- Thursday, November 3, 2005

Costa Rican municipal public services provider Empresa de Servicios Públicos de Heredia (ESPH) has plans to start construction of a wastewater treatment plant to serve Heredia province.

The 105,000 cu m/d-capacity plant will be located in the Barreal district and is expected to clean wastewaters from the Flores, Barreal, San Rafael, Santo Domingo and San Pablo districts during its first four years of operations.

BNamericas spoke with ESPH's CEO Allan Benavides about the project, its financing and the wastewater situation in the country.

BNamericas: What are the wastewater treatment needs in Heredia province?

Benavides: In Costa Rica, there has been a lack of attention to environmental issues regarding wastewater treatment. However, building a central sewerage network in the main cities of Costa Rica's central valley - where most of the population resides - has become a big priority, as the President [Abel Pacheco] himself has announced.

One of the provinces that has a strategic and urgent need to face this problem is Heredia, located north of the river Virilla. This river practically divides the country in two and also has very valuable water resources that supply water to the population of Heredia city (nearly 400,000) and also provides 50% of the water consumed in capital San Jos�.

BNamericas: Does Heredia have aquifers?

Benavides: To the north of Heredia we find a volcano called Barva, where there is natural water filtration due to the porous quality of the earth, which also has several cracks. This is how three aquifers have formed: Barva, Colima superior and Colima inferior.

A study from Costa Rica's national university UNA has warned of the need to protect these aquifers because there are contaminants affecting the people's health. This is why ESPH began about eight years ago - with Inter-American Development Bank [IDB] support - studies to develop a sewerage project in the city.

BNamericas: Can you tell us what this project will consist of?

Benavides: The project consists of a large sewerage plant, for which French consultancy Sogreab has already carried out a feasibility study and has defined the area to be covered by the project. The project will be developed in two stages: a US$10mn first phase for building the plant at Heredia's central canton - where the largest part of the population resides - and a second, US$50mn stage to link the rest of the province to a secondary and tertiary sewerage network.

The idea is to collect wastewaters from homes, businesses and the different industries located within the province.

BNamericas: You have told local press that financing for this project will be "special." Why?

Benavides: The project financing will be very original and is perhaps the most important component. In fact, I will be presenting this project as an example at a seminar organized by the IDB in Washington, next November 29.

Traditionally, companies that wanted to undertake large investment projects needed a local bank to have a state guarantee, which had to be approved by congress first. This procedure delayed projects considerably and made it difficult for countries with financial problems.

The mechanism we have found is for the Costa Rica's national bank BNCR to issue bonds, which will be backed by the IDB, instead of the government. The IDB is searching to promote this non-traditional way of financing projects especially in Latin America, where many projects have been stalled due to bureaucracy.

BNamericas: What else can you tell us about the plant project?

Benavides: The idea behind these projects is that they are state projects, because if there are wastewaters contaminating rivers at some part, and these flow into other areas, the entire country is being contaminated. That is why we are thinking about the state financing the plant, which seems to be an accepted idea, which lowers the project's costs considerably [if a private company is to eventually operate the plant].

BNamericas: This means you will be calling for bids for companies to operate the plant?

Benavides: It could be that a company constructs the plant or that it operates the plant under a rental scheme. We are still studying the exact management model and we will choose the best alternative when the moment comes.

BNamericas: When do you plan to begin the plant's construction?

Benavides: We hope to do that by June next year.

BNamericas: How do you see the wastewater treatment situation in Costa Rica?

Benavides: The tendency in Costa Rica is for private companies, instead of the state, to undertake these projects. Also, there is now an increasing political and social awareness of the need to clean wastewaters in the country.

About the company

ESPH is a municipal service provider offering potable water, sewerage and electricity to northern Costa Rica's Heredia province. It has operated as a private company since 1998.