The Empresas Públicas de Medellín and Habilitación de Viviendas

Medellín is Colombia’s second largest city with a population of approximately 2.3 million. Like many large cities in Latin America, a significant portion of its population lives in extreme poverty. According to Colombia’s most recent census, conducted in 2005, 12.4 percent of the then population could not meet their basic needs (DANE, 2005). Medellín’s Development Plan for 2008-2011, registered the number of informal housing units at 85,168, or nearly 17 percent of all homes in the city (González Zapata, 2009, 129). Surveys conducted in the informal settlements of La Cruz, La Honda and Esfuerzos de Paz Uno, show a high percentage of displaced among their inhabitants (up to 76%), a predominance of female headed households (up to 65%), dependence on work in the informal economy (up to 70%), and a majority of persons earning less than the minimum wage (up to 90%) (Associación Cambiemos, 2010, RIOCBACH, 2010).

 The Empresas Públicas de Medellín (EPM, The Public Utility Companies of Medellín) is a multi-utility corporation owned by the city of Medellín, its sole shareholder to which it pays a minimum annual dividend of 30 % of net revenue. EPM provides water, sewer, gas, and electricity services in Medellín and in a number of other municipalities in the Department of Antioquia and Colombia. EPM’s net profits in 2010 were US$ 773.4 million of which US$ 450 million was transferred to the City of Medellin (EPM, 2011a). It is among the City’s primary employers with 5,830 employees. EPM is also the majority shareholder in a range of affiliates across utility sectors; the “Grupo EPM” boasts over 10 million clients and 10,644 employees (Empresas Públicas de Medellín, 2011b).

Through a program called Habilitación de Viviendas (rehabilitation of homes), EPM has been extending utility networks to the city’s marginal inhabitants since 1964. This program provides long-term low-interest loans to marginal neighborhoods in order to enable them to pay for infrastructure extension. Today, 35 percent of EPM’s “clientes” have become so through this program.

In 1998, EPM modified the program to “Contratación Social” (social contracting). Instead of contracting to a private construction firm to do the work for Habilitación de Viviendas, EPM contracts to the local community leadership (the JAC), which hires all local labor. The program helps to generate employment, results in a variety of urban improvements (stair cases, reinforcement of walls, paved walkways etc), generates profits in the community, results in better infrastructure, and helps to build the JAC’s capacity to continue acting as a contractor for other projects in the City, thus generating more local employment and income.

Photos @Juan A. Aristizabal 2011