Second, the Chilean government instituted a subsidy for water costs in 1990 for citizens located in impoverished regions.

[2] The Chilean water supply and sanitation sector today are recognized with one of the best coverage and quality levels in Latin America.

In 1977, the national public water and sanitation company SENDOS (Servicio Nacional de Obras Sanitarias) was created, which had 11 regional branches.

[17] In 1988, the Chilean people denied General Augusto Pinochet a new term in a referendum, thus passing a key step in the country's transition to democracy.

Between 1988 and 1990, a number of legal reforms and the creation of new institutions had two principal objectives: Therefore, in December 1988 The General Water and Sanitation Law (Ley General de Servicios Sanitarios) allowed the granting of 13 regional concessions to public, private or mixed shareholding companies in each of Chile’s regions.

Under the government of Christian Democrat President Eduardo Frei, the law was amended in 1998 to promote private-sector participation.

The stated motive was to increase efficiency, improve service quality and mobilize capital to extend wastewater treatment.

Staffing was further reduced, new complaints management procedures were introduced and the share of collected wastewater treated increased significantly.

This latter way of private sector participation, also known as a concession, differs substantially from selling shares of the companies because the infrastructure remains the property of the Chilean state.

[2] According to the World Bank's Private Participation in Infrastructure database, investment commitments by the private sector in Chile's water and sanitation sector reached 5.7 billion USD in 1993–2005 through 20 projects, with 4 billion USD of commitments made in 1999 alone through 4 projects.

In 2011, the state-holding company Corfo sold its stakes in the three largest water companies—Aguas Andinas, Esval and Esbio—on the stock exchange, primarily to individual local and foreign shareholders.

However, the planned sale of shares in a fourth water company, Essal, was suspended because of low prices offered.

[27] The SISS controls water and sanitation services in urban areas according to financial and quality norms (see above).

The SISS has the right to impose fines on the service providers in case of violation of norms, which directly flow into the regulator's budget.

[28] The water and sanitation regulatory system in Chile is considered by the WHO to be a model not only for Latin America, but also for Europe.

[29] One of its innovative features is the use of a hypothetical efficient model enterprise to assist in determining if tariff increases requested by service providers are justified.

Currently, the Government of President Bachelet has submitted before the Chilean Congress a Bill to give this sector a new institutional framework.

[30] According to Law 19,549 of 1998, urban concessionaires have to provide technical and administrative assistance to water committees and cooperatives in their respective region.

[2] Until 2011, the Chilean state held 36% of water and sanitation companies through its Production Development Corporation (CORFO).

[2] The Ontario Teachers' Pension Plan from Canada is a major shareholder of the private water utilities Essbio and Esval.

[2][31] In rural areas, tariffs only cover operation and maintenance costs[19] Affordability On average, the water and sanitation bill accounted for 1.14% of household income according to a 1998 survey by the National Statistical Institute.

Rural water systems receive a partial investment subsidy that is defined in the Ley del Subsidio al Agua Potable y Saneamiento.

[29] By law, the subsidy can cover 25-85 percent of a household's water and sewer bill up to 15 m³ per month.

The subsidy is meant to target only those households that are unable to buy water at a subsistence level and is based on willingness to pay.

On the contrary, poor families do not have access to efficient methods of using water in cooking, cleaning, and washing.

Approved June 14, 2007, 20% of a US$30 million loan was appropriated and spent in the general water, sanitation, and flood protection sectors.