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Aug 11 2007
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Interview with Luis Padron about the public-public partnership for improving water supply in Huancayo, Peru

1. What is the current state of drinking and wastewater services in Huancayo?

SEDAM Huancayo currently provides around 225,000 inhabitants in 6 province districts with water services, with around 62 % coverage for drinking water and 57% for wastewater. The leakage rate is 50%, because around 40% of the pipes in the network are over 50 years old. The service is not continuous, depending on the community water flows between 6 and 18 hours per day, as a result of insufficient production and storage capacity. During the dry cold season, neither rainwater nor thaw water is available and the utility lacks the infrastructure to store the water in the summer; instead the available water simply flows downstream into the sea. The amount of water available for the population is even further reduced by ineffective use of water in irrigation farming in the region, as well as by pollution from mining activities. Meanwhile, most of the wastewater is released into rivers and streams without treatment. The tariffs collected from the users do not cover the utility's total costs of operation and maintenance. On the other hand, parts of the operational expenses are unnecessarily high, for instance due to inefficient use of electricity and chemical products, as well as questionable expenses made by the utility's board.

2. What are the goals of the public-public partnership?

We hope that SEDAM can achieve operative autonomy, including efficient management, strong technical performance and financial health.

The tariff structure might become more social so the poorest households can afford it, while still raising enough revenue to cover the utility's operation and performance costs, without external subsidies.

ABSA, on the other hand, hopes to successfully design the projects agreed upon in order to improve the production, storage and treatment capacity of the utility. Thereby, ABSA gains valuable experience that can be used in similar areas in Argentina where we are also involved in technical cooperation. The experience can also prove useful in our own utility in the province of Buenos Aires.

3. What are the next steps in the public-public partnership?

We have worked with the Peruvian counterparts on an integral diagnosis. From this diagnosis, we expect to agree on a list of actions to improve the management, reduce leakage levels, increase water treatment and storage capacity, etc. These actions will be developed through specific projects and agreements over the next three years.

The reforms will hopefully also involve the farmers in order to reduce their water consumption, through water saving measures and wastewater reuse. We will start talks with them.

The Peruvians will look for the funding to implement all the renewal and expansion works, from national and international funding sources. In order to ensure that the provincial government backs the reforms of SEDAM, pressure from the community is key. We are therefore trying to interact closely with the different stakeholders, including SEDAM, the local water workers' union SUTAPAH, the university, local institutions, business organisations, community organisations, etc. The Peruvian population has a very strong national identity (45% of the population is native, while another 45% is mestizo); this is an advantage when looking for collective support towards a common goal like this.

4. How did the cooperation start and who is involved?

Over the last few years, citizens and workers have struggled to stop the proposed privatisation of Huancayo's water utility. During this process, the local water workers' union SUTAPAH and the Peruvian federation of water unions FENTAP built strong links with SOSBA (the water workers union of Buenos Aires). We worked together to develop an alternative to the privatisation plan, a proposal for public utility reform through a public-public partnership; this happened with the support of Public Services International.

SOSBA had its own, unsuccessful, experience with trying to prevent privatisation, in the 1990's when US water multinational Azurix took over water delivery in the province. But just two years into the contract, after the collapse of its mother company Enron, Azurix suddenly left Argentina. SOSBA proposed to take over the operations and the provincial government agreed. The new water utility ABSA was created and the operations were taken over by the workers cooperative '5 de Septiembre'. After the first phase of concentrating on improving the operations of their own utility, '5 de Septiembre' decided to offer assistance to other public utilities as well, also in order to learn and gain experience.

After the plans for privatisation in Huancayo were shelved, efforts to develop progressive public water reforms instead intensified. An agreement was first reached between the trade unions SUTAPAH and SOSBA, followed by an agreement between the utilities SEDAM and ABSA. The final step was to ensure agreement on the level of the provincial governments of Huancayo and Buenos Aires. This third level is crucial to ensure that everyone involved assists with implementing the agreement.

Getting the workers involved in the management of a public utility helps to ensure permanent planning and care. Participation by the users and civil society helps guarantee an appropriate administration.

5. What have been the main obstacles so far? What are the threats to the success of the public-public partnership?

Clearly, reaching agreement on the political level was the toughest part, also because politicians often are more accountable to their own interests than the public interest. Their time scale is the four years election term, whereas we are talking of services that must be secured over generations. Building and consolidating pressure from the communities is crucial to hold politicians accountable.

Another threat is the conditionalities imposed by donors. Again, community pressure is critical. The current work done by civil society organisations to create alternative funding options for public utilities in the South is very relevant. Let's also see what the UN's Water Operator Partnerships (WOPs) initiative can offer.

6. What are the main differences between public-public partnerships such as the one between Buenos Aires and Huancayo and public-private partnerships?

Profits. Private involvement through public-private partnerships means that resources escape local service delivery. This means that these resources will not be available for extending the network, improving the quality of the service, etc.

Also, external private operators have no real commitment to the local utility: these companies will leave when they want. In our public-public partnership with its three-level institutional agreement, governments do not leave but remain responsible for the utility.

7. According to your experience, what kind of changes is needed to create a favourable context for public water delivery to succeed?

We need governments to provide accurate records of public expenditure on hospitals, medicines, social insurances, unemployment, etc. If that information is publicly available, then we can calculate - or at least estimate - the indirect costs to society of inadequate access to safe water, for instance the costs of the medical infrastructure and treatment, sick workers, inappropriate development of sick children, etc. When adding together all those costs, investing in universal coverage of drinking and wastewater means a huge saving for society. Responsible politicians might then decide to spend more on water services. In case they will not, this information has to be shared with citizens so they can be better informed and put pressure on their governments.

Note: Luis Mario Padron is Technical Assistant Manager at '5 de Septiembre S.A', the drinking and wastewater operator of the Buenos Aires province, Argentina. '5 de Septiembre S.A.' is the workers-run company operating the provincial utility Aguas Bonaerenses S.A. (ABSA), established by the union of water workers of Buenos Aires, SOSBA.

See also "Argentina: Workers' Co-operative Takes over Post-Enron", Guillermo Amorebieta, published in "Reclaiming Public Water - Achievements, Struggles and Visions from Around the World" (TNI/CEO, March 2005).

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