Tapping into Mexico’s Water Sector for Investment Flows

The Mexican state needs to modernize its legislative framework to allow for joint participation between the public and private sectors in water infrastructure, panelists said at the Mexico Infrastructure & Sustainability Summit 2018, as they reflected on the challenges that Mexico faces to ensure access to water for all its inhabitants.

“We need new regulation that permits joint public and private investments and we need a regulatory commission for water, in the same way we have established regulatory commissions for electricity and oil,” said Sergio Ramírez, Director General of Acciona Infraestructuras, during a summit discussion at the Hotel Marquis Reforma in Mexico City on Wednesday.

Ramírez was joined by Federico Casares, Business Development and Institutional Affairs Director Mexico of Veolia; Othón Pérez, Business Development Director at FOA Consulting; Yolanda Padilla, Regional Manager Mexico and Central America of Fluence; and Roberto Olivares, President of RELOC and the panel’s moderator.

Padilla echoed Ramírez and said that the private sphere is willing to participate with investment in the sector but it is waiting for the government to generate the necessary conditions that would foster the sector’s participation. “We understand that the government cannot undertake the challenge of water infrastructure on its own, which is why we have to work together using tools such as PPPs.”

As an example of how the public and private sector can work together successfully, Casares mentioned Veolia’s water concession in Aguascalientes, where over 20 years the company has covered almost 99 percent of the city’s water needs. “When we started operating, water supply was deficient. However, local authorities knew that participation from the private sector was crucial for the long term.”

Pérez said that participation from the private sector faces three main hurdles: financial, legal and political. “For the private sector to participate, they need legal certainty regarding the projects, local governments need to know how to operate PPPs and we need to solve the problem of political communication with citizens regarding the participation of private players in the management and commercialization of water services.”

For Ramírez, part of the challenge lies in generating a new culture regarding water in the country. “We need to get accustomed to paying for water services the way we pay for electric or phone services.” Casares added that a change in culture must obey to a change in the governance model that is used to face the challenges in water infrastructure. “There needs to be a solid legal framework that includes and respects the different positions of society and that at the same time includes mechanisms that allow for control and transparency in the use of resources.”

Particularly in the use and reuse of water, Olivares said that Mexico has an important opportunity. “In countries like Japan, water is used up to 11 times, while in Mexico we only use it once.”

Ramirez said that if the industry and society do not change the way water is managed, the country could face a water crisis very soon. “We need a structural reform for water. We are at a very high risk of suffering from a major water crisis.” Pérez added that the key is to generate a cultural change. “We need a more rational use of water and integral planning.”