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Mexico's Puebla state water utility Soapap is more than 3bn pesos (US$251mn) in debt, La Jornada de Oriente reported.
During a national meeting of water utilities held in Puebla, state governor Rafael Moreno confirmed that Soapap owes 800mn pesos to the state finance department and 2.2bn pesos to national development bank Banobras.
Moreno said customers will bear the brunt of the debt but added that the utility will introduce a sliding scale of payment based on the means of each customer.
Soapap director Manuel Urquiza blamed former directors for taking out the loan from the state to repay another loan from Banobras. "I don't know why it was authorized, it shouldn't have been authorized but now it has been spent," Urquiza was quoted as saying.
The only way the utility can repay the debts is to increase revenues from potable water, drainage and sanitation services, Urquiza said.