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Draft Addendum to the Concession Contract for improvement, expansion, maintenance, operation and exploitation of infrastructure and potable water and sewerage in the jurisdiction of the provincial towns of Tumbes, Zarumilla

Proposal for amendment of the Contract promoted by the Ministry of Housing, Construction and Sanitation (MVCS) and the National Superintendence of Sanitation Services (SUNASS).

Vidal Abogados involved in the process from the legal assessment of the proposals made ​​by the MVCS addenda, SUNASS, updating the contract to the new legal framework, support validation of the proposal to the Ministry of Economy and Finance.



Problematic

The gap sanitation infrastructure in the country is still widespread, particularly in rural areas. At the urban level, the largest gap lies in the coverage of sanitation services in the field of municipal providers (outside Lima and Callao) exceeds 20% and particularly in the area of ​​Tumbes region (provinces of Zarumilla and Tumbes) on 48.56%, well above the national average. In addition, quality indicators and nationally optimum levels not recorded, occurring in the provinces indicated an average of 16.5 hours per day continuity, unbilled water above the level of 64% and less than 50% micromedición.

The provision of sanitation in the provinces of Zarumilla and Tumbes is concessioned since 2005 the company "Aguas de Tumbes S.A.". More than ten years later, the development of the concessionary scheme has the following problems:


  • Deficit planning or scheduling long-term investments

    The term of the concession is 30 years; however, no provision in general or as an obligation of the concessionaire planning or investment programming consistent with the long-term horizon of the contract.

  • Failure of tariff revenue for the repayment of state debt with KFW

    The scheme involves the payment of compensation to the dealer, as well as payment of debt incurred by the State with the German financial cooperation (KFW) for co-financing investment in the first stage of the project in addition to the assumption of costs the provision of service. Considering the high level of non-revenue water and the existing level of delinquencies, the tariff revenue does not cover the amounts corresponding to these concepts and does not allow to generate resources for investment financing.

  • Lack of coordination in the implementation of local investment policy and regional

    Local and regional governments in the sphere of influence of "Aguas de Tumbes S.A." execute investments in works of sanitation with own or transferred by the MVCS, without proper coordination of the company that will be responsible for operation and maintenance resources. This problem goes beyond the scope of the concession contract has generated concrete works if not received by the company by technical flaws in its design and execution.

Solution strategy

Confidential

Perspectives

Result of the coordination made with the Ministry of Economy and Finance, have been making changes to the financing scheme and compensation raised in the proposed addendum to the next start of the process of concurrent evaluation with the participation of the concessionaire pursuant to Legislative Decree N° 1224 and Supreme Decree N° 410-2015-EF.