UNDERSTANTING THE PERUVIAN WATER SECTOR: THE CASE OF ...

UNDERSTANTING THE PERUVIAN WATER SECTOR:

THE CASE OF SEDAPAL –CITY OF LIMA

FRANCISCO DUMLER CUYAChairman of the Board SEDAPAL(Lima-Perú)Past Minister of Housing, Construction and Sanitation

February 2020

+ water- population

+population- water

Amazonas : Disponibilidad: 97,91%Población: 33,32 %Producción de PBI: 17,6%

Titicaca: Disponibilidad: 0,32%Población: 4,15%Producción de PBI: 2%

Pacífico: Disponibilidad: 1,76%Población: 62,53 %Producción de PBI: 80,4%

Source: Water National Autority

The average annualvolume of water in thecountry is 1,935,711million m3. Peru is amongthe 08 countries with thehighest water availabilityin the world.

Water availability percapita is 63,518 m3 a year

With data only from thecoast: water availabilityper capita is 1,800 m3 peryear.

Water in Peru

Water Coverage by Scope

60

65

70

75

80

85

90

95

100

2013 2014 2015 2016 2017 2018

WATER COVERAGE

Nacional Urban Rural

Source: National Institute of Statistics and Informatics, National Survey of Budget Programs 2013-2018.

2013 2014 2015 2016 2017 2018Nacional 87.1 87.9 87.9 89 89.2 90.4Urban 93.4 93.6 94 94.5 94.5 95.3Rural 63.3 67.3 68.4 70.7 71.6 73.6

AñoÁmbito Geográfico

Water Service Coverage

CAPTACIÓN Y ALMACENAMIENTO DEL RECURSO HÍDRICO Y PRODUCCIÓN DE AGUA POTABLE

DISTRIBUCIÓN PRIMARIA Y SECUNDARIA

RECOLECCIÓN DE AGUAS RESIDUALES TRATAMIENTO Y DISPOSICIÓN FINAL

19 Lagunas y 3 represas con 361 MM de m 3

4 Plantas de Tratamiento de Agua Potable (PTAP) : La Atarjea 1 y 2 (17,05 m3/s), Chillón (1,14 m3/s) y Huachipa

(1,31 m3/s), además de 411 pozos disponibles (7,46 m3/s)Tunel Trasandino de 10 km

15 237 km de redes de agua potable compuesta por 781 km de redes primarias

y 14 456 km de redes de secundarias .

1 586 330 conexiones de agua potable.

23 Plantas de Tratamiento de Agua Residuales (PTAR) con caudal tratado total de 21.125 m3/s

21,4 horas/día de continuidad del servicio

Taboada ( 3 San B 3 entre otras.

Situational State 2019

13 837 Km de redes de alcantarillado, 971 primarias y 12 866 secundarias

Taboada 13.336 m3/s, La Chira (5.99 m3/s), San Bartolo (1,23 m3/s), entre otros.

714,745699,010

729,326

748,492

670,000680,000690,000700,000710,000720,000730,000740,000750,000

30 MMC Fuente: Equipo de

Planeamiento Operativo y Financiero

MAXIMUM STORAGE IN LAGOONS

VOLUME (m3) OF WATER DELIVERED TO THE CITY

Source: Primary Production and Distribution Management

Jul 2016 Jul 2017 Jul 2018 Jul 2019

okIncrease in Production and Decrease in Storage Over Time.

Source: 2020-2049 Master Plan

(*) Assumes 100% coverage and 24 hour continuity

Source: Aquafondo 2016

Normal Operating Conditions

BENCHMARKING DE RESERVAS (OFERTA)

40.35

• High turnover in the Directories and General Managers (5 PDand 5 GG in the last 5 years).• Management cadres not prepared in business management.There are no compliance policies in house, nor knowledge in theuse of PMO tools.• Twice the lawyers that engineers.• Incidents such as water cut by huaicos in summer 2017 and thefailure of a primary collector in January 2019 detract fromcredibility and reputation.

Internal Structural Weaknesses

WHAT ARE WE DOING TO REVERT THIS SITUATION?

Project Delivery

_______

PILLAR 1

• SEDAPAL currently takes 10.4 years on average to place awater and sanitation service. This contradicts the optimizedplans presented to SUNASS (5 years) and increases the conflictwith organized groups of settlers.

• An agreement has been signed with UNOPS to materialize -until the end of 2020 - a portfolio of projects for more than4,000 million soles. The first of them “Sector 300-Rinconada(first stage)” begins the phase of the bidding process in thenext few days. Its approximate cost is 1,100 million soles. Itwill be the largest tender for a water and sewer networkproject in the entire history of Peru.

• The projects will have PMOs to guarantee delivery within thedeadlines indicated in the file.

PROJECT DELIVERY PERIODS

Aggressive asset replacement policy___________

PILLAR 2

• Currently, SEDAPAL does not comply with the replacement ofassets (water networks and sewage collectors) at the end oftheir useful life.

• Approximately 35% of these networks have exceeded theircycle and impacts the breakage rate (7.3 breaks / day).

• it is necessary to change the water and sewage networks withmodern technologies. In some areas of Lima, these are morethan 80 years old.

ASSET REPOSITION POLICY

Private participation and PP collaboration systems___________

PILLAR 3

• SEDAPAL has been completing studies to create subsidiarycompanies with specific purposes (desalination, etc.) bymodalities “take or pay”.

• In this scheme (“Sale of water in block”), SEDAPAL reserves a“golden action”, guaranteeing a “take or pay” paymentstructure to the created company and a pre-existence in thepayments to them.

• The tariff design of SEDAPAL is transferred to the subsidiaryand it makes the investment by replenishing its CAPEX andOPEX according to its investment plan.

PRIVATE PARTICIPATION AND SYSTEMS OFPUBLIC-PRIVATE COLLABORATION

Promote innovative management instruments__________

PILLAR 4

Thanks