Towards a Sustainable Wastewater Treatment Model

Public-Private patnerships as a Public Policy Strategy to close the Sanitation gap

Abstract

This essay analyzes the persistent gap in wastewater treatment in Peru, proposing Public-Private Partnerships (PPPs) as a viable and efficient alternative to the traditional model of state-led execution. This recommendation stems from the fact that, despite the State having allocated over S/ 37 billion to the sanitation sector in the last ten years, 24,4 % of the total volume of wastewater still goes untreated, with the greatest incidence in rural and jungle areas. The analysis focuses on the performance of Wastewater Treatment Plants (WWTPs), highlighting Sedapal’s experience in Lima. This is because Sedapal operates three concessioned plants under the PPP model (Taboada, La Chira, and Provisur), which treat 83.9% of the total flow, while the 17 plants directly managed by Sedapal cover only 16,1 %. This difference reflects the greater efficiency of the PPP model, attributed to its ability to attract larger investments, implement higher technical and operational standards, and ensure an optimal distribution of risks between public and private stakeholders. The essay also presents ProInversión’s project portfolio, which includes 13 wastewater treatment projects under the PPP modality, with an estimated investment of over US$ 1,6 billion. However, it also discusses the case of the Puerto Maldonado WWTP as an example of the contractual, technical, and economic challenges that can hinder the success of such projects. The initially unattractive conditions led to limited private interest, prompting a revision of the contract and the introduction of adjustments to improve its financial feasibility. The essay concludes that, although some progress has been made, it is essential to design more attractive contracts with flexible payment schemes that mitigate risks for investors. Only under an adequate contractual framework will it be possible to close the sanitation gap and improve the quality of life for millions of Peruvians.