In July 2000, Águas do Amazonas (a subsidiary of Suez Environment) and the municipality of Manaus agreed upon a 30 year concession contract: The company paid EUR 192 million in order to obtain the right to act as a service provider by selling potable water and providing sewage disposal in the Amazonas state capital. This right was combined with the obligation to operate, maintain and to enhance the number of the city's inhabitants connected to the water network by four percentage points - from 91 to 95 percent - until 2006. A further increase in the connection rate by another three percentage points until 2011 and maintaining a 98 percent quota all the way through 2029 were also part of the agreement. The sewage disposal network connection rate (which stood at 11 percent in 2000 according to the concession contract) was supposed to be raised to 31 percent by 2006.

Shortly after the contract had been signed, the meaning of the contract's expression A população urbane residente no município de Manaus (meaning: the resident urban population of the city of Manaus) became subject of major disputes. The problem was that the contract did not seem to take into account the enormous influx of peasants who illegally poured into Manaus' slums year by year. Or did it?

For the municipality of Manaus the contract did include them. For águas do Amazonas it did not. This was only logical: Had the contractual expression referred to the legally registered residents only, águas do Amazonas would have had to connect no more than 3,840 homes. But had it referred to all of the city's residents (both legal and illegal), águas do Amazonas would have been obliged to link many times that number of households (many of which were in slums) to the water network system in six years.

The fact that the municipality's interpretation of the contract was correct posed a major problem for águas do Amazonas. For even if the company managed to set up enough costly and additional technical infrastructure on time, the poor slum inhabitants might not have enough money to pay for the subsequent water services.

How was Schock going to meet these challenges?

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