Peru, Bolivia splash out on water projects amidst drought

The governments of both Peru and Bolivia are increasing public spending on water projects as the neighboring Andean countries battle widespread drought.

A plan to reactivate the economy will enable Peru's President Pedro-Pablo Kuczynski to invest more in potable water and sewerage services, after congress this week approved a 142bn-sol (US$42bn) budget for 2017 by 99 votes to 18, vice president Martín Vizcarra said.

The budget includes 6.78bn soles for the housing and construction ministry, a 41% increase. About three quarters of next year's budget, or 5.0bn soles, will be allocated to water and sewerage. The government also plans to nearly triple its 2017 budget for potable water and sewerage projects in rural areas to 1.40bn soles.

"It's the policy of the current government to focus on potable water and sewerage," Vizcarra told reporters in Lima. "The 2017 budget features a 4.7% increase over 2016. That's in line with inflation, which is reasonable."

Inflation reached 4.4% in 2015, according to the national statistics institute.

President Kuczynski, who took office July 28, has pledged to eliminate all bureaucratic obstacles to US$25bn in delayed infrastructure projects, including 170 potable water and sewerage projects. He also announced plans to install connections for water services for 100% of the population by 2023.

The region is facing the effects of the La Niña phenomenon, where cooler ocean temperatures cause drought in the highlands. The El Niño phenomenon, which causes warmer sea temperatures, caused flooding in much of South America last year.

The Peruvian national water authority (ANA) has declared a state of emergency in several northern regions battling drought-related wildfires that have destroyed at least 9,000ha of forestland.

BOLIVIA

In Bolivia, meanwhile, President Evo Morales pledged US$78mn in investment in four potable water projects for the country's capital, which is facing severe water shortages.

The projects include a US$8.9mn pipeline linking the city's Hampaturi reservoir to Lake Kasiri, which will supply 280lt/sec; a US$20mn, 18km pipeline to the Inchaca reservoir to provide 100lt/sec; a US$7mn reservoir near the Irpavi River to supply 80lt/sec; and a US$42mn, 6Mm3 reservoir near the Choqueyapu River to provide 500lt/sec, Morales said.

Bolivia will need to build reservoirs across the Andean mountains to be able to supply La Paz in case of future droughts, Morales said, according to state news agency ABI.

Morales last month last declared a national emergency and sacked state water officials for failing to warn the government about the lack of water supply in La Paz, a highland city of 800,000 inhabitants. State water company Epsas has extended water rationing in the capital to 150 neighborhoods, where water availability is restricted to three hours/day.

While Morales has pledged US$48.6bn in infrastructure and energy investments over the next five years, his government is struggling to line up financing as economic growth slows. Bolivia, which depends on natural gas for half its export revenue, saw hydrocarbon revenue plunge 50.8% to US$1.1bn in the first half.

Morales allocated US$6.40bn to public spending in 2016, compared with US$6.18bn last year. The country, which allocated US$2.5bn to infrastructure projects in 2015, earmarked 30% of this year's budget to infrastructure.