A complaint signed by residents of the city of Guayaquil and the Asociacion Movimiento Mi cometa y Observatorio Ciudadano de Servicios Publicos was filed on January 15 2008 regarding the activities of the International Project Water Services Guayaquil Interagua C. Ltda (Interagua). The complaint raises three key social and environmental concerns:

• Repeated cuts of residential water to the poor;
• Lack of service provision to poorer neighbourhoods;
• Lack of sewage or wastewater treatment;
• Non-compliance with the concession contract resulting in infringements of MIGA’s safeguard policies.

Interagua is supported by an $18 million MIGA guarantee granted in 2001.  The company aims to improve the services and operating performance of the existing water utility in Guayaquil, Ecuador as a private sector operator.   The company is regulated by government agency ECAPAG under the terms of a concession contract which sets out targets for quality of water provision, connections of potable water and sewage, and service coverage.

CAO Ombudsman met with the complainants, the comany, and the regulator in Guayaquil from February 27-29, 2008, and again from October 6-10, 2008. The October assessment trip was scheduled immediately following passage of a Constitutional Referendum in Ecuador that prohibits all forms of water privatization.  The new Constitution calls for an audit of the financial, judicial, environmental, and social aspects of all public utilities, including water.  While the results of the Constitutional referendum satisfied most of the concerns raised by the complainants, they are seeking continued engagement with the company over issues regarding debt forgiveness and service cuts to the poor.

The parties have stated that they will comply with the findings of the Constitutional mandated audit of Ecuador's public utilities.  They have agreed to meet during the first week of November 2008 to discuss issues not related to the audit, including resolution of outstanding issues outlined above.  The parties have agreed to report the outcomes and next steps to CAO Ombudsman immediately following the meeting.