South Americas's most and least expensive water utility fees

By
Monday, August 19, 2013

With the waterworks industry driving some US$245bn/y in business worldwide, opportunity in the sector is not lacking, especially when it comes to providing water and wastewater services for many growing economies throughout Latin America.

However, how much should one charge for services? Considering larger-scale water utilities, below is a list of some of South America’s most and least expensive services, according to BNamericas research "Water and Waste stats 1Q13" which measured the fees utilities charged for the provision of water, per m3, in 1Q13.

THE MOST EXPENSIVE – CHILE

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Chilean companies are ranked the most expensive. Water utility Aguas Andinas, which serves the metropolitan region including capital Santiago, charged a 669 pesos/m3 (US$1.30) residential rate, while northern region II water utility Aguas de Antofagasta, controlled by the Antofagasta Plc group, charged an industrial rate of 1,110 pesos/m3.

Aguas Andinas is the country's largest sewerage and potable water utility, serving some 1.8mn clients and benefiting about 6mn people. It holds a 42.7% market share.

FAIRLY INEXPENSIVE – BRAZIL, PERU, COLOMBIA & ARGENTINA

Brazil’s largest water company, São Paulo state utility Sabesp (Bovespa: SBSP3, NYSE: SBS), charged a flat rate for 10m3 which equates to approximately 1.59 reais/m3 (US$0.66) for residential clients. It also charged a discounted social service rate of some 0.54 reais/m3 and a commercial rate of approximately 3.20 reais/m3.

Serving more than 27.1mn residential, commercial and industrial clients, equivalent to 60% of the state's urban population, Sabesp provides water and sewerage services to a total of 363 municipalities.

Peruvian state-owned water utility Sedapal which provides water and sewerage services to Lima and neighboring Callao, charged a rate is 1.47 soles/m3 (US$0.53/m3) for residential, 6.42 soles/m3 for industrial, and 3.60 soles/m3 for state accounts.

Charging a similar fee is Empresas Municipales de Cali (Emcali), the state-owned company providing water, telecommunications and electricity services in Cali, Colombia. It charged 921 pesos/m3 (US$0.48/m3) for social services, and 3,741 pesos/m3 for industrial clients.

The second lowest rate tabulated was provided by Argentine privately held waterworks concessionaire Aguas Cordobesas, which is responsible for a 30-year concession to provide drinking water to the city of Córdoba. It charged 1.94 pesos/m3 (US$0.35/m3).

LEAST EXPENSIVE – VENEZUELA

Finally, the least expensive rate was reported by Venezuelan state water utility Hidrocapital. It serves 23 municipalities in the capital district and Miranda and Vargas states through six operating systems, charging 1.90 bolívares/m3 (US$0.30/m3) for residential clients, and 1.55/m3 bolívares for commercial clients.

PRICE TO GDP COMPARISON

The price of waterworks services correlates to GDP per capita as the country charging the highest fee, Chile, posted the highest average salary per person of US$18,700/y.

In the second category, Brazil’s per capita GDP was US$12,100/y, while Peru and Colombia’s annual income was about US$10,900 and US$11,000, respectively, falling in line with our price to GDP comparison. Argentina, however, charges a low rate for its residents, who make US$18,400/y on average.

Finally, GDP per capita is US$13,800 in Venezuela which appears to have reasonable rates when compared to the rest.