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In this issue:

Upcoming Events

Regional

Country Reports

Argentina
Bolivia
Brazil 
Chile 
Colombia
Dominican Republic
El Salvador
Haiti
Honduras
Mexico
Nicaragua
Paraguay
Peru
Puerto Rico
Uraguay
Venezuela

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Upcoming Events

• Latin American Hydraulic Congress. The 21st Latin American hydraulic congress will be held October 18-22 in Sao Paulo, Brazil. It is organized by the Latin American regional committee of the International Association of Hydraulic Engineering and Research. For more information, please visit: http://www.fec.unicamp.br/~hidraulica2004/Welcome.html.

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Regional

• US$23 billion needed to cut waterworks shortage in Central America/Mexico. The Inter-American Development Bank (IDB) estimated in a recent study that Central America and Mexico need to invest US$23 billion to meet the UN's Millennium Development Goal of halving the portion of their population without access to drinking water and sanitation services by 2015, according to sources. This amounts to about US$2 billion per year and would provide access to water services to about 50 million people and sanitation services to about 56 million. In order to achieve this goal, the report recommended mobilizing the private sector used in conjunction with public sector investments.
• PAHO: Water deficiencies persist in Latin America. The Pan-American Health Organization (PAHO) assessed the state of Latin America's water industry during the Aqua Sur 2004 water conference in Buenos Aires, sources say, finding that while the area still suffers significant deficiencies, noteworthy improvements were made during the past 15 years. During the 1990s, drinking water coverage rose to 85% from 80% and access to sewerage services increased to 79% from 66%, at a time that the population grew to 500 million from 430 million. While these numbers show improvement, 103 million Latin Americans still lack basic sanitation and 77 million have no drinking water access, mostly in rural areas. While most people have access to some form of drinking water, quality of the water remains an issue as 41% of the people with connections use water that has not been disinfected and 60% have access only intermittently. This lack of disinfection and treatment explains why water-borne illnesses continue to be such a major problem in many parts of the region. Other water quality issues such as high levels of arsenic continue to be a problem in some areas. One solution to the water quality issues presented at the conference was the increased employment of "point-of-use" chlorination wherein a dilute chlorine solution is added to the household's drinking water. Coming at a cost of only US$0.30/month per household, advocates claim that it is affordable in even the poorest regions.
• Guaraní aquifer project. The Organization of American States accepted expressions of interest in the second quarter for a US$27.2 million consulting project which aims to better manage water resources in the 1.2 million square kilometers. Guaraní aquifer, sources say. The aquifer is shared by Argentina, Brazil, Paraguay, and Uruguay. The 28 month project includes designing and implementing a hydrogeological database, designing a monitoring network and evaluating geothermal resource potential. The World Bank approved a US$13.4 million grant for the project in 2002. Increased populations in the area are straining surface water sources and driving demand for new sources while waste in the area is damaging the aquifer. For more information, contact licitaciones@sg-guarani.org or visit http://www.sg-guarani.org.

Argentina

• Yacyretá channel, dam contracts awarded. EBY awarded the contract to build the US$27 million channel downstream from the dam which will help to prevent 380 square kilometers of farmland when water is released from the dam. EBY selected a local group of companies for the project made up of José Chediak, César Daniel Delgado and Calcaterra companies.
• US investigating Yacryetá. As a part of a larger inquiry into projects funded by the World Bank and the Inter-American Development Bank in Latin America which report corruption and cost overruns, the U.S. Senate has begun to examine Yacryetá. Responding to allegations of widespread corruption, as well as an unwieldy debt associated with massive cost overruns at the Yacyretá hydroelectric project on the Argentina-Paraguay border, the US Senate Committee on Foreign Relations began an investigation in mid-May into the cause of the problems, sources say. Begun in 1983 with a budget of US$2 billion, about US$11 billion has already been invested and today the plant runs at only 60% of capacity as a result of financial problems which prevented reaching planned water levels. An estimated US$800 million is needed in order to reach full capacity.
• Argentine/Paraguayan governments ink deal. In other Yacyretá news, the Argentinean and Paraguayan governments announced an agreement which aims to make Yacyretá bi-national entity (EBY) a "profitable and efficient" company, sources say. The agreement includes a pledge by Argentina to pay US$25 million to EBY debt it owes Paraguay. With the agreement in place, the governments hope to push forward the bidding process on the remaining works needed to raise the dam level in order to reach full hydroelectric capacity.
• Santa Cruz aqueduct work to begin. Reports indicate that work began on a 124 kilometer aqueduct in the Santa Cruz province that will pull water from the Santa Cruz river and supply drinking water to the town of San Julián. Construction is being performed by the Esuco-Gotti-JCR consortium after they won the contract with a US$20.9 million bid submitted late last year. The project should be complete in two years.
• Uco dam project stalled. Plans for a dam in the Uco valley in the province of Mendoza have been stalled as the country lacks funds needed to conduct the initial base studies, sources say. The government hoped to start the studies during the first half of this year, but now will be postponed to at least the second half of the year. The dam would be built on the confluence of the Santa Clara and Las Tunas rivers and would supply water for irrigation.
• Aguas Argentinas's contract revised. The Argentine government, which is in the middle of revising numerous concession contracts to better reflect the current socio-political context, reached an agreement in early May to revise Aguas Argentinas's operating concession, sources say. The renegotiated contract is currently under review by a bicameral congressional committee. Aguas Argentinas won its 30-year operating concession in 1993 to provide water to 11.5 million residents and sewerage service to 7.5 million residents in greater Buenos Aires. Under the revised contract, Aguas Argentinas will spend 242 million pesos (US$83 million) of its own money on a fund to improve infrastructure and service provision, including the extension of water services to 110,000 people and sewerage to 250,000. After the signing of the agreement, President Néstor Kirchner praised Aguas Argentinas and asserted that all concessionaires should follow the example and renegotiate their contracts to increase investment. In mid-June, Aguas Argentinas announced the first project under the renegotiated contract, a project which will extend water services to a further 1.5 million residents in Buenos Aires and will focus on the poorest areas of the city.
• US$468 million infrastructure program in Buenos Aires. The Argentine government announced in early May a US$468 million infrastructure program for Buenos Aires, according to news reports. One of the objectives of the development plan, which is expected to begin this year and finish in 2007, is to improve access to running water from 65% to 75%. Other works in the plan include sewerage, road improvements and hydraulic works.
• Santa Fe aqueducts finance plan submitted. A financing request for three aqueduct projects in the Santa Fe province, the Norte, Centro and Sur aqueducts, each of which will pull water from the Paraná river, was recently submitted by the water affairs ministry to the federal agency Enohsa. Although the US$140 million projects have been in the works for five years, the country's economic crises and subsequent lack of financing kept the tender launch from proceeding.
• Los Monos dam feasibility study accepted. According to sources, a feasibility study for the US$20 million Los Monos dam project in the Chubut province was approved during the second quarter, meaning that the bidding process to carry out the dam's executive project may now go forward. The multi-purpose dam will provide irrigation, flood control and a small amount of power generation.
• US$34 million Mendoza aqueduct bill tabled. Sources say that a bill was submitted in June to Congress which provides for the construction of a US$34 million aqueduct in Mendoza, in order to provide 20,000ha of irrigation in the province's wine growing region. The provincial government would provide 25% of the financing and the national government the rest.
• Mendoza water supply works. Officials from the Mendoza province announced plans for a 500 million-600 million peso (US$170 million-203 million) water supply project which will divert water form the Río Grande river to the Atuel river in order to boost water supply for irrigation in this agricultural region, sources say.
• Neuquén governor requests federal funds for Chihuido reservoir. Sources say that the governor of Neuquén province was upset President Néstor Kirchner's plans to invest US$3.8 billion in power projects in various provinces around Argentina did not include any projects in Neuquén, and thus he requested federal funds for the province especially aimed at large projects such as the Chihuido II dam. Specifically, he asked the federal government to match Neuquén's contribution of US$140 million to the project. Once in operation, Chihuido II will produce 228 milliwatts of electricity and will irrigate 7,000ha.

Bolivia

• Aguas de Tunari negotiations. As a part of ongoing negotiations between the consortium Aguas de Tunari (ADT) and the Bolivian government over what type of compensation ADT should get for the government's cancellation of a water and sewerage services contract, Bolivia's deputy minister of public works and services, José Barragán, made an offer to buy out ADT's shares at a low price. The objective of the offer is not to give compensation to ADT's owners, but rather to obtain control of the entity in order to dissolve it for lack of capital. To do so, the government needs to control 66% of ADT shares. The Bolivian government took control of ADT following the "water war" in 2000, a violent civil disturbance directed at private involvement in the water industry.
• Ugalde defends Semapa. Responding to a recent audit report by the general comptroller critical of the Cochabamba's water utility, sources say that Gonzalo Ugalde, the general manager at Semapa, said that the company has been working to reduce environmental impacts and reduce water loss. The audit report said that the company was not sufficiently reducing environmental impacts and was not making optimum use of water. Ugalde claimed that the report was politically motivated and that it did not reflect the actual state of affairs. Supporting his stance, Ugalde pointed out that Semapa reduced water loss from 58% to 51% and obtained 26 environmental licenses in 2003.
• Misicuni nears completion. The troubled Misicuni water project in the Cochabamba department is scheduled to finish by year-end, sources report officials involved in the project as saying. The year-end prediction partly hinged on the receipt of US$24 million in concessional credit from the Italian government, credit which must be spent on Italian companies such as Astaldi, which is currently applying a lining to the 19.2 kilometer tunnel with Bolivian partner ICE. Although work lining the tunnel will not be complete, the tunnel is scheduled to begin delivering 400 liters of water to Semapa, Cochabamba city's water utility, as early as September.

Brazil

• US$163 million in BNDES financing for Copasa. According to news reports, BNDES, Brazil's national development bank, approved 469 million reais (US$163 million) in financing in early April for Minas Gerais state water utility Copasa, enabling Copasa to start a number of water supply and sewerage works.
• BNDES to finance waterworks in Minas Gerais. Sources say that BNDES recently agreed to finance waterworks projects in Minas Gerais state through the subscription of 300 million reais-worth (US$95.4 million) of debentures in state water utility Copasa. The arrangement will allow for 530 million reais-worth of works in 77 municipalities for three years, including 198 kilometers of supply network, 120 new reservoirs, 926 kilometers of distribution network and 75,000 residential connections.
• Regulatory agencies bill. In mid-April, a bill was sent to Brazil's congress by President Luiz Inácio Lula da Silva which if passed would change the structure of regulatory agencies and would affect the way concession contracts are signed, news reports indicate. The bill would bring sweeping changes in a number of ways by transferring the signing of concession contracts to the respective sector ministries from the agencies, by limiting the terms of regulator heads and providing limited power to the President to replace them, and by requiring the regulator heads to sign performance and management contracts, with funds disbursement tied to goals achievement.
• ANA: US$57 billion needed in water, sewage sectors. ANA, Brazil's water authority, announced this quarter that it estimates that US$57 billion in investment in the water and sewerage treatment sectors is necessary over the next 20 years in order to provide coverage for the entire population, sources say.
• Lula sings US$678 million in water, waste, drainage contracts. According to news reports, on May 20, President Luiz Inácio Lula da Silva signed 2.13 billion reais (US$678 million) worth of contracts for waterworks, solid waste and drainage works. In total, he signed 249 contracts with 70 municipalities, six state water utilities, five state governments and the Federal District. Works will benefit 1.8 million families and are expected to generate 500,000 jobs.
• US$1.79 billion for São Francisco basin recovery. The Bahia state government announced plans to invest 5.3 billion reais (US$1.79 billion) over the next ten years in various environmental recovery and remediation works in the São Francisco basin, sources say. These works include water supply works for isolated communities, sewerage works, and dam construction.
• US$158 million in waterworks financing for Minas Gerais, São Paulo, DF. BNDES, Brazil's national development bank, approved 460 million reais (US$158 million) in waterworks financing for the states of Minas Gerais and São Paulo and the Federal District (DF), news reports indicate. This financing is expected to benefit close to 300 municipalities and create over 25,000 jobs during the works phase. Works in Minas Gerais that will benefit from the financing include 120 new reservoirs, 198 kilometers of supply network, 926 kilometers of distribution network and 75,000 residential connections. In São Paulo, the financing will help with increasing sewerage coverage, constructing three treatment plants and nearly 70 kilometers of outlet pipe. In the Federal District, works include 126 kilometers of water distribution network, 11 kilometers of channels, a sewerage treatment plant and sewerage connection.
• Upcoming PROGERIRH tenders. The water resources department for the state of Ceará announced upcoming tenders that come under the US$247 million water resources management project PROGERIRH, sources say. The tenders are for civil works and the supply of pipes for a number of pipelines in the state. The state has chronic water issues due to the semi-arid nature of most of the state, problems the works aim to alleviate.
• US$343 million for waterworks in metropolitan regions. The cities and health ministries signed a decree during the second quarter which created a 1bn reais (US$343 million) waterworks and waste project for metropolitan regions, new reports indicate. The project, named Projeto de Saneamento Ambiental em Regiões Metropolitanas, will assist 465 municipalities in 27 metropolitan regions with projects including increasing water and sewerage coverage, waste collection, and treatment works and is projected to produce 100,000 jobs. Municipalities submitted requests for financing for local projects in early May and agreements were scheduled to be signed in July or August.
• Paraibuna river remediation and urbanization project tenders. The city of Juiz de Fora announced during the second quarter a general procurement notice for a package of contracts that are a part of the US$38.5 million Paraibuna river remediation and urbanization project, sources say. The Inter-American Development Bank (IDB) agreed to provide US$19.3 million in financing for the project. Included in the project are an 850 liter/second wastewater treatment plant, 27 kilometers of collection mains, 20 kilometers of interceptors, 20 pumping stations and 5,000 residential connections, with the goal of increasing wastewater treatment from 1% to 90%. The first project up for bidding is expected to be a US$13.6 million contract to build the principal interceptor, collectors and pumping stations.
• US$25 million for Odebrecht suppliers, subcontractors. In an effort to support the small and medium enterprises (SMEs) which are suppliers and subcontractors of Contrutora Norberto Odebrecht (CNO), which specializes in design and construction services for large-scale works and is a subsidiary of Odebrecht, the International Finance Corporation (IFC) approved a US$25 million corporate loan which will help CNO fund advances and capacity building for SMEs in Latin America, sources say. Many of these smaller businesses lack access to bank financing and thus advances from CNO are typically the main source of funding for these firms.
• Sergipe water supply to get US$54 million-plus boost. Deso, the Sergipe state water utility, announced during the second quarter that it is spending more than 159 million reais (US$54 million) on water supply works for the capital city Aracaju and municipalities in the interior, sources say. The main project is the doubling of a 43 kilometer stretch of the São Francisco water supply channel that will increase the supply rate by more than 400 liters/second, benefiting close to 150,000 residents.
• São Francisco basin environmental fund creation. Brazil's lower house formed a special committee that is looking into the creation of a large environmental recovery fund for the São Francisco river basin, sources say. In April, the committee announced plans to draft a 5.3 billion reais (US$1.69 billion) investment for the basin area including water supply works for isolated areas, sewerage works, and dam construction. The basin is home to some 15 million people and the river is Brazil's longest and a major source for irrigation and hydroelectric power. More information is available at www.cbhsaofrancisco.org.br.
• Water resources recovery project in DF. During the second quarter, a World Bank mission met with officials representing Brazil's Federal District (DF) about possible bank financing of a US$115 million environmental recovery program for water resources in the area, according to sources. The project would seek to clean and protect water resources, find new water resources, and properly dispose of solid waste. Officials are hoping that a financing contract for the program, entitled "Programa Brasília Sustentable," can be signed during the first half of next year.
• US$390 million Santa Catarina water supply project seeks funds. Casan, the water utility for the state of Santa Catarina, reportedly is seeking funds from the Japan Bank for International Cooperation (JBIC) for a major new waterworks project estimated to carry a price tag of US$390 million. "Macrocaptação do Norte," as the project is known, seeks to provide water distribution to 1.5 million users in the northern area of the state by utilizing an aquifer in the municipality of Corupá.
• São Paulo PPP law enacted. In mid- May, São Paulo state governor Geraldo Alckmin signed into law a program that will seek to create expanded public private partnerships (PPP) aimed at expanding infrastructure, including waterworks projects. Sources estimate that the program will bring in up to 7.5 billion reais (US$2.4 billion) in private investment in works and services in the period from 2004-2007. The São Paulo PPP law mirrors a PPP bill currently under review in the federal congress.
• State and municipality waterworks financing qualifiers announced. In late May, the cities and health ministries named the states and municipalities which have qualified for 400 million reais (US$130 million) in financing for waterworks and waste projects in metropolitan regions. The 400 million reais is only the first part of a 1 billion reais four year projected named Projeto de Saneamento Ambiental em Regiões Metropolitanas which is predicted to create 100,000 jobs and to benefit over 450 municipalities with water, sewerage and waste collection works. The financing contracts between the federal government and municipalities and states were signed on July 2.
• Paraná to invest US$565 million in waterworks through 2006. According to news reports, Paraná state water utility Sanepar announced that it will be investing 1.75 billion-reais (US$565 million) through 2006 on drinking water and sewerage works. Most municipalities will see drinking water coverage increase to 99% and sewerage collection will increase to 58%. To increase the rate of public works, bidding processes are being pushed forward at a rate of two bidding launches a day.
• Upcoming Recife urban project tenders. Sources say that Pernambuco state municipal development foundation Fidem released a general procurement notice for a package of upcoming contracts that are a part of the US$84 million urban upgrade project in Recife. The project, referred to as Prometrópole, seeks to improve living conditions for the 1.2 million residents of Recife's shantytowns by improving access to drinking water, sanitation, housing, public transport, and drainage. For more information contact idpresi@fisepe.pe.gov.br.
• Year-end launch for Tiete river pollution reduction program tenders. São Paulo state water utility Sabesp announced that there will be a year-end bidding process launch for US$80 million of works under the larger US$400 million Tiete river pollution reduction program, sources say. Works include the construction of more than 65 kilometers of interceptors and collection mains and 491 kilometers of collection network. The ultimate goal of the Tiete program is to prevent 300 million liters/day of wastewater from being released untreated into local waterways. For more information visit: www.projetotiete.com.br.
• US$575 million infrastructure-financing fund backed by IDB. The planning, budget and management ministry and the IDB collaborated to create a US$575 million infrastructure-financing fund which will finance projects to be carried out mainly through public-private partnerships, sources say. IDB will provide US$75 million to "open" the fund and then investors will buy into the fund. Waterworks project will be some of the primary beneficiaries of the fund.
• US$47.8 million of waterworks tenders authorized in Bahia. According to reports, Bahia's governor announced the authorization for the launch of tenders worth US$47.8 million which fall under the waterworks programs Pró-Sanear and Pró-Saneamento. Water and sewerage works will benefit around 500,000 people and roughly half the money will go toward the 27.5 meter-high Cristalândia dam.
• Jucazinho channel's 3rd branch opens. Benefitting 255,000 people in the city of Caruaru in Pernambuco state, reports indicate that the third branch of the Jucazinho water channel opened this quarter thus increasing the city's water supply from 150 liters/second to 500 liters/second. The fourth branch is currently under construction and should be operable by year end, supplying water to the cities of Gravatá and Bezerros.
• Water utility created for DF, Goiás. Responding to a burgeoning population in the Brasília area, the governments of the Federal District and Goiás state signed an agreement creating a water utility to serve the municipalities in the DF and the surrounding area, sources say. Under the agreement, the water utilities Caesb (DF) and Saneago (Goiás) are authorized to create a utility named "Companhia Ambiental �?guas Brasileiras" which will serve the area around the capital, encompassing a total of 23 municipalities. There are about 1 million residents in the area.
• US$93 million in Paraná waterworks contracts. Sources say that Paraná state water utility Sanepar signed water and sewerage works contracts with 50 municipalities worth 290 million reais (US$92.7 million) as a part of the state's waterworks investment plan that calls for spending 1.76 billion reais through 2006. The works include 1088 kilometers of sewage collection network, nine reservoirs and seven water treatment plants.

Chile

• Aguas Nuevas wins bid for Esmag, Essat and Essar. With a bid of US$171.8 million, the consortium Aguas Nuevas won the concessions for all three remaining state-operated water utilities, sources say. The utilities are Essat serving Region I, Essar serving Region IX, and Esmag serving Region XII. Transfer of the utilities is expected to occur in late July or early August.
• Farmers snub water code reform. Chile's national agriculture society (SNA), Chile's leading advocacy group for farmers, rejected a water code reform bill under review in the senate, sources say. The major components of the bill would tax water rights holders who do not put their share to productive use and would base future water rights decisions on needs rather than wants.
• Region III dam to be transferred to locals. According to sources, the Chilean government announced that they will transfer the US$45 million Santa Juana dam in Region III to Huasco valley irrigators. Under the deal, the Agrupación de Canalistas del Huasco y sus Afluentes, an association of irrigators in the Huasco river valley, would own, manage and administer the dam.
• US$2 billion rain catchment works financing bill. The rain catchment works financing bill continued to proceed through Chile's legislature, sources say, as the senate public works committee approved the bill in May. Legislators will now perform a detailed analysis of the bill and officials close to the bill expect the it to go before congress in September. One of the primary provisions of the bill will allow works to be put out to concession, which could provide significant opportunities for the private sector as works are estimated at close to US$2 billion. Demonstrating the private sector opportunities with the bill, public works under-secretary Clemente Pérez said that he expects by 2007 around US$290 million will have been spent on works in and around Santiago, of which US$230 million will have been part of concession contracts. Works will be financed through a surcharge on the water bills of homeowners, although there is a proposal to exempt those with homes valued at less than US$4,165. In efforts to prevent the bill's enactment, water utilities argued to the public works committee that the bill is unconstitutional. Moreover, they said it would raise water bills by 40%, a number government officials dispute and claim that it is closer to 10%.
• Region V utility to get US$120 million during 2004-2006. Sources say that an official from Esval, the water utility for Region V, announced that they will invest US$120 million between 2004 and 2006 on various waterworks projects. Projects will focus on increasing drinking water capacity and wastewater works and will be sufficient to accommodate the region's population growth for the next 20 years.
• Punilla dam project. Sources say that during the second quarter, the public works ministry presented the environmental impact study (EIS) to the national environment authority Conama for the Punilla dam project. Submission of the EIS starts a 120 day notice and comment period. The ministry plans to put the US$150 million dam out to concession. The Region VIII dam would more than double irrigation capacity in the area and support a 94 millowatt hydroelectric facility with a 104 cubic meters/second flow. The ministry is also reviewing two other dams: the US$128 million Puntilla del Viento dam in Region V and the US$34 million Ancoa dam in Region VII. All three dams will be put out to concession, although officials have not decided which one will be put out to tender first.
• Convento Viejo dam concession. Sources say that 10 groups have purchased bidding rules for the US$123 million Convento Viejo dam concession since they went on sale in February. The contract will include expanding the dam's current capacity to 237 million cubic meter and building a channel supply system that will irrigate approximately 40,000ha. At the request of potential bidders, the original June 30 submission date was extended until September 14.

Colombia

• Uribe endorses coastal water improvements. US$93 million Colombia's president �?lvaro Uribe announced that he will endorse credit applications from the country's coastal departments to multilateral lending institutions for sewerage, aqueduct and irrigation projects, according to news reports. The president also said that he would seek out greater investment from the private sector in public sector services.
• US$27 million to be invested in Barranquilla waterworks. The Colombian water utility Triple A announced in early April that it plans to spend 72 billion pesos (US$27 million) over the next four years improving water services in Barranquilla, sources say. Works will include aqueduct maintenance, sewer sanitation works, and installation of sewerage networks.
• US$300 million poverty alleviation program in Meta department to target water. Colombia's Meta department will be the focus of renewed vigor to alleviate extreme poverty that wracks the area, as the government is moving ahead with a 800 billion peso (US$300 million) plan to improve conditions. According to sources, water and irrigation projects will play a key role in the plan, as the government plans to build aqueducts and extend irrigation to 36,000ha of land in the area.
• US$94.6 million of credit available for Atlantico water projects. Findeter, Colombia's state development agency, announced during the second quarter that it has allocated 250 billion pesos (US$94.6 million) of credit for potable water and sanitation programs for the Atlantic coast region, sources say.
• "Social capitalization" of aqueducts. Colombia has embarked on its "Tools for Equality" social program, which seeks to make utilities users owners by selling shares directly to users, a process called "social capitalization." Sources say that in the first part of this quarter, Colombia completed the first such social capitalization when users purchased shares of the Melgar, Chía and Moscquera aqueducts in the Cundinamarca department.
• Relaunch of Interceptor Norte in 2005. After voiding an earlier bidding process due to only receiving one offer, sources say that EPM, the Medellin based multi-utility, announced that it will relaunch a bidding process for the Interceptor Norte wastewater-channeling project next year. While technical aspects of the project will likely remain the same, the budget will likely be increased from 85 billion pesos (US$32 million) to 99 billion pesos (US$38 million). The project will channel wastewater from Medellin and neighboring Bello 8 kilometers to a water treatment plant.
• Emcali saved from liquidation. Facing the threat of imminent liquidation of the Colombian multi-utility Emcali, a financial restructuring agreement was reached between creditors, the nation, energy company Termoemcali, service users, and company workers, sources say. The agreement, which was brokered by the public services regulator, was the result of compromise by various stakeholders, including creditors who forgave 35% of the outstanding debt and 35 billion pesos worth of benefits cutbacks from workers, as well as financial support from the national government in the order of 1 trillion pesos (US$373 million) to capitalize the debt guaranteed in a social capitalization fund.
• Atlántico to upgrade potable water systems. Colombia's Atlántico department announced plans to spend US$52 million from 2004-2007 in an effort to develop the area's potable water supply, sources say.
• Triple A achieves near perfect coverage in Barranquilla. Demonstrating the benefits privatization can bring, news articles recently reported that concessionaire Grupo Triple A in Barranquilla received near perfect coverage scores. Since Triple A took over, coverage passed from 66% to 99% for water service network, from 54% to 96% for sewerage, and for waste management it passed from 67% to 100%. Barranquilla's system is now among the best in Latin America.
• Bidding for Piedras Blancas study to go forward shortly. Sources indicate that it is likely that the bidding process for a US$1.2 million study for the Piedras Blancas water project will go forward in the short term. The process was shelved in March so that officials from the IDB could evaluate complaints by some participants of the ranking of their technical proposals. The study will assess the Piedras Blancas drinking water project that includes the construction of a US$200 million dam.

Dominican Republic

• SNC-Lavalin continues water plant negotiations. With construction on the $138 millon water treatment and delivery system set to commence at the beginning of the second quarter of this year, sources say that the Canadian engineering company SNC-Lavalin is still negotiating some of the details of its contract to build the plant and aqueducts. The state water utility Inapa awarded the contract to SNC-Lavalin in April 2003 and the project is designed to benefit more than 400,000 residents.
• Santiago drinking water projects. The water utility Coraasan which serves the Santiago city and province singed an agreement with Invi, the country's national housing institute, to proceed with several drinking water projects in Santiago, sources say. The projects fall under Invi's neighborhood improvement program and are worth US$119 million.

El Salvador

• El Chaparral hydro project gets green light. The Japanese power generator company JPower completed the feasibility study of the 67 megawatt El Chaparral hydroelectric project on the Torola River, finding the project to be feasible, sources say. El Salvador's state power company CEL is in charge of the project and over the next two years is expected to finalize designs, seek financing and call for bids, and they expect to begin construction during 2006.

Haiti

• Drinking water consultancy tender. As a part of a US$60.1 million potable water and sanitation sector investment reform program, sources say that Haiti's public works and communications ministry accepted expressions of interest for a drinking water consultancy. The program aims to improve and sustain potable water in the country while at the same time establishing a framework for developing wastewater service. More information can be obtained by contacting the ministry's sector reform unit at ursep_haiti@yahoo.fr.

Honduras

• Negro river dispute. The Central American legislative integration committee is investigating a dispute between Honduras and Nicaragua regarding the access and use of the Negro river, sources say. The river begins in Honduras, but 127 kilometers of the 163 kilometers long river run through Nicaragua. Last year, Honduras constructed a canal to redirect the river after its course was altered toward Nicaragua by Hurricane Mitch. While the river's limits were set in a 1958 agreement, how the volume of the water should be used was not specified.

Mexico

• CNA predicts severe water shortages. Sources say that Mexico's national water commission (CNA) is forecasting severe water shortages in the country by 2025, due to growing demand and diminishing supply. CNA also estimated that 30 billion pesos (US$2.7 billion) will need to be invested annually in order to avoid the crisis. Shortages would be most acute in the Valley of Mexico which includes the Distrito Federal.
• Pachuca water concession for AquaSol. Sources say that in early Apri,l AquaSol, the Mexican waterworks firm, won an 18-year BOT waterworks concession contract in the city of Pachuca. Under the contract, AquaSol will develop and operate a 400 liters/second plant which is designed to provide water for agricultural and industrial use. The concession is valued at US$25 million. In other news for AquaSol, they continue to contest their second place finish in a bid on a desalination plant in Los Cabos.
• Arcediano dam project. The controversial Arcediano dam project continued to come under fire during the second quarter, sources say. A study conducted by a team from Guadalajara University concluded that it is not clear that the 3.2 billion peso (US$280 million) dam is "viable in economic, public health, environmental and social benefit terms." Instead of building one large dam, the study found that there should be a series of smaller dams to provide drinking water to Guadalajara. Currently, much of Guadalajara's drinking water is extracted from Lake Chapala, a practice the project will stop. The team concluded that before a decision is made, another study should be conducted which considers the alternate Loma Larga project. The state water commission CEAS was quick to refute most of the findings of the study and said that Jalisco was committed to going forward with the dam.
• Degremont-Sumitomo-Prodin consortium signs US$321 million wastewater contract. Sources say that this quarter the Degremont-Sumitomo-Prodin consortium and the municipality of San Luis Potosí signed a large BOT contract for a wastewater treatment plant. The 263 million-euro (US$321 million) plant will take 2 years to complete and will recycle 80,000 cubic meters of the city's wastewater for industrial and agricultural purposes.
• Saltillo treatment plant tender temporarily delayed. State capital Saltillo delayed launching a tender for a 20-year concession to build and operate a 1,300 liters/second wastewater treatment plant due to administrative details, sources say. The launch was expected in April, and although a new date has not been set, tenders are expected to be launched during the third quarter. The US$35 million contract entails a 1.5 year construction phase which includes building the primary plant, drainage, and transport networks.

Nicaragua

• Negro river dispute. See Honduras.

Paraguay

• Yacryetá news. See Argentina.
• Patino aquifer consultancy. Five offers were submitted in mid-April to draft and implement a management plan for the Patino aquifer, which is one of the primary water sources for Asuncion, sources say. While the water is used extensively by the capital city's two million residents, uncontrolled sewage, industrial wastewater discharges, and agricultural chemicals have polluted the aquifer. The management plan will seek to ensure that the aquifer is used in a sustainable manner.
• State water utility Essap ailing. Members of the federal government explored options on how to revive the ailing state water utility Essap, sources say. Saddled by almost US$200 million in debt, the utility is hardly attractive to international firms, but it may appeal to local firms eager to refloat the business. Currently, Paraguayan law prohibits the sale of state companies to private interests, but opposition parties recently submitted a bill that would change that. In late June, the utility proposed a debt swap in which the finance ministry pay the principal of its foreign debt this year, and Essap would pay to the state revenues from water bills paid by public entities.
• Rural waterworks project deadline extended to Dec. 2005. After completing a site visit, the World Bank decided to extend until December 2005 a US$55.7 million rural water supply and sanitation project, sources say. The original close date for the project was December 2003, but at that time only about a quarter of the project goals had been completed, a delay blamed on the country's political climate.

Peru

• Marca II project to proceed. After months of uncertainty about the future of the Marca II project, it forged ahead during the second quarter, sources say. In mid-April, Peru's ministers of economy and finance (MEF) and housing, construction and sanitation, Pedro Pablo Kuczynski and Carlos Bruce, signed an agreement for the first stage of the project, sources say. The first stage involves the construction of the 10 kilometer Transandino tunnel which will bring water from mountain sources to Lima as well as building canals and upgrading the Pomachocha reservoir. The works are expected to cost US$40 million and to take 36 months. No details of the sources of funding were provided, although it is unlikely to come from the Japan Bank for International Cooperation as the MEF turned down a loan from them earlier in the year.
• Piura water project tender launched. The bidding process for the Piura water project, a US$100 million surface water project in the Piura department, was launched in late April, sources say. The project involves the construction of two water treatment plants which will benefit 307,000 people when it produces potable water. The concession winner will take over operations of utility EPS Grau and will perform technical studies and execute the works. The winner is expected to be announced in mid-August. The Japanese government is financing US$75 million of the project's costs with the rest coming from the Peruvian government. The first potable water should start flowing to inhabitants in May 2006.
• Sunass: State lacks money for waterworks. Sergio Salinas, the president of the public service regulator Sunass announced during the second quarter that Peru lacks the fiscal resources to continue investing in waterworks projects, sources say. During the 1990s, the state made significant investments in the water sector, peaking in 1997 with US$450 million; however, such levels of investment are unsustainable. One implication of this news is that in the future Peru will likely increase its reliance on the private sector for investment in waterworks.
• Chira-Piura irrigation project short on funds. The Chira-Piura irrigation project in northern Peru, which aims to provide irrigation to 156,000 ha benefiting more than 500,000 residents, is short on funds, according to news reports. Tomás Mendoza requested an additional 54 million soles (US$15.5 million) from the ministry of finance and economy (MEF) for the 2005 budget, but funds have been slow in reaching the project, and thus one option officials are exploring is external financing.
• SNC-Lavalin in negotiations with Arequipa over water treatment plants. During the second quarter of the year, SNC-Lavalin continued negotiations with the government of Peru's Arequipa department regarding the construction of two water treatment plants, sources say. The US$100 million projects involve the construction of the Tomilla II drinking water plant and the Pampa La Estrella wastewater treatment plant. Once built, it will be administered jointly by the regional government, Sedapar (the utility in the region), and SNC-Lavalin.
• Olmos project. After submitting the only bid, sources say the Brazilian construction firm Odebrecht won the 20-year concession to develop the Olmos water supply and hydroelectric project in Lambayeque department. Odebrecht will construct the first stage of the dam as well as the tunnel which will transport water to the irrigated areas. The project will take water from the Huancabamba River to generate electricity and help irrigate 30,000ha in the Olmos area. The Peruvian government is providing roughly half of the money for the US$140 million project, and Odebrecht will supply the rest. Odebrecht's concession only covers the first stage of the project, but once complete, the project aims to supply 2,050 million cubic meters/year of water, to be able to generate 600 megawatts of electricity and to irrigate more than 150,000ha for agricultural production.
• KfW offers to aid Epsel. In late May, the German development bank KfW offered US$237 million to keep Epsel, the water utility for the department of Lambayeque afloat, news reports indicate.

Puerto Rico

• AAA takes over from Ondeo. After Ondeo's operating contract was cancelled earlier this year, Puerto Rico's aqueduct and sewer authority (AAA) took over and found many jobs that needed to be completed in order to comply with US Environmental Protection Agency standards, sources say. These works included fixing leaky sewage pump stations, installing water-filtration systems, and developing and implementing a preventative maintenance program for all water and sewerage facilities. US$125 million has been allocated for these projects.
• Governor candidate describes ambitious US$1.6 billion water investment plan. Aníbal Acevedo, one of the candidates running for governor in the upcoming elections in November announced his intentions of launching a US$1.6 billion water investment plan if elected, sources say. The plan would include several new reservoirs and two desalination plants.

Uraguay

• Anti-privatization bill tabled. News reports indicate that proponents of an anti-privatization bill, which if enacted will prevent the transfer of waterworks management to the private sector, secured enough signatures to place the bill on the October ballot. The group behind the bill formed in March 2003 in response to a bill submitted to congress which aimed to open of the water sector to private investment. The group's position is that water is not a commodity which can be freely traded on the open market. They also claim that the experience with concessionaire Uragua shows that privatization leads to higher prices and a drop in service quality. Reportedly, Presidential candidate Tabaré Vázquez, who is widely expected to win this year, supports the bill.
• Upcoming tenders announced. In early May, OSE, Uruguay's state water utility, announced upcoming tenders which fall under its US$48 million modernization and systems rehabilitation program project, sources say. The package includes contracts for the construction of a drinking water supply main in the city of Salto, the supply of water shutoff valves, and, among others, the construction of a new wastewater treatment plant for the city of Durazno. The project aims to increase the efficiency, coverage and sustainability of water supply and sanitation services and is partly financed by a US$27 million loan from the World Bank.
• Bidding rules published for water supply works in Canelones. OSE published bidding rules this quarter for tenders to complete water supply works in the Canelones department. Works are a part of OSE's US$48 million modernization and systems rehabilitation program and include the expansion and renovation of a drinking water plant and the supply and installation of piping for the construction of a water supply network. Offers are due July 23.

Venezuela

• Millennium water goal reached. Venezuela announced this quarter that it has already met its potable water millennium goal of reducing by half the number of people (based on 1990 figures) who do not have access to potable water, sources say. While the goal was to do this by 2015, Venezuela aims to have 100% water coverage by that date.
• Hidrolago recommends US$60mn in water supply projects. In mid-May, the Venezuelan water utility Hidrolago recommended a number of projects aimed to improve water quality distribution systems in Zulia state, sources say. The plan included the development of a water plant on the east coast of Lake Maracaibo, the construction of 10 wells in San Francisco, interconnections between a number of cites, and an integrated sanitation plan for La Guajira. These proposals would come at a cost of 115 billion bolívares (US$60 million) and has been tabled while Hidrolago approaches multilateral lending institutions to secure financing for the projects.
• Chávez announces US$2 billion development fund. Reaching into Venezuela's significant international reserves from the oil industry, President Hugo Chávez created a US$2 billion fund to be used for public projects, sources say. The fund will allow the acceleration of some development projects already underway, such as the US$58 million El Diluvio dam and the $US100 million Metro de Los Teques system in Miranda state.
• Yacambú-Quíbor dam project moves forward. The Yacambú-Quíbor dam project, which once completed will be the third tallest dam in the world and has been under construction since the 1970s, continues to progress with US$90 million in funds expected to be spent on the project between now and 2005. While the government is providing most of the funding for the US$805 million project, another US$224 million is still needed. The 162-meter dam will create a reservoir covering 852ha containing 435 million cubic meters of water which will be conducted via a 26 kilometer tunnel.