In an excerpt from his exclusive interview with Mexico Infrastructure and Urban Sustainability Review 2017, Emilio Soler, Latin America Manager of Aqualia, where he discusess the ample amount of opportunities for private sector participation in water infrastructure.
Budget cutbacks have impacted Mexico’s ability to build the infrastructure it sorely needs. In the water sector, the country must invest at least MX$19.8 million (US$1.04 million) during the current administration to guarantee the availability of water, according to CONAGUA. As funds dry up, the private sector should be given a bigger role, says water management company Aqualia. The government appears inclined to agree. Among CONAGUA’s catalog of 150 drinking water, sewage and sanitation projects, 10 are planned under the PPP scheme, which increments the private sector’s participation by 56 percent in comparison to the previous presidential term.
Emilio Soler, Director of Latin America at Aqualia, believes the economic environment and budget cuts have significantly impacted the country’s ability to construct, improve and fix its water infrastructure systems. “CONAGUA was one of the federal entities worst affected by the budget cuts and this has seriously affected investment in hydraulic infrastructure in the country,” he says. “Not only have CONAGUA’s federal projects been limited but so too has the capacity of municipalities to obtain investment. This is because the majority of operators are not self-sufficient and they depend a great deal on federal support.”
The private sector could hold the key to solving funding issues and getting water infrastructure back on track, suggests Soler. He is confident about the willingness of the private sector to contribute the necessary development because there is great confidence in Mexico. “Companies like Aqualia can bring not only technology and experience but also resources,” he says. “Private participation in water infrastructure is highly valued and is generally extremely successful. The potential is enormous but in Mexico the political will to carry out these projects must be enhanced.” Most cases of successful private participation in water saving and treatment were in Build-Operate-Transport (BOT), says Soler. These were developed with partially recoverable private funds and supported by FONADIN. “The obligations to pay the private sector were guaranteed through alternative mechanisms by federal entities with operator income,” he says. “This model, which is attractive for the private investor, is becoming scarcer and the private sector should take on projects with fewer guarantees and less involvement from the federal government.”
With CONAGUA preparing to launch three tenders for water projects for NAICM, Aqualia is readying itself for participation. “We are interested in PPP projects for the construction and exploitation of 21 treatment plants on the NAICM peripheries,” he says. “We have the best technology for these projects, our experience is significant and we have built more than 100 of these types of plants. We now operate approximately 250 plants.” Aqualia was involved in designing, building and equipping the Caracol pumping plant in Mexico City. The long-term contract model and financing is one of Aqualia’s strengths and Soler believes the company can provide all the necessary guarantees to CONAGUA and NAICM for the success of the airport project.
The company, a unit of Spanish construction group FCC, is also delving into new areas of water treatment technologies. In July 2016, Aqualia signed an initial 18-month agreement with CENTA for the use of algae in water treatment, a process that could revolutionize the industry. Micro algae are an emerging biological resource in countries like the US, France and Israel due to their many unique properties and applications. Some years ago, Aqualia began an innovative technological project to use micro algae for purification and bioenergy, which allowed the company to obtain biofuels through the purification of residual water.
“Among the advantages and innovations of the project is improved efficiency due to the rapid growth culture provided by the micro algae,” says Soler. “Also, bacteria from wastewater can be eliminated and biomass can be simultaneously collected and processed for oil and other chemical extraction. This project was applied on a real scale in the Chiclana municipality in Spain. The biofuels produced by this technology equates to the annual consumption of a fleet of 400 vehicles.”
Exclusive interview with Emilio Soler, Latin America Manager of Aqualia.
This is an exclusive preview of the 2017 edition of Mexico Infrastructure and Urban Sustainability Review. If you want to get all the information, plus other relevant insights regarding this industry, pre-order your copy of Mexico Infrastructure and Urban Sustainability Review 2017.