transferred to the private sector. The so called “Water War“ that took place in Cochabamba in
2000, in which the private operator Aguas del Tunari - a consortium led by International Water
Limited IWL, and jointly owned by the US construction company Bechtel and the Italian energy
company Edison - was in fact renationalized by the State, is a grim remainder that there is indeed
a great deal of disillusionment with how reforms have performed in this country Similar demands
have occurred in Argentina and, to a lesser extent, in Peru, Brazil, and elsewhere. Under present
circumstances, it is almost inevitable that some sort of changes will have to be carried out in
order to make the “model“ more participatory, more inclusive, and hence better able to deliver on
its initial promise.
Hence it seems pertinent to take stock with the results of utility privatization in Bolivia. This
paper deals with the process of structural reforms in this country and the specific results that have
to date been accomplished in the electricity industry. It is mostly interested in exploring whether
the reformation of this industry contributed to lessen poverty levels and whether in light of the
obtained results, a reversal or a continuation of the reform process should take place. To that end,
the paper is divided as follows: the first part presented the introduction; section 2 describes the
regulatory system in Bolivia; in section 3 the electricity industry is described and analized, as is
its evolution from 1990 onwards. The impact of reforms on poverty and quality is assessed as
well, as is the the extent of possible capture of the regulatory institutions by the industry. The
final section draws some conclusions and recommendations.
2. The Sectorial Regulatory System (The SIRESE1 System)
The regulatory system in Bolivia is the result of the capitalization process2 (privatization,
bolivian style) of the mid 1990‘s that transferred most public utilities companies to the private
sector. This regulatory body was named the SIRESE System and its main objective is to regulate,
control and monitor activities in the water, electricity, hydrocarbons, telecommunications and
transport sectors of the economy. As stated in its first article, implicit in this objective is that the
activities under its jurisdiction operate efficiently, contribute to the development of the national
economy and enable all country‘s inhabitants to have access to services covered by the system.
The system is also meant to serve as a liason among consumers, regulated enterprises and the
1 SIRESE is the Spanish acronym for Sistema de Regulacion Sectorial, as is known the regulatory system in Bolivia.
It came into being with the passage of Law 1600, in October of 1994.
2 Capitalization of a government enterprise occurs when, instead of paying a certain amount of money to the
Treasury in exchange for this company - as would occur with standard privatization schemes - the capitalizer invests
at least the market value of the company into the company, thereby assuring management control of it. With his
investment, the capitalizer may own up to 50% of the stock of the enterprise. The remaining shares are to be
managed by private pension funds, on behalf of the bolivian people, who are in name the proprietors of this stock.