2008 - 2009 - Pinsent Masons Water Yearbook 2012 - 2013

MEXICO
PART 2: COUNTRY ANALYSIS
Goals for the National Water Commission (2001-2006)
Measure 2001 2004 2006 Goal
Population with potable water service 88% 89.4% 89%
Population with sewerage service 76% 77.4% 78%
Rural areas with potable water service 69% 71% 71%
Volume of wastewater treated as % of wastewater collected 25% 31.1% 46%
Verification of wastewater quality discharges to ensure 10% 96.7% 100%
compliance with NOM-ECOL-001-1996
River basin councils functioning autonomously 1 16 25
Autonomous Technical groundwater committees 4 41 41
Number of inhabitants protected against floods (1000’s) 364 3,371 1697
Amount collected for water rights and fines (Million EUR) 478 581 610
Source: CNA, 2005
A series of measures to help preserve water supplies has been launched in a move that could help
Mexico pay its Rio Grande river water debt to the USA under the 1944 treaty. A deal reached by U.S.
and Mexican Governments earlier in 2003 said the two countries will invest in water conservation
measures and mandates the modernisation of the water infrastructure, aiming to achieve greater
efficiency in water use. Mexico also seeks to boost the amount of treated and reused wastewater from
one-third of output to two-thirds by 2006.
Other challenges stem from Mexican politics and their several legacies. Since the 2000 elections
ended 71 years of rule by the Institutional Revolutionary Party, there has been a piecemeal transition
from a centralised state to one with more local decision making, but without an effective transfer of
operations. While in constitutional terms, water belongs to the state, this does not allow for the
economic and environmental opportunity costs involved when water is transferred from one state to
another or to Mexico City. Meanwhile, up to half of users do not pay for the service, health regulations
stipulate that at least a minimal supply must be maintained to domestic non-payers.
Freshwater
Annual availability (1998) 375.40km³
Per capita 3,729m 3
Annual withdrawal (1991) 77.8km³
Domestic 17%
Industrial 5%
Agriculture 77%
Politics and privatisation
Mexico has a long tradition of private sector water contracts. Concessions were awarded in Pueble,
Saltillo and Monterrey in 1855, 1899 and 1904 respectively. In the 1920s there were 20 concessions
in operation. Since the 1940s, these were taken over by the state. Privatisation in Mexico was revived
in the wake of the 1992 National Water Law. At the same time, Federal support for water and
sewerage services in the provinces was eased to encourage the commercialisation of the services.
After strong progress between 1992 and 1994, economic problems have meant that progress in
subsequent years has been piecemeal.
Many of the current generation of privatisation contracts were awarded shortly before the 1994 Peso
crisis, which caused problems with regards to the quality of earnings in hard currency terms.
Contracts such as Biwater’s sewage treatment BOT in Puerto Vallarta have suffered from the inability
of anticipated tariff increases to be imposed. Companies such as Biwater have concentrated on
working within new financial constraints to deliver high service quality with the longer term in mind. 50
wastewater treatment BOT contracts were awarded up to the end of 1999. In 2001, twelve were
operational (with a PE of 6million), while 20 have been cancelled and twelve are under re-negotiation.
Azurix entered the market in 1999 by buying out private sector stakes in two concessions. Azurix’s
activities were sold to Suez in 2002. Likewise VE has gradually increased its holding in its Omsa JV
from 33% in 1993 to 50% by 1998. From 2003, the Government aims to award concessions for 180
cities with a population over 50,000. This will cover water treatment and provision services, with 49%,
51% and 100% stakes being available. In reality, five BOT contracts awards were identified in 2003
139
Pinsent Masons Water Yearbook 2008-2009