Water shock ahead

05 August 2017

One of the main promises made by President Kuczynski on taking office was to ensure that all Peruvians, no matter what their circumstances, would have access to mains water and sewerage by 2021: ‘water’ would be the headline achievement of his administration.

As his second year dawns, the promise is being dusted down having been largely ignored over the previous twelve months. What is becoming clearer is that though the government wants to avoid the p-word, some sort of privatisation will be the key to water policy.

Speaking last week, the housing minister, Edmer Trujillo, outlined his thinking on the matter. It will cost some US$15 billion to ensure complete coverage in urban areas and to raise coverage to 84% in rural ones.

Aware that ‘privatisation’ would probably spark the sort of social conflict which shook the Bolivian city of Cochabamba in 1999 and 2000, he says that the government will aim for the sort of private-public partnership that will significantly increase the role of the private sector without the outright sale of public companies.
But PPPs have come in for huge criticism in recent years in other sectors, given the incapacity of the state to ensure they work in the public (and not just the private) interest.

What is in prospect is the transfer of management of public, mainly municipal providers (known as EPSs) to private-sector groups on a concession basis. The problem of the 50 or so EPSs, the minister claimed, is what he called “political interference” (“injerencia política”) at the local level. Since almost all the EPSs run at a loss, the implication of such a policy is a substantial increase in water tariffs.

It was tariff increases that sent consumers out on to the streets in Cochabamba, forcing the Bolivian government of the time into a hugely embarrassing about-turn on water privatisation.

The Lima water authority, Sedapal, is currently looking urgently for ways to sugar the pill. An expected increase in water tariffs has been postponed “until later in the year” while Sedapal looks for ways to protect those on the lowest incomes.

But for the ideologues of the right, such half-hearted measures are not the answer. Full-blooded privatisation and the creation of a market in water is what’s needed. In a hard-hitting editorial, El Comercio takes the Kuczynski administration (and Trujillo in particular) to task from not taking the bull by the horns when it comes to the EPSs. “As other economic sectors transferred to private hands show, from telecommunications to air transport” El Comercio writes “only properly regulated market mechanisms work in improving the supply and quality of services to consumers”.

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