Case ID: HKS067
Solution ID: 4903

Cancun Mexico Water System Privatization Case Solution

Case Solution

This case concentrates on the privatization of water and sanitation services within the town of Canc n, Mexico. Canc n's growth from the small fishing village within the seventies to some major worldwide tourist destination through the the nineteen nineties overcome the city's public consuming water and sewerage systems. Inadequate coverage, deficient budgets, poor output quality, and environment pollution were lengthy-standing problems. Using the goal of fixing a few of these problems, Canc n privatized water and sanitation provision in 1994, granting Mexico's first comprehensive private concession for water or wastewater system operation. 2 yrs later, the concessionaire's lack of ability to satisfy its service coverage and investment obligations brought to some major legal confrontation using the condition government of Quintana Roo and condition administrative takeover from the concession company's procedures. The case is made to be utilized in discussions about (1) the issues produced by the lack of competitive putting in a bid and transparency in concession processes (2) the problem of raising charges without visible service enhancements (3) the function of regulating monitoring and enforcement of concession performance targets and (4) the impacts of contingencies like macroeconomic instability (Mexico's 1994 peso devaluation) on concession obligations. In 1996, the condition government of Quintana Roo required over operation of Canc n's water and sanitation services, privatized 3 years earlier. HKS Case Number 1593.

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