Water Solutions to Peru

Trends and opportunities

The market

Peru is going through a major transformation of its water resources management – from a centralised approach focused on irrigation infrastructure development in the coastal region to river basin integrated water resources management for the entire country.

Water in Peru is either abundant or scarce depending on where you live or operate. The country accounts for four per cent of the world’s annual renewable water resources and ranks as the 20^th country in the world in terms of water availability per capita.

However, water resources are unevenly distributed. Almost two thirds of Peru’s population lives in the arid or semiarid areas of the Pacific basin. This area contributes to around 80 per cent of the local gross domestic product (GDP) and has a little more than two per cent of the total available water resources. Most of the freshwater resources (more than 97 per cent) are located in the Atlantic basin, primarily in the Amazon forest lowlands, which are scarcely populated and with few demands for water (Source: Autoridad Nacional del Agua, 'Informe Pais 2012 VI Foro Mundial del Agua').

Peru’s leading growth sectors, mining, energy, export agriculture and drinking water, depend heavily on a steady supply of water. Agriculture accounts for 88 per cent of total water usage. The potable water sector (8.1 per cent) and mining sector (1.3 percent) consume far less. Generally, within the industry, water usage efficiency is poor, particularly in agriculture (Source: Autoridad Nacional del Agua, 'Plan Nacional de Recursos Hidricos 2012').

Some studies predict that Peru is the only Latin American country that will experience water stress or shortages by the year 2025 due to global warming. A significant number of the glaciers that feed the most important rivers in the Pacific basin are melting, because of higher temperatures (Source: Autoridad Nacional del Agua, 'Plan Nacional de Recursos Hidricos 2012').

Opportunities

Australia water technologies and services industries have innovative solutions and expertise operating in countries with demanding environmental requirements, as well as those with resources in remote locations where energy is expensive and water scarce.

New water infrastructure can help to manage the storage and usage of waters from rivers located in the Pacific basin. Improved water management in this area can support the local agricultural sector and its future projects.

Peru’s 2,400km coastline has great potential for the installation of desalination plants. These could potentially supply water to important industrial and urban projects and improve relations between project sponsors and local communities in regions where there is opposition to the use of existing fresh water resources in mining and other industrial projects. 

Australia has strong offerings in specific areas that match Peru’s market needs, including:

• providing services for the improvement of water and sewage infrastructure in Lima and major cities, including consulting services.
• consultancy in water management:in policy, river basin integrated water resources management, price structure, sewage management, water licensing/rights, water treatment, restoration of aquifers, drought management, social conflicts, aquifer recharge, etc.
• water technology: desalination, treatment of highly contaminated effluents from mining, water use optimisation, water quality control equipment, more efficient irrigation systems and water tanks.
• government and industry education and training, plus community consultation.

Visit the National Water Authority (ANA) and Lima Water Utility (SEDAPAL) to view the latest tenders for consulting services.

The Peruvian Investment Promotion Agency (Proinversion) has several water infrastructure projects going out to tender in the next few months.

Competitive environment

Major local and international companies active in the EPC market sector include: Abengoa (Spain), Acciona Agua (Spain), Andrade Gutierrez (Brazil), Camargo Correia (Brazil), COSAPI (Peru), GyM (Peru), JJ Contratistas Generales (Peru), Odebrecht (Brasil), Suez (France), and Veolia (France). Most of the aforementioned companies are involved in drinking water and wastewater treatment projects, for which they mostly partner with local engineering, technological and consulting companies.

On the contrary, in the consulting market, local firms have a stronger presence with CESEL as the main player in the market. Consulting companies are constantly partnering with foreign firms to complement their areas of expertise.

Financing

Water resource management in Peru is mainly financed through government budgets, water use and discharge fees. According to the InterAmerican Development Bank (IADB), the creation of ANA has significantly raised the budget allocated to the industry. However, these are still considered insufficient. Because of this, studies are taking place (mostly financed by World Bank (WB) and IADB) to formulate a strategy to ensure there are sufficient financial resources for adequate participatory, integrated, basin-scale water resource management.

Nowadays, the Peruvian Government is negotiating with the IADB and the WB the extension of some of these projects, which will provide further funding for the implementation of some of these studies and reforms.

Future government plans and projects

With the expansion of Peru’s major cities, the supply of potable water and sewage services has been challenged over the past few years. Water and sewerage services coverage has progressed significantly in recent years, 86.1 and 67.9 per cent respectively in 2013 (Source: Ministry of Housing, Construction and Sanitation, 'Plan Nacional de Inversiones – Sector Agua, Saneamiento 2014-2021'). However, these services still have low coverage rates and quality of service, particularly in rural areas.

Recently the new government confirmed its commitment during the electoral campaign, which is aligned with the goal of the National Sanitation Plan 2014-2021, to expand coverage of sanitation and water projects to 100 per cent by 2021 comprising investments of US$10.4 billion. This will be done with projects aimed at upgrading and expanding water and sewage networks in remote and rural communities.

A new law for the modernisation of Peru’s existing water and sanitation services and its regulation was enacted in November 2013 and the new government has decided to enable the participation of private investors in regional and municipal water utilities.

On December 2015, the Peruvian Government modified the then existing Environmental Quality Standards (ECAs) and the Maximum Permissible Limits (LMPs) for wastewater discharged into natural bodies and postponed until December 2018 the implementation of private sector plans to meet the new ECAs, which constitutes an important driver for the demand of new technology aimed at achieving those goals (Source: Global Water Intelligence 2015, p.506).

The new government has also put water sowing and harvesting through the construction of dams and small reservoirs aimed at recovering 100,000 hectares of Andean terraces. The estimated budget for this five-year program will be about US$300 million.

Marketing your products and services

Market entry

The best approach to entering the market depends on the type of business, the appetite for risk, funds available to the company and issues around protection of intellectual property.

Relationships are very important in Peru and a local partner can provide valuable connections and networks to decision makers.

There are also suppliers that prefer not to have a presence in Peru, instead selecting to sell into the market through distributors or agents. This approach is less capital intensive, but requires patience and a good local partner.

Some tips to keep in mind:

• Setting up in Peru sends a strong message to customers signalling commitment to the market and will often convert interest into a solid commercial relationship.
• It is an advantage to find a local partner or representative that can help you navigate the public and private bidding process.
• Understand Peruvian company structures and their process for procurement. To be successful you need to be patient, persistent and polite. It is not uncommon that contacts will not answer emails.
• Prepare a concrete value proposition which demonstrates clearly how your solution has saved customers money in previous projects.
• Consider participating in water related industry conferences which occur in Peru, such as the Water Symposium (June), the National Water Congress (November) and Extemin. They are an excellent vehicle for gathering intelligence and networking. Austrade hosts networking opportunities at some of these events.

Links and industry contacts

Government resources

Mining, Oil and Energy National Association
Ministry of Agriculture and Irrigation
Ministry of Environment
Ministry of Housing, Construction and Sanitation
National Water Authority (ANA)
SEDAPAL (Lima Water Utility)
SUNASS (Superintendency of Sanitation Services)

Please note: This list of websites and resources is not definitive. Inclusion in this list does not imply endorsement by Austrade. The information provided is a guide only. The content is for information and carries no warranty; as such, the addressee must exercise their own discretion in its use. Australia’s anti-bribery laws apply overseas and Austrade will not provide business related services to any party who breaches the law and will report credible evidence of any breach. For further information, please see foreign bribery information and awareness pack.

Contact details

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