Potable water is a diminishing resource internationally. As climate change is effecting us, it is also effecting potable water supplies. You do not need to read too much to know Panama has some serious water problems this year. The National Water Authority in most of Panama is IDAAN, the national aqueduct. IDAAN has failed in being able to provide potable water in much of the country.

Boquete, Dolega and the Comarca are not dependent upon IDAAN. For better or worse we manage our own water supplies. That means the people who control the water are also equally dependent on the water. The government of Panama wants to change that, the question is whether the proposed change is good.

Before I read the entire proposed legislation I was opposed to the change. Now that I have read all forty seven pages I am not so sure it a bad idea, but I question the long term motives.

The government wants to dissolve IDAAN and create Autoridad Nacional de Agua Potable y Saneamiento, a new department to take over. They also want to move control of the current rural aqueducts from MINSA, the Health Ministry,  to the new agency. The new agency probably called ANAPS, will report to ASEP, the public utility commission, same as other utilities.

I doubt anyone would care about the change at the top, except that in this proposed change the government has decided to include all the rural aqueducts, like those in Boquete. The opposition is concerned that local decision making will be taken away and centralized. The proposed law does not do that, it changes to whom the local boards report, the new agency, not MINSA. It however does add metering of water, a controversial idea in a area where water is now free.

This is a link to the new proposed legislation, a PDF for download: Link 

This is my completely unofficial Goggle assisted translation of the explanation clause from the PDF linked above, including long run on sentences. Notes in parenthesis are mine.

“EXPLANATORY STATEMENT

The functioning and operation of the current legal and institutional framework in the sector of water and sanitation in the country (stewardship in the Ministry of Health regulation in the National Authority of Public Services (ASEP) and provision of services at the Institute of Aqueducts and Sewerage (IDAAN) for urban and rural water management boards (JAAR) for rural areas) has strong limitations, weaknesses and gaps in public policy, strategic and operational planning, coordination, role assumption by part of the key players, financial self-sufficiency, and pricing policies, all of which impact at the sector level, both in the levels of coverage and quality of service delivery and efficiency, rationality and impact of the use of resources allocated for the sector is projected as a matter of state and government to effect their long term planning.

The water sector and sanitation receives a high volume of state subsidies (not the rural districts, we get nothing from the government except regulation), which are not producing the expected results in terms of better quality of service delivery to the population, given that they are being applied to the offer to cover operating deficits that do not generate incentives to service institutions, and investments that do not respond to an efficient allocation of resources.

That IDAAN does not have the appropriate resources and financial autonomy required to operate efficiently and provide the services that the government and citizens expect. Also, the institution is not able to properly operate and current assets to be developed in the short-term investments that could add B/.800 million.

Sector performance indicators in Panama are below indicators countries of Central and South America, which, to some extent, reflects the inefficient way in which it has handled the management of services and the allocation of investment .

The provision of potable water and sanitation in Panama for the life and health of all Panamanians is essential. The national government aims to improve the quality and coverage of such services (water and sanitation) , for which take place a process to reform, modernize and reorganize the sector with a long-term commitment as befits a state to which every government must follow up and compliance.

Through this Act, the Government proposes the standards necessary to reform, modernize and reorganize the sector of water and sanitation in the country guided by the following strategic objectives:

1 Providing quality services in urban and rural communities;
2. Increase coverage of services;
3. Systems operate efficiently associated with the provision of drinking water and
sanitary sewer;
4. More efficiently use the funding provided to the sector and reduce the cost to the treasury;
5. Set user accessible rates sufficient to cover the full cost of providing the service efficient;
6. Those who, from time to time, established by the Board of Directors of the Authority.

We take this opportunity to reiterate our appreciation and consideration for the presidency of the National Assembly and, through them, we invite honorable members to evaluate this project with detachment and preserving the interests of the majority.”

In summary IDAAN failed, the rural districts are too independent and unmanageable, so bundle them all into one package. This is creating a quasi government agency, one that does no commingle funds with the government and is not funded by the government, except for significant seed money from Panama Canal profits. This all looks like a repackaging for future sale to a private entity. Panama has done this with electric and telephone utilities in the past.

Article 67, looks to me to be a fat lure for a take over target, $1.65 Billion dollars in subsidies for 10 years. Big numbers for a country the size of Panama.

“Article 67. The Support Fund’s assets will consist of:

c. Contributions National Treasury of surplus product the Panama Canal Authority referred to in Article 39 of Law 19 of 1997, in the amount of two hundred millions of Dollars and 00/100 (B/.200, 000,000.00) annually for a period of five years from the effective date of this Act, and in the amount of one hundred twenty-five million balboas with 00/100 (B/.125, 000,000.00) per year for a period of five years from the fifth year of the enactment of this Act

“Article 55. The national government may not commit the gross income received by the Authority, directly or through it, or offer any good of this heritage as security for any loan or financial transaction of the State or any of its autonomous institutions.
Nor can the Government allocate, on their own, no expense against future revenues of the Authority.”

Today in Boquete we do not pay for water, it is free. We pay for maintaining the infrastructure. If this bill passes you, me and our neighbors, many of whom who earn $12 a day will need to buy a meter at an unknown coast and pay for the water they use. This is a big change here in the rural areas, it is not a change for people served by IDAAN. There is a clause in the legislation that will help those families.

“Article 65. It creates Sector Support Fund Water and Sanitation for the services water supply and sewerage, hereinafter the Support Fund in order to raise and disburse resources on a multi-year scheme. The Support Fund resources may be used to cover:
a) The operating deficit is projected Authority established in the Performance Agreement to be signed by the Authority and the ASEP.
b) Contributions to the Authority to be used to reduce the rates they charge to users of the Authority. The Board of the Authority, based on studies of the reasonable cost of the services provided by the Authority to be performed every five years, will determine the actual costs of providing the services. In the event that the Government decides that the average fee would be charged to users of the Authority to cover the actual costs of the provision is very high, the government will contribute an amount to the Support Fund to reduce the rates will charged to users of the Authority.
c) The costs of reorganization and restructuring of the Authority to be approved by the Board of the Authority.
d)The  investment of capital of the authority.
e) Grant of water supply services and sewerage health
provided by the Authority to families who are considered as social cases. These families regarded as social cases must have a proven family income is below a level that will be set by the Board of the Authority, with the support of the information you supply the Ministry of Social Development. The grant will be awarded as a discount on the monthly invoice value these families must be canceled, or any other mechanism that the Board determines by regulation. The subsidy will be limited to a maximum of eighty-five percent (85%) and a minimum of twenty percent (20%) of family basic consumption. The Board of the Authority shall determine by regulations the volume corresponding to the familiar basic consumption.
f) The costs of connecting to the network of aqueducts and sewers incurred by families called social cases according to the previous paragraph.”

The cost for water will be set by the following section.

“Chapter V
Rates and Fees for Services Rendered by the Authority
Article 87. Charges shall be set at rates calculated to cover the costs of operation, maintenance, rehabilitation, expansion, and other of the Authority, in accordance with an established methodology by the National Public Services Authority (ASEP), which include at less:
1. Efficient costs of operation and maintenance of the Authority.
2. Efficient costs of rehabilitation, expansion and modernization of water supply and sanitation in the country,
including water resource protection, working capital and required reserves.
3. Repayment of principal and payment of interest on revenue bonds issued, loans
or loans contracted.
4. Other efficient costs directly or indirectly related to the provision of
services.
The rates and fees established by the Board of Directors of the Authority shall take into account the conditions of safe, continuous, efficient, competitive and profitable entity.”

Everyone will need to buy a meter and all subdivisions will need to turn their water infrastructure over the the new agency.

“Article 100. From the entry into force of this Act, all customers, understood as all residential, neighborhood, housing complex or buildings, whether condo or rental apartment, commercial and industrial houses, including national or municipal government entities, must pay the cost of meters of potable water consumption and installation fee. In the case of developments, apartment complexes, commercial, industrial and large consumers, understanding these gauges those requiring two or more inches in diameter, the Authority may authorize them to acquire such meters.

The meters will be of features and technical specifications previously established and published by the Authority. In all cases, the installation of the meters should be performed according to procedures established by the Authority.”

The rural boards will remain as they are.

“Chapter X (a)

The Rural Water Management Boards
Article 115. The Rural Water Management Boards, hereinafter administrative boards are responsible for the management, operation and maintenance of rural water.”

Chapter X seems to leave the rural boards like those in Boquete in tact but now reporting to the new agency. All the articles below in Chapter X appear the same as those we currently have under MINSA.

If they establish rates based upon local costs and do not rape people on the meter costs this might make some sense. The water we use does not come from a reservoir nor do we have the costly infrastructure of the capital.   Here in Boquete all of our water comes from passive, gravity fed streams. That does make for problems during the dry season and when a cow or car break a pipe,  but it also means usage is less of an issue since if we do not use it it flows to the sea.

Why are they doing this?

One possible reason the government is doing this is potential privatization. Panama has taken a lot of money from the World Bank for water infrastructure. The World Bank encourages privatization of water infrastructure. By packaging all water resources into one package it is going to make privatization possible.

If you think turning a water utility over to the private sector is a good idea, allow me to suggest reading the sad history of Bechtel, a US company and it’s effort to control potable water in Bolivia. Private companies might be more efficient than government, but they also demand a profit for their shareholders. That profit requires revenue, consumer be damned.

Jan 2000 Bolivia

“Cochabamba protesters shut down the city for four days, going on strike and erecting roadblocks throughout the city. Residents protest the privatization of their municipally run water system and Aguas del Tunari’s rate hikes, which have doubled and tripled their water bills. Aguas del Tunari (a Bechtel company) had informed Bolivian officials that water rates would increase only by 35 percent, to cover the cost of expanding water delivery and to upgrade the city’s water infrastructure.”  Frontline

In Panama the government is starting it’s propaganda, education, campaign by hiring a Public Relations firm to sell the public on this new idea of centralized control and government ownership of all water resources. They have a nice website, LINK, named OUR WATER PANAMA, cute.

This same PR firm, not the government, has offered to meet with the rural juntas but has then cancelled the meetings. They really do not want any input, the deal is done.  I expect this bill to pass, short of  people taking to the streets.  I also expect that once all is said, done and solvent, the government will put the entire new utility on the auction block. With $1.625 Billion in Panama Canal subsidies over a ten year period locked in, this will be a very attractive corporate target. This action will make for another battle in the water wars of Panama.