# **Box  5.9  Private sector financing of wastewater treatment plants for irrigation use in Argentina, Chile, Mexico, Jordan and Iran**

> **Mendoza, Argentina – planned direct wastewater irrigation:** The _Campo Espejo_ primary treatment plant was built in 1976 to treat an average flow of 1.7 m<sup>3</sup> /s. It was operated by the public water company, _Obras Sanitarias de Mendoza_ (OSM), and the effluent was discharged to irrigation canals and used for indirect irrigation. To upgrade the quality of the effluent, in 1993 OSM awarded a 20-year BOOT contract to build and operate a waste stabilization pond system required to meet the 1989 WHO guidelines for unrestricted irrigation The winning consortium, _Unión Transitoria de Empresas_ (UTE), inaugurated the new _Campo Espejo_ plant in 1996, consisting of 12 series of three ponds each (facultative + aerobic + polishing). The waste stabilization pond system occupies 320 ha and it is one of the largest such lagoon systems in Latin America.

The bidding process was straightforward. The bidding documents specified criteria for the quality of effluent, such as a meeting the 1989 WHO microbial guidelines (<1,000 FC/100ml and <1 helminth egg/liter), plus removal of at least 30% of BOD and 70% of suspended solids. The bidding documents also defined a certain level of fines for failure to produce an effluent of the standard specified. OSM guaranteed a minimum wastewater flow of 3 Mm<sup>3</sup> /month. The selection criterion used was the wastewater treatment charge per m<sup>3</sup> proposed by the BOOT bidders. Five contractors submitted bids with proposed treatment charges varying from a 5¢/m<sup>3</sup> (UTE’s winning bid) to 11¢/m<sup>3</sup> plus value added tax. Based on the winning bid price and the average treated effluent flow, UTE’s initial investment of $15 million had an expected payback period of 7 years. (See also Box 5.7.)

# _Sources:_ Idelovitch and Ringskog, 1997; Kotlis, 1998; Barbeito, 2001.

**Santiago, Chile – planned indirect wastewater irrigation:** In 1999, following a decade of water sector reform, a 30-year concession was awarded to the private consortium AguasAndinas to provide water and sewage services to the Santiago metropolitan area. The new company immediately began implementing a Sanitation Plan for wastewater treatment plant construction, inaugurating the El Trebal plant (4.4 m<sup>3</sup> /s) in 2001 and the La Farfana plant (8.8 m<sup>3</sup> /s) in 2003. Currently 82% of the Santiago’s wastewater is treated, and with the scheduled startup of the Mapocho plant (1.8 m<sup>3</sup> /s) in 2012 the treatment level will reach 100%.

Upon completion of the Sanitation Plan in 2012, AguasAndinas will have invested a projected total of 654 Euro (US$896) in wastewater treatment – an achievement far beyond the resources of the GoC. This addition of wastewater treatment as a new service has led to a significant increase in the water tariff to recover this investment, but corresponds to applying the “polluter pays” principle to households and businesses that discharge wastewater. To protect poor households and ensure their access to water and sanitation services, the GoC provides a means-tested subsidy. The magnitude of these investments and the corresponding tariffs increases would be unlikely to survive politically if not accompanied by vigorous and sustained economic growth, which has helped make it possible for households to pay their share of the cost. (See also box 5.3.)

# _Sources:_ Larrain, 2009; Yayur, 2009.

**Monterrey, Mexico – planned indirect wastewater irrigation:** Monterrey, a city of 3.5 million people with over 10,500 industries, is located in a region of severe water scarcity.  To secure needed additional water supply in the early 1990s, Monterrey petitioned the Federal Government for the right to construct a reservoir and divert flow from the San Juan River to reach a total of 10 m<sup>3</sup> /s.  The water rights belonged to farmers in the downstream State of Tamaulipas.  In return, Monterrey committed to treating all of its municipal and industrial wastewater (8 m<sup>3</sup> /s) before discharging it back to the San Juan River for protection of irrigation use in Tamaulipas.

To meet this commitment, three wastewater treatment plants were inaugurated in 1995 – Dulces Nombres (5.0 m<sup>3</sup> /s), Norte (2.5 m<sup>3</sup> /s), and Noroeste (0.5 m<sup>3</sup> /s). All three WWTPs have sludge conditioning and 70