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With the presidential elections right around the corner, Mexico Infrastructure & Sustainability Review looks back at last year’s interview with Ramón Aguirre, Director General of SACMEX to evaluate the water priorities of the administration and how much has been achieved.
Q: What is SACMEX’s project timeline for the water plan for the future of Mexico City?
A: Water management for Mexico City is divided into three main issues. First, there is much to do to solve the problem and the key actions to be implemented require a certain level of infrastructure. For example, we estimate that 70 percent of the city’s pipelines need to be replaced, which equals 15,000km, and this takes time to achieve. Second, the cost to develop this level of infrastructure is significant. Third, Mexico City cannot be treated as an isolated system. The capital’s plans must be integrated with those of the State of Mexico. The required investment is approximately MX$256.03 billion, implying a huge total investment. But we can adjust the timeline to ensure that it is attainable. Our current plan foresees an annual investment of MX$6 billion over 40 years.
We need to strategically solve the problem of leaks, given that about 40 percent of water is being lost. The most urgent leaks must be prioritized and eventually, the pipeline network must be replaced completely, as the pipes are 57 years old, on average. Next, we need to focus on the sewer system, which is deteriorating. We need to foster water reuse at all levels and maximize rainwater collection to better manage resources and avoid flooding. Likewise, we must improve our supply sources and we are considering deep wells as a short-term solution. We also need to build metropolitan treatment plants to reuse water in agricultural areas so they do not put a strain on the aquifers, which are being overexploited.
Q: What strategies are you implementing to reduce water consumption?
A: We need people to change their consumption habits if we are to reduce water usage by 30 percent. To facilitate this, we are implementing two strategies: we have launched marketing campaigns on traditional and online media sources and we are implementing differential tariffs and sanctions for high consumption.
Q: What is the private sector’s role in reducing the budget gap to enable compliance with the Water Management Plan for Mexico City?
A: I see a great ally in the private sector to provide services, paid with results. PPP schemes are advantageous in that the reward is derived from benefits of a specific project. For example, rather than paying for a water-treatment plant, SACMEX essentially pays for drinkable water, as our interest is not in the plant but in the quality of the water. But by law, water treatment, distribution, drainage and supply services cannot be privatized. Although water management should be a public endeavor, I believe that it is better to involve the private sector to ensure the proper control of certain services. The problem is that it is simply unconstitutional.
Q: What do you believe would be the ideal relationship between the public and private sectors for water management?
A: Ideally, we would have service provision contracts paid according to results. The problem with the private sector is that the company controls which projects it wants to participate and can withdraw from a project if it no longer finds it lucrative. Conversely, the public-sector finances projects because it is required to and not only because it is cost-effective.
Q: What strategies are you implementing to guarantee that the 40-year agenda will transcend administration changes?
A: The Legislative Assembly is about to create a new binding law to draft and fully execute a strategic plan to manage the issue in the long term. Part of this law requires the city government to allocate an annual budget for water.
Q: To what extent do you believe that local governments should have more autonomy in terms of budgeting for water management?
A: Mexico’s management model is not adequate, as the dependencies in charge of water constantly change due to political decisions, and their representatives are not appointed on merit. The system is politicized, instead of working according to a technical plan. We need to change our current model and prioritize technical decision-making.
Q: What can be done to make authorities prioritize water management in the country?
A: I have perceived a certain level of neglect from the federal government in the cutting of our budget. We need to make the authorities realize their duty to correct this error, given the consequences it carries by limiting our sphere of action. The issue is highly dependent on the involved players, especially those in charge of the budget, as this is not a matter of goodwill but of financial capabilities.
Q: What is your position regarding the real estate boom in Mexico City and the amount of water that each project will require?
A: We are demanding developers make up for the water they will use. It is clear that a lot of water is being lost due to pipeline leaks, so we want each developer to implement key actions for structure rehabilitation to compensate for the consumption the project will involve. Ultimately, they will not completely solve the problem but this solution will help us mitigate it.
Q: What are SACMEX’s top projects for 2018-2019?
A: Our budget was reduced, so for 2018 we will be focused on small projects that address the current crisis in the most reasonable and efficient way possible. We do not have or plan to start a large and emblematic project. Rather, we will continue with the rehabilitation of the existing infrastructure, among other small new initiatives. Regarding 2019, the upcoming administration will decide the projects it wants to focus on. There are many interesting potential projects, especially related to water network rehabilitation, water-treatment plants and deep wells, which I consider very important. I would probably invest in any of those.
This is an exclusive excerpt from the 2018 edition of Mexico Infrastructure & Sustainability Review. If you want to get all the information, plus other relevant insights regarding this industry, pre-order your copy Mexico Infrastructure & Sustainability Review or access the digital copy of the 2018 edition.