Existing rates sufficient to fund Sedapal's US$1.36bn master plan - Sunass

Tuesday, January 25, 2011

Peru's national sanitation authority Sunass has dismissed the idea of increasing tariffs in capital Lima, after finding that local utility Sedapal already has sufficient funds to expand water services under its 4bn-sol (US$1.36bn) five-year master plan.

The regulator said Sedapal is capable of fulfilling its obligations to concessionaires for various water projects under its master plan, including the Taboada wastewater treatment plant and Huachipa potable water plant, state news agency Andina reported.

Following a 3.2% rate increase approved last year, Sedapal's revenue grew 4.24% from April to September, according to Sunass. The utility had previously cited a 20% decrease in revenue to justify a proposed increase in the city's water rates.

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Sedapal will be able to appeal for an additional 2% rate increase following Sunass's 2011 project evaluation, and will be allowed a 2.5% rate increase for the La Chira wastewater treatment plant, marking a 7.8% rate increase overall compared with 2006.

The Lima utility has said the 3.2% rate hike established in 2010, plus the additional increases proposed for 2011, are insufficient to cover its financing needs. Sedapal is looking for a 10% rate increase, according to previous reports.

The higher rates would be used to finance a number of projects in the firm's 2010-15 investment plan, which involves installing new water meters and expanding potable water and sanitation services to 100% of the population in Lima and neighboring Callao.