The future of water infrastructure in Latin America

CG/LA Infrastructure LLC has been actively identifying all the key infrastructure projects in Latin America to showcase in the Latin American Leadership Forum.

May 16th, 2003


May 16, 2003 -- CG/LA Infrastructure LLC has been actively identifying all the key infrastructure projects in Latin America - to showcase in the Latin American Leadership Forum, being promoted by CG/LA in conjunction with Foreign Policy Magazine.

The Forum will be held on June 11 and 12, 2003 at the Willard InterContinental Hotel in Washington, DC. Key figures from the Bush Administration, successful policymakers from throughout Latin America, and leaders of the business community in the Americas will participate.

The project identification and selection process highlights several of the key trends in water and wastewater infrastructure project development.

Private Capital has simply failed to address the region's water investment needs. While it is common knowledge that US $ 1 of investment in water, saves U $ 5 in health care costs, this does not translate into acceptable Internal Rates of Return. The projects that have relied on 100% private investments are all stalled, and have serious back-logs in their investments.

For example, of the 48 private concessions signed in Brazil, CG/LA highlights that only 8 are in fact meeting their investment schedules. Concessions, BOTs and BLTs are surely not the solution to the regions' ailing water infrastructure - and multilateral institutions are acutely aware of the need to foster a different model for private capital participation.

The trend towards user-fee returns based investments is over; and a hybrid public/ private model is being shaped.

In this vacuum of a workable model, CG/LA identified 31 water projects - 90% of which are publicly or multilaterally funded - and the others, being niche project opportunities. The Brazilian Governments' estimates call for US $ 80 billion in water investments in water and wastewater infrastructure by 2010, to achieve the sought after "universal coverage".

Yet, only US $ 50 million have been invested with private capital during 2002! The needs are overwhelming, and sub national governments are beginning to tap into capital markets and channel private capital through local utilities - however, this is incipient, and insignificant when compared to the investment needs.

The Millennium Development Goals for the region outlined by World Bank - "to reduce population without safe water by half by 2015" will be achieved only if a balanced hybrid model is developed - and CG/LA expects unique approaches depending on specific needs.

Several innovative locally bred projects involve private capital, technology and management with public sector ownership - which is a workable solution in the opinion of CG/LA analysts. CG/LA has highlighted some of these projects in the Leadership Forum. For example, loss reduction programs have evolved into financeable projects through private management and building of Water Services Companies - similar to the established Escos' (Energy Services Companies).

The Leadership Forum will present over 100 infrastructure projects to the delegates; the top 15-20 projects, with total values in the range of $1 billion, will be presented at the Forum. The total value of projects profiled will be roughly $4 billion. These projects are of interest to equipment exporters, service providers and investors with an appetite for risk.

For more about the Forum, to reserve your place in this watershed event, to register to meet the leaders who are transforming the Americas, or to identify the business opportunities that will allow you to grow in the coming years please visit the Latin American Leadership Forum's web site at: www.latinamericanleadershipforum.com.

Hemnani is Vice President of CG/LA Infrastructure, LLC. CG/LA focuses on the creation of new value in the world's infrastructure marketplace - for businesses, private investors and public policy professionals. Originally focused on Latin America, we are a firm with global reach - working in Latin America, and in the growing markets of Asia, Europe and the Middle East.


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