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Poor
and Rich Alike Complain About Privatized
Electricity
Yadira
Ferrer*
BARRANQUILLA, Colombia, (Tierramérica)
- Six years after its transfer to
private hands, CORELCA, Colombia's
third leading electric company, has
come under fire for its high rates and
breakdowns in its distribution
network.
The privatisation of CORELCA (Corporación
Eléctrica de la Costa) improved
coverage and customer service, but
brought worse setbacks, including
failures in service delivery and
higher rates, which are out of reach
for the poorest sectors of the
population.
”No one is free of the high rates or
breakdown in services,” which affect
quality of life for the poorest and
richest alike, says an official from
the Office of the People's Defender
(Ombudsman) in the northern department
of Atlántico, one of the seven served
by CORELCA.
Angel Cervantes lives in Me Quejo, a
poor outlying neighbourhood of
Barranquilla, in the north, and did
not used to pay for the electricity he
used via an illegal connection, like
the rest of the people in the
district.
Since the privatisation in 1997,
CORELCA placed an electrical meter
next to the door to his house and
sends him a bill each month ”for as
much as 50,000 pesos (around 17.5
dollars)”, a sum he cannot afford
with his wages as a fruit vendor.
Architect Carlos Prieto lives in Los
Alpes neighbourhood, in northern
Barranquilla, and CORELCA charges him
300,000 pesos (105 dollars) a month --
approximately equal to a minimum
monthly salary -- for electrical
consumption ”in a house in which I
live with only my wife and young son,
and with the usual: a television, a
computer and the basic electrical
appliances,” he told Tierramérica.
So far this year Prieto has had to
replace his computer monitor twice,
the modem and the entire computer unit
once, due to the damage caused by
abrupt changes in voltage -- and in
spite of the fact that his equipment
includes a stabilizer and a grounded
connection.
In the lower income neighbourhoods
there were several injuries and one
death during the past year resulting
from the clashes associated with the
street blockades set up in protest
against high energy rates and frequent
blackouts.
The government began the process of
privatising CORELCA based on the
results of studies conducted by the
Ministry of Energy and Mining and by
the World Bank, which gave the
state-run enterprise poor marks for
administrative, operational and
financial efficiency, including
serious deficiencies in billing and
collection.
Electrical ”leaks” and billing
problems were costing the company 7.1
million dollars a month, and operating
costs were more than 30 percent of
revenues.
According to the national electrical
finance agency, in the 1990s the
government transferred 1.1 billion
dollars to CORELCA, not counting
interest or other costs.
Privatisation was a quick way to
resolve the energy crisis that had led
the country to daily rationing of up
to 12 hours, says Jacobo Acosta, the
first director of CORELCA and credited
with the company's improved management
in the 1980s.
”The government decided to call on
the private sector to invest,” he
said in a Tierramérica interview.
”Curiously, we were once again in
the same situation as 30 years ago,
when the public services were provided
by private companies.”
According to Acosta, the ”mixed
participation” of government and
private enterprise allowed Colombia to
pursue energy development. He says it
is vital to maintain the state's
presence in the sector, for one thing,
to subsidize electrical services for
the poorest.
Article 365 of the 1991 Constitution
establishes that public services are
inherent to the social ends of the
state, which has the duty to ensure
these services are provided in an
efficient manner to all of the
country's inhabitants.
The article also states that public
services will be subject to the
juridical regimen established by law,
and can be provided by the state --
directly or indirectly, by
partnerships or private entities.
According to business consultant Jorge
Medina, this constitutional mandate
opened the way for the privatisation
process in Colombia's electrical
industry at the end of the 20th
century.
Or, more accurately, the country
returned to the situation of the late
19th century, when electrical services
were the result of private investors'
efforts, as they set up the first
companies for generating, distributing
and marketing electricity.
The Comptroller General of Colombia (CGR)
says the privatisation of CORELCA is a
demonstration of how directionless the
privatisation processes in Colombia
are.
CORELCA was initially ”a company
with enormous technical solvency...
that not only consolidated itself as
an energy producer,” but also
provided resources for processes of
development and self-management in the
region, says the CGR.
CORELCA was one of the largest
integrated electric companies in the
country. It was made up of a thermal
energy plant, a transmission network
and eight distribution firms serving
the Caribbean coastal region.
But the enterprise's solid footing
crumbled ”in a prolonged history of
setbacks” due to the lack of
foresight by its administrators, adds
the Colombian national accounting
office.
According to defenders of
privatisation, the electricity sector
overall faced bankruptcy and
administrative negligence that
produced an unfavourable economic,
technical and operational situation.
In this context, the industry was
unable to take necessary actions in
response to the climate phenomenon
known as El Niño, which produced
droughts in Colombia in 1991 and 1992,
leading to electricity rationing.
To confront the crisis and prevent its
effects from spreading, the government
decreed on Apr. 23, 1992 a state of
economic and social emergency and
authorised the capitalisation and
restructuring of several state
enterprises and the mobilisation of
more than 3.0 billion dollars towards
the energy sector.
>From another perspective, the
privatisations of CORELCA and other
companies in the energy sector are the
result of the neoliberal economic
model that was consolidated in the
1990s, Amylkar Acosta, president of
the Colombian Society of Economists
and expert in energy issues, told
Tierramérica.
This process” indiscriminately
opened up economies to the detriment
of the most vulnerable sectors of the
population,” Acosta said.
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