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Viewing cable 06LIMA3148, GARCIA'S PROMISE OF "WATER FOR EVERYONE"

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Reference ID Created Released Classification Origin
06LIMA3148 2006-08-10 22:38 2011-08-25 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Lima
VZCZCXYZ0000
RR RUEHWEB

DE RUEHPE #3148/01 2222238
ZNR UUUUU ZZH
R 102238Z AUG 06
FM AMEMBASSY LIMA
TO RUEHC/SECSTATE WASHDC 1775
INFO RUEHBO/AMEMBASSY BOGOTA 3752
RUEHQT/AMEMBASSY QUITO 0605
RUEHLP/AMEMBASSY LA PAZ AUG SANTIAGO 0792
RUEHCV/AMEMBASSY CARACAS 9719
RUEHBU/AMEMBASSY BUENOS AIRES 2534
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
UNCLAS LIMA 003148 
 
SIPDIS 
 
DEPT FOR WHA/AND, WHA/EPSC, EB/IFD/OFD 
TREASURY FOR OASIA/INL 
COMMERCE FOR 4331/MAC/WH 
DEPT PLEASE PASS TO AID 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ETRD ECON EINV EFIN PGOV PE
SUBJECT: GARCIA'S PROMISE OF "WATER FOR EVERYONE" 
 
REF: A) Lima 2532 B) Lima 2534  (C) State 128599 
 
1. (U) Summary.  President Alan Garcia has made his Agua Para Todos 
(Water for Everyone) program a top priority.  The $5 billion program 
sets an ambitious five-year target of reducing by half the five 
million Peruvians without access to potable water.  It includes nine 
major water treatment, infrastructure, and credit projects in Lima 
and five other provinces.  Financing will be by government austerity 
measures, donor assistance, private concessions and a water guaranty 
fund.  Garcia faces strong pressure to demonstrate results before 
the November regional/local elections, especially in the southern 
and jungle regions that are Humala strongholds.  End Summary. 
 
Peru's Water Crisis 
------------------- 
2. (U) Roughly one quarter of Peru's 28 million do not have piped 
water and almost one half have no access to sewage or drainage 
systems.  Peru's narrow coastal plain, the hub of Peru's industry 
and export agriculture, and where over 70 percent of Peruvians live, 
annually experiences water shortages.  Rapid population growth, 
deforestation, glacial melting, inefficient water management, and 
poorly built water transportation infrastructure in the highlands 
and jungle have all exacerbated Peru's water shortage. Communities 
often resort to purchasing trucked water in the black market.  Over 
40 percent of the country's water production is unaccounted for -- 
due to leakages and illegal connections -- and over 70 percent of 
the water/sewage systems built in the 1990s are inoperative. 
 
 
Agua Para Todos 
--------------- 
3. (U) In his July 28 inauguration speech, President Garcia 
introduced his Agua Para Todos (Water for Everyone) program and set 
an ambitious target of reducing by half the five million Peruvians 
without access to potable water in the next five years.  The $5 
billion program aims to modernize Peru's infrastructure and expand 
water services to the country's neediest communities.  It 
prioritizes nine major water treatment, infrastructure, and credit 
projects in Lima and five other provinces.  Garcia announced that 
financing has already been secured by international donors -- 
including the InterAmerican Development Bank, the Community of 
Andean Nations, and the governments of Japan, Germany, Canada, and 
Switzerland.  Funding will also be provided through government 
austerity measures (including salary cuts), concessions and a water 
guaranty fund.  Performance-based incentives and public-private 
partnerships will round out the program. 
 
4. (U) Housing and Sanitation Minister Hernan Garrido Lecca (Septel) 
spearheads the program and described it to DepEconCouns on July 19. 
The first priorities outside of Lima are inadequate drainage in the 
major jungle cites -- Puno, Iquitos, Pucallpa and Tambopata.  Garcia 
proposes to build sewage systems and water treatment plants to 
decontaminate key water sources like Amazon tributaries and Lake 
Titicaca that have been contaminated by debris and raw sewage. 
Garrido Lecca stressed that contaminated water affects health and 
education; prioritizing water is the first step in advancing 
Garcia's health and education goals. 
 
5. (U) A second priority is to strengthen existing infrastructure 
projects to prevent water loss and address declining agricultural 
production, such as relining the Tinajones canal in Lambayeque.  A 
third priority is to expand potable water access to small towns 
(3,000-8,000 inhabitants) by providing credit to local water 
companies. 
 
Long-term Sustainability? 
------------------------- 
5. (SBU) Garcia's ambitious water program has sparked debate about 
its long-term sustainability.  SUNASS, Peru's national water 
regulatory agency, argues that Garcia's targets in Lima will be 
unsustainable if water-user rates are not increased by 44 percent 
over the next five years. (Note: Recent water infrastructure 
projects have failed to recover costs because of the politically 
sensitive issue of raising water-user rates, especially during the 
election season.  End Note.)  Garcia's team agrees that increasing 
water rates will be necessary but remains vague about the details. 
Water guaranty fund director Jose Salazar told DepEconCouns in 
conversations since July 28 that the program is funded for the next 
few years, but he is hoping for some expertise from the EPA to help 
 
design the fund. 
 
Comment: 
-------- 
7. (SBU) Program success will depend on financing, but as important 
will be success in regulating water companies, enforcing rate 
increases and ensuring efficient spending. For example, SEDAPAL, 
Lima's state-owned water company, has been rated among the worst 
water service providers in Latin America.  The U.S./Peru Free Trade 
Agreement and associated Environmental Cooperation Agreement will 
provide opportunities to cooperate with Peru to achieve water goals. 
USAID has several water initiatives in various stages of 
implementation and will continue to prioritize water projects as a 
foundation for rural development. Whatever the feasibility of 
Garcia's promises, Garrido Lecca is an impressive leader for this 
program. 
 
STRUBLE