Water Supply and Sanitation in Portugal - Tariffs and Cost Recovery

Tariffs and Cost Recovery

For regional companies water tariffs vary between 0.31 to 0.55 euro per cubic metre and sewer tariffs vary between 0.33 and 0.54 euro per cubic metre. While in water supply systems cost recovery levels are satisfactory, the situation regarding sanitation is clearly unsustainable. The coastal urban regions show greater cost recovery ratios than the inland regions, especially regarding the Northeast region where the costs are higher and revenues are lower. A decree defining the water and sanitation tariff policy is being finalized in 2007. The decree determines the basic rules for tariff setting and aims at achieving full cost recovery, in line with the EU Water Framework Directive.

In 2010 the government was planning to set up a national tariff equilibrium fund to cross-subsidize utilities in the poorer inland regions with revenues from the wealthier coastal regions. The regulator ERSAR says that it is not aware of a similar mechanism anywhere else in the world.

There have been protests against tariff increases under private concessions. For example, residents of Paços de Ferreira, a municipality in northern Portugal, say that after the private company AGS. They say that the price of water has gone up by around 6 % every year since water provisions was handed over to the private company.