US$50 Million to Expand, Upgrade Uruguay's Water and Sanitation Services

"This project supports Uruguay’s efforts to support universal access to water and sanitation services,” saidCarlos Velez, World Bank task manager for the project. “It will do so by helping Obras Sanitarias del Estado increase its efficiency through the introduction of new management practices, decentralization of some services, and development of more effective water delivery strategies across the country,” he added.

The new financing supports the Second Phase of the OSE Modernization & Systems Rehabilitation Program, which seeks to improve the efficiency of Uruguay's state-owned water utility, Obras Sanitarias del Estado (OSE). The program will set performance targets, increase competition, and upgrade and rehabilitate existing water and sewage treatment plants by financing the following activities:

* Supporting OSE’s strategy to improve the national utility’s transparency, accountability, client responsiveness and efficiency. This component will help instill a culture of consumer orientation, quality and efficiency, as well as optimize organizational processes to cut costs, time and improve productivity and coordination.

* Testing a series of innovative initiatives in selected cities, including Montevideo, to help align commercial and engineering incentives to tackle unaccounted-for water. The performance of these initiatives will be carefully monitored to enable the distinction between physical and commercial water losses.

* Completing the sewerage expansion works in at least five cities, including Treinta y Tres, Colonia, Mercedes, Rio Branco and Melo. This component will also seek to stimulate demand for more households to connect to the existing network.

The first phase of the program –originally supported by a US$27 million loan approved by the Board in June 2000- has been essential in laying the groundwork for the current project. OSE successfully implemented and disseminated an internal benchmarking system, comparing the utility’s performance across 21 cities based on eight service quality indicators. In addition, the first phase helped improve sewerage coverage in secondary cities through the demand-driven expansion of sewerage networks in 12 interior cities. Finally, three new sewerage treatment plants were built in Minas, Treinta y Tres, and Durazno, with the overall capacity to serve around 60,000 people.

The US$50 million loan from the International Bank for Reconstruction and Development (IBRD) reaches maturity by 2022, including a grace period of five years. -The World Bank