the Vice-ministry of Environment and Water. However, on 2014, the National
Government announced the implementation of the Project Water for the South this project
incorporated potable water and sanitation infrastructure valuated in 11.9 million dollars, from
which 80 % is financed by the National Government and 20% by the Municipal Government
(Los Tiempos, 24/01/14). The infrastructure incorporated in the project is allocated in the
poorest neighborhoods of the city, the South Zone. Currently the water for the south is under
construction and is expected to be concluded on 2016. Moreover, the a government official
expressed in an interview that the National Government has interest to continue the
development of infrastructure in Cochabamba and provide the funding, however, the problem
is the instable management of the water utility SEMAPA:
The Ministry (of environment and water) has submitted many (projects), the problem
is that SEMAPA do not have a stable management, they change general managers all
the time. Therefore, the new manager do not understand what is going on and when he
starts to understand they are changing to a new one. For instance, the last year they
changed five general managers I think, I am not sure. Therefore, they do not have an
actual institutional management SEMAPA do not have credibility
(Vice Ministry of potable water and sanitation official)
Furthermore, the same Government official stated that the reason cause the National
Government if focusing attention on La Paz-El Alto water services goes beyond the instable
management of SEMAPA. This since there is also political motives behind all the financial
support towards La Paz and El Alto.

In contrast with the water utilities of La Paz and Cochabamba, the water utility of Santa Cruz
has shown a high level of financial autonomy in relation to the development of projects. Since
1979, the water utility have funded most of their infrastructure. For instance, in 2006 the water
44
utility accessed to a loan from the World Bank for 12 million dollars this to implement a project
to capture greenhouse gases emission, from a waste treatment plant. Under the contract
SAGUAPAC is the direct responsible for the payment of the loan. Moreover, on 2012 the
Andean Development Corporation facilitate a loan for 18 million dollars. The main difference
in relation with the water utilities of La Paz and Cochabamba is that under this contractual
agreement SAGUAPAC has to pay the 100% of the debt. The Ministry of environment and
water recognizes that SAGUAPAC have the capability to provide the funding for the
development of infrastructure and improvement of the services.
SAGUAPAC did not submitted projects (to the ministry) because they are a water
company presenting indicators of efficiency, they even can access to loans. In my
understanding, they have accessed to credits coming from the World Bank from which
they are paying that debt
(Vice-ministry of Water and Sanitation Official)
On 2010, the Bolivian National government recalled a loan obtained on 1979 (948/BO). This
loan it was destined to the development of infrastructure in the city of Santa Cruz, in which 3
agencies participated: The Santa Cruz Development Corporation with 2.5 million dollars, the
International Development Association with 9 million dollars and SAGUAPAC with 5.8
million dollars. On January 2010, the National Government requested to the Cooperative
SAGUAPAC the payment of credit interests for 6.4 million dollars. Under the agreement
signed on May 2010, SAGUAPAC paid these interests through the construction of a sewer
system outside of their service area.
Table 7 show some of the projects developed over the past 5 years and the funding source.
Moreover, the funding coming from the Andean Development Corporation has the form of a
loan from which SAGUAPAC is financially responsible to pay the debt.
Table 7: SAGUAPAC Investment Projects
Project
South Pumping station and storage
Total million dollars

0.89
Funding organization
SAGUAPAC
Sewer System North Zone
Sewer System East zone
Sewer System South Zone
South Outfall Pipe
5.7
SAGUAPAC
South Water Treatment Plant
6.3
SAGUAPAC
Sewer System North 1
5.8
SAGUAPAC
Total
36.69
SOURCE: SAGUAPAC
45
CHAPTER 7

7.1. Legal Autonomy
The current Bolivian water law 2066, promulgated on April 1st, 2000, recognizes the Entity
Provider of Potable Water and Sewer Service (EPSA) defined as Juridical personality, public,
or private, providing one or more potable water and sanitation services At the same, the law
recognizes the following classification of EPSA: Municipal public company, Joint Stock
Company, private company, cooperative of public services, civil association, indigenous and
native unions and/or associations, water committees and any other organization with a
recognized juridical structure. However, the new national constitution enacted on 2009
prohibits the concession nor privatization of the water services in Bolivia.
The water companies providing services to the cities of La Paz Cochabamba and Santa Cruz
modified and/or had different legal status through the history of the water services in Bolivia.
For instance, the first legal status of the entity providing water services to these three cities, it
was intrinsic to the National Government and the national public system. This since the agency
responsible of the water services, at the time, it was the Ministry of Urban Development and
Housing. From 1965 to 1973, along with the decentralization of the water services in Bolivia
the different water utilities created in La Paz, Cochabamba, and Santa Cruz were conferred
different legal status.

There is evidence of three different legal status of water services companies, which provided
the services to the city of La Paz- El Alto. The First, from 1966 to 1997, the company providing
water services is SAMAPA; this company was created through the presidential decree 07597,
of April 1966. Beyond the creation of the Municipal Autonomous Potable Water and Sewer
Services, this presidential decree conferred the legal status of a municipal public water utility.
The second company providing water services is the private firm Aguas Del Illimani S.A.; this
company had a private legal nature and operated the water services from 1997 to 2007.
Furthermore, the Presidential Decree 24573 of April 1997 is the instrument that allowed the
concession from SAMAPA to Aguas Del Illimani. This Presidential Decree articulated the shift
from a public municipal legal status to a private operator. The third company operating the
water services in La Paz-El Alto is EPSAS S.A.; this company is the current responsible of the
water services management, which initiated operations on 2007. As mentioned in a previous
section, EPSAS S.A. has the same legal status of AGUAS del Illimani since the Bolivian
national government bought the service concession from the private operator. Moreover,
EPSAS S.A. has the same tax identification number of Aguas Del Illimani. Consequently, the
legal status of the company EPSAS S.A. is a private company. However, since the government
46
is operating the company they develop special regulations embraced to the public system. As a
result, EPSAS S.A. do not have a defined legal status.

In the Cochabamba water services timeline, it is possible to identify three different legal status
of companies managing the water infrastructure. The First period, from 1967 to 1973, SEMAPA
is the company responsible of the management of water services in Cochabamba. In Analogy
with La Paz, the Presidential Decree 8048 of July 1967, creates the company SEMAPA,
moreover, it defined the legal status of the company as a mixed enterprise (public-private).
However, on November 1972, the Presidential Decree 10597, modified the legal status of the
company and shifted from a mixed enterprise to a municipal public company. The same
company, SEMAPA, continued the operations of the water services from 1972 to 1999. Later
on, June 1999, the Presidential Decree 21453, is the mechanism to shift the management from
the municipal public water utility SEMAPA to the private operator Aguas Del Tunari
Consortium. Moreover, this company just functioned for a period of 5 months. On April 2000,
the management of water services returned to SEMAPA, the municipal public water utility
which is the current operator of water services in Cochabamba.

A recapitulation of Santa Cruzs water services present two different legal status of the company
managing the water infrastructure. In the first period, along with the creation of SAGUAPAC,
the Presidential Decree 10844 of May 1973 conferred the quality of a municipal public water
entity. Later, on February 1979, under the request of the administrative council of SAGUAPAC,
the legal status is shifted, through the Presidential Decree 16139, to public services
Cooperative. Moreover, the public services cooperative status incorporate the private limited
liability status, meaning that their operations are under the private law. On the other hand, define
this type of entities as non-profit organizations. In other words, the Cooperative legal status is
a non-profit private organization.
At the same time, Bolivian cooperative legal framework prohibits the merge and/or absorption
from another type of company:
Article 79, (Prohibitions). The Cooperatives are able to merge or be absorbed under
the same sector, in accordance with the regulatory Supreme Decree. It is prohibited the
merge or absorption with other type of non-cooperative economic organizations
(Cooperatives National Law)
47
CHAPTER 8

8.1. Interventional Autonomy
Under the interventional dimension of autonomy, it is considered the level of supervision and
reporting requirements over the water utilities, it considers penalties and interventions over the
water utilities as restrictive to the autonomy of these companies. This since the supervision,
reporting requirements, penalties, and interventions reflect a constraint to the water company
self-discretion.
On 1994, the National Government enacted the law 1600. This law allowed the creation of
supervisory governmental bodies for the telecommunications, electricity, gas and oil,
transportation and water services, among others. On 1999, the National Government formalized
the creation of the Basic Services Superintendence27 (SISAB) that was the agency responsible
of the oversight of the water services at the National Level. However, on 2006 this agency
shifted to a new agency named The Drinking Water and Sanitation Audit and Social Control
Authority (AAPS)28, which is the current national water regulator. At the same time, under the
Bolivian water law 2066, the National Water Regulator can intervene whichever water utility
when the populations water service is under risk. At the same time, all the water utilities have
to submit a technical and financial annual reports to the National Water Regulator.
Moreover, SAGUAPAC, because of its legal status as water cooperative, its aditionally
supervised by another government agency, the Cooperatives Supervisory Authority (Afcoop)29.
This Government Agency regulates SAGUAPAC under general law of cooperatives (Law, 365)
which represents more reporting requiarements onbehalf of this water utility, as well as, more
supervision.
Superintendencia de Servicios Bsicos

Autoridad de Fiscalizacin y Control Social de Agua Potable y Saneamiento
29
Autoridad de Fiscalizacin y Control de Cooperativas (Afcoop)
27
28
48
CHAPTER 9
Results - Performance of Water

operators
9.1. Performance in the Bolivian Water Services Sector
It is challenging to find records prior 2011, of the behavior of the water utilities embraced in
the present research. For this reason, the performance results, shown in this document, are
capturing the period 2011 2014, this based on the information provided by the Bolivian
National Water Regulator (AAPS), which initiated to request and collect performance
indicators from the different registered water utilities in Bolivia on 2011, this through a program
funded by the International German Cooperation Agency in Bolivia30.
The National Water Regulator classify the water utilities in Bolivia based on the service areas
population. Therefore, there are five categories identified: A) more than 500 thousand people,
defined as the countrys backbone, B) 50 to 500 thousand people, defined as the capital cities,
C) from 10 to 50 thousand people, defined as intermediary cities, D) from 2 to 10 thousand
people defined as municipal cities, and E) below 2 thousand people defined as rural areas. The
water utilities EPSAS (La Paz), SEMAPA (Cochabamba), and SAGUAPAC (Santa Cruz) are
under the first category, which allows comparing the performance of these three water utilities.
The key performance Indicators are defined by the National Water Regulator as: indicators
that evaluate the performance of each EPSA31, regarding its technical, economic, financial and
commercial operations, under parameters and optimal ranges that generate alerts, so that the
AAPS32 regulate and physicalize the behavior of the EPSA to improve the quality, quantity,
coverage and continuity of service (National-Water-Regulator, 2016)33. Furthermore, to
process and present the key performance indicators, the National Water Regulator request to
the registered water utilities to submit information in two forms annually presented. The first
form, comprehend technical information. In addition, the second form, incorporate economic,
financial and commercial information. Moreover, these forms are complemented with annual
reports published by the company, external audit reports, and the annual operations plans of
each water utility.
http://www.aaps.gob.bo/?p=8656
Water Services Enterprise Provider
32
33
http://www.aaps.gob.bo/cca/autentificacion.php
30
31
Results - Performance of Water operators
49
There are five categories of Key Performance indicators defined by the National Water
Regulator: 1) Reliability of water resource, 2) Supply stability, 3) appropriate management of
the system, 4) Environmental protection and 5) Economic and administrative sustainability of
the system. Each of these categories incorporates from three to nine performance indicators.
However, in the present research, it is selected 1 to 3 indicators of each category in
representation of the different categories.
Moreover, the selection of each indicator is based on the capacity of consistent comparison. For
instance, one of the indicators suggested by the National Water Regulator, under the
appropriate management of the system category, is the potable water treatment plant
capacity. However, not all the water utilities subject to this study utilize a water treatment
plant to process the potable water. The water utilities in La Paz and Cochabamba partially use
surface water, which demand a water treatment plant. On the other hand, in Santa Cruz the main
water source is ground water with a reliable quality. Consequently, in Santa Cruz the water
treatment process is not practiced. Finally, this indicator do not provide an element of
comparison between the water utilities in La Paz, Cochabamba, and Santa Cruz.
9.2. Category 1, Reliability of water resource

Under this category there are presented two key performance indicators: Current performance
of the water source and efficient use of the resource. First, current performance of the water
source, this indicator measure the level of exploitation of the water resource in relation to the
capacity authorized by the National Water regulator. The optimum status is below 85% of the
authorized capacities. Moreover, if this indicator is near 100 %, it can be considered that the
water source is intensively overexploited. On the other hand, if it present a low value, can be
considered that the water resource is sub-utilized to satisfy the population demand. At the same
time, the sub-utilization of the water resource can reflect a lack of infrastructure to delivery
water to the distribution network (National-Water-Regulator, 2016). Second, efficient use of the
resource, this indicator is defined as the percentage of raw water that is effectively delivered to
the users, based on the relation of the total water sold (Total water billed) and water extracted
from the source. At the same time, the National Water regulator stablished a value of above
60% of efficiency as an optimum indicator.
50
Results.-
Current performance of the Source

112.5
100.52
97.57
83.7
66.98
64.43
73.41
69.55
2011
69.71
83.23
79.68
54.3
2012
2013
2014
Year
EPSAS (La Paz)
SEMAPA (CBBA)
SAGUAPAC (SCZ)
Figure 18: KPI - Current Performance of the Water Source
There is an ambiguity based on the definition of current performance of the source indicator.
This since there is not a clear minimum acceptable value under its definition. For that reason,
this analysis is focus on the maximum acceptable value proposed by the National Water
Regulator. On 2011, the values of the three companies show figures under 85%, showing an
acceptable performance of these water utilities. However, on 2012, SEMAPA show a value of
100.52%, showing an overexploitation of the water source. At the same time, the water utilities
EPSAS and SAGUAPAC show percentages under 85% that express efficient indicators. On
2013, a similar pattern is followed; SEMAPA increased its current performance of the source
from 100.52 to 112.5 %, manifesting a low performance and overexploitation of the water
source. On the other hand, EPSAS and SAGUAPC show figures below the acceptable value of
85%. Finally, on 2014, SEMAPA decreased this indicator from 112.5% to 97.57%, improving
its performance, however, still above the acceptable. The water utilities EPSAS and
SAGUAPAC have values below 85%, presenting an acceptable performance. Finally, from
2011 to 2014, SEMAPA show a poor performance based on this indicator. On the other hand,
SAGUAPAC and EPSAS show an acceptable performance.
At the same time, SEMAPAs poor performance on the current performance of the water
source can be explained based on the water resources availability. This since Cochabamba is
located in a region with high water scarcity, reason that drives the water utility to overexploit
the limited water resources available. On the other hand, EPSAS in La Paz and SAGUAPAC
in Santa Cruz have a reliable and consistent water source, which availability is considerable
higher than the population demand.
51
Results.-
Efficient Use of Resource

79.83
70.73
78.47
69.98
55.14
46.45
2011
78.26
78.01
68.18
65.09
42.01
2012
2013
48.52
2014
Year
EPSAS (La Paz)
SEMAPA (CBBA)
SAGUAPAC (SCZ)
Figure 19: KPI - Efficient Use of Resource
The optimum value stablished by the National Water Regulator on efficient use of the
resource is above 60%. SEMAPA reflect values below 60% from 2011 to 2014. Furthermore,
the values decrease from 2011 to 2013, and slightly increased again on 2014, however, still
below the optimum value of 60%. On the other hand, SAGUAPAC and EPSAS show values
above 60% from 2011 to 2014. Moreover, SAGUAPAC present a higher efficiency having a
stable behavior around 78% of efficient use of the water resource. EPSAS reflect efficiency
on this indicator, however, on 2011 initiate with 70.73% and decrease to 65.09% on 2014. A
possible explanation in the comparison between SAGUAPAC and EPSAS is that SAGUAPAC
use a groundwater source that do not require treatment. On the other hand, EPSAS uses surface
water that is processed to reach the chemical requirements of the Bolivian water quality law
NB512. Finally, SEMAPA show a low efficiency regarding this indicator. In contrast, EPSAS
and SAGUAPAC have results above the optimum acceptable value defined by the National
Water Regulator.
The results based on the efficient use of resource indicator, show an inefficient behavior on
behalf of SEMAPA. As explained in the previous section, SEMAPA is located in a region
where there is water scarcity. However, the company do not show an efficient use of the scarce
water resource. During the period 2011 to 2014, SEMAPA present loses from 45% to 58% from
the water source to the connection points. Consequently, the policies and behavior of the
company is not consistent to its water scarcity reality. In fact, neither the municipality align its
policies to the water scarcity situation of the city. This since on 2015, the municipality of
Cochabamba invested 5 million dollars of city funds to construct a recreation water park (La
Razn, 10/09/15).
52
9.3. Category 2, Supply stability

The goal behind this category is to assess the continuous supply and the universality of the
service. Under this category there, two indicators presented continuity of rationing and potable
water service coverage. First, Continuity of rationing is defined as the annual average hours of
potable water served per day. The National Water regulator stablished the efficiency of this
indicator when above 20 hours per day. Second, Potable water service coverage, is defined as
the relation between the population connected to the water distribution network and the service
areas population. At the same time, the National Water Regulator delineated efficiency when
above 90% of potable water service coverage.
Results.-
Hours/Day
Continuity of rationing
24
24
24
24
15.15
15.31
2011
2012
23.39 23.61 24
24
2013
23.7
24
2014
Year
EPSAS (La Paz)
SEMAPA (CBBA)
SAGUAPAC (SCZ)
Figure 20: KPI-Continuity of Rationing
SAGUAPAC and EPSAS show a high performance based on the continuity of rationing
indicator. From 2011 to 2014, the average hours of potable water supplied to the water network
is 24 hours/day. On the other hand, SEMAPA, on 2011 and 2012 reflect low efficiency with
values below 16 hours/day of potable water supplied to the water network, however, from 2013
to 2014 its performance improved to 23.65 hours/day, expressing high efficiency. Currently the
three water utilities show a high performance in the continuity of rationing indicator.
Moreover, might be possible to link the continuity of rationing indicator to the water scarcity
situation in Cochabamba. This since, even if the water company aim to improve the water
continuity, might not have enough water resource to provide services 24 hours a day. However,
there is no evidence of a special event that explain the exponential improvement on 2013 and
2014 if this performance indicator.
53
Results.-
Potable Water Service Coverage

100
98.64
94.73
99.99
95.16
98.24
97.14
95.47
62.42
47.36
42.9
2011
2012
49.69
2013
2014
Year
EPSAS (La Paz)
SEMAPA (CBBA)
SAGUAPAC (SCZ)
Figure 21: Potable Water Service Coverage
From 2011 to 2014, SAGUAPAC show efficiency on the potable water service coverage,
expressing values above 98%. In analogy, EPSAS show a stable pattern of 95.6% from 2011 to
2014, demonstrating an efficient behavior during this period. In contrast, from 2011 to 2014,
SEMAPA present values below of 62.42% of potable water service coverage. Reflecting a
low efficiency. Finally, SAGUAPAC and EPSAS show an efficient behavior regarding this
indicator. On the other hand, SEMAPA show a low performance of potable water service
coverage.
9.4. Category 3, appropriate management of the system

The goal behind this category is to measure the adequate service to the users through an
appropriate operation and management of the system. Under this category, two indicators are
presented: Distribution system unaccounted water index and potable water system pressure.
First, Distribution system unaccounted water index represent the percentage of losses from the
water treatment plant and/or the storage tank to the water consumption points. The National
Water Regulator defined below 30 as efficient behavior. Second, potable water system
pressure, represent the pressurized portion of the water distribution system in relation to the
entire system. Furthermore, above 95% is considered an efficient management value based on
the National Water Regulator.
54
Results,
Distribution system unaccounted

water index
49.4
42.29
30.21
30.02
29.26
21.28
20.81
19.44
2011
44.38
42.93
2012
28.57
2013
20.99
2014
Year
EPSAS (La Paz)
SEMAPA (CBBA)
SAGUAPAC (SCZ)
Figure 22: KPI - Distribution System Unaccounted Water Index
From 2011 to 2014, SEMAPA express an inefficient behavior in relation to this key
performance indicator. The values presented during this period are in the rage of 42.29% and
49.4%. Unlikely, EPSAS present values close to the maximum acceptable value of 30 %,
considered the efficiency boundary. The rage of values presented by EPSAS are between
30.21% and 28.57%. In analogy to EPSAS, SAGUAPAC present values reflecting an efficient
behavior. The values presented by SAGUAPAC are in the range of 21.28 % and 19.44%.
Finally, SAGUAPAC present the highest performance among these three water utilities, closely
followed by EPSAS. On the other hand, SEMAPA show inefficiency regarding the
distribution system unaccounted water system performance indicator.
55
Results.-
Potable water system pressure

100
84.42
100
33.84
25.82
23.46
2012
2013
EPSAS (La Paz)
93.75
78.6
78.21
76.19
2011
100
SEMAPA (CBBA)
2014
SAGUAPAC (SCZ)
Figure 23: KPI - Potable Water System Pressure
From the period 2012 to 2014, SEMAPA reflect low efficiency. Having an efficiency boundary
of above 95%, SEMAPA express values in the range of 25.82% to 33.84%. However, there is
pattern of a slight improvement during this period. Data from 2011 for SEMAPA is unavailable.
In Analogy, EPSAS reflect values below the 95%, these in the range of 84.42% and 76.61%.
Moreover, from 2011 to 2012, this value decreased. On the other hand, it slightly increased
form the period 2012 to 2014. Contrasting these first two water utilities, SAGUAPAC show
values over 95% from the period 2011 to 2012, however, the value of 2014 is below the
considered efficient. Finally, SAGUAPAC present the highest performance based on this
indicator, followed by EPSAS and lastly SEMAPA.
Under this category, the distribution system unaccounted water index and potable water
system pressure are indicators that can be attributed to the water company managerial
behavior. Furthermore, the results are consistent regarding SEMAPAs instable managerial
environment and its results under this performance category. However, EPSAS show a different
patter in which the water utility replaced the managerial environment repeatedly, and at the
same time, the company present a high performance under this category.
56
9.5. Category 4, Environmental Protection

The objective behind this category is to assess the environmental protection contribution. Under
this category there is one key performance indicator presented, Groundwater extraction
incidence. This Indicator represent the relation of groundwater extracted and the capacity of the
source. The National Water Regulator defines below 85% as representative of an efficient
performance.
Results.-
Groundwater Extraction Incidence
260.6
50.65
83.59
49.57
58.48
2011
75.3
52.01
63.64 74.45 53.63
2012
43.57
2013
48.87
2014
Year
EPSAS (La Paz)
SEMAPA (CBBA)
SAGUAPAC (SCZ)
Figure 24: KPI - Groundwater Extraction Incidence
From the period 2011 to 2013, the water utility SEMAPA present values under 85%, considered
an efficient behavior. However, on 2014 the groundwater extraction incidence exponentially
increased reflecting a value of 260.6%. EPSAS reflect values from, 2011 to 2014, in the range
of 43.57% to 63.64%. From 2011 to 2013 there is a slight increase from 50.65% to 63.64%,
however, on 2014, decreases to 43.57%. From 2011 to 2014, SAGUAPAC show a uniform
behavior in which the groundwater exploitation index varies in the rage of 48.87% to 53.63%.
Finally, from 2011 to 2012, the three water utilities reflect an efficient behavior. On the other
hand, on 2014, SEMAPA show an overexploitation of the aquifer, Unlikeness to SAGUAPAC
and EPSAS.
The three water utilities SEMAPA, SAGUAPAC, and EPSAS differ on the reliability of ground
water, which might explain the heterogeneous behavior. Moreover, the 40% decrease of
SEMAPAs wells might explain the exponential increase of groundwater overexploitation on
2014.
57
9.6. Category 5, Economic and administrative sustainability

of the system
The objective behind evaluating this category is to assess the economic strength and the
administrative efficiency. Enclosed in this category four key performance indicators are
presented: Collection efficiency index, implementation investments index, unit operational
cost, and staff efficiency. First, the Collection efficiency index, assess the water utilitys
capacity to collect the water services billed. Furthermore, this key performance indicator is the
result of the relation between effectively collected revenues and the total billed services for a
determined period. The National Water Regulator define an efficient behavior when above 90%
of collection. Second, investment implementation index, reflect the implementation capacity of
the investments planned for certain period. Moreover, this result from the relation of
investments implemented and investments budgeted. The National water regulator define an
optimum value above 90% of completion. Third, the unit operational cost, express the costs
involved in the production of one cubic meter of water. This indicator come from the relation
of total operations costs and the total water billed. Fourth, the Staff efficiency show the number
of employees required by the water utility per thousand connections. The national water
regulator considers from two to four as optimum number of employees.
Results.-
Collection Efficiency Index

99.6
89.56
80.57
85.54
80.02
62.3
62.23
2011
2012
83
84.55 87.51 82.9
61.21
2013
2014
Year
EPSAS (La Paz)
SEMAPA (CBBA)
SAGUAPAC (SCZ)
Figure 25: KPI- Collection Efficiency Index
The results presented under the collection efficiency index show a heterogeneous behavior
among the three water utilities. On 2011, EPSAS is positioned with the highest collection
efficiency index of 89.56%, close to the 90 %, defined as optimum. Following, SAGUAPAC
has 80.57% and last is SEMAPA with 62.3% of collection efficiency. On 2012, the same
sequence is presented, with 85.54, 80.02, and 62.23% respectively. However, on 2013 the
pattern change, positioning SAGUAPAC with a 99.6% of collection efficiency, the highest
collection efficiency registered from the period 2011 to 2014, following, EPSAS has 83% and
58
last is SEMAPA with 61.21. Finally, on 2014, SEMAPA is positioned with the highest
collection efficiency of 87.51%, followed by EPSAS with 84.55% and last SAGUAPAC has
82.9%. This key performance indicator is the most disputed; however, the highest efficiency is
pointed to SAGUAPAC and EPSAS, followed by SEMAPA.
Results.-
Investment Implementation Index

117.7
89
77.78
60.15 57.17
35.51 34
36.46
2011
41.79
13.95
2012
68.46
34.47
2013
2014
Year
EPSAS (La Paz)
SEMAPA (CBBA)
SAGUAPAC (SCZ)
Figure 26: KPI - Investment Implementation Index
This is the key performance indicator expressing the lowest efficiency of the three water
utilities. For Instance, from the period 2011to 2014, SAGUAPAC initiated with a high
efficiency, having an investment implementation index of 117.7%, however, this value
decreased to 89%, 77.78% and 68.46%, from 2012 to 2014, respectively. Unlikely, EPSAS
initiated with a low efficiency of 35.51% on 2011, nonetheless, from 2012 to 2014 increased it
to 36.46%, 41.79%, and finally 60.15%. Finally, SEMAPA follow a pattern in which from 2011
to 2012 decreased from 34% to 13.95%, however, from 2012 to 2014, increased from 13.95%,
to 34.47% and 57.17%. Overall, the highest performance among the three water utilities is hold
by SAGUAPAC, followed by EPSAS and SEMAPA.
59
Results.-
Average Unit Cost

1.38
US$/M3
1.11
0.67
0.53
1.21
1.07
0.69
0.58
2011
0.74
0.62
2012
0.79
0.65
2013
2014
Year
EPSAS (La Paz)
SEMAPA (CBBA)
SAGUAPAC (SCZ)
Figure 27: Average Unit Cost
The results enclosed in this key performance indicator show a marked disparity among the three
water utilities. For instance, SEMAPA present unit operational costs in the range of 1.11 and
1.38 dollars per cubic meter, for the period 2011 to 2014. On the other hand, SAGUAPAC,
present unit costs in the range of 0.67 to 0.79 dollars for the same period, in average 0.51 dollars
less. In addition, EPSAS, present the lowest unit operational costs among the three water
utilities, having values in the range of 0.53 and 0.79 dollars. It is challenging to define which
water utility present the highest efficiency under this key performance indicator. This since the
three companies employ different water sources, which is translated in different processes
involved. Consequently, the costs to produce one cubic of water differs. Moreover, there is not
clarity in the definition. The National Water Regulator define this indicator as the relation of
total operational costs and the total water billed. However, do not specify what operational costs
comprehend. For instance, operational cost could represent the supplies costs involved on the
processing of one cubic meter of water, excluding administrative costs. On the other hand, it
could include both, supplies and administrative cost. This ambiguity do not allow us to define
which company has the highest efficiency under this key performance indicator. However, it is
evident that EPSAS has the lowest unit operational cost, followed by SAGUAPAC and
SEMAPA.
60
Results.-
Staff Efficiency
# Staff/1000Con
6
5.26
4.8
2.88
1.4
4.57
2.82
1.74
1.16
2011
2.73
2012
1.63
2013
2014
Year
EPSAS (La Paz)
SEMAPA (CBBA)
SAGUAPAC (SCZ)
Figure 28: KPI - Staff Efficiency
Under this key performance indicator, there is a notable difference among the three water
utilities. From the period 2011 to 2014, SEMAPA present values out of the considered optimum
range of 2 to 4 employees per a thousand connections. The values for SEMAPA oscillate from
4.57 to six employees per thousand connections. On the other hand, SAGUAPAC, in the same
period, present values from 2.73 to three employees per thousand connections, which is under
the optimum range. EPSAS, in the same period 2011 to 2014, present lower values, having
from 1.4 to 1.74 employees per thousand connections. Finally, EPSAS is positioned as the one
with highest performance under this key performance indicator, followed by SAGUAPAC and
SEMAPA.
61
CHAPTER 10
Discussion
10.1. Performance and autonomy of water utilities
Diverse studies show a positive corrlation between autonomy and performance of public
organizations. For instance, Ayub & Hegsted, (1986), studied the relation of autonomy and
performance of organizations on 13 different countires, the results express a positive correlation
(Ayub & Hegsted, 1986). Moreover, Lioukas et al, (1993), claim that the state control produce
negative consequences to the performace of public organizations (Lioukas et al., 1993).
Braadbaart et al., (2007) studied the relation of managerial autonomy and performance of 23
different public water utilities, the results express a positive association (Braadbaart et al.,
2007).
Verhoest et al., 2004, present four dimensions of autonomy which delimit the internal
autonomy of the water utility: structural, financial, interventional, and legal autonomy
dimensions. Moreover, each dimension reflect certain level of autonomy. For instance, the
structural dimension express high autonomy when the organizations board of directors do not
include government officials. The financial express large autonomy when the organization is
less dependent in government funding. The legal show wide autonomy when the organizations
legal status is away from the public apparatus and close to the private sector. Finally, the
interventional manifest high autonomy when there is no supervision and reporting requirements
over the organization.
At the same time, the Bolivian National Water Regulator defined the performance of water
utilities based on five categories: Reliability of water resources, supply stability, appropriate
system management, environmental protection, and administrative and economic service
sustainability. At the same time, this agency has in its performance archives data embracing the
period 2011 to 2014. Consequently, the following section focus on the same period, as well as,
its correspondent water operator.
Performance of Water Utilities
The Bolivian Water Regulator defined the performance of public water utilities based on the
following categories: 1) Reliability of water resource, 2) Supply stability, 3) Appropriate
management of the system, 4) Environmental protection and 5) Economic and administrative
sustainability of the system. At the same time, under each category, the National Water
Regulator incorporated key performance indicators, which reflect the behavior of the water
utility. Furthermore, the National Water Regulator delineated an optimum efficiency for each
Discussion
62
key performance indictor, consequently, this parameter allow understanding if the water utility
reflect an efficient behavior or not.
As shown on Chapter 9, SEMAPA from Cochabamba, express the lowest performance among
the water utilities under study, moreover, this water utility reflect an inefficient behavior. This
since it present results out of the optimum range under all the performance categories: reliability
of water resource, supply stability, appropriate management of the system, environmental
protection, and economic and administrative sustainability of the system. For instance,
SEMAPA present the lowest efficiency of water resource use, the lowest potable water service
coverage, the highest unaccounted water, the lowest potable water system pressure, the highest
ground water extraction incidence, the lowest investment implementation, the highest unit
average cost and the lowest staff efficiency. Positioning this SEMAPA as the water utility with
the lowest performance among the three water companies embraced in this research.
On the other hand, EPSAS from La Paz, reflect an efficient behavior in which the majority of
the key performance indicators are qualified under the optimum required by the Bolivian
National Water Regulator. EPSAS reflect an efficient behavior under the reliability of water
resource, supply stability, appropriate management of the system, environmental protection,
and economic and administrative sustainability of the system performance categories. For
instance, EPSAS show high efficiency in terms of water resource use, unaccounted for water
and collection efficiency. At the same time, EPSAS reveal the lowest unit production cost and
the highest staff efficiency. This behivour position EPSAS under an efficient behivour.
In analogy, SAGUAPAC from Santa Cruz, manifest an efficient behavior in which the key
performance indicators of the water utility are qualified as optimum. Furthermore,
SAGUAPAC express efficiency in the five performance categories defined by the National
Water Regulator: reliability of water resource, supply stability, appropriate management of the
system, environmental protection, and economic and administrative sustainability of the
system. SAGUAPAC holds the highest efficiency on use of the water resource, the highest
continuity of service, the highest water coverage, the lowest unaccounted water, the highest
water system pressure, and the highest investment implementation index. Positioning
SAGUAPAC as the most efficient water utility among the water utilities subject of this study.
Structural Autonomy
In Cochabamba, from the period 2011 to 2014, SEMAPA was the water operator responsible
of the water services management. The water company show low autonomy in relation to its
organizational structure, this since is under the control of the Municipal Government of
Cochabamba. At the same time, this organizational structure confers special attributions to the
mayor of the city of Cochabamba, which is the president of the administrative council;
moreover, the mayor of Cochabamba holds the authority to appoint the general manager of the
company. As a result, the company tend to be subordinated to the municipality political
behavior. Furthermore, for SEMAPA its autonomy dimension show a positive correlation with
its performance. This since the low structural autonomy of this company aligns with its
inefficient performance.
Discussion
63
From the period 2011 to 2014, EPSAS was the water operator of the La Paz water services.
During this period, EPSAS was subject of an official intervention34 on behalf of the National
Water Regulator, agency that endorsed this decision on the compromised water services to
the population. As a result, there are two water operators during this term: From 2011 to 2013,
there is EPSAS with a mixed organizational structure, in which the board of directors it was
under the control of the National Government. In addition, from 2013 to 2014, EPSAS
intervened under the direct management of the National Water Regulator agency. The main
difference with the previous arrangement is the dismissal of the board of directors and direct
control of the National Government Agency. In both periods, there is a high external influence
over the organizational structure of EPSAS. In the first period, the board of directors adopted
attributions over the water company executive management. On the second period, the
National Water Regulator had direct attributions over the water utility. Moreover, during the
second period, the National Water Regulator replaced 3 times the general management of the
company. Consequently, from 2011 to 2014, the organizational structure of the company was
subordinated to external interference and influence of the National Government and the
National Water Regulator, which finally delivery the lowest level of autonomy on the
organizational structure dimension. Unexpectedly, the low structural autonomy of EPSAS do
not align with its high performance, consequently, EPSAS reflect a negative correlation
between structural autonomy and the performance of the organizations.
In contrast with SEMAPA and EPSAS, during the period 2011 to 2014, the water cooperative
SAGUAPAC do not incorporate municipal nor government representation in its board of
directors and therefore its organizational structure. Furthermore, the composition of the board
of directors entirely composed by water users. Reason cause this water utility was not under the
subordination of elected officials. Consequently, this water utility present the highest level of
structural autonomy among the three water utilities included in this study. At the same time, the
structural autonomy of the water utility SAGUAPAc positively aligns with its high
performance.
Financial Autonomy
Based on the Verhoest et al., 2004 proposition of financial autonomy, the water utility
SEMAPA from Cochabamba, show the lowest autonomy in terms of the financial dimension,
this since the water utility do not have the capacity to self-finance investment projects,
moreover, heavily rely on public funds. At the same time, this high dependency on public funds
aligns with it inefficient performance. Consequently, SEMAPA holds a low financial autonomy
and a low performance.
In analogy, EPSAS from La Paz, express a high dependency of National Government funds,
this since for the past 10 years most of the investment projects developed by the water utility
were funded by the National Government, which reflect a low financial autonomy. However,
EPSAS express high efficiency. Consequently, the low financial autonomy of the company
EPSAS express a negative correlation with its high performance.
The intervention comprehend the control of the National Water Regulator over the water company, this in
order to secure the provision of water services.
34
Discussion
64
In contrast with SEMAPA and EPSAS, SAGUAPAC from Santa Cruz do not depend on public
expenditure. In fact, this water utility hold the capacity to self-fund most of its investment
projects. This financial behavior is qualified by Verhoest et al., 2004 as the highst level of
autonomy under the financial autonomy dimension. At the same time, SAGUAPAC holds a
high efficiency. Consequently, for the case of SAGUAPAC, the financial autonomy dimension
show a positive corelations with its high efficiency.
Legal Autonomy
Verhoest et al., 2004, defined legal autonomy based of the legal status of the organizations, in
which a public organizations with a legal status instrinsic to the National Government would
reflect the lowest level of autonomy, on the other hand, an organizations holding a private legal
status tend to be more autonomous. This since it is considered that the public legal system
embrace higher complexity and requiarements on its procedures, which consequently, limit the
self-discretion of the organizations.
SEMAPA from Cochabamba, hold a decentralized public status wich it is qualified as high
level of autonomy, this since the company can partially define cetain procedures undes this type
of legal status, which is not under the National Government legal complexities. At the same
time, SEMAPA hold an inefficient performance. Consequently, for the case of SEMAPA, its
high autonomy under the legal status show a negative correlatation with its poorperformance.
In Analogy, EPSAS reflect the hihest autonomy under the legal autonomy dimension, this since
this water uitlity holds a private legal status which confers to the company high self-discretion.
At the same time, this water utility holds high efficiency. Consequently, for the case of EPSAS,
its high autonomy under the legal dimension reflect a positive correlation with its high
performance.
SAGUAPAC from Santa Cruz, holds a water cooperative legal status. The cooperative legal
status allows the water company to operate under the private law. As a result, the cooperative
legal status confers to the water services cooperative SAGUAPAC a high autonomy under the
legal dimension. At the same time, this water utility manifest high efficiency. Consequently, its
high autonomy under the legal dimantion reveal a positive corelation with its high performance.
Interventional Autonomy
Verhoest et al., (2004), framed the interventional autonomy dimension as dependent on the
level of reporting requiarements as well as the supervision over the enterprise. Consequently,
based on this theory, a water utility with high level of reporting requiarements and strict
supervision tend to hold less autonomy. This since the behivour of the water utility is constraint
to the agencies suppervising the water utility. The Bolivian water sector reproduce a reality in
which, all water utilities are subject to the same level of supervision on behalf of the National
Water Regulator, which is the governments entity responsible of the supervision of water
services at the national level. Under the Bolivian water law 2066, the National Water Regulator
can intervene whichever water utility when the populations water service is under risk. At the
same time, all the water utilities have to submit a technical and financial annual reports to the
National Water Regulator. Consequently, the companies EPSAS, SEMAPA and SAGUAPAC
Discussion
65
are subject to the same level of supervision and reporting requiarements toward the National
Water Regulator, which would translate in the same level of autonomy exercied under the
interventional autonomy dimention. Moreover, Verhoest et al., 2004 categorize this level of
supervision and posible intervention as in a low level of autonomy under the interventional
dimention.
Moreover, SAGUAPAC, because of its legal status as water cooperative, its aditionally
supervised by another government agency, the Cooperatives Supervisory Authority (Afcoop)35.
This Government Agency regulates SAGUAPAC under general law of cooperatives (Law, 365)
which represents more reporting requiarements onbehalf of this water utility, as well as, more
supervision. At the same time, under the organizational structure of SAGUAPAC, this water
utility has an internal supervisory mechanism. This through the Supervisory Council which also
oversee the technical and financial behivour of the company. Consequently, SAGUAPAC can
be situated as the water utility with the lowest level of autonomy under the interventional
dimension. This since it has two governmental agencies and one internal department
supervising the behivour of the water utility.
Consequently, SEMAPA reflects a positive corelation of its low interventional autonomy and
its poor performance. On the other hand, EPSAS and SAGUAPAC, indicate a negative
correlation of its low interventional autonomy and their high performance.
Correlation of autonomy and performance of water utilities
For the case of SEMAPA, there is a positive correlation between the financial, structural, and
interventional autonomy dimensions and the water utility performance in which the hypothesis
proof to be valid. This water utility show evidence of little financial, structural, and
interventional autonomy, and at the same time, proof to be the water utility with the lowest
performance among the three water companies studied. On the other hand, it has high
autonomy in term of its legal status which do not align with its poor performance
EPSAS in La Paz reflect a negative correlation between structural, financial and interventional
autonomy in relation to the performance of the water utility. This specific case show evidence
of a water utility with a minimun level of autonomy under the structural dimension and low
autonomy under the financial and interventional autonomy dimensions. However, it present one
of the highest performances among the water utilities, moreover, most of the key performance
indicators are qualified as optimun based on the National Water Regulator standars. On the
other hand, it reflect the highest autonomy based on its legal status wich positively correlate
with the high performance of the company
The case of SAGUAPAC show a positive correlation between the structural, financial and legal
autonomy dimensions and the performance of water utilitiy. However, reflect a negative
correlation between the interventional dimension and the performance of the water utility. This
case show evidence of a water utility with the highest level of autonomy in the financial, legal
and structural autonomy dimensions, and at the same time, reflect the highest efficiency in the
35
Autoridad de Fiscalizacin y Control de Cooperativas (Afcoop)
Discussion
66
Bolivian water sector. On the other hand, it holds the lowest level of autonomy under the
interventional dimension.
Finally, based on the analysis of the three case studies presented in this research, it not possible
make a direct correlation between autonomy and performance of the water utilities in the
Bolivian water context. Furthermore, it is possible to identify other elements out of the
autonomy framework proposed by Verhoest et al., 2004 that might help explain the behivour
of the Bolivian water utilities.
10.2. Water Resources, Politics, and Legitimacy of the

Bolivian water services providers.
Water Reforms and the Bolivian Water Services
Through the history of the Bolivian water services (decentralization, privatization, social
participation, and government control); the different water operators are a product of local water
reforms, which were performed under the pressure of political movements. In the Bolivian
water sector, the Presidential Decree it has been used since 1966 as the main mechanism for
local water services reform. These reforms modified the organizational structures, legal status,
and the financial mechanisms of the different water operators in Bolivia.
The different Bolivian water services reforms are characterized by a common factor. A political
driver force towards the National Government initially motivated each reform. Furthermore,
the first and second reforms (decentralization and privatization eras), were articulated by
International Funding Agencies, using international financial support as the persuasion tool.
For instance, the first reform over the La Paz water services, was one of the conditionalities of
the 1966 agreement, between the Bolivian National Government and the German Federal
Government, this in order to access to the funding destined to the development of water
infrastructure for the city of La Paz. The decentralization of water services in Santa Cruz was
one of the conditionalities of the Inter-American Development Bank to provide a loan directed
to the development of water infrastructure in Santa Cruz. In addition, the private sector
participation in La Paz and Cochabamba was maneuver by the World Bank, which provided 77
million dollars to rearrange the Bolivian legal and institutional framework to allow the
involvement of the international private sector at the local context, in which the Bolivian water
sector was included. Under these two initial reforms, it is possible to identify the presence of
international agencies, which motivated the rearrangement of the Bolivian water services
sector. These international agencies influenced the decision of the Bolivian National
Government regarding the water services in Bolivia.
Furthermore, the third and fourth periods (Social Participation and Government Control) were
motivated by political forces coming from the grassroots local level, in which protests, strikes,
and corruption publicly exposed were the instruments to pressure the National Government to
reformulate the water services. For instance, the recovery of water services in La Paz and
Cochabamba were driven by massive protests, known as the Bolivian water wars, events
Discussion
67
internationally recognized. These were conducted and led by the neighborhood association of
El Alto, in the case of La Paz; and La Coordinadora del Agua y de la Vida, in the case of
Cochabamba. These grassroots organizations driven the political pressure toward the National
Government, this in order to dismiss the contractual agreements with the private water utilities
at the time. As a result, the new water services arrangement took the form of social
participation.
Local Water
Reform
National
Goverment Presidential
Decree
Structural and
Legal
Dimension
The different presiential decrees

enacted, reproduced different
organizational structures. At the same
time, modified the legal dimension of
these companies
Financial and
Interventional
Dimension
Finally the organizational

structure of the company is
linked to the financial
dimension. At the same
time, the legal status is
linked to the interventional
dimension.
Figure 29: Water Services Reforms and Autonomy Dimensions
Water resources, Autonomy and performance of water utilites

Caughey et al., (2009), identified the resources as influential of the autonomy of organizations.
This since diverse resources influence the acomplishiment of an organizations goals and
objectives. The authors define resources as financial, political support, public image, human
resources and physical resources, among others, necessary to accomplish the organizations
objectives. Furthermore, it is possible to identify that some of these resources can influence the
performance of the Bolivian water utilities.
The water resource availability can be identified as influential to the behavior of the Bolivian
water utilities. Considering the local biophysical conditions of the three regions where the water
utilities under study are located, it is possible to identify a main difference regading the water
availability. In fact, La Paz, Cochabamba, and Santa Cruz differ on their biophysical conditions,
in which La Paz and Santa Cruz have abundant water availability, and on the other hand,
Cochabamba is highly limited of water resources. The city of Cochabamba identified the local
water scarcity as a constraint to the development of the water services since 1987, year in which
major water works were proposed to the National Government in order to tackle the water
Discussion
68
scarcity of the city36. Furthermore, on 2015, the wells managed by SEMAPA decreased their
capacity on 40% (ATB, 27/10/15), and on 2016, the water company announced the rationning
of the water supply due to a 39% of water shortage (Opinin, 22/03/2016)37. At the same time,
an additional problem regarding the water resource availability in Cochabamba is that the
majority of the water sources utilized by SEMAPA are located in municipalities out of
SEMAPAs service area. As a result, which is a matter of conflict among the municipal
government of Cochabamba and the neighboring municipalities, who are competing on the use
of the water resource (Los Tiempos, 10/10/11).
The water scarcity can be directly link to the performance of water utilities based on the water
resource reliability, environmental protection and partially to the water supply stability
categories. For instance, the key performance indicator current performance of the source,
assess the relation between the water withdraw and the authorized capacity. In the case of
Cochabamba, SEMAPA overexploit the water resources since they are subject to water scarcity.
Which finally delivery a low performance under this indicator, among others. However, the
general unsatisfactory performance behavior of the water utility SEMAPA cannot be purely
atributed to the water scarcity. This behivour is associated to an aggregate of elements as the
untechnical managerial behavior, negative political interference, and internal corruption among
others.
Water Services as a Political Good
On 2013, the National Water regulator intervened the water services in La Paz and took
control over the company EPSAS S.A. This determination was endorsed, by this government
agency, due to the poor performance of the company that compromised the water services
to the local population. However, the key performance indicators of EPSAS S.A. show evidence
of a high performance at the time. Moreover, the National Government direct control over the
water services of La Paz, seems to be aligned to a political strategy since 2007.
The 2007 La Paz-El Alto water services reform was initially planned for a period of 6 months,
however, this period was extended for over 5 years, in which the companys board of directors
was under the subordination of the National Government. Morover, on 2013, the initial 6
months period of National Water Regulator direct management was extended 3 times. As a
result, the National Government hold control of the La Paz-El Alto water services for a total of
9 years and 2 months. Coninsidentially, Bolivia has been governeed by the same President, and
consequently, the same political party, over the same period. As Scharfenaker, 1992, identified
on 1990s:
politics is a modern life for water suppliers (Scharfenaker, 1992:26 from (Schouten
& Schwartz, 2006)).
On 1987 the National Government created the national company MISICUNI, this company was created in
order to build a multipurpose dam as well as a river basin transfer tunnel, this in order to supply drinking water
to Cochabamba, provide water irrigation for the farmers and to generate electricity through a hydroelectric
plant. The construction of the water works initiated on 2009. However, due to a breach of contract the
contractor shifted through different contractors companies. Which delay the schedule as well as the delivery of
the infrastructure.
37
http://www.opinion.com.bo/opinion/articulos/2016/0322/noticias.php?id=185886
36
Discussion
69
Meaning that water operators are subject to interaccion with the political environment, that
consequently, influence the water services sector. For instance, during the period 2007 to 2016,
the National Government provided a significant financial support to EPSAS regardless the
internal corruption exposed in different opportunities. At the same time, this financial support
it was retributed through the participation of Government officials in public acts presenting the
water projects developed by the company to the population. In fact, on January 2016, the vicepresident of Bolivia presented the 40% of advance of the new water treatment plant
Chuquiaguillo, in La Paz. Event largely covered by the local and national media. Some would
ask, how relevant is the 40% of a water treatment construction advance? However, at the time,
the National Government was in a political campaing to reform the Bolivian National
Constitution to allow the re-election of the president and vice-president for an additional term.
Making a comparison of the National Government funds distribution over the water services of
La Paz, Cochabamba and Santa Cruz, it is possible to identify the significant attention over the
La Paz water services, in which the water and sanitations services was supported with 56 million
dollars. In contrast, Cochabamba granted 11 million dollars and Santa Cruz did not received
any National Government funds over the same period. Schouten & Schwartz, (2006), identified
that the investements make over water services are subject to politics:
investment decisions in the water supply and sanitation sector are not just a matter
of economic cost-benefit calculations and humanitarian considerations. Rather the water
services sector is inherently intertwined with the political realm, meaning that investing
in water services entails to invest in a political good (Schouten & Schwartz, 2006, p.
419).
The geopolitical importance of La Paz can explain the National Government attention over the
water services of La Paz and El-Alto. This since the city of La Paz is the political capital of the
country, and at the same time, the National Government had develop a strong political alliance
with the Neighborhoods Association of El Alto. The Neighborhood Association of El Alto is
well recognized for its robust political influence at the National Level. In fact, this grassroot
organization turneddown the 2003 presidency, this throught protests and strikes against the
National Government. As a result, the president at the time abandoned the country and never
retuned to Bolivia. The significant investments over La Paz can be considered as an investments
in a political good. Furthermore, the significant funding supporting the water and sanitation
services of La Paz and El alto might explain the improving performance of the water utility of
La Paz.
On the other hand, SAGUAPAC is geograpfycally located in a region which during the 1970s
and 1980s, was insulated from rest of the country, moreover, it was neglected by the National
Government (Ruiz-Mier & van Ginneken, 2006). Is not untill 1990s when Santa Cruz gain
economic and political importance at the National Level. This element explain why during the
1970s to 1980s, there is little political attention over the Santa Cruz water services sector, this
in relation witth La Paz and Cochabamba.
Discussion
70
Legitimacy and stability of a Water Services Provider

Another variable that can be identified as influential to the Bolivian water services sector is the
Legitimacy of a water provider. Carpenter, (2001), recognized the element of legitimacy as one
of the constraints of the autonomy of organizations. The legitimacy of public organizations is
explained as when the organization find the mechanisms to convince the citizens and
government officials of its unique ability. This in order to gain recognition and support towards
the agency and its policies. Moreover, this quality can allow the agency to shape the preferences
of the population and government officials, this since the agency holds expertise in the
specific field. Moreover, the legitimacy can be link to the continuity and the performance of the
water operators.
The case of SAGUAPAC in Santa Cruz exemplify the element of legitimacy proposed by
Carpenter. Florence Btricey, (2015), performed a research in which from 1979 to 2013, he
analyzed the local media publications referring to SAGUAPAC. The results not just reflect a
high performance and technological capacities of the water utility; moreover, it reflects an
identity toward the local population.
SAGUAPAC has been able to build its image that should be considered as essential,
not only for the provision of water services, but also to protect the Crucenian Identity
(Btrisey, 2015, p. 31)
One of the elements behind the companys legitimacy is the environment in which is company
developed. As mentioned before, during the 1970s and 1980s Santa Cruz was neglected by the
National Government, which settled an environment of self-reliance and regional identity. The
company SAGUAPAC developed under the support of the regional grassroots movements,
consequently, it gained the recognition of the local community.(Ruiz-Mier & van Ginneken,
2006). At the same time, the behavior of the water company developed a customer orientation,
this as a result of the civic support towards the local water services company.
Furthermore, the cooperative SAGUAPAC, have internally institutionalized practices
reflecting a strong company culture. For instance, the company have an average employees
permanence of 17 years, which translates into a strong work stability. At the same time,
significant salaries are compensated to the water utilitys employees, in which the performance
and permanency are two variables to calculate each employee remuneration. Furthermore, the
company offer to its employees the possibility to develop a carrier within the water utility, this
since employees with a high performance tend to be subject to promotions. Moreover,
SAGUAPAC have develop an internal culture of zero tolerance to corruption, and on the other
hand, an honest behavior of an employee is publicly recognized (Ruiz-Mier & van Ginneken,
2006).
The combination of an internal company behavior reproducing a high performance and the
ability to communicate this behavior toward the local populations and political actors can
explain SAGUAPACs stability as the Santa Cruz water provider, this since the water utility
Discussion
71
did not suffered alterations over the past 37 years. This claim is reinforced by Shafritz & Hyde,
(2015), who identified the legitimacy of public organizations as the key element for the survival,
stability, and continuity of a service provider.
No bureau survives, unless it is continually able to demonstrate that its services are worthwhile
to some group with influence over the resources to keep it alive.
(Shafritz & Hyde, 2015, p. 239).
The combination of an organizational structure insulated of politics, strong internal company
culture, high efficiency and the ability to communicate this behavior to the companys network
(legitimacy), guarantied the survival of the water company over the different periods of water
services reforms in Bolivia. Moreover, enhanced the continuity and stability of SAGUAPAC.
At the same time, the stability and continuity of the water services cooperative SAGUAPAC
might be link the high performance hold by the water operator.
In contrast, the diverse water utilities, which provided water services to La Paz and
Cochabamba, did not hold the capacity to gain the recognition of the local population.
Moreover, these water utilities held accountability mechanisms toward public agencies rather
than the local population, which influenced the legitimacy of these companies. At the same
time, these companies been subject to scenarios of internal and external conflicts, inefficient
behavior, untechnical approach, and corruption publicly exposed. As a result, these water
operators did not legitimize their existence, and consequently, their continuity as water
providers.
Informal relations and the failure of the social participation in the Bolivian water sector
After the private participation era, the National Government incorporated water users and
neighborhood representatives at the board of directors, this in order to include a Social Control
element. The goal behind was to generate transparency, participation and democracy. The
failure of the social participation era can be partially attributed to the informal arrangements,
which percolated the water utilities Board of Directors. As Carpenter, (2001) and Caughey et
al., (2009), identified the informal relations as influential to the autonomy of public
organizations, this since, informal arrangements can pass over the principal-agent formal
agreements. Consequently, these relations can influence the behavior of organizations.
In the case of EPSAS in La Paz, the water users representatives were members of the El Alto
Neighborhood Association board. This grassroots organization have a clear alliance with the
National Government, which defined a political affiliation, Therefore, the actual representation
of the water users and local population was compromised. At the same time, Neighborhood
Association of La Paz did not recognize the representative of the La Paz water users. It is
speculated that the National Government officials directly appointed this member of the board
of directors. These informal relations allowed the National Government control over the La Paz
water services sector and the water utility EPSAS.
In the Case of Cochabamba, the water utility administrative council informally dismissed the
water users representation of this entity. Informal arrangements allowed the Municipal
Government of Cochabamba to recovery the control of the water services. This since the
Discussion
72
statutes of the company recognizes the participation of water users at the administrative council.
However, the president of the water utilitys administrative council (the mayor of
Cochabamba), claimed that the costs for the elections are not justified. Consequently, the
company did not call for elections for water users representation anymore.
At the same time, Driessen, (2008), identified more elements explaining the failure of social
participation era in the Bolivian water sector. First, it was assumed that the presence of water
users in the administrative council would generate transparency, participation and democracy.
Nevertheless, the social control mechanism lacked of tools to articulate such process.
Consequently, the role of the water users representatives was not clear. Second, the lack of
incentives drove some of the water users representatives to reproduce corruption in the water
utilities. And third, the elections and the form in which these water users representatives were
selected lacked of transparency and recognition from the actual water users (Driessen, 2008).
Discussion
73
CHAPTER 11
Conclusions
Through the history of the world water services different approaches in the different periods
have been practiced to tackle the lack of drinking water and sanitation. As a result, the 1977
United Nations Water Conference of Mar del Plata declared 1980s as the water and sanitation
decade. This period focused the attention of international development agencies and national
governments to invest in water and sanitation infrastructure, this to provide water and sanitation
services to the population. However, the results are questioned due to the lack of sustainability
on the services (O'Rourke, 1992). At the end of the decade, the attention shifted from the
hardware dimension to managerial and institutional arrangements (Schwartz, 2008b),
delivering two approaches: The Private Sector Participation and the New Public Management.
The private sector participation incorporated the inclusion of the private companies over the
water services, this in order to extend these services. However, the 15 years of private sector
participation generated little expansion of the water services (Jones & Hardstaff, 2005). On the
other hand, the new public management proposed the mimicking of the private sector over
public water utilities (Schwartz, 2008a). However, in order to copy the practices of the private
sector it was required to acquire the autonomy that private organizations hold. Consequently,
the autonomy on water services operators gained attention.
The majority of scientific research regarding autonomy focus attention over public
organizations and its relation with performance. Moreover, Ayub & Hegsted, (1986), studied
the relation of autonomy and performance of organizations in 13 different countires, the results
express a positive correlation (Ayub & Hegsted, 1986). Moreover, Lioukas et al, (1993), claim
that the state control produce negative consequences to the performace of public organizations
(Lioukas et al., 1993). However, there is little research over the autonomy of water services
organizations and its relation with the performance of the water operators. Braadbaart et al.,
(2007) studied the relation of managerial autonomy and performance of 23 different public
water utilities, the results express a positive association (Braadbaart et al., 2007). However,
this study focus on managerial autonomy and utilized a quantitavie methodology, which do not
highligh the complexities of the water services sector based on the relations of public autotiries
and water services providers.
This research aimed to study the relation of autonomy and performance of water services
organizations utilizing a qualitative research methodology, articulated through the autonomy
conceptual framework proposed by Verhoest et al., (2004). In which, the structural, financial,
interventional and legal dimenstions were the considered relevant to understand the complaex
relation that the water services sector present. At the same time, the Bolivian case study was
selected due to the heterogenity of the principal (National Government) and agent (water
services operators) relations. This since the water utility of La Paz is under the control of the
National Government, the water utility of Cochabamba is owned by the Municipal Government
Conclusions
74
and the water services of Santa Cruz are under the control of the water users in a form of a
water cooperative. This hetereogeinity allow to understand the complexities that the water
services sector associate in these relations.
The results reflect that the water utility in Cochabamba, SEMAPA, present a positive
correlation between the financial, structural and interventional autonomy dimensions and the
water utility performance. This since the water utility reflect low autonomy in these three
autonomy dimensions, and at the same time present an inefficient performance. On the other
hand, it has high autonomy in term of its legal status do not align with its poor performance.
EPSAS in La Paz reflect a negative correlation between structural, financial and interventional
autonomy in relation to the performance of the water utility. This water utility present the lowest
structural autonomy, and a low financial and interventional autonomy. However, it present an
efficient performance. In fact, EPSAS performacne is qualified as optimun based on the
National Water Regulator standars. On the other hand, it reflect the highest autonomy based on
its legal status wich positively correlate with the high performance of the company
The case of SAGUAPAC in Santa Cruz show evidence of a water utility with the highest level
of autonomy in the financial, legal and structural autonomy dimensions, and at the same time,
reflect the highest efficiency in the Bolivian water sector. Consequently there is a positive
corelation based on these three dimensions and the performance of water utilites. On the other
hand, it holds the lowest level of autonomy under the interventional dimension that reflet a
negative correlation with the optimun performance of this water operator.
In conclusion, for the Bolivian water services context, is not possible to atribute a direct
association of autonomy and performance of water utilites. Furthermore, the ressults point other
elements that influence the autonomy and the performance of water services operators.
Elements as reforms over the water services sector, the biophysical consditions, the political
context, the legitimacy and the informal relations over the water services.
Reforms and Autonomy dimensions
The history of the water services in the cities of La Paz, Cochabamba and Santa Cruz, reveal
local reforms, which modified/shift the organizational structures and legal status of the water
services operators, moreover, these reforms influenced the structural, legal, financial and
interventional autonomy dimensions of the water providers.
Furthermore, the diferent local reforms over the water services in La Paz, Cochabamba and
Santa Cruz were driven by political driver forces. The decentralization and privatization eras
were motivated by international developing agencies as european goverments, the InterAmerican Bank and the World Bank. These organizations motivated these reforms using loans
as the persuasion tool to convince the National Goverments to perform these reforms.
Consequently, these international bodies represent the political force which presured the
National Government to reform the local water services during these periods. Furthermore, In
the post-neoliberal era, grassrrots organizations as the Neighbourhod Association of El Alto
and the Coordinadora del Agua y de la Vida represent the political force preasuring the
National Government to recovery the water utilites of La Paz and Cochabamba, and at the
75
same time, to reform the water services of these cities. These grassroots organizations utilized
the protests, strikes and corruption publicly exposed as the tools to presure the National
Government to implement a reform over the water services.
Water resources, Autonomy and performance of water utilites
The water resources avaialbility influence the autonomy and the performance of water
operators. This since, the water resources availability might be a limitant to the desires and
goals of water services organization. For instance, a water operator might have the conviccion
to increase the hours of water supply to the population. However, this decision might be limited
based on the water resources availability. Consequently, the performance based on continuity
of drinking water supply is as well affected. This elemnt is exemplified by the Bolivian case,
in which La Paz and Santa Cruz are located in regions with abundant water resources. On the
hand, the water scarcity of the Cochabamba region represent an element of influence to the
behivour of the water services company, wich influence its performance in three of the four
performance categories stablished by the National Water Regulator. However, the
poorperformance of the water company of Cochabamba cannot not be sonenly atributed to
water scarcity. This since elemnts of negative political interference, internal corruption and an
untechnical approach, in addition to the water scarcity, convey to deliver the general inefficient
behavior of the water company.
Water Services as a political good
The water services services sector is likely to be influenced by the political context. Schouten
& Schwartz, (2006), recognized that the investments in water services are also investments in
a political good, as a result, political actors focus attention on locations where their efforts
retribute a political good. At the same time, these investments might decrease the autonomy
of the water operator based on the influence of these political actors over the decision-making
of the water operator. On the other hand, it might represent a positive influence over the
perforamance of the water operators. This since the investments allow water operators to
expand and improve the water services to the population. The Bolivian case study show
evidence that the national government investments on the water services sector are
assymetricaly distributed based on the political retribution that the political actors can achieve.
Legitimacy
The Bolivian water services sector show that one of the three water utilities studied held the
capacity to convince the local population and political actors to its unique capacity to provide
water services, this due to its efficient behivour. At the same time, these element allowed its
continuity for 37 seven years. Furthermore, the water coperative SAGUAPAC has been able to
reproduce its legitimacy under particular conditions in which the company developed in an
environment politicaly insulated from the rest of the country. The National Government
regional neglect, produced a self-reliance behiviour, as well as a sense of regional identity
(Ruiz-Mier & van Ginneken, 2006). Which, combined with an strong company culture and
efficient behivour, allowed the water cooperative to position its legitimacy as the water provider
of Santa Cruz. On the othe hand, the water utilities of La Paz and Cochabamba, reproduced
scenarios of conflict in which the political environment interfered the water services of these
76
citites. Moreover, their image its been subject to corruption publicly exposed and internal
scandals. As a result, the legitimacy and continuity has been compromised. The capacity of a
water operator to convince the population and public authorities of its unique ability, enhance
its legitimacy (Carpenter, 2001). Moreover, it allows the continuty of the water operator.
However, this condition is just possible on the basis of an efficient behiviour.
Informal relations and the failure of the social participation in the Bolivian water sector
As Carpenter, (2001) and Caughey et al., (2009), suggested that informal relations can influence
the autonomy of public organizations. The cases of La Paz and Cochabamba are an explanple
of how informal arrangentes can infiltrate the structures of the water services organizations.
The case of La Paz present a board of directors with representation of the neighbourhod
associations of La Paz and El Alto. However, through informal alliances the National
Government held control over the water utility. The case of Cochabamba show that the
municipality informally dismissed the water users representation. The company statutes
recognizes the participation of water user at the administrative council. However, the president
of the council (the mayor of cochabamba) claimed that the funding requiared for the elections
is not justified.
Recommendations and further research
This research focused attention on the structural, legal, financial and interventional autonomy
dimensions of the water utilities EPSAS in La Paz, SEMAPA in Cochabamba and SAGUAPAC
in Santa Cruz. However, Verhoest et al., 2004 present a framework including two additional
autonomy dimensions, the managerial and policy autonomy dimensions, which are dependent
on the four dimensions embraced in this research. Further research is necessary to understand
the internal behavior of the water utilities in terms of the managerial and policy autonomy
dimension, which might provide clarity of the internal culture of these companies as well as
highlight informal arrangements within these water organizations.
77
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The Intricate Relation of Autonomy and Performance in The Water Sector

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The Intricate Relation of Autonomy and Performance in The Water Sector

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The Intricate Relation of Autonomy

The Intricate Relation of

Master of Science Thesis

Afnn Agramont Akiyama

Results - History of the Bolivian Water Services Sector

Results - Organizational structures

Results - Financial Dependencies

6.4. Santa Cruz Water Services

Results - Legal Framework

Results - Regulatory Framework

Results - Performance of Water operators

1.1. International water and sanitation decade

1.2. Privatization in the Water Sector

Figure 1: Private Sector Participation water projects from 1990 to

Figure 2: Private sector investments in Billion US Dollars. Source:

The outcomes from the private sector

Including Private Sector investments and Official Development Assistance.

1.3. New Public Management

1.4. Autonomy and performance in the water services

The agency can decide

The agency decides

The agency can

The agency head is

The agency head is

The agency is primarily

The agency is fully

The agency is full

The agency is part of

The agency has a

different from the

Capacity to achieve goals and

Autonomy of Public Organizations

Autonomy of Public Organization - Summary

2.2. Autonomy and Performance of Public Organizations

2.3. Research objectives

2.4. Research questions

3.2. Conceptual framework

Figure 4: Conceptual Framework

3.3. Case Study

3.4. Data Gathering Methods

Autoridad de Fiscalizacin y Control Social dela Agua y Saneamiento (AAPS)

Table 2: Research methodology and data collection

Who are the actors that interact

Legal Department - Managers

with the water utility, and how

these actors influence

autonomy of the water utilities

National Water Regulator

National Association of Water Utilities

What Factors influence the

autonomy of the water utilities

National Association of Water Utilities

Press and National Decree Magazine (Gaceta)

Secondary data review

utilities under study?

What is the relation between

autonomy and the

National Association of Water Utilities

performance of the water

3.5. Analysis of Results

Bolivian Water Services Sector

Cochabamba Water Utility