Room for the Private Sector in Water Infrastructure

Q: What are the main issues Ayesa has identified within Mexico’s water infrastructure?

A: To solve the country’s pressing water problems, especially in large cities such as Mexico City, we must look at the issue from a different perspective. There are different strategies that will have to be implemented to meet future demand. Extracting water from the city’s aquifers is no longer an option. The water that is extracted is of poor quality and extremely difficult to purify due to the amount of minerals it contains. We must limit the quantities of water that we extract and instead look for alternatives. The Cutzamala System is the country’s largest water infrastructure project and acts as the ZMCM’s water tap. It distributes, stores and purifies much of the area’s water supply. We are involved in the expansion of Line 3 of the system, which includes more than 7.7km of pipes. Apart from bringing water from other locations, we must address the efficiency of the existing water infrastructure. Of the water that is pumped through Mexico City’s water system, less than 50 percent actually makes it to the faucet because of leaks and system malfunctions. Another project in which we are participating is Atotonilco Waste Water Treatment Plant, that when completed, will be the largest water-treatment plant in the Americas and will treat 60 percent of Mexico City’s wastewater. This is a huge step and authorities are aware that water-treatment infrastructure is a priority.

Q: What role does Ayesa play in the construction projects such as Atotonilco and Zapotillo?

A: Ayesa has different roles in these projects. We have supervised the construction of Mexico’s most important water projects, such as the Aqueduct II in Queretaro, the third line of the Cutzamala System and the WWTP in Atotonilco. The role of a supervisor involves technical and constructive expertise, being the eyes of the client and verifying that everything is being done according to what was established in the contract.

The other role played by Ayesa is all the engineering behind the projects. Ayesa elaborates executive projects that consider the whole lifecycle of the project, from the feasibility studies to commissioning, operation and maintenance. In this role, Ayesa has participated in Zapotillo, Purgatorio and Santa María Dams, a wide portfolio of water-treatment plants, water supply and sewage systems and irrigation systems.

Q: How can the private sector play a larger role in bridging the water infrastructure gap?

A: Private companies can manage certain parts of the water cycle. Privatization is a delicate word in Mexico and personally I do not know why we are afraid of it. I believe that it is necessary to have the private sector become more involved, perhaps not in the complete privatization of a city’s water system but certain parts of the process. For instance, the collection of fees for water services or water treatment could be privatized. Atotonilco will function under a PPP scheme wherein the Mexican government contributes a large sum of money and this is complemented by the private sector, which constructs and finances the project. The private sector will receive a return on its investment through the fees charged for the use of the water-treatment plant. We must combine public resources with private partners to get the most of the limited resources the country has. Nevertheless, it is crucial that the private sector and investors feel comfortable participating under a PPP framework in Mexico.

Q: Given the high subsidies on water services, how can water infrastructure projects become more attractive to investors and engineering companies?

A: Water projects with a standalone private investor are not viable. Much investment is needed to close the water gap in Mexico. Along with public and private investment, we need a cultural change and citizens must pay the real cost of water. For Atotonilco to be developed, it needed heavy public investment. As we move forward and require more private investment, we need to give investors the security that they will see adequate returns. The goal of the private sector is to make money. If the right price is not paid for water, utilities companies will not be able to operate the system and this will promote the misuse of water in general.