In March 1991, the Municipality of Matagalpa, Nicaragua, reached an agreement with the national water authority to allow the municipality to assume administration of the municipal water system. This would be the nation's first experiment with decentralization of a utility service. Under the pilot agreement, a local water authority, Acueductors y Alcantarillados de Matagalpa (AyAMAT) was established and a series of physical and administrative improvements to the antiquated and neglected system were put into place. AyAMAT also designed an ambitious, multi-phased Matagalpa Potable Water Project, calling for the construction of additional dams, water holding facilities, and water delivery channels to address critical water shortage problems.