By INÊS LOPES ines.lopes@algarveresident.com
Water tariffs in Portugal are set to increase following new legislation proposed for the sector that expects the end consumer to pay for the €500 million debt owed to national water group Águas de Portugal (AdP) by municipalities, warns the Association of Portuguese Environment Sector Companies (AEPSA).
The proposed law, approved in April by the government, will see AdP undergo a major restructuring programme in order to achieve considerable savings and improve its financial situation, “harmonise” water tariffs across the country and regulate the sector.
Diogo de Oliveira, president of AEPSA, says water bills will increase because of costs related to a new “billing system”, “charging process”, “software adaptation programmes”, “new invoice formats” detailing additional service charges and “treasury management procedures”.
“Consumers will be even more puzzled by the long list of water service charges detailed on the bill,” added Diogo de Oliveira, who believes the alterations in the water sector will generate “thousands of complaints across the country” because bills will be “extensive”, “complex” and “indecipherable” to most people.
According to the AEPSA president, the suggested legislation is taking responsibility away from municipalities whose role is to ensure water provision remains accessible to consumers.
“When Águas de Portugal service costs are being charged directly to the end consumer, municipalities, are being stripped of their responsibilities in the billing process,” he said, reiterating that the €500 million debt is not the responsibility of consumers but of Portuguese council authorities.
Diogo de Oliveira says the proposed law is “unworkable”, “unfair” and “does not protect the interests of consumers”.
AEPSA has since sent a document to the government and Parliament containing “valid proposals to offset the negative impact on consumers”.
In a document that Lusa news agency had access to, the debt owed by municipal authorities to state holding group Águas de Portugal was over €555 million in 2012, which represents an increase of 27% on 2011.
Even though payment agreements between the municipalities and AdP increased by 55%, these were not enough to put a brake on the escalating debts, which have led to serious financial difficulties for the companies operating under the water group.
Furthermore, annual accounts approved recently in a shareholders’ assembly revealed that, in 2012, the tariff deficits for water supply and wastewater treatment services had worsened, amounting to €508 million.
Explaining the grave financial difficulties faced by AdP, its president, Afonso Lobato de Faria, said the group has to deal with “two twin towers that grow by €100 million a year – the municipal debt totalling over €500 million and tariff deficits also above €500 million”.
The solution to solve the tariff deficits over the next “25 years” is to aggregate, “in a vertical management structure”, the various multi-municipal systems responsible for water abstraction, wastewater treatment and supply to the end-consumer.
“This could mean savings to the tune of €175 million a year and eventually reduce water tariffs” as consumers are being forced to pay “not only for the service but also for its inefficiencies”.
Afonso Lobato de Faria says tariffs charged by municipalities must include the “real costs” associated with the whole water service.
Águas de Portugal’s accumulated debt in 2012 stood at €3.09 billion (+3.97% on 2011), while investment by the group decreased a staggering 53% on the previous year, totalling €229 million.
Investment cuts made by AdP had begun in 2011 after debt curbing measures were imposed by the government on state companies.
The restructuring programme of AdP is aimed at reducing costs through the merger of 18 multi-municipal water companies into just four and ensure water tariff convergence across Portugal.
Minister confirmes tariff increases
The Minister of Agriculture, Sea, Environment and Land Planning, Assunção Cristas, admitted last month during a Council of Ministers meeting that the price of water supply to the end-consumer would increase in 32% of municipalities over the next five years. However, “on a more positive note”, tariffs would decrease in 68% of municipalities, as a result of the restructuring programme for AdP.
In March, Afonso Lobato de Faria of Águas de Portugal told Lusa that water price increases in 2014 would “not be significant” and would average at an extra 50 cents a month for an average family using 10 cubic metres of water”. Faria said “progressive” price increases would be felt in 36 municipalities and “immediate” decreases would be the case in 103 municipalities.
AdP administrator Manuel Frexes admitted recently that water sold to municipalities is also expected to become “gradually” more expensive by 3% in coastline areas, while in hinterland regions it will become 20% cheaper in 2014.
This price variation relates to AdP services charged to municipal authorities, while end-consumer supply charges are the responsibility of câmaras.
The new water billing regime also rules the intervention of the water regulatory body, Entidade Reguladora dos Serviços de Água e Resíduos (ERSAR), whenever municipal tariffs are infringing the law.
Data from ERSAR for 2012 revealed that consumers paid, on average, €10 a month for mains water, which is 49 cents more than in 2011.
In the municipalities that increased the price of water to bring tariffs in line with the “real costs” of the service, the average cost for consumers was €20.69 a month (+€1.58 on last year). Even so, water tariff discrepancies are still recorded across the 278 municipalities of Portugal, revealed ERSAR.
In Castro Marim, for example, the price of water, which was the cheapest in the Algarve, nearly trebled from 2011 to 2012, to reflect the costs charged by Águas do Algarve which the municipality was absorbing. Families paid on average €22 per 10 cubic metres of water used last year against €7.46 in 2011 (see box on the left).
But what weighs the most on the price of water are charges related to wastewater and residual waste treatment added to the bill, something the regulatory body admitted many councils had failed to do in the last two years.
The tendency of rising water prices will continue, according to ERSAR, but progressive increases are recommended.
Aveiro is the district capital city charging the highest tariffs for water, at around €33.39 a month, followed by Vila Real (€30.73), Beja (€26.82), Guarda (€26.65), Portalegre (€24.80), Faro (€23.04), Porto (€20.51) and Coimbra (€20.23).
Meanwhile, the National Association of Portuguese Municipalities (ANMP) has accused Águas de Portugal of “bad management” and “disproportionate investments”.
“Investments have been made by AdP as if Portugal had 50 million consumers,” slammed the ANMP source, refusing to accept the €500 million debt that AdP claims is owed by the municipalities.
The Algarve case
Municipal authorities in the region owe Águas do Algarve a staggering €72 million, the regional water company told the Algarve Resident this week.
A source for Águas do Algarve has confirmed that the debt is being negotiated directly with the municipalities but refused to reveal the amounts owed by câmaras individually.
Although the Algarve Resident contacted all 16 câmaras to find out the amounts owed, only Silves municipality admitted that it had a debt of €917,000, while Alcoutim said it had no debts.
An interview with Jorge Ramos, the left-wing Bloco de Esquerda candidate for Lagoa Câmara, published in Barlavento newspaper, revealed that the municipality had requested a loan of €4 million to pay a debt to Águas do Algarve.
All other municipal authorities either claimed the figures were not available or simply dismissed our various attempts at obtaining the information.
|| Luxury water tariffs
The most expensive water bills in Portugal, according to ERSAR data for 2012, are paid in the luxury areas of Vale do Lobo and Quinta do Lago, where water supply is the responsibility of “autonomous services” (InfraLobo and InfraQuinta respectively) and whose tariffs are dependent on fixed rates to make up for the population fluctuations in those localities.
The monthly bill for 10 cubic metres of water used was €40.71 in those areas while for the rest of the council, including in Vilamoura (water supplied through InfraMoura), it was €22.30.
|| Calling for transparency
Environmental association Quercus is calling for more government transparency over discussions to privatise Portugal’s water sector. Although the government refers to a “sub-concession of the water sector”, the association believes a privatisation programme is in place. Águas de Portugal has rejected this claim and says that the only issue on the table is water tariff rises, which “must be brought to the forefront in clear and transparent debates”.
|| Water price reduction in São Brás
A new measure to help local businesses in São Brás de Alportel survive the economic crisis has been announced by the municipal authority. All retail and service businesses can now benefit from a 50% reduction in their water bill, as was already the case with the industrial sector since 2009. Business owners based in the municipality just have to go to the water department at the câmara and request the reduction.
Find out what Algarve municipalities are charging water consumers by clicking on the link below:
http://www.the-resident.com/portugalresident/pdf/ALGARVE_WATER_TARIFFS_240513.pdf
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