Sunass: more than 3 million Peruvians receive subsidized drinking water

The National Superintendency of Sanitation Services (Sunass) reported that, currently, 20 of the 50 companies that provide sanitation services (EPS) in the country have incorporated the targeted cross-subsidy (SCF) into their rate structure, in order to protect the most vulnerable families, who pay a lower rate of water, in accordance with their economic conditions.

For example, in Lima, 75% of the population with a targeted cross-subsidy from Sedapal consumes 20 m3 and pays 51% of the average cost of the service; that is to say, practically half of what it costs to bring the service to their homes (to collect, treat and distribute drinking water, as well as to treat wastewater and dispose of excreta).

To identify the most vulnerable families, Sunass uses the INEI’s Stratified Plans and, in addition, the Socioeconomic Classification (CSE) of the Household Targeting System (SISFOH) of the Ministry of Development and Social Inclusion.

In this way, the EPS establishes in its rate structure the number of users with a targeted cross-subsidy and the corresponding adjustment factor to have a rate lower than the average cost.

Sunass: subsidizing water since 2017

Since 2017, when Sunass has been implementing the application of this tool in the EPS rate structure, 3.4 million domestic users living in poverty and extreme poverty have benefited from a lower rate.

This figure represents 19.7% of the total population with domestic units at the national level, as well as 29%, on average, of the population with domestic units within the 20 EPS that apply the SCF.

The SCF is also related to the responsible consumption of drinking water. To avoid that the beneficiary makes indiscriminate use of the resource, due to the fact that it has a lower rate, the discount is applied only to the first range of consumption, which varies according to each provider, between 8 m3 and 20 m3.

Sunass: What is Targeted Cross Subsidy?

Through a statement, Sunass explains that the targeted cross-subsidy is a tool developed under one of the principles that govern rate regulation in Peru, that of social equity, whose purpose is to achieve that sanitation services reach a greater number of people

In this way, each user can pay according to their consumption and their economic capacity, and also promote a responsible use of drinking water.

The SCF is a concrete benefit in the families’ economy. For example, a subsidized user in Metropolitan Arequipa that consumes 10 m3 per month pays S / 15.8 instead of the S / 41.8 that he would pay, if he covered the average cost (including VAT and fixed charge). That is, a saving of S / 26 per month or S / 312 per year.

Sunass: where will the water go now?

So far this year, three rate studies have been published (EPS Emusap SA, EPS Moyobamba SA and Sedapar SA) that include targeted cross-subsidies. It is projected that, by the end of 2021, the EPS Sedalib, Grau, Seda Ayacucho and Yauli La Oroya will also incorporate this mechanism into their tariff structures, which would increase the number of EPS with this benefit for the most vulnerable to 24.

The goal of Sunass is to include the SCF in all the provider companies in Peru, to refine the identification and protection of the most vulnerable population and ensure that everyone pays, in an equitable manner, just enough for their consumption. With the previous incorporation, the impact of the subsidy is expected to grow to more than 4 million people.

“This is a process that must be accompanied by the construction of a culture of valuing the service and responsible and supportive use of drinking water on the part of the citizens, in order to advance in the purpose of expanding access to the service to more Peruvians”, Sunass ends.