Santa Fe, the reprovincialized water management model

Daniel Florentin, 2012

1.the province of Parana

Only 1% of the flow of the Parana River is sufficient to supply water to the main cities of the Argentine province of Santa Fe. Yet, in many parts of the province, and sometimes within the cities themselves, there is a lack of water, insufficient pressure, and some people do not have access to the basic networks in their homes. The issue of universal access to the water system in this region is therefore still very much alive and unresolved¹. As in many other provinces, the water and sanitation networks of the fifteen main cities² were put under private concession in the 1990s. Their management was entrusted to the Suez group, as in Buenos Aires, through the company Aguas Provinciales de Santa Fe. The experiment with private sector participation lasted only ten years, however, and, as in Buenos Aires, ended in 2005 after a major political and economic conflict, leading to proceedings before ICSID, the World Bank’s dispute settlement body.

The company was accused of not fulfilling its obligations, particularly with regard to investments to expand the network and the inclusion of the least creditworthy populations in the network. It was re-provincialized, renamed Aguas Santafesinas, and the political objective was to establish the right to water, i.e., to achieve universal access to the network. A few years after this takeover by the public sector, we can ask ourselves to what extent a new model has been implemented that meets the social challenges that the private company was unable to manage.

2. between the end of the english-style regulatory system and the temptation of the municipal model

The legacy of the private experience in the province of Santa Fe is more tenuous than in the province of Buenos Aires. Similar to the concession in Puerto Rico, the regulatory model was profoundly changed when the water company returned to public ownership. The English-style system of an independent regulator with the ability to impose tariffs and fines for non-compliance with contractual terms was gradually erased.

The provincial regulator, ENRESS, still exists, but its resources have been limited. The current director of ENRESS was the leader of the anti-Suez movement and defends a position of autonomy from the water company in order to advance the rights of users. But the decrease in the number of staff working for the regulator, and its lack of funding, profoundly limit its capacity for action. The regulator also suffers from a lack of adequate technical and technological conditions to do its work properly, as most of the complaints and other tasks that fall to it remain in paper format, and have not kept up with the benefits of digitization, particularly in terms of time savings. In addition to these limitations, there is the structural inability to financially sanction the water utility for non-compliance, as the regulator’s supervisory authority and the owner of the water utility are the same legal entity, namely the province. ENRESS is thus confined to a public warning role, while it has very little visibility for users, most of whom are unaware of its existence.

This break with the English model of regulation has led the provincial authorities to move towards a municipal rather than a provincial model. Such a change would in fact be socially and spatially discriminatory: the current system works on an equalization basis between the different cities to have a single price for water in the fifteen cities served by the utility. A change would make water cheaper in the richest city, Rosario, and would double or triple its price in areas with poor service and concentrated social problems, such as Villa Gobernador Galvez. However, the project is not yet approved, but seeks to follow the municipal paradigm, although it could be more penalizing than the existing redistribution system. If implemented, it would in some ways contradict one of the major contributions of re-provincialization, namely renewed public investment in major infrastructure works.

The logic of major works: a return to the hydraulic mission?

One of the changes that has taken place over the past five years has seen the public sector take charge of major infrastructure works. A plan for twelve aqueducts is supposed to provide universal access to water throughout the province, especially in the cities of the Aguas Santafesinas concession.

This plan has existed, in this form or in another, for about thirty years. However, the first aqueduct has finally been built and a second is already underway. The entire program will cost more than a billion dollars to complete and will take 20 to 25 years to complete, which means that it will be subject to a number of political reversals and possible stoppages. One of the major problems is related to the mode of financing, since the province, while having limited financial resources, invests in a rather isolated way, without benefiting from notable or only minimal external aid from external actors, notably Brazilian and Austrian.

The logic that prevails in this plan emerges from what is traditionally called the hydraulic mission, where the public actor makes large investments for the construction of massive infrastructures, without the same interest being given to the management of water distribution.

4. significant financial and technical management problems

The management problems facing Aguas Santafesinas are multiple and reveal a profound disjunction between the policy of major works and the management of the networks.

Financially, the province tends to underinvest in the water company. Bills do not cover all operational costs, even though tariffs were increased in 2010, and the company is therefore largely dependent (around 50%) on subsidies from the province. However, the province regularly puts a strain on the company’s proposed budget of 50 to 60%, which necessarily limits its capacity to act.

This investment problem weakens the company’s financial management, and has repercussions on the network’s technical capacities. The lack of overall planning of works, pipe replacement and leakage management is in fact only a reflection of this problem. In other words, the technical malfunctions are multiple, and concretely translate into too little water pressure in some places, leakage problems and uncompensated wastage. The situation is critical in some places, since the pipes in Rosario and Santa Fe are 120 and 80 years old respectively, and there is no plan to replace them.

These malfunctions paint a picture of a water company that is often in difficulty and that, for political reasons, does not benefit from social engineering programs such as Agua Mas Trabajo in Buenos Aires. Only solvent populations, and still in an incomplete way, have access to water, and there are no plans for the concrete realization of the right to water and universal access to the network.

This disjuncture in provincial policy between the massive construction program and the deficiencies in local network management marks the contradictions of this new public model and the unresolved contradictions in a province where water is no longer as politicized an issue as it was in the era of the private concession. Users, however, are more included than in the previous model.

The democratic and environmental issue: the logic of social participation and control of consumption

This user participation is particularly present in the consultative assemblies presiding over the water company’s tariff increases, which are debated and discussed by civil society associations. This new practice, which has been in place since 2010, has led to the introduction of more rational tariffs, which increase with the level of consumption and are no longer based on the area of the land served.

This participatory practice also seeks to combine the democratic issue with a more acute environmental awareness, in order to preserve water resources. As elsewhere in Argentina, the levels of consumption per capita in the province are very high, often exceeding 400 or even 500 liters per person per day, figures that correspond to world records. This work of changing the water culture is, however, a long-term task, and the company is taking it on, with awareness campaigns conducted among the younger generations in schools, but also by the installation, on the initiative of some company executives, of water meters ³ in the southern part of the province, the experience showing that this installation allowed a reduction in average consumption.

The new public model of water and sanitation management in the province of Santa Fe is therefore struggling to impose a clear guideline, torn between the assertion of a right to water and defective management of the network that prevents its realization, tempted by the municipal model but without the financial means and political will to ensure it in a sustainable and fair way, both socially and spatially.