In recent years, the water sector has received ten years, grants for the exploration of around 1.4 billion eurosbut its performance remains “below what is desirable,” according to the conclusions of a study published on Tuesday.
The work, presented at the conference of the Association of Portuguese Companies in the Environmental Sector (AEPSA) and carried out by Rui Cunha Marques, from Fundec, of the Instituto Superior Técnico, outlines a scenario of dependence on subsidies and little progress in this sector.
Over the past 10 years, it is estimated that around 1.4 billion euros have been allocated to subsidies for the operation of water services”, and these amounts “could have been allocated by municipalities to other investments or to priority public services for regional development”, reads a statement.
Even so, “the sector presents a average performance level below desirable and sustainableand reveals an increase in asymmetries, in an increasingly marked difference between the best and worst results, in the different managing entities.”
The author of the study also concluded that “annual financial flows in the water and sanitation sectors related to subsidies and market distortions far exceed 500 million euros,” indicating that, with this pattern, they become “excessively dependent on subsidies, which in the medium and long term is negative for their development and sustainability.”
These subsidies, which “were not temporary in nature and did not allow existing barriers and difficulties to be overcome”, did not improve the sector, and “the main performance indicators of water supply and wastewater sanitation services in 2021 are not significantly better than those seen in 2012”.
At the same time, water supply service coverage grew by only 1%, according to the study, from 96% to around 97%.
The study also concluded that “total subsidies to water supply and sanitation services, which exclusively cover exploration and investment subsidies, reached more than 223 million euros” in 2021.
Of these, the majority is attributed to the direct management model (around 58.1% of the total), followed by the Águas de Portugal public concession management model (26%) and the delegated management model with 15.3%. The private concession model accounts for 0.6% of the total amount of subsidies granted.
According to the conclusions, the investments made within the framework of the SEUR PO – Operational Programme for Sustainability and Efficiency in the Use of Resources, until September 2023, by management model, “show that until that date, subsidies were allocated to investment in urban planning worth 660,879,215 euros The water cycle”.
Only about 1.2% of this amount “was allocated to private management entities that compulsorily reflect these subsidies in lower rates, and which serve almost 20% of the Portuguese population.” “There are no reasons for this differentiation and discrimination of users in the provision of an essential public service based on its management model,” the document reads.
The study argues that “water supply and sanitation services must be financially self-sustaining” and that their costs must be “paid by users, through tariffs, in accordance with the principles of user pays and polluter pays.”
This is not the case in Portugal, he said. “As tariffs are artificially low in most municipalities, for political reasons, the costs must be covered by subsidy mechanisms,” and “in 2021 alone, exploration subsidies amounted to more than €121 million.”
This means, he said, that each Portuguese citizen paid at least 12.3 euros in taxes in the year under review, “to subsidise water supply and sanitation services.”
The study recalls that, according to PENSAARP 2030 (Strategic Plan for Water Supply and Wastewater Sanitation 2030), average tariff increases of around 40% will be necessary, also calling for an “intelligent” distribution of subsidies and conditional on the improvement of operating results.
Source: Observadora
