"A disaster": Vivendi in Puerto Rico

http://www.cupe.ca/arp/02/6.asp

When Puerto Rico privatized administration of its water and wastewater authority (PRASA), a subsidiary of Vivendi won control over PRASA's administration.

Many supporters of the deal now admit that handing PRASA to this firm was a serious mistake. The Puerto Rico Office of the Comptroller issued an extremely critical report on the PRASA-Vivendi contract, listing numerous faults including deficiencies in the maintenance, repair, administration and operation of aqueducts and sewers as well as late or missing financial reports.

According to the Comptroller, the privatized PRASA's operating deficit reached US$241 million by 1999. The Government Development Bank had to step in to provide the agency with emergency funding. The Comptroller also found the Vivendi subsidiary owes US$36 million to the Electric Power Authority and US$1.7 million to the Puerto Rico Telephone Company.

"For the customers, it means uncertainty, confusion and doubt, and unfortunately a worsening of the already poor service," said economist and University of Puerto Rico professor Héctor RÌos-Maury, author of a recent book on privatization. He added that "the subsidy given to the private company is excessive."

"PRASA's deficit increased without any noticeable improvement in the service", notes economics professor Francisco Catala.

"Outsourcing has also been a disaster," said political commentator David Noriega. "There've been cases in which PRASA work brigades have had to redo work that private contractors didn't do right."