Earlier this year, IDB approved a US$100mn loan for Venezuela to improve potable water and sanitation services.
The loan will support a program by the Venezuelan government, which works through an innovative system that involves local communities in the planning, construction and operation of water infrastructure.
BNamericas spoke with IDB water and sanitation specialist Henry Moreno about the program and the wider issues affecting water and sanitation in Venezuela.
BNamericas: How far will the IDB loan go towards improving rural water and sanitation in Venezuela?
Moreno: This project [loan] is US$100mn. The total cost of the project is US$125mn, which isn't the total that the government is investing in the rural water sector. They direct funds through other social programs as well, but they don't have the same arrangement as this program.
BNamericas: What is the overall situation at the moment with water and sanitation in rural areas?
Moreno: Venezuela has just achieved the millennium development goals for water and sanitation, but obviously the rural areas are worse than the urban ones. The figures in Venezuela show more or less 80% of people are served by drinking water and about 72% for sanitation.
Despite these figures, the drinking water delivered to domestic connections is only 48%, and other systems are also used such as public fountains and protected wells.
For sanitation, the situation is worse, as it's estimated that only 11% of the rural population is covered through networks and the rest are served by septic tanks, latrines and infiltration systems. So that's more or less the situation we have.
BNamericas: Has coverage improved a lot in recent years?
Moreno: Yes, the country has been working continuously in the last few years on an investment program to promote water and sanitation projects, with the participation of communities.
BNamericas: Can you tell us more about how the IDB program is involving communities in water and sanitation?
Moreno: The way that the beneficiaries are going to work on the project is very innovative. Communities are going to be in charge of procurement, or if they don't have the capacity then they will receive help from the government. We have had pilot projects and the community has taken charge of this. It's the first time we have seen something like that happen.
BNamericas: What kind of size are these projects?
Moreno: They're normally less than US$1mn per project.
BNamericas: Does the program focus more on potable water or sanitation?
Moreno: Almost every project for water supply will be accompanied by a project in sanitation. The only cases where we won't involve a sanitation component is when the community already has a sanitation solution.
If we finance a project in water supply and there is no sanitation, we will always include a component for a sanitation solution.
BNamericas: What's the role of technical water committees in the program?
Moreno: These are boards that are being promoted by the government in order to take care of providing services in local communities. They will act as the counterpart of the government in the supervision, execution or construction of the projects in local communities. They will also take care of the operation and maintenance once construction ends.
BNamericas: Will state-owned water company Hidroven also have a role?
Moreno: Hidroven is the executing agency. It will be responsible for getting in touch with the communities and evaluating the projects the communities present. It will also prepare the community to create the enterprise that will build and operate the system.
BNamericas: Do tariffs cover the cost of building and operating water systems?
Moreno: They cover almost all of the costs, so on average about 85% of the costs of operation and maintenance.
Tariffs were raised by a huge amount around a year ago. It was about a 50% raise, which had to be approved by congress and President Hugo Chávez.
BNamericas: Overall, what would you say are the main challenges affecting water and sanitation in Venezuela?
Moreno: Well, as we said, Venezuela was one of the first countries to reach the development goals, so one of the challenges that one can see is obviously the sustainability of the sector. At the moment, they more or less cover the cost of operation and maintenance with tariffs, and the regional governments receive government grants to run their systems.
Sustainability could definitely be an issue in the future because of the transfers from the national government to the companies. Right now they are secured by the government, but you don't know what could happen to those funds in the future.
Most countries in Latin America receive government grants, so this is an issue that affects the sector as a whole.