[6] A comprehensive sector policy, introduced in 1994, aimed at increasing water and sanitation investments through targeted transfers to municipalities, improving service quality and efficiency by promoting private sector participation in the poorest parts of the country where utilities were not performing well, the establishment of autonomous regulatory agencies at the national level, increased cost recovery, and protecting the poorest through cross-subsidies in the form of area-based tariffs.

Recently, the government of Álvaro Uribe has initiated a number of complementary policies to accelerate increases in access to water and sanitation services, such as the strengthening of the roles of departments in the governance of the sector, a program for marginal urban neighborhoods and an increase in investments for wastewater treatment.

According to a survey of the Superintendencia de Servicios Públicos Domiciliarios (SSPD) or Superintendency for Residential Public Services in 2004, 72% of the users had water of potable quality.

Empresas Departamentales de Acueducto y Alcantarillado (ACUAS) or Departmental Water and Sewerage Companies were created, consisting of the departments, the municipalities and INSFOPAL, which took care of managing and maintaining the infrastructure of the member communities.

The most notable case are the Empresas Públicas de Medellín (EPM), a municipally owned multi-sector utility created in 1955.

[2] The two liberal governments of César Gaviria (1990-1994) and Ernesto Samper (1994-1998) pursued a policy of economic opening and business modernization.

In the spirit of these policies, the government established a comprehensive new sector policy that aimed at increasing water and sanitation investments through targeted transfers to municipalities, improving service quality and efficiency by promoting private sector participation in the poorest parts of the country where public utilities were not performing well, the establishment of autonomous regulatory agencies at the national level, increased cost recovery, and protecting the poorest through cross-subsidies in the form of area-based tariffs.

The basis of this sector policy was established by Law 142 of July 1994, at the end of president César Gaviria’s term of office.

[24] In about 2011, the responsibility for water supply and sanitation, and with it the Vice-Ministry, was transferred to the newly created Ministry of Housing, Cities and Territories.

In addition, two new programs were started: The current responsibilities and policies in the water and sanitation sector in Colombia are primarily defined in the 1991 constitution and in Law 142 of 1994 (Ley de Servicios Públicos Domiciliarios or Public Housing Services Law)[12] The Vice-Ministry of Water and Sanitation, created in October 2006 within the Ministry of Environment, Housing and Territorial Development is in charge of setting sector policy.

The Comisión de Regulación de Agua Potable y Saneamiento Básico (CRA) or Potable Water and Basic Sanitation Regulatory Commission defines criteria for efficient service provision and sets the rules for tariff revision, but is not in charge of controlling the application of these rules.

The latter is the responsibility of the Superintendencia de Servicios Públicos Domiciliarios (SSPD) or Superintendency for Residential Public Services, a multi-sector regulatory agency.

[13] The Government aims at improving the performance of the water and sanitation sector through: (1) strengthening the regulatory framework; (2) implementing technical assistance programs; (3) providing financial support to promote modernization and efficient management as well as to subsidize the poor; and (4) rationalizing the institutional framework at the national level to improve coordination in the sector.

[9] Colombian municipalities are responsible for “ensuring that their inhabitants are given domestic services of water supply and sanitation in an efficient way by public companies”.

[8] The sector is characterized by a high degree of fragmentation which makes it difficult to realize economies of scale, according to a World Bank study.

[14] Some of Colombia's larger cities are home to well-performing public utilities, some of them providing multiple services, others being specialized in water and sanitation only.

Another multi-sector utility is the Empresas Municipales de Cali (Emcali), which provides fixed line local telecoms, Internet, potable water, sewage and electricity services to some 600,000 clients.

Overall performance of utilities with private sector participation has improved, in some cases spectacularly, and some – such as Barranquilla – have had impressive successes in expanding coverage to the urban poor.

An example of a regional association is Acuavalle S.A. ESP, which provides drinking water and sanitation to 582,000 inhabitants in 33 municipalities of the Valle del Cauca department.

The association is preparing its own water treatment plant and preparing to install meters with the aid of the Colombian organization Asociados en Desarrollo Rural (ADR) or Associates in Rural Development and the United States Agency for International Development (USAID).

[37] In addition a GIS study published in 2014[38] documented that for many rural areas the time needed to drive to water testing labs than is longer than the sample is viable.

Since 1994 Colombia has pioneered many innovative approaches for basic service provision in general and for water supply and sanitation in particular.

Notable innovations at the national level are the introduction of two autonomous economic regulatory agencies (one, CRA, to develop and fine-tune regulatory tools in the water and sanitation sector, and another one, SSPD, to implement them in across all basic services) in 1994; the introduction of socio-economic strata as a basis for spatially differentiated tariffs, also in 1994; and the spatial aggregation of municipal service providers in small towns at the departmental level to benefit from economies of scale since 2006, with strong support from the national government.

Another innovation is an association of community-based organizations (CBOs) providing water supply in rural and peri-urban areas in the departments of El Valle, Cauca and Risaralda in Southwestern Colombia.

It began in the late 1990s with the assistance of the Universidad del Valle in Cali in order to protect and recover source watersheds and to strengthen the CBOs' capacity to administrate, operate and maintain their water systems.

[39] In addition, Colombia boasts one of the oldest and largest multi-utilities in Latin America, Empresas Públicas de Medellín (EPM), created in 1955.

The basic tariff is calculated on the basis of economic costs according to a methodology defined at the national level by CRA (Law 287 of 2004).

The city wants to reach 45,000 households and has budgeted 25 billion Pesos (USD 14 million) to finance free basic water and associated awareness campaigns.

[50] According to the ministry, the investments were mainly financed through three sources: self-financing, funding by the national government and charges for the extraction of petroleum and carbon.

A World Bank study estimates an investment of US$411m in 2004, which was financed as follows: According to the report, the average annual transfers from the national government to the municipalities for water supply and sanitation (including solid waste) were about US$278m between 1998 and 2001.