Sedapal supports “honesty” of the costs of drinking water distribution in Lima

The Lima Drinking Water and Sewage Service (Sedapal) supported the legislative modifications proposed by the Ministry of Housing, Construction and Sanitation (MVCS) for the distribution scheme of the water element and ruled out that it is a “privatization.”

According to Sedapal, the initiative promoted by Minister Hania Pérez de Cuéllar seeks to “ensure that the sincere rate setting process responds to technical criteria, and includes service assessment elements that can cover the necessary investment in the growth of the network and the maintenance of infrastructure.

Currently, the rate setting process developed by the National Superintendency of Sanitation Services – Sunass is not technical, nor does it respond to modernity criteria.

“The determination of a technical rate does not necessarily mean that the cost is transferred to the users. What it is about is achieving knowledge for a better distribution of existing subsidies, which is essential to know the true costs of the service,” Sedapal assured.

In this sense, he stated that “an efficient condition for modern regulation is to know the true cost of the activity, regardless of how it is financed and how users are subsidized.” To that end, he said the MVCS is only “trying to identify the value of efficient and equitable rates.”

In addition, he assured that the water rate per cubic meter in Peru (US$0.79), identified without technical criteria, is one of the lowest in the region, in a city that has “serious water supply problems unlike of the others with which it is compared”.

“In neighboring countries, the average rate far exceeds the Peruvian rate. In Uruguay (US$2.22), in Ecuador (US$1.88), in Brazil (US$1.66), in Colombia (US$1.61) and in Chile (US$1.28). This affects the development of investment in coverage expansion projects and does not technically reveal the true level of the subsidy,” the statement continues.

Finally, Sedapal assured that the MVCS proposal seeks “technical honesty of the costs of the activity, and has nothing to do with the privatization of the service.” The company will remain public and rates will remain subsidized. The honesty of the information is necessary for efficient management.

Union rules out insolvency and warns of covert privatization

However, the Sedapal Workers’ Union (Sutesal) stated in a statement that the previous declaration of “insolvency” in Sedapal is inconsistent, and that instead it would be intended to privatize it as a mixed company with management through Public Associations. Private-APP, dismantle Sedapal into three zones (north, center and south), and increase rates (as happened in the privatization of telephone and electricity).

“Sunass warned in a statement that what the government intends to do with the increase in rates eliminates the regulatory function and determination of rates of Sunass and violates its autonomy. With which we would return to the old model of increasing rates for political purposes, in this case to favor the privatization of the company,” the union added.