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New resolution issued by Water Regulation CommissionGomez Pinzon & Associados, Bogota

The Drinking Water and Sanitation Regulation Commission (Comisión de Regulación de Agua Potable y Saneamiento Básico (CRA)) recently issued Resolution 136 in which it focuses, inter alia, on Article 39.3 of Law 142 of 1994. This provision regulates the special contracts that apply to the management of public utilities. In these contracts, official entities: (i) transfer the property or the use and enjoyment of the assets intended to render public utilities, concessions or similar schemes; or (ii) make third parties responsible for any of the activities that they have carried out to render public utilities; or (iii) allow one or more consumers to carry out the necessary works to benefit from a utility that public entities are rendering.

Articles 14 and 19 of Resolution 136 establish an innovative rule with respect to the authorization required for the rendering of the aqueduct, sewage and waste public utilities and their complementary activities. According to the new rule, the signing of a state concession contract is not required in all cases where state entities envisage the participation of third parties in the management or in the total or partial rendering of the referred utilities. This is unless areas of exclusive utility are established or contracts are entered into with the purpose of amending any of the clauses of the contracts that created those areas, in the sense of amending the concessionaire, the rates, the areas, their sizes, the investment programs or the duration of the concessions.

Before the issuance of Resolution 136, it was discussed whether the authorization contained in Articles 10 and 22 of Law 142 of 1994 in a general form was, in all cases, sufficient for the entities to provide public utilities or if, to the contrary, it was necessary to comply with additional requisites such as the completion of a bidding process with the purpose of granting these utilities through a concession. In Article 4 of Resolution 18 of 1995, the CRA had determined that, whenever state entities were intending to subscribe contracts with the purpose of granting third parties the provision of the aqueduct, sewage and waste public utilities and their complementary activities, the entities had to use bidding process as regulated by Law 80 of 1993.

With Resolution 136, the CRA has substantially modified its initial position, and has harmoniously interpreted the spirit of Law 142 of 1994 without requesting additional requisites to those contained in the provision referred to above and that apply when state entities hire third parties for the management or the total or partial provision of utilities. This position will help to facilitate and promote the connection between the private investment process and the water and sanitation industry in Colombia.

In addition, the fact that the bidding process regulated by Law 80 of 1993 is not applied does not mean that the guarantees and principles of transparency, objective selection and others established in Law 80 of 1993 will not be applied. This takes into account the fact that Resolution 136 implemented, through Article 22, a series of rules to guarantee the objective selection and the competition of bidders.

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