Colombia: Energy Deregulation Opens the Way for Spanish Multinational to Take over in "Energy Coup." The Result: Arbitrary Electricity Suspension and Faulty Billing Practices.

The people of Bogota, Colombia are experiencing the adverse effects of a privatized energy system controlled by Spanish transnational corporation Endesa. The initial privatization occurred following the advice of the World Bank and the International Monetary Fund. Now the WTO’s General Agreement on Trade and Services (GATS) is likely to complete the corporate windfall by allowing Endesa to expand its involvement and ‘lock-in’ this failed experiment in energy privatization.
When electricity was partially privatized in 1998, local regulations prevented Endesa from taking complete control of the newly privatized energy companies. However, thanks to various administrative devices Endesa has since then effectively taken over electricity generation, transmission, distribution, and commercialization in Bogota.
Following Endesa’s energy ‘coup’ in Bogota, there have been remarkable cases of increased tariffs and numerous examples of business favouritism. Overall, the situation is generating serious social tensions, especially in underprivileged areas of the city.
In some cases, for example, household electricity prices have increased by 500 percent from the average price. There have also been arbitrary suspensions of electricity services to homes, public hospitals and community centers. Endesa’s aggressive and exclusive policies in the poorer parts of the city contrast sharply with the benevolent image that the company presents in wealthier neighbourhoods, where it arranges financial plans for buying appliances and discounts. Energy workers have also been hard hit during the privatization process. Forty percent of the personnel, a total of 1750 people, left either voluntarily or through forced redundancies following privatization, and new vacancies were subcontracted out under very bad conditions of employment.
Whenever considering issues like this in the Columbian context, it needs to be remembered that the country has a history of human rights abuses against union and community activists. Since 1998, 27 electricity sector officials have been murdered, 7 have been forced out of their jobs and 230 have been threatened.

endesa’s influence
Endesa is the third largest energy company in the world, and it plays a dominant role in Latin American electrical service provision in places including Buenos Aires, Lima, Sao Paulo and Chile. The company is part of a Spanish conglomerate with activities in the financial, gas, electricity and petroleum sectors. It has been influential in multilateral liberalization negotiations and has been involved in pushing for the privatization of energy and financial companies, particularly in Latin America. The company enjoys an influential position within the European energy lobby. Rafael Miranda Robredo, CEO of the Endesa Group, is Vice President of the European electricity lobby group, Eurelectric. Eurelectric is the only energy sector group in the influential pro-liberalization lobby, the European Services Forum. As Corporate Europe Observatory has detailed, the ESF has a highly privileged position in the European GATS negotiations.
The potential for GATS to lock-in and expand liberalization programmes which have been initiated by the World Bank and International Monetary Fund, like energy privatization in Bogota, is no doubt one of the reasons why the GATS is so forcefully promoted by the United States and the European Commission.
Colombia has yet to submit its offers for services liberalization under the GATS 2000 negotiations, but there is pressure for the country to serve up its entire domestic electricity market for liberalization. The European Commission, for instance, has asked Colombia for full market access in ‘services incidental to energy distribution’ and full commitments in the trading of energy products.
For members of the ESF and related companies like Endesa, GATS is likely to open up new areas for liberalization and ensure that their massive gains cannot be reversed regardless of the social or environmental implications. In contrast, GATS will take essential services further out of the reach of ordinary people like those living in Bogota.
[Source: CENSAT/Friends of the Earth Colombia]