A public company that achieves goals in spite of the crisis

Friday, January 23, 2009

In just eight years, Ecuadorian capital Quito's basic services utility Emaap-Q has managed to prove that a state-owned utility can be efficient, in spite of all the challenges it faces.

BNamericas spoke with general manager Juan Neira to learn about some of the utility's investments and achievements in 2008, and about new developments for 2009 and the years to come.

BNamericas: Can you tell me about the advances made by Emaap-Q in 2008 in terms of water and sewerage services?

Neira: One of the main goals we achieved last year was to reach 98% potable water coverage in the city, and 93% in sewerage and sanitation. We also completed an ambitious program to build retaining walls around the Pichincha volcano.

BNamericas: Is this latter program designed to prevent floods?

Neira: That's right. It's a plan designed to prevent floods, landslides, rock slides, etc, which used to fall onto the city of Quito. This program is partly financed by IDB.

BNamericas: How much was invested in this program last year?

Neira: We invested about US$12mn in the flood prevention program during 2008. The project in the city's central and northern area is now finished.

We are launching a new section to prevent these natural disasters in the city's southern area in 2009. We will invest some US$8mn in the initiative this year. The works are also be partly financed by IDB and the rest will be covered by Emaap-Q funds, just as in the previous stage.

BNamericas: What other projects have you been working on?

Neira: In February 2008 we began to implement and develop an electronic billing system to charge for potable water services. This system consists of having an inspector, equipped with a portable computer, visit homes to read water consumption meters and immediately type and deliver the bill to users.

This facilitates the paying of bills within 24-72 hours. The process used to take us 20 to 22 days. This gives the company improved economic liquidity.

BNamericas: Why did the billing process take so long before?

Neira: Because it was almost fully manual. An inspector would take the reading and bring the data back to the company. The data was processed here and it took about 15 days to print out the bill. We then gave users five days to pay. Now, the whole process takes about three days.

We have also reduced unbilled water considerably. In 2000, the percentage of water not charged for was 47.8% and we are now down to 30%.

BNamericas: How did you reduce this percentage?

Neira: It took great effort, but it was worth it. We made it possible by implementing an aggressive micro-metering program, installing water meters and reducing the amount of clandestine water connections.

BNamericas: I believe the company has also worked on an acquisitions plan. How is that going?

Neira: We have fully renewed the company's potable water maintenance and operational equipment, which is computerized in each of our water treatment plants. Now, everything is computerized.

We also purchased state-of-the-art equipment to operate our plants and sewerage services.

BNamericas: How much did you spend for this equipment?

Neira: We have invested about US$10mn in this project.

The investment was carried out along a number of years, but I would say it was mainly done during the last three years. We have also modernized our buildings, etc.

BNamericas: Would you say you turned the company around?

Neira: Absolutely. We turned it around completely, and the firm has even obtained international recognition and awards from Spain, France and Germany, as well as in our own country. These prizes confirm administrative excellence and the quality of our services.

In August 2000, when we just arrived in the company, only 72% of the city had potable water services and 68% had direct access to sewage. Those numbers are now a thing of the past.

BNamericas: Exactly how did you manage to do that? Did you receive the support of the national government, for instance?

Neira: No, it was all through self-management and with the support of IDB and the Andean Development Corporation. The rest has been financed by company funds.

BNamericas: Finally, I know you are working on a large water supply project. Could you tell us about that?

Neira: Yes. We are carrying out the studies for the project known as Ríos Orientales, which will bring 17m3/s of water from the bottom of the Cotopaxi and Antisana volcanoes, allowing us to supply potable water to the city's entire population until the year 2060. These studies are already being carried out.

According to our plans, the construction of the project's first phase should begin at the end of 2011, when the studies are finished. The construction of the whole initiative will last until 2020.

According to projections, Quito's population - which is now at 2mn people - will double in 20 years.

We are planning this with mayor Paco Moncayo, focusing not only on solving current problems, but also thinking about future generations.

At current costs, we estimate the project will require an investment of about US$1.2bn.

The initiative will also include the construction of two hydroelectric plants along the way, before the water is treated.

BNamericas: Will you operate these plants?

Neira: Yes. Currently, the company has two mini-plants, and these new water resources will produce an additional 194MWh. Whatever we generate and don't use, we'll sell on the wholesale market.