Environmental Technologies Industries

Environmental Technologies Industries

Market Plans

Argentina Environmental Export Market Plan

Chapter 3-Water Pollution Prevention and Control

Priorities in the Water and Wastewater Sector

Water pollution is by far the most pressing environmental problem facing Argentina. Historically, the water and wastewater sector has suffered from under-investment and poor performance. Even though Argentina is Latin America's most prosperous nation, it has the lowest percentage of households receiving potable and sanitation services. Backed by multilateral development banks, Argentina has fully embraced privatization as a means to promote substantial investment in this sector. With several concessions now in operation and a number in the works, the water and wastewater sector is in full transformation to the private sector.
Argentina suffers from widespread groundwater contamination problems caused primarily by industrial effluents and residential septic tanks that are not connected to sewerage systems. Correcting the latter cause is critical because 28 percent of the country's households and 65 percent of those in the marginal areas of greater Buenos Aires use groundwater as their primary drinking water supply. It is believed that close to one-quarter of the population in Buenos Aires drinks contaminated water, which is a major cause of diarrhea in children.
The surface waters in many areas are also extremely contaminated, due largely to the discharge of untreated sewerage. Limits set by water pollution guidelines are consistently exceeded in areas nearest to the shores of the La Plata River, making the beaches completely unusable in the water and wastewater sector. Key problems that need to be addressed include:
Water Supply. The most critical need in Argentina's water wastewater and sector is to extend water delivery systems to the entire population. In 1995, 81 percent of the urban population had access to drinking water, up from 71 percent in 1991. Coverage in Buenos Aires increased from 49 to 71 percent over the same time period. Of urban areas with populations of over 10,000.
Municipal Wastewater Collection and Treatment. Despite the significant increases in coverage, only 50 percent of Argentina's urban population had connections to sewerage systems in 1995, up from 37.3 percent in 1991. Of the total amount of municipal wastewater generated in the country, 65 percent is discharged into waterways without prior treatment, 27 percent receives only primary treatment, and 8 percent receives secondary treatment. The Provinces of Misiones, San Juan, Chaco, Santiago del Estero, La Rioja, and the Buenos Aires metropolitan area have the lowest level of sewage treatment in the country.
A key priority in Argentina is the cleanup of the Matanza-Riachuelo River Basin, one of the two basins that encompass the Federal District of Buenos Aires and the Province of Buenos Aires. It is estimated that 280,000 cubic meters of untreated municipal wastewater and 82,000 tons of industrial waste are dumped into the basin's rivers each day causing severe pollution. Project Briefing Paper: Environmental Management of the Matanza-Riachuelo Basin (AR-0136). Inter-American Development Bank. February 1995. To address this problem, the government has embarked on a $700 million cleanup program, which is supported by a $350 million loan from the Inter-American Development Bank (IDB). The program is designed to significantly reduce the volume of organic wastes entering the water basin, limit the volume of heavy metals and petroleum discharged into the basin, decrease the number of illegal dumps, and establish an environmental monitoring program. This program will complement the ongoing cleanup program for the Reconquista River Basin, the other basin in the same region.

Institutional Structure Overview

The water and sanitation sector has undergone extensive changes in the last two decades. Under the decentralization reforms in the early 1980s, responsibility for water and sewerage services was transferred from the national government to the provincial governments, except in the greater Buenos Aires area, which remained in the hands of the National Sanitation Works (OSN). The shrinking of investments in the water and sanitation sector during the 1980s led to the deterioration of existing facilities and diminished the expansion of services. To boost investment in this area, the privatization reform of 1992 allowed for private sector participation in water and sanitation services throughout Argentina. These changes have made the institutional structure for water and wastewater management more complex.
At the national level, the Subsecretariat of Water Resources (SSRH), which recently was moved from the Ministry of Economy to the Secretariat of Natural Resources and Sustainable Development (SRNDS), is responsible for developing water management policy. SSRH developed the National Sanitation Plan for 1988-2003. It has jurisdiction over the National Water Works and Sanitation Agency (ENHOSA) the national regulatory agency for the water and sanitation sector. ENHOSA provides technical assistance to provincial and municipal water authorities, conducts environmental impact studies for national projects, and participates in the monitoring and evaluation of water concessions and other privatization efforts. It is also responsible for administering funds from the World Bank and the Inter-American Development Bank (IDB) to promote water and sanitation sector reforms at the provincial and municipal government levels. The Office of Environment Quality of SRNSD is responsible for water quality.
Because of decentralization, however, each province is pursuing its own strategy for managing water and sanitation services, creating uneven practices across the country. Most provinces unified water and sanitation services under one utility, but in some cases the responsibilities were passed on to the municipalities or local cooperatives. Some provinces have also established control agencies to oversee utility operations. The Federal Council for Sanitary Service Providers (COFES), established in 1982, provides a forum for coordinating activities of the numerous organizations, provincial utilities, municipalities, and cooperatives that provide water and wastewater services. The council helps its members develop plans to improve the quality of their services, provides technical assistance and support, and facilitates the exchange of information. Nevertheless, the current situation is characterized by the lack of a nationally integrated system for standards and regulations, common policies, information, or common tariff and technical standard guidelines.

Privatization Initiatives

The water and sanitation services in the Buenos Aires metropolitan area, which were under national government control, were the first to undergo privatization. After a formal bidding process in 1993, Aguas Argentina, an international consortium lead by Lyonnaise des Eaux, was awarded a 30-year concession for the water and sewerage services in an area of over 8.6 million people. The consortium included Lyonnaise des Eaux (France), Compagnie Generale des Eaux (France), Aguas de Barcelona (Spain), Anglian Water International (U.K.), and various Argentine investors, including Sociedad Commercial del Plata, Grupo Meller, and Banco de Galicia y Buenos Aires. The Tripartite Agency for Public Works and Sanitary Services (ETOSS) was created to regulate the services provided by the private company Aguas Argentinas, S.A. The company has successfully reduced costs, improved water quality, extended coverage, and improved customer relations. Nevertheless, ETOSS claims that the company has failed to meet its goals and investment targets, particularly for wastewater treatment, and is in the process of reexamining the terms of the contract.
In the Province of Tucumán, the transition to privatization has been somewhat more problematic. In 1995, Aguas del Aconquija, a joint venture led by Champagne Generale des Eaux, won a concession valued at approximately $400 million to upgrade and maintain the water supply and sewerage system. Almost immediately Aguas del Aconquija came under attack for water quality problems, and shortly thereafter, the governor called for the cancellation of the contract. Despite negotiation efforts, disputes remain over a number of issues. The company is now $30 million in debt and has taken its claims to the International Court of Dispute Settlement based in Washington, D.C. A specially formed commission is currently evaluating the possibility of contracting with a company to manage Aguas del Aconquija until a new bid can be called.
Similarly, in the Province of Mendoza, the government decided to change the terms of the concession after it had accepted prequalification bids. Originally, the deal was to be a $1.5 billion 30-year water and wastewater concession, but it was restructured to sell 49 percent the utility's shares to the private sector. Under this scheme, known as the Mendoza Model, the government will retain control over the administration of the utility but will allow the private sector company operative and technical direction. Bids for the project were due in early January 1998. The U.S. firm Enron submitted a bid along with the French company Saur International and Italy’s Italgas.
Each of the many concessions undertaken in Argentina is being done independently, with little formal exchange of lessons learned. Despite the problems that have been encountered with privatization, Argentina is fully committed to privatization and will continue to involve the private sector in water supply and sanitation services.

Municipal Water Supply and Wastewater Treatment

At the World Summit for Children in 1990, Argentina committed to extend potable water to 90 percent of the population and sanitation services to 80 percent by the year 2000. To achieve this goal, the government developed the National Plan for Drinking Water and Sewage Services, which is being financed in part by the IDB. The estimated investment requirement from 1995-99 is $2.4 billion.
As a result of Argentina's decision to allow water and wastewater services to be privatized through long-term concessions, there are a number of concessions successfully operating, a few that are currently in the process of being established, and several planned for the next two years. Table 3 lists a number of projects that are likely to bid over the next two years, although no dates

The Experience of Aguas Argentinas

The Aguas Argentina concession covers the greater Buenos Aires area, which includes the Federal District and the 13 surrounding municipalities belonging to the Province of Buenos Aires. All are connected to the same water supply and sewerage system. The water distribution network covers some 11,000 km and the sewerage network about 7,000 km; water production capacity is more than 3.6 million cubic meters per day. In 1991, only 70 percent of the 8.6 million people were connected to the public water supply and 58 percent to the sewerage system. Only 5 percent of the 2.2 million cubic meters per day of sewerage was treated at one plant; the rest was discharged into the La Plata River.
Coverage Targets: The program established by the concession contract established coverage goals of 82 percent of inhabitants by 2001 and 100 percent by 2023 for water supply; 66 percent by 2001 and 95 percent by 2023 for sewage collection; and 100 percent by 2023 for sewage treatment. To date, the most progress has been in extending water supply to 1.1 million additional people. In addition, a half million people have been connected to the sewerage system. No additional wastewater treatment has been achieved.
Water Quality: Water quality improved considerably during the first four years of operation. As of 1996, the principal water quality parameters comply with standards set by the World Health Organization and the Argentine Ministry of Health. Since 1993, both Aguas Argentina and ETOSS have been monitoring water quality throughout the system 24 hours a day, 7 days a week.
Investments: In the first two years of operation, close to $300 million were invested, and the company plans to invest an additional $1 billion during 1995-98. Total investments of more than $4 billion are anticipated more than the life of the 30-year concession to achieve the performance goals stipulated in the contract. The company has received financial support from the International Finance Corporation and the Japanese Government.
Plans Under Way: Aguas Argentina is investing $120 million to extend potable water to eight communities over the next years: Lomas de Zamora, Lanús, Avellaneda, San Martín, Tres de Febrero, San Fernando, San Isidro, and Vicente López. Plans include:
--Construction of an underground river of 15 km long and 3.5 meters wide that will transport potable water from Saavedra neighborhood, in Buenos Aires City, to supply 800,000 inhabitants in the Tres de Febrero and Moron neighborhoods. The investment is approximately $300 million.
--An increase of 30 percent of potable water from the General Belgrano plant in Bernal. The investment is approximately $20 million.
--Construction of the first plant for the purification of sewer liquids in San Fernando and optimization of the first establishment in La Matanza.
Source: Aguas Argentinas, S.A. and Emanuel Idelovitch and Klas Ringkog, “Private Sector Participation in Water Supply and Sanitation in Latin America.” Washington, D.C.: The World Bank, 1995.

The concession model has been very advantageous to the French, British, and Spanish water companies, due to their experience with this type of arrangement at home. As a result, these companies are entrenched in Argentina. In contrast, few U.S. companies have been able to compete in the municipal market, except as minor consortium members due to their relative lack of experience in water utilities operation. While it is unlikely that U.S. companies will successfully win large concession projects, there are opportunities for U.S. firms to partner with European-led consortiums or firms. For example, Bechtel partnered with Britain's Northwest Water to form the company International Water; Montgomery Watson formed a joint venture with Lyonnaise des Eaux to supply utility planning, project design, and construction management services to the concession operators; and Enron is teaming with Saur International.
ENOHSa is also managing several programs, sponsored by the IDB, that may provide opportunities for U.S. firms. These include:
--The National Program for Optimization, Rehabilitation, and Extension of Water and Sanitation Services, which is directed at areas with over 15,000 inhabitants and has $250 million to finance water supply, sewerage, and treatment works
--The Financial Assistance Program, which has $1 million to support consulting services for the preparation of loans from the above program
--The Small Works Program, which has $2 million.

Table 3-Water and Wastewater Concessions Likely to Be Submitted for Bidding

Province/Cities	Description	Expected Date	Est. Value (US$ millions)
Province of Misiones - City of Posadas	30-year concession for potable water and sewerage.	Not yet established; awaiting legislative approval	138
Province of Entre Rios - Paraná City	30-year concession for potable water and sewerage.	Not yet established	89
Province of Catamarca - City of San Fernando del Valle de Catamarca	30-year concession for potable water and sewerage for San Fernando del Valle de Catamarca, Fray Mamerto Esquiú and Valle Viejo.	Not yet established; awaiting legislative approval	29
Province of San Luis - City of San Luis	30-year concession for potable water and sewerage.	Not yet established; awaiting legislative approval	42
Province of La Rioja - City of La Rioja	30-year concession for potable water and sewerage	Proposal were due December 1997	62
Province of San Luis - City of Villa Mercedes	30-year concession for potable water and sewerage	Not yet established; awaiting legislative approval	32
Province of Chubut - City of Comodoro Rivadaria	Revise regulatory structure and the contract with the Sociedad Cooperativa Popular Limitada	Not yet established; awaiting legislative approval	42
Province of Mendoza - City of Maipú	25-year concession for potable water and sewerage.	Not yet established; awaiting legislative approval	38

Industrial Water Pollution Prevention and Control

The discharge of untreated industrial wastewater continues to be a serious problem in Argentina. In the greater Buenos Aires area, an estimated 1.9 million cubic meters of industrial effluents are discharged daily into the La Plata River. Additionally, the Riachuelo River, which runs through Buenos Aires, is laden with chemicals. Over 5,000 industrial facilities are located in the Matanzas-Riachuelo River Basin, making it one of the most polluted in Argentina.

Alenco International Active in Argentina’s Industrial Wastewater Market

Since participating in a trade mission sponsored by the U.S. Department of Commerce’s Environmental Technology Exports office, Alenco International, an Orlando, Fl.-based firm, has won four contracts for the design, manufacture, and operation of industrial wastewater treatment plants. These contracts represent over $7 million in U.S. exports.

Table 4- Major regulations affecting Water Supply and Wastewater Treatment

Category	Government Agency	Regulation	Scope
Water quality	SRNDS	Federal Regulation Decree 674/89 and 776/92.	Control of industrial effluents and their disposal into rivers, and channels
	SRNDS	Law 24,051 and its decree 831/93	Management and secure disposal of toxic wastes
Continental Water protection	PNA (Prefectura Naval Argentina)	Law 22,190	Pollution prevention of lakes, rivers, and oceans related to navy activities.

The industries causing most water pollution problems are petroleum, leather tanning, pulp and paper, textiles, chemicals, steel, and food processing. However, these industries are taking measures to treat their wastewater. Approximately 75 percent of the food processing facilities have some form of wastewater treatment facilities, 67 percent of the beverage facilities, 90 percent of the metal-finishing facilities, 33 percent of the chemical plants, 60 percent of the tanneries, and 50 percent of the textile plants. The oil industry has begun to address its environmental problems, including water contamination, soil contamination, and open oil pits. Government Oil Wells (YPF), which was privatized in 1993, has implemented a four-year $300 million facility and operations improvement program, which includes environmental measures. Opportunities exist for pollution prevention and control in both upstream and downstream activities. Opportunities also exists for pollution prevention technologies that will help tanneries reduce waste and save money. Leather tanning is extremely polluting due to the chromium used in the tanning process. Most tanneries are small to medium sized and have few financial resources for environmental projects. Some leather tanning associations have banded together to build collective treatment plants.
Overall, regulations and standards governing the area of water pollution prevention and control are still inadequate. Table 4 gives the major regulations affecting water supply and wastewater treatment. The principal regulation for wastewater stems from the Hazardous Waste Law (Law 24,051) and its decrees. However, it only provides guidelines for wastewater discharges and is applicable only to areas under federal jurisdiction such as inter-jurisdictional waters. In the Province of Buenos Aires, there are discharge parameters in effect for industrial facilities, but few facilities are in compliance with this provision.
There are two initiatives to provide incentives to the private sector to invest in pollution prevention and treatment. One is being developed under the $700 million project to cleanup the Matanza-Riachuelo River Basin and the other is under the Reconquista River Basin project. For both, studies are under way and a plan for the control of industrial effluents is being prepared. Key elements of the plan include a requirement that industries located in the areas at least have pretreatment equipment in their facility and incentives for clean technology.

Common Treatment of Tannery Waste

In Avellaneda, the 16 members of a tannery association joined together to implement a long-range plan for wastewater treatment. The first step was to build a chrome-recovery facility, which began operating in 1995, to treat 200 cubic meters of chrome-laden wastewater per day. An Italian firm, Italprogetti, was contracted to design the plant, provide the equipment, and provide technical assistance. Funding was provided by the association. The plant is currently operated by Tratamiento de Efluentes Avellaneda, S.A. (TEA) and is currently operating at below capacity.

The original plan included two additional phases: the treatment of chrome-laden sludge from the treatment plant (estimated cost: $3-4 million) and the treatment of remaining organic material (estimated cost: $12 million). These have not been implemented.

Source: Communication with TEA, S.A.

Market Summary and Best Prospects

The 1998 market for water and wastewater is estimated at $650 million. While U.S. companies have not been very active in the market for water and wastewater concessions, a few companies have partnered their engineering skills with European companies that have experience with water concessions. U.S. firms are more competitive in the industrial wastewater market. Some of the best prospects for U.S. firms include:
Engineering services. Services that will be in demand include master plan preparation, feasibility studies, and design of wastewater treatment plants.
Know-how for managing industrial wastewater. Because U.S. firms have extensive experience in effluent management, Argentine companies want to buy the know how already obtained by international firms. Interested U.S. companies should recognize, however, that Argentina is less advanced in its regulations and should offer solutions and technologies accordingly.
Pretreatment equipment. Various types of pretreatment (sedimentation, flotation, degreasing, and neutralization) will be in demand, particularly by companies located in the Matanza-Riachuelo and Reconquista River Basins.
Sludge management technology. As more treatment systems come on-line, water utilities and companies will need to manage the sludge generated by the treatment processes and will require technological solutions.
Waste minimization equipment. Tanneries; metal finishers; textile, pulp and paper mills; paint companies; and slaughterhouses need this equipment.
Wastewater treatment. Technologies for heavy metals are in demand.
Remediation and disinfectant technologies. Bioremediation for hydrocarbon contamination in water has been identified as a priority need.
Monitoring equipment. For both ambient water quality and effluents, monitoring equipment will become increasingly required by both the public sector and private companies.

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