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Quarterly Report on Water Industry Developments in Latin America -- December 2002 December 2002
In this issue:
Argentina
- The government of Eduardo Duhalde has announced that the government will invest US$424mn on a public works plan in the next
six months, which includes hydraulic projects. The country's construction association presented a plan, Plan Posible, in an
effort to reactivate the sector, which calls for spending 10bn pesos/year that could create 1.3 million jobs through 2007.
The source of funds for this program was not disclosed.
- Administracion Provincial del Agua (APA), the Chaco province water authority, has pre-qualified two companies for the construction
of a $152mn peso aqueduct project. The bidders are Dycasa and a consortium of Supercementos and Ieicsa. Both bidders plan
to work with a local, small-scale company. The technical offers are expected to be opened in the next few weeks, and the economic
offers have not been requested yet. The aqueduct will supply 140 million liters/day to 30 areas; the construction will be
finished in five years.
- Cordoba province water utility Dipas mentioned that 12 groups purchased bidding rules for two contracts to build two multi-purpose
dams. The dams, known as El Chanar ($74.5mn pesos) and Achiras ($5.25mn pesos), will provide drinking and irrigation water,
although their main function will be to prevent flooding. The offers are due in mid December.
Bolivia
- TAMS, a subsidiary of Earth Tech, submitted a study for the design of the US$40mn Misicuni dam. TAMS is providing the conceptual
engineering for the dam project. The dam is part of the US$354mn Misicun project, which is designed to guarantee sufficient
water to meet the growing drinking water needs of Cochabamba for the next 30 years. The project entails channeling water from
the northern slopes of the Tunari Mountain range through a 20km tunnel connecting the Misicuni reservoir to the town of Cochabamba.
The project also includes a 120MW hydroelectric power plant. The construction of the dam is supposed to begin in 2004.
- The Pronar national irrigation program will be financed by a US$20mn part of the US$350mn the Andean Development Corporation
(CAF) promised to Pronar. Pronar will try to strengthen the irrigation sector, support water resources management, provide
technical assistance and training, and improve and rehabilitate small-scale irrigation systems in low-income areas.
- The United Nations Food & Agriculture Organization (FAO) has met with Bolivian officials and international lending institutions
to plan the irrigation master plan. FAO, the Inter-American Development Bank (IDB), the World Bank (WB) and German development
bank KfW began discussions regarding the funding of the project. The plan is valued at US$400mn that will help bring 110,000ha
by building new irrigation systems and improving existing ones. The project will be for the period 2002-2007. This project
is part of the national master plan (Plan Bolivia Agropecuaria).
Brazil
- Sanepar, the water utility of Brazil's Parana state, has issued the bidding rules for the water supply component of a project
that is worth 200mn reais (US$50.4mn). The bidding rules have been available for sale since October 23 for the sewerage works
component, and the water and sewerage rules are due December 5 and 9. In September, Sanepar pre-qualified 20 companies to
purchase the bidding rules.
- The bidding rules for a tender to build Pindobacu dam have been published by Cerb, the state rural engineering company for
northeast Brazil's Bahia State. The project is in Bahia's semi-arid region and is part of the sustainable development program
Sertao Forte. The offers are due December 4 and, according to the bidding rules, the construction is estimated to be finished
in one year. The dam is to provide irrigation and drinking water. The construction of the dam is being financed by the World
Bank, under the Bahia Water Resources Management Project approved in 1997, for a value of US$85mn. Bahia state will provide
US$35mn.
- In mid October, Sabesp, the São Paulo state water utility, announced the bidding rules for four tenders to supply ceramic,
PVC and cast-iron piping in varying diameters, as well as cast-iron lids, for the Tiete II river cleanup project, with an
overall value of US$400mn. The financing of the project is through the Inter-American Development Bank (IDB), Brazil's national
development bank BNDES and Sabesp. This project includes 343km of ceramic piping; 43km of PVC piping; 6km of cast-iron piping;
and 12,000 cast-iron lids.
- Brazil's Ceara state water resources department (SRH), under the state's US$247mn water resource management project PROGERIRH,
has accepted 25 background documents from interested companies in connection with feasibility and design studies. The contracts
are for the design and specifications of engineering projects for the Midwest/Ibiapaba/Acarau network; studies and engineering
design for the Fronteiras Reservoir-Plato de Poti network, the Inhuncu, Arabe, Macacos, Jacurutu, Paula Pessoa, Frecheirinha
and Tiaia dams; and the Lontras dam, tunnel and small hydroelectric plant. SRH is looking to set a short list of six companies.
The shortlist is expected by early January, and the list will require the approval of the World Bank. This year Brazil's state
development bank BNDES and Ceara State entered into a financing agreement of US$53.4mn. The World Bank approved a US$136mn
loan to Ceara State in 2000 for the PROGERIRH, which aims to improve institutional, legal, and administrative frameworks;
increase the network of strategic reservoirs; integrate river basins; rehabilitate existing hydraulic infrastructure; and
increase the volume of water supplied.
- The Federal District (DF) water utility Caesb will invest 200mn reais (US$63.8mn) on new water and sewerage works through
2004 in connection with the water project for the DF, with a value of US$260mn. Caesb has invested 100mn reais to build 1,200km
of drinking water and sewerage networks in the last three years and eight months. The Inter-American Development Bank approved
US$130mn for Caesb, in connection with the sanitation program. Caesb has published bidding rules for six contracts to carry
water and sewerage works budgeted at 45.3mn reais (US$14.5mn) that are part of the project.
- In November the Inter-American Development Bank (IDB) was expected to review a loan request from the Ceara state water utility
Cagece for an amount of US$100mn, which would be used to finance the second phase of the utility's US$200mn waterworks master
plan Sanea. The IDB approval is expected in the first months of 2003. Phase two will include the building of a sewerage network
in capital Fortaleza that will increase coverage to 77% from 52%, and the construction of collectors in the Maranguapinho
and Coco River basins.
- Brazil's national development bank BNDES has approved a US$115mn sewerage improvement program for Rio Grande do Sul state
capital Porto Alegre. It is expected that the Inter-American Development Bank (IDB) will help to finance the project, which
plans to increase sewerage treatment to 77% from 27% by 2015 by collecting sewage from the Ponta da Cadeia, Cavalhada and
Restinga systems and sending it to the Zona Sul treatment plant.
- The Procav II drainage program will include, among other projects, the Aricanduva III containment pool the first of five such
pools. The 256,000 cu. m. capacity reservoir will benefit more than 100,000 residents, and once the other four pools are built
(by year-end) the area's storage capacity will be 1.8 million cu.m. This is program is partially financed by the Inter-American
Development Bank (IDB), which is providing US$302mn, and local counterpart funds in the amount of US$319mn.
- Cedae, the Rio de Janeiro water utility, is going to publish bidding rules on December 2 in connection with services for phase
I of the Guanabara Bay remediation program (PDBG), for an estimated value of US$793mn. The contract includes financial planning
and control, support for goods and services, coordinating the drafting of engineering projects for the waterworks and solid
waste, and conducting background checks of suppliers. The company backgrounds and technical and economic offers must be filed
by January 16, 2003. Phase I is scheduled to commence in 2003. The financing of the project is structured as follows: Inter-American
Development Bank US$350mn, Japan Bank for International Cooperation US$237mn and Rio de Janeiro state US$206mn.
- In November Caesb, the Federal District (DF) water utility, announced that it is drafting a waterworks assessment that will
help create a master waterworks plan through to the year 2030. The study is expected to be ready by the end of this year.
The financing of the project will not start until the paper work is completed, but Caesb mentioned the project will complement
works that fall under its US$260mn basic sanitation program. Caesb announced it will invest 200mn reais (US$63.8mn) on new
water and sewerage works in the years 2003 and 2004 as part of the basic sanitation program. The Inter-American Development
Bank approved a loan for US$130mn in connection with the projects.
- In mid November, the Senate authorized the federal government to act as guarantor for two waterworks loans totaling US$122.6mn.
The loans involve US$75mn from the World Bank, in connection with the government's US$211mn water sector modernization project
PMSS II, and a loan for US$47.6mn from the Inter-American Development (IDB) for Saneago's US$95.2mn waterworks project. The
projects will target Brazil's north, northeast and center-west regions. Although the government's special urban development
department (SEDU) is the project's executing agency, utilities are responsible for launching goods and services acquisition
tenders. This project will provide drinking water to the users of Goiania and improve sewage treatment, thereby reducing pollution
in the rivers draining the service area and setting the framework for further expansion of the potable water system. The project
also includes the construction of a dam on the João Leite River, which is expected to be completed by the year 2004.
- In early October Espirito Santo State announced that it expects to complete the water and coastal pollution management project
Prodesan in April of 2003, with a value of 149.5mn reais (some US$41mn). The project was financed by the World Bank, and includes
388km of collection network and outlet pipes, 24 lift stations, 33,288 hookups and five treatment stations, which will increase
sewerage treatment in state capital Vitorias.
- It is expected that the Inter-American Development Bank (IDB) will approve a minimum of US$6bn in new financing operations
during 2003-2006, after talks with president-elect Lula. IDB-financed water and waste related programs, such as Rio de Janeiro
state's Guanabara Bay remediation program (PDBG) and Rio Grande do Sul state's environmental management program Pro-Guaiba,
include last month's signing of a loan agreement between the finance ministry and the country's northeastern development bank
Banco do Nordeste and the IDB for the US$400mn second tourism development program. The IDB approved a US$47.6mn drinking water
and wastewater loan for Goias state water utility Saneago's US$95.2mn waterworks project. The IDB funds are also being sought
for Ceara US$200mn waterworks master plan Sanear, the Porto Alegre US$115mn sewerage improvement project, Belo Horizonte's
US$225mn river basin remediation and recovery program and Juiz de Fora planning and strategic management directorate for US$35mn.
- Parana State water utility Sanepar has announced that construction began in November to expand water supply infrastructure
in five coastal cities as part of the company's US$390mn water and sewage program Paranasan. The work includes water storage
facilities, a distribution network and the treatment plant in Guaratuba, which is expected to be completed by 2004. Sanepar
awarded a US$15mn contract to a consortium made up of Gel Engenharia, Acma Construcoes Civis and Formato Engenharia this year.
- Embasa Bahia's state water utility will wrap up its US$600mn waterworks and environmental management program Bahia Azul in
June 2003. Bahia Azul began in 1995 and includes sewerage, water supply, and solid waste, among other programs. The financing
for the program was structured as follows: Inter-American Development Bank US$264mn, Bahia state US$95mn, the Overseas Economic
Cooperation Fund US$78.2mn, the World Bank US$73mn, BNDES US$60.8mn and CEF US$29mn.
Caribbean
- Cayman Islands water services company Consolidated Water (CWCO) has entered into definitive agreements to acquire interests
in several companies in the British Virgin Islands and Barbados. The total amount of the purchase is US$41.5mn.
Chile
- Essbio and Essel, the water utilities for Region VIII and Region VI respectively, have officially merged and started operating
as a joint company. The majority owner of the new company is Thames Water. Essbio and Essel will continue to use their respective
names, logos and corporate image. The merger is part of Thames' growth and consolidation strategy in Chile, and it was the
first merger of its type in Chile. Thames Water is also the owner of Aguas Nuevo Sur Maule, the water utility of Region VII.
Essbio's investment pledge calls for spending some US$123mn through 2010, while Essel has vowed to invest US$42.4mn in the
same period.
- Feller Rate has assigned its AA+ rating to the eight-year bond issue for up to US$250mn by Aguas Andinas, the water utility
of Santiago that is controlled by France's Suez and Spain's Agbar. Aguas Andinas filed a request with Chile's securities regulator
so that the bond would be issued in the country's inflation-indexed currency. Aguas Andinas' investment plan calls for spending
US$598mn between 2002-2010.
- Esval, Region V water utility, will begin operations of its US$13mn Quillota wastewater treatment plant before the end of
2002. Quillota is the last of four treatment plants to come online that will, in the aggregate, treat 93% of the region's
wastewater. Investment in the four projects is US$79mn. The works will help clean up the Aconcagua and La Ligua rivers and
the Limache estuary. The companies involved in the construction are Infilco and local construction company Claudio Vicuna
Valenzuela. Anglian Water controls Esval and plans to invest some US$135mn in 2002-2003.
- Ancoa dam in Region VII will begin construction in the year 2004, and will require US$50mn. Consultant Luis San Martin Ingenieros
is drafting the dam's definitive design that will be concluded in June 2003. If everything goes according to plan, the work
should be completed by late 2005 or early 2006. The Ancoa dam will be a 100-150 million cu.m. dam upstream from Linares. The
construction of the dam could include power generation.
- The government has announced that in November it will begin the tender of a 30-year concession to build and operate the Convento
Viejo dam, with a capacity of 230 million cu.m, for a value of US$104mn, although this November deadline is expected to be
pushed to early 2003. The project also includes the construction of a 90km flow, distribution and metering system. The winner
will be chosen in July 2003. The construction of the Convento Viejo dam must be finished by the year 2008. The dam will be
mainly used for irrigation, but has potential for tourism and power generation. Convento Viejo dam is located in the Chimbarongo,
Region VI. A second dam project that has been announced is the Punilla dam, requiring a US$240mn investment, and will be located
in Region VII, with a capacity of 650 million cu.m.
- The government will sell a 9.2% share in Aguas Andinas before the end of 2002. The stake carries a book value of US$120mn.
The government's industry development arm, Corfo, currently has a 44.2% stake in Andinas, and can only sell the 9.2% because
by law the government must retain at least 35% of the utility. The other main shareholders are Agbar and Suez ,which control
51.2%. The rest is owned by workers and other shareholders. The pricing agent will be Celfin Capital. Aguas Andinas posted
a net profit of 36.9bn pesos (some US$51.2mn) between January and September of this year. Last year, Aguas Andinas posted
a net profit of 47.6bn pesos.
Colombia
- Empas, the Sincelejo water utility, is scheduled to award a concession to the sole contract competitor, Ingenieria Sala, but
the government may annul the bidding process. Ingenieria Sala was the only company to present technical and economic bids
as part of the competition, and the process is now closed to other companies. A total of US$58mn will have to be invested
in the concession. The concession is part of a US$70mn water sector reform program for 2002-2006, for which the World Bank
is going to finance US$40mn, and the government the rest.
- The city of Bogota and the World Bank met in November to discuss a US$200mn program to improve urban services. The World Bank
will provide US$100mn and Bogota the rest. This program is part of Bogota's territorial planning initiative, and aims to increase
access, coverage, quality, reliability and inter-agency coordination in the water, sewerage, transport and related basic services,
in particular for low-income residents. EAAB, Bogota's water utility and other departments of the city will help carry out
the four-year program.
- A plan for insolvent Emcali is expected next month. This is the Cali water, power and telecom utility company. A capitalization
of the company is needed. The government is willing to provide US$246mn, through the international banks. The debt of Emcali
is US$316mn, of which 54% is with foreign creditors and the remainder owed to domestic creditors. In April of 2000, the public
services regulator Superservicios took control of Emcali to ensure efficient and uninterrupted service. Superservicios is
helping Emcali get back on a solid financial footing by implementing several programs.
- In early September EAAB, Bogota's water utility, made available bidding rules for a contract to manage service operations.
The process closed on October 23 with the presentation of offers from the interested parties. It is expected that the project
may begin early next year. To maximize efficiency, the project plans to split the city into five zones and will manage and
improve the services in each of the zones. EEAB will pay the winning company a fixed amount per cubic meter of water supplied,
and the clients will continue to pay bills directly to EEAB. This is in part because the government will continue to subsidize
the water. The five-year contracts are worth (some US$131mn) in total.
- The department of drinking water and basic sanitation of the economic development ministry will begin reviewing those projects
that have been sitting idle due to the change in government. Projects include Bolivar department towns Turbaco and Arjona
for a 10-year concession, US$10mn investment; Norte de Santander department capital Cucuta for a 30 year concession, US$170mn;
San Andres island for a 10 year concession, US$7mn; and Risaralda department capital Pereira US$142mn. The concessions are
part of a US$70mn water sector reform program to be carried out between 2002-2006.
- It is expected that the construction of the Guatapuri river dam will start in 2004. The dam requires US$20mn-30mn in investment,
and Chinese investors have expressed interest in the project.
- The Inter-American Development Bank (IDB) is expected to approve US$2bn in loans to Colombia for several social programs including
water projects. The IDB expects to disburse US$500mn to Colombia this year and has placed a special emphasis on financing
the fiscal needs for 2003.
Costa Rica
- The water utility for San Jose, AyA, is re-evaluating a US$285mn concession to build and operate an expanded sewage collection
and treatment project for the city. The concessionaire will then be required to operate the system for a 25-year period. Spanish
investment bank Nmas1 is managing the concession process, but the new government wants to co-finance the project instead of
relying only on private capital. Costa Rica's public works regulator Aresep recently approved a 25% water rate hike for AyA
to help finance the concession and make it more profitable for potential investors. The increase will be phased in over the
next 12 months.
Dominican Republic
- Dominican Republic's national water resources institute (INDRHI) will invest US$485mn on construction works in the country.
The financing will be provided by German, Spanish and French financial entities, as well as Colombia's foreign trade bank
Bancoldex. Most of the projects will be rural water and power programs that include the design and construction of small-scale
aqueducts and power systems in 65 communities.
- The government has announced it will invest US$1.16bn in hydro projects in the next 10 years. The main projects are the US$213mn
Moncion dam and reservoir in Valverde province, completed in September 2001. The dam will supply water to the US$141mn Northwest
Line (Linea Noroeste), currently in construction. The US$182mn Alto Yuna hydroelectric project, plus other aqueducts servicing
Santo Domingo are currently in the planning phase.
Ecuador
- The Andean Development Corporation (CAF) has granted Ecuador's government a US$100mn loan agreement to help finance Ecuador's
US$ 155m, 2002 general public investment program that includes drinking water and sewerage works. US$ 44.2m from the US$100m
will be allocated by CAF for waterworks.
- Decontamination of the 40km-long Machangara river, which runs through Ecuador's capital Quito, has commenced. The decontamination
process includes US$100m worth of cleaning and park and sewer construction. With the community's help, workers are clearing
scrub and trash along the river. Upon completion of the decontamination process, an extra US$100m water purification process
designed to eradicate toxins will be launched. It is estimated that untreated sewage constitutes 70% of pollutants that end
up in the river.
- The Inter-American Development Bank (IDB) recently approved a US$40m loan that will be used by the Ecuadorian government to
help finance capital city Quito water utility Emaap's US$110m first phase waterworks expansion program. The bidding rules
for the first tenders will be released soon and will start with a US$ 12m drinking water project for the Calderon zone. Consulting
services will be contracted to assist in the privatization of 50% of Emaap's commercial operations and in the redrafting of
existing contracts with third parties to improve efficiency for the other 50%.
- Emaap plans to conduct additional studies for the US$600m Rios Orientales water supply and power project. Emaap will soon
decide whether it will hire one of the companies that expressed their interest in conducting the study or if it will carry
out the studies on its own. Emaap officials are said to be negotiating the project financing with public and private lending
entities. The project includes the construction of a 109-km water channel from the Valle Vicioso river to the Bellavista treatment
plant, a 100m-high dam on the Cosanga river and two hydroelectric plants. Eventually, the concessionaire will be granted a
20-year concession. The Ecuadorian government expects the project to meet Quito's medium- and long-term water needs, as the
city's population is expected to double in the next 20 years.
- The US$47m Playas-Posorja drinking water and sewerage regional system in Guayas province peninsula Santa Elena is now in operation.
The system's drinking water plant will benefit close to 200,000 residents and will meet projected demand through 2030. Financing
for the project was furnished by Banco do Brasil and local funds. Cedege, the Guayas river basin water commission, will manage
the system, which was built by Brazilian construction company Norberto Odebrecht.
Guyana
- Severn Trent is considered as the preferred bidder for a water supply and wastewater services management contract. The negotiations
with Severn are in process. The UK's Department for International Development will pay the five-year contract. Severn will
manage Guyana Water, the company that will result from the consolidation of the Guyana Water Company and the Georgetown Sewerage
& Water Commissioners.
Honduras
- The government, through the program for the reconstruction of Central America, PRRAC, announced that thirty-six companies
have purchased pre-qualification guidelines for a contract to carry out a water and waste consultancy. The companies include
consultants from the EU and PRRAC beneficiary countries: Honduras, Nicaragua, El Salvador and Guatemala. The consultant(s)
will design and supervise waterworks and waste management systems for the cities Puerto Lempira, Tocoa, Catacamas, Talanga,
El Paraiso and Nacaome.
Jamaica
- The Inter-American Development Bank (IDB) announced the winner of a feasibility study for a US$50mn waterworks project in
Kingston's metropolitan area (KMA). The IDB might finance up to US$40mn of the project. The project includes implementation
of a program of efficiency enhancement; rehabilitation and expanding coverage of drinking water and sewerage systems in Kingston
and St. Andrew parishes, and planning for Kingston Harbor's rehabilitation.
Mexico
- In late October, five companies submitted pre-qualification documents to Mexican water utility Cespm, which serves Baja California
Norte state capital Mexicali, for a turnkey contract to design, build, supply, operate and maintain drinking water plants.
The cost is estimated at US$20mn. The contracts are due to be awarded in March 2003. The JBIC is helping with the financing
of the project.
- In October Guadalajara State water utility Siapa is to concession the billing and collection activities as well as maintenance
work for its drinking water system. It is estimated that 35% of the water Siapa produces is lost to leakage. Siapa is currently
carrying out a project to increase water supply in Guadalajara for a value of US$50.8mn.
- In October Mexico's national water commission CNA submitted a project to invest in irrigation and hydro-agriculture in Chihuahua
to the Border Economic Environment Cooperation Commission for a value of US$144mn. The project is going to be partially financed
by US$40mn from the North America Development Bank.
- The Federal District, DF, needs US$1bn to improve and increase the water treatment in Mexico City. The risks of not attending
to the water problem in Mexico City are great, for some experts believe the system may collapse. President Fox mentioned that
the CNA might have to 'revise' water rates.
- Comapa, which serves Tamaulipas state city Reynosa, is receiving expressions of interest for three contracts to carry out
studies for a comprehensive wastewater project for the. Part of the financing for consulting services is going to come from
the NADB.
- Aguas de Saltillo, a partnership between Agbar and the municipality of Saltillo, will publish bidding rules for two wastewater
contracts for the Saltillo province for an estimated amount of US$30mn.
- Monterrey needs US$500mn investment for storm water drains to prevent flooding, as reported by the state water utility Agua
y Drenaje de Monterrey, AyDM. The project includes the construction of a dam and the improvement of the 14.2km Topo Chico
storm water channel.
- Tijuana public services utility Cespt has requested NADB to finance the rehabilitation and improvement of a wastewater collection
system, with an estimated cost of US$42mn. Cespt has requested US$18 million of the funded Border Environment Infrastructure
Fund, BEIF, and funds and loans totaling some US$6mn are to be disbursed in the first phase.
- Wartsila, a Finnish company, has not attracted enough financing for a desalination plant on Mexican tourist island Cozumel.
Cozumel has a very significant problem with water shortage, especially drinking water. The desalination plant is part of a
cogeneration project in San Miguel that would use heat from the cogeneration power plant to convert seawater into high quality
drinking water, with an estimated value of US$34mn. Power generation started last year, but an underwater cable from the mainland
is still needed to supply the difference between the plant's production and the island's energy demand.
- The Lerma-Chapala water basin in central Mexico will require 2.8bn pesos (US$278mn) over the next four years for a planned
environmental cleanup. Five Mexican states will lead the project. The states of Jalisco and Guanajuato, being the largest
states, will finance most of the project. Federal funds are expected to be contributed to help finance the project, with an
estimated value of US$278mn. The region has major population centers, including Guanajuato City, Guadalajara and Leon, and
is a major cereals and avocado producer.
- Ciudad del Carmen, in the southeastern state of Campeche, announced that the planned aqueduct for the city is to be completed
before 2004. This project is estimated at $500mn peso (US$49mn). This aqueduct will provide 100% water coverage for Ciudad
del Carmen and nearby towns for at least the next 20 years. The Federal Government, the CNA, and the municipality are going
to finance the project.
Panama
- Eleven companies have began the work for feasibility studies and the final design for three irrigation projects in Panama.
The relevant projects are in the provinces of Chiriqui, Los Santos and Herrera. The Chiriqui project is for US$34mn, the Los
Santos for a value of US$22mn, and US$33mn for the Herrera project. The groups that are interested and participating are Colombia's
Gomez Tajiao y Asociados, Canada's SNC-Lavalin, Israel's Tahal, Fundacion Chile, Aluvenza, Fundacion Tecnologica-Louis Berger,
Consorcio Global, Omni Consult, F. Ycaza-Hidrotec, Consorcio CAI-CRE, Riego Net and Inypsa.
Peru
- The Peruvian government has recently launched a five-year, US$180m program to develop more than 1,600 small sewage treatment
programs, designed to benefit 70% of rural areas. According to people familiar with the plan, projects will commence by the
end of this. The World Bank, the Inter-American Development Bank (IDB) and Japan's government will provide the funds for the
project, which will be carried out by the government's compensation and social development fund Foncodes. Peruvian governmental
sources indicated that the government aims at ensuring a 90% treatment rate for Lima's sewage system by the year 2006, something
that the government expects to achieve by way of other treatment programs already underway.
- The consultancy hired for conducting the pre-feasibility study for the US$675m-900m Puyango-Tumbes irrigation project on the
Ecuadorian-Peruvian border has recently completed the final version for the study, incorporating feedback from the IDB and
the two governments. Pacific Consult Tang International, who conducted the study, has already submitted the final version
to the Inter-American Development Bank (IDB) for its review. The IDB will use the study to evaluate whether it will fund a
more comprehensive 15-month feasibility study. The project is being conducted under the umbrella of a bi-national development
plan signed by the two countries. The project would extend over from the Puyango River in Ecuador's El Oro province to Peru's
Tumbes river.
- Proinversion, Peru's investment promotion agency, has not yet hired the financial advisor that will provide assistance to
the Peruvian government in its search for viable private sector operators that may be interested in taking on 30-year concessions
for municipal water utilities EPS Grau (Piura) and Emfapa Tumbes. The utilities serve the northern cities of Piura and Tumbes,
respectively. According to Proinvesion sources, the municipal-owned companies are bankrupt mainly due to mismanagement. It
is estimated that only 55% of water supply services are actually billed and that only half that is paid for by consumers.
The concession areas for both water utilities are adjacent to each other and, hence, any company willing to take on both concessions
may achieve economies of scale.
- Peruvian President Alejandro Toledo signed a decree authorizing the construction of the US$69mn, third phase of the Chira-Piura
irrigation project in Piura, one of the country's northern departments. The project's work contract was awarded to a consortium
formed by Energo Project, Cosapi, Upaca and Viasol in 1990, but its completion was delayed due to weather phenomenon El Niño.
The same consortium is now in charge of completing the project, something that should occur by the year 2005. The works, it
is estimated, will benefit 5,300 users and some 29,000 residents, considering that more than 21,000 additional hectares have
been incorporated into the project.
- As part of Promesal, the US$258mn waterworks program developed by Sedepal, Peruvian capital Lima's municipal water utility,
Sedepal will soon launch a tender for a contract to design works for Lima's northern and eastern zones. Promesal aims to provide
basic water and sewerage service to 1.5 million residents in marginal areas of the capital. The US$65m works, aimed at benefiting
170,000 residents in Puente Piedra, Ate-Vitarte, Chaclacayo and Santa Anitato, are expected to commence in 2003. Works will
include 105km of piping and 47 drinking water reservoirs. The Japan Bank for International Cooperation will provide US$219m,
with Sedepal contributing the remainder.
- In an effort to attract more investors to participate in the proposal process, the deadline to submit offers for the Olmos
irrigation and hydroelectric concession in Lambayeque department has been postponed to December 11, 2002 by Proinversion,
Peru's investment promotion agency. The concession will be granted for a 40-year term. Construction costs are estimated to
be around US$245m, including US$60m for continuing work on the Trans-Andean tunnel, which would allow for water from the Atlantic
basin to reach the arid Pacific basin. Under the new schedule, the concessionaire will be selected by December 18, and the
concession contract will be executed by January 30, 2003. The government recently increased its project finance share to US$77m
from an original share of US$40m.
- The Peruvian government expects to carry out a public tender in the first quarter of 2003 for a 40-year concession to build
and operate the Majes-Siguas II hydroelectric and irrigation project in Arequipa, a southern department in Peru. Former president
Alberto Fujimori had previously granted the contract to a hydroelectric firm without holding a public tender. Peruvian officials
are said to be already negotiating the financing for the project, which according to existing reports is valued US$208m, with
the World Bank and the Inter-American Development Bank (IDB). While Peruvian government will contribute US$100m for the project,
private investors are expected to contribute the remainder, approximately US$108m. The concessionaire would be tasked with
developing a water diversion tunnel and the construction of the Angostura dam, which would irrigate some 50,000ha.
Puerto Rico
- The US Army Corps of Engineers will begin building the Bechara canal in January 2003, designed to help prevent flooding in
capital San Juan's industrial areas. The estimated value of the project is US$75mn. The project will be completed in three
years.
Venezuela
- The environment and natural resources ministry is carrying out coastal waterworks for a value of US$197mn, in Nueva Esparta,
Sucre, Anzoategui, Miranda, Vargas, Falcon and Zula.
- The environment and natural resources ministry accepted background documents from companies interested in a project that is
part of the US$167mn ongoing project to install wastewater treatment infrastructure in the Lake Valencia area. The funding
of the project is structured as follows: government US$64mn, the Inter-American Development Bank US$50mn, the Andean Development
Corporation US$40mn and the UK's Halcrow Group US$13mn.
- The finance ministry and the Bank of China agreed to the financing for the construction of a 180km aqueduct in Falcon. The
total cost of the project is estimated at US$222mn, and the Bank of China will provide 85% of the funding of the project.
The Acueducto Bolivariano de Falcon is designed to solve water supply problems in Falcon by channeling water via a treatment
plant from the Maticora dam. The project will be coordinated by Hidrove and the Falcon water utility Hidrofalcon. The Chinese
consultancy Chinacam is working on the project's study.
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