Social services


Company seeks compensation after Bolivians force re-nationalisation

25 March 2002

A case has been filed by US-based multinational Bechtel seeking US$25 million compensation from the Bolivian government for breach of contract. The case was accepted in February by the International Centre for the Settlement of Investment Disputes (ICSID) – a little-known arm of the World Bank Group.

In January 2000, in Cochabamba there was a general strike provoked by opposition to the World Bank’s push for privatisation of water. The unrest targeted Aguas Del Tunari, a subsidiary of Bechtel which had been awarded the contract to provide water in Cochabamba, Bolivia’s third largest city.

In 1999, following years of pressure, the Bolivian government agreed to privatise the Cochabamba water system. A subsidiary of utilities giant Bechtel was given a 40-year lease. Within weeks of taking over the water supply, the company tripled water rates. Families suddenly faced monthly bills of more than US$20 to be paid from earnings of less than $100 a month. A range of organisations mobilised against the privatisation, forcing the Bolivian government to declare martial law in April 2000. Then, following the death of a protestor, the government agreed to re-nationalise the water system and reduce water rates. By the end of that year, the Government of Bolivia formally cancelled Aguas Del Tunari’s 40-year contract. Bolivian organisations are looking for international support as they prepare to campaign against the role of ICSID, which is being asked to rule that the government of one of the poorest countries in the world must pay compensation to one of the richest multinational companies.

The Democracy Center’s Bechtel vs. Bolivia

ICSID pending cases