Global Water Intelligence September 2015 Opposition politicians have seized on a critical 2014 report to come up with a manifesto which promises widespread reform of Portugal’s water concessions. All they need to do now is win October’s election. The opposition Socialist Party (PS), which is leading the polls a month before Portugal’s general election on 4th October, has promised sweeping reforms of both private sector municipal water concessions and the state-run bulk water operator Aguas de Portugal (AdP). The PS manifesto calls for “the renegotiation, jointly with municipalities, of first-generation concessions” which do not transfer investment risk to operators. It argues that these contracts have provided poor service and “disproportionate levels of profit for concession-holders [which are] unacceptable under proper market regulations.” The proposal reflects severe criticism of the way many of Portugal’s 27 private sector water concessions were awarded and operated, as outlined in a 2014 report by the Tribunal de Contas (TdeC) national accounting watchdog (see table, right). Nelson Geada, president of the water industry association APDA, told GWI that “the PS has not come out against concessions on principle, but – in order for private sector operators to have a future in Portugal – there needs to be change. I think that the government, municipalities and concession-holders have a mutual interest in reaching agreement.” If such agreement can be reached, and if water regulator ERSAR can successfully implement a standardised methodology for setting water tariffs, then the way could be clear for new private sector concessions, he said. Greater private sector involvement in municipal water, on improved terms, would allow much-needed investment in renewing water infrastructure without increasing public debt, he added. “One or two cities, for example Leiria, with a population of 130,000, are certainly considering the concession model and, if costs start to be reflected in tariffs, then in four or five years, the private sector could offer prices that compete with public sector operators,” according to Geada. Francisco de Mariz, president of AEPSA – which represents private sector operators in Portugal – told GWI: “the TdeC report was unfair and did a lot of damage to the reputation of the private sector. There have been problems with some concessions, but there has been a positive evolution over time, with contracts becoming more sophisticated as knowledge and experience has developed. AEPSA is convinced that, “if confidence is restored in the private sector, it can play an essential role as partner in EU co-financing schemes” over the period of the next parliament. Portugal’s 2020 strategic water plan requires €3 billion of investment, and only €620 million of this has been promised by way of EU funding, Mariz pointed out. The PS has also promised to restructure the state bulk water operator AdP “from scratch”. This means scrapping the regionalisation strategy introduced by the incumbent government in June, “the logic and efficiency of which are highly questionable,” the manifesto maintains. APDA agrees that the restruc
