Service quality for those with access is mixed, with water often being supplied only on an intermittent basis and most wastewater not being treated.

[3] A study for the Development Bank of Latin America and the Caribbean (CAF), however, estimates based on figures from the 2001 census and HIDROVEN statistics that only 82% of the population had access to an improved source of water in 2001.

Before 1991 a national state-owned enterprise, the Instituto Nacional de Obras Sanitarias (INOS), was in charge of providing water and sanitation services in Venezuela.

In the remaining three states services were provided by the Corporación Venezolana de Guayana (CVG).The Pérez government also launched a bid for a private concession for the water and sanitation system of Caracas in 1992.

Until 1999 five decentralized water companies were created with a strong presence of the state governments (see above under service provision).

[9] Some of them also signed management contracts with private operators, which led to an improvement in the performance of the water and sanitation companies.

[10] Such a substantial real tariff increase, which apparently did not cause political turmoil, is unusual in developing countries.

Some municipalities refused to receive the service responsibility unless systems would be modernized, but a mechanism to finance the necessary investments was lacking.

About 80% of the population thus continued to be served by HIDROVEN and its subsidiaries, and the slowness of the decentralization process consolidated institutions that were meant to be only temporary.

The Government has also completed studies on the formation of business units in the states of Cojedes, Carabobo and Aragua.

This is in direct contradiction with the 2001 law that stipulates the principle of cost recovery and assigns the responsibility to set tariffs to the municipalities.

The Chávez government encourages such "community experiences", which also include so-called "technical water tables" (Mesas Técnicas de Agua).

These are associations involved in monitoring neighborhood-level segments of water supply and sanitation networks, including the identification and reduction of leakage and illegal connections.

[16] HIDROVEN suggests illegal connections are a major contributor to poor non-revenue water performance in the country.

[10] As of 2010, 36% of all users, mainly in groups with low ability to pay, received water free of charge.

Tariff levels vary substantially within Venezuela by a factor of almost 1:10 between regional companies, reflecting differences in the cost of service provision.

The volatility in sector financing has made it difficult to initiate a sustainable medium-term investment program needed to rehabilitate infrastructure and extend access to services.

[22] Inter-American Development Bank In 2010 the IDB provided a $50 million loan to promote the efficient use of drinking water by replacing pipes and installing meters for 80,000 households in at least five of the subsidiaries of Hidroven, including in the Ocumarito neighborhood in Caracas.

[6] Previously the IDB had attempted to support the reform of the water and sanitation sector through a decentralization loan of US$100 million that was approved in 1998 and had to be cancelled subsequently.

[11] The loan had aimed at introducing private sector participation, following the model of management contracts in the state of Monagas and Lara.

Development Bank of Latin America and the Caribbean The Development Bank of Latin America and the Caribbean (CAF) supported the water and sanitation sector through various loans, including five loans approved until 2003 for a total of US$292m, of which three for HIDROCAPITAL, the subsidiary of HIDROVEN serving Caracas.

In 2004 CAF approved a US$15m loan to improve water and sanitation services in the Peninsula of La Guajira in Zulia state.

[23] In 2005 the CAF reassigned US$25m from a non-disbursing water and sanitation sector modernization and rehabilitation loan to environmental projects.

[24] At the beginning of 2008, the CAF announced that it has approved a water and sanitation loan for the Venezuelan states of Amazonas, Anzoátegui, Aragua, Bolívar, Cojedes, Delta Amacuro, Sucre and Trujillo.