President Orsi announced that Uruguay would renegotiate the contract for the drinking water megaproject: what are the alternatives?
The President of Uruguay convened his Council of Ministers for the first time and made the issue one of his priorities.
The President of Uruguay, Yamandú Orsi, met for four hours with his Council of Ministers for the first time since taking office. The President listened to the priorities of each ministry and, at the end of the meeting, held a press conference to outline the programme for the coming months.
One of the short-term priorities of Orsi’s government is to renegotiate the contract with the international consortium that won the tender to build a mega-project to improve the supply of drinking water (see previous Blue News here).
The contract between the Uruguayan state and the international consortium was signed at the end of January, just over a month before former President Lacalle Pou‘s term of office ends. The Neptuno project is planned for Arazatí (San José department), about 100 kilometres from Montevideo. The idea was presented by the Aguas de Montevideo consortium (made up of the companies Berkes, Saceem, Cimsa and Fast) and proposes the construction of a water intake on the Río de la Plata, a water treatment plant, a pumping station and a pipeline.
The process has been full of ups and downs, with criticism from the Frente Amplio and opposition from social movements. There was also a judicial decision – which was overturned by an appeals court – that halted the signing of the contract for a while. The argument of the appeals is that the Uruguayan constitution states that water supply must be provided by the state.
Even before taking office, Orsi’s government had expressed its willingness to amend the contract. On Monday, Orsi announced the opening of a ‘negotiating forum’ with company representatives. “We have to see how we can renegotiate this commitment with what is laid down in the contract. Uruguay must honour its commitments”, said the Uruguayan President.
“What we are saying today is that we have to sit down and renegotiate this. The idea is to have an agreement in 90 days”, said the Uruguayan President.
The government is therefore committed to honouring a treaty whose breach could lead to international arbitration for millions of dollars. But it also has a number of alternatives on the table, which, according to El País, should be quantified together. One of the biggest costs in the plan is the construction of a polder, a reserve of raw water to be used during periods of high salinity.
In the memorandum of understanding that accompanies the signed contract, there are four possible changes to the consortium’s plan: moving the intake 84 kilometres away from Arazatí, eliminating the polder where the water would be stored during days of high salinity, reducing the size of the polder (and using other reserves on days when the water is salty) or building a new reservoir.
In addition to these options, the Orsi government is considering other alternatives. The authorities are analysing the possibility of taking water from another location. Riachuelo is one of the alternatives, as is Juan Lacaze, a town in the department of Colonia.
The contract also lays down some conditions for renegotiation. No changes can be made within the first 12 months of signing the contract. On the other hand, any change to the original project must not exceed 50% of the budget in the case of mutual agreement, or 20% if it is made solely on the government’s initiative.
According to El País, this one-year wait will give the government time to evaluate the alternatives on the table without rushing.
