Wed | Jul 18, 2018

Billion$ for water - Massive investment needed for regional transformation

Published:Monday | October 31, 2016 | 12:00 AMJovan Johnson
Dr Horace Chang.
Evan Cayetano

Caribbean nations need approximately US$5.5 billion over the next 10 years to address water and sanitation issues, a figure that adds support to the growing calls in the region for more public-private partnerships (PPP) or even full privatisation of the water utility.

The Inter-American Development Bank (IDB), one of the leading global support agencies in the region, has now joined that call, noting that debt-burdened Caribbean economies, by themselves, cannot afford to fund that kind of investment for what's considered a 'human right'.

"Coming out of the high-level forum of the Caribbean Water and Wastewater Association that took place [last week], it is estimated that US$5.5 billion is required over the next 10 years to attend to our water and wastewater issues in the Caribbean," Evan Cayetano, a senior specialist for water and sanitation at the IDB, told participants at the Organisation of Utility Regulators Conference that ended last Friday in St James.

Cayetano said the identification of the funds needed for investments show that utilities are now able to calculate the problem and put forward solutions to political representatives.

"It is in this context, given that much of these investments are way beyond the capacity of the utilities, that the governments of our countries, we believe, are demonstrating that there must be a different way to attend to these problems.

"Let's look at it perhaps in partnership with the private sector and the role that the private sector could play in bringing investments to address the problems."

The problems afflicting the provision of reliable and affordable water in the Caribbean have been linked to old supply systems, some in place for more than 100 years. There are also high levels of leakage and theft, poor maintenance and inadequate charges for usage, which affect reinvestment into the system.

Between 2008 and October 2016, the IDB pumped more than US$2.2 billion, or just under 30 per cent of its financing in the region, on water and wastewater projects, according to Cayetano.

More, he said, needs to be done and the recommendation to Caribbean governments is to adopt more business principles in utility regulation and embrace PPPs as a practical avenue through which to get the required levels of investments without disturbing the focus on social sectors.

It's a point supported by Dr Horace Chang, Jamaica's minister without portfolio with responsibility for water, who noted that the Government is intent on listing the National Water Commission on the Jamaica Stock Exchange.

He was careful to note that the State would still have control over distribution.

"We are looking at privatising water by having private sector participate in water production by PPP operation. We will ask investors to produce water for us, then we will distribute it. We are very committed that the distribution should remain in one company, because it's difficult to develop. We're also looking into privatisation of wastewater treatment," Chang said, noting that the regulation for the new structure would have to be worked out.

Chang admitted that investment in water has suffered throughout the region because of its "unattractiveness" to politicians.

"Often, it is not a major political problem until you don't have any water. The moment water starts again, the idea of investing billions of dollars in water goes, because it's much more attractive to fix a road. [Fixing infrastructure] gives the member of parliament a nice, good response that he's working. For that reason, the approach to water, in terms of investment, has been lagging behind," he said.

Some regional utility stakeholders, including Kathleen Riviere-Smith, a former head of the utility regulation authority in The Bahamas, said governments should control water with private sector funding modernisation. Water can remain with the government or a municipality. However, they need to remove the politics out of it, and it needs the capital investment," she told The Gleaner.