Water Supply and Sanitation in Portugal - Investment and Finance

Investment and Finance

Many water systems in Portugal are quite old, so that there is a substantial requirement for infrastructure rehabilitation. From 2000 to 2006 investment needs in the sector were estimated at 4.23 billion euro, including 2.37 billion euro in bulk water supply and wastewater treatment (vertem "baixa"). Actual investments were in the same order of magnitude, but with a very different breakdown than expected: 3.4 billion euro, or 77% more than expected, had to be invested in bulk supply and wastewater treatment, mainly because cost estimates had been too low and because environmental standards had been tightened. Concerning investments in water distribution and sewers (vertem "alta"), they were only 0.9 billion euro and thus much lower than expected. Many of these investments had to be postponed because of lack of funding.

AdP by itself invested 588 million euro in 2006 alone. Grants from the European Regional Development Fund funded about 1.7 billion euro, or 40% of total investments in 2000-2006. Loans from the European Investment Bank (EIB) to Águas de Portugal and self-generated capital of the utilities funded the remainder of the investments. In October 2006 the EIB approved a 925 million euro loan for investments in eleven regional water and sanitation utilities in Portugal.

Since 2000 two mid-term national investment plans for the sector, PEAASAR I 2000-2006 and PEAASAR II 2007-2013, have been approved. Such national sector investment plans are an interesting feature that is specific to Portugal and are not common in other EU countries.