EMFAPA Tumbes

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In July 2005 the Municipalidades Provinciales de Tumbes, Zarumilla and Contralmirante Villar awarded a 30-year concession contract of the Empresa Municipal de Frontera de Agua Potable y Alcantarillado (EMFAPA) Tumbes to the Latinaguas-Concyssa consortium. EMFAPA Tumbes was Tumbes’ utility that provided water and sewer services to urban customers in the provinces of Tumbes, Zarumilla and Contralmirante Villar. The public tender for the concession was carried out by Peru’s private investment promotion agency (ProInversion). ProInversion awarded the concession to the consortium formed by Latinaguas (60%) –an Argentine private water operator- and Concyssa (40%) –a Peruvian construction company specialized in the water and sewer industry. The Latinaguas-Concyssa consortium won the concession by requesting the lowest present value of guaranteed annual revenues during the first five years of the contract (US$31.4 million), beating the Colombian firms of Canovias (US$44.9 million) and Cohydra (US$48.1 million). The Municipalidades Provinciales de Tumbes, Zarumilla and Contralmirante Villar agreed to provide the minimum revenue guarantee. In September 2005 the Latinaguas-Concyssa consortium started to operate as Aguas de Tumbes, S.A. In addition to operating and maintaining water supply and sewerage services, Aguas de Tumbes took over the responsibility of completing the following objectives within the first five years of the contract: • Add 8,650 new residential connections for potable water and 9,967 new sewer connections. • Add 435 new public water fountains. • Extend coverage of micro-metering to 86%. • Achieve minimum pressure in the network of 10 m.c.a. • Extend availability of water services to 23.5 hours per day • Increase treatment of wastewater during to 80%. The Superintendencia Nacional de Servicios de Saneamiento (SUNASS), was the regulatory entity in charge of supervising the terms of the concession. Aguas de Tumbes was expected to invest an estimate of US$ 32 million during the first five years of the contract, and US$40 million in the following 25 years to meet the objectives and obligations stipulated in the contract. To assist in the financing, the government obtained from Kreditanstalt für Wiederaufbau (KfW) -Germany’s official cooperation agency- a US$9.7 million (Euro8.1 million) loan and a US$11.3 million (Euro9.4 million) donation. In addition the government provided US$4 million to assist investments needed during the first five years and to prevent increases in tariffs. According to the contract, real water tariffs would not change during the first two years. It was stipulated however that tariffs were set to increase 6.1% in the third year (September 2008) and 6.5% in the fifth year (September 2010) if Aguas de Tumbes met the established goals. In addition, to the water tariff, the tariff for sewerage is set to 45% of the total amount due for potable water.