Peru looking to recover privatized Tumbes water utility

Peru's government, which is going against the trend of the past 25 years of privatization, is looking to rescind the contract of a privatized water utility as part of a plan to salvage dozens of bankrupt water companies, a senior official said.

The government is seeking ways to scrap the potable water and sewerage services contract awarded to Aguas de Tumbes (Atusa) and turn it over to Tumbes municipality, according to housing and construction minister Carlos Bruce.

The consortium, which was awarded the 30-year Tumbes concession in 2005, is formed by Spain's Inassa and Peruvian firm Concyssa.

"Tumbes is the only region in Peru where there's a water concession - Atusa, a company that is operating very poorly," Bruce told Lima-based TV station ATV.

Inassa's press office did not immediately reply to an e-mail seeking comment.

Tumbes may be incorporated into a government plan to invest 532mn soles (US$160mn) this year to overhaul the country's bankrupt municipal water companies known as EPS, Bruce said. State water regulator OTASS is already operating a dozen of the country's 47 bankrupt EPS.

Tumbes is a major fishing and agricultural area that is also home to oil and gas operations, including state oil company Petroperu's Talara oil refinery.

Bruce, who is expected to be replaced next week along with the rest of the 19-member government cabinet, said his successor will have to travel to Tumbes to discuss how local mayors will manage the region's water infrastructure.

The bid to take over another private concession comes after the government previously announced it would develop the US$510mn Chinchero airport project as a state-run venture after scrapping the contract previously awarded to concessionaire Kuntur Wasi.

The government has committed to a 50bn-sol (US$15bn), five-year water investment program in a bid to extend potable water and sewerage services to 100% of the urban population by 2021.