The Political Economy of Water and Sanitation by Krause Matthias;

Author:Krause, Matthias;
Language: eng
Format: epub
Publisher: Taylor & Francis Group
Published: 2011-02-01T00:00:00+00:00

Tariff Transition Period

Since the tariffs charged by service providers in 1996 were well below reference tariffs adjusted for maximum subsidies allowed, it was politically unfeasible to increase tariffs to the reference levels in one go. Therefore, it was established that reference tariffs had to be reached by each service provider only by the end of a transition period in 2001 (Congreso de Colombia 1996). However, the transition period was prolonged until December 2005 (Congreso de Colombia 2000), because in 2000 actual tariffs charged were still well below the reference levels adjusted for maximum subsidies allowed. In addition, real incomes of households had been hit by the economic recession of the year 1999, which meant that considerable tariff increases would have had further diminished real incomes and, thus, would have been associated with high political costs (SSPD 2002, 81–82). Figure 5.2 shows average tariff increases between 2001 and 2004 for a sample of the major service providers. It becomes evident that stratum 1 has been faced with the highest increases.

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