1. CUBA WATER/WASTEWATER INFRASTRUCTURE ASSESSMENT COMMITTEE COLLABORATION OPPORTUNITIES FOR ENGINEERS & ECONOMISTS: A WORK-IN-PROGRESS TO: ASSOCIATION FOR THE STUDY OF THE CUBAN ECONOMY (A.S.C.E.) MIAMI, FLORIDA AUGUST 7, 2008 BY: HELENA SOLO-GABRIELE, Ph.D., P.E. (ACE) ARMANDO I. PEREZ, Ph.D., P.E. (C-AACE) AS ADVISED BY: JUAN BELT, Ph.D. (USAID) LUIS VELAZQUEZ (USAID)

2. DISCLAIMER The opinions expressed in this presentation are those of the authors and do not necessarily represent the views of their employers or of their sponsoring engineering societies. The opinions expressed in this presentation are those of the authors and do not necessarily represent the views of their employers or of their sponsoring engineering societies. Authors knowledge of Cuba is based on limited information available mostly on the Internet. Authors knowledge of Cuba is based on limited information available mostly on the Internet. The advice provided by USAID staff represents the staffs own views and not necessarily that of the U.S. government. The advice provided by USAID staff represents the staffs own views and not necessarily that of the U.S. government.

3. OUTLINE OF PRESENTATION Role of Committee before and during a political transition. Role of Committee before and during a political transition. Cubas legal and institutional framework for the sector. Cubas legal and institutional framework for the sector. Service delivery modes (including private operators) and structure of tariffs (user fees). Service delivery modes (including private operators) and structure of tariffs (user fees). Water/wastewater issues in Havana (sample). Water/wastewater issues in Havana (sample). Lessons learned from other countries. Lessons learned from other countries. Areas of potential collaboration with A.S.C.E. Areas of potential collaboration with A.S.C.E. Contact information for Committee members/ acknowledgements. Contact information for Committee members/ acknowledgements.

4. ROLE OF COMMITTEE BEFORE AND DURING A POLITICAL TRANSITION WASHINGTON AGENCIES ONLY WASHINGTON AND HAVANA COMMITTEES WORK DATA INTEGRATION PHASEANALYSIS PHASEADVISORY PHASE ADVICE BEFORE TRANSITIONTRANSITION ……

5. EXISTING LEGAL AND INSTITUTIONAL FRAMEWORK MINISTRY OF SCIENCE, TECHNOLOGY AND ENVIRONMENT MINISTRY OF PUBLIC HEALTH MINISTRY OF CONSTRUCTION NATIONAL INSTITUTE OF WATER RESOURCES (INRH) (WATER & WASTEWATER INFRASTRUCTURE: CAPITAL IMPROVEMENTS & OPERATIONS) GOVERNMENT-OPERATED SERVICE AREAS PRIVATELY-OPERATED SERVICE AREAS BY AGUAS DE BARCELONA: HAVANA & VARADERO REGULATORY FUNCTION? MINISTRY OF ECONOMY AND PLANNING Big Picture Concurrency Planning and Coordination DelegationPrivatization Contracts for Operation Environmental Quality Standards Monitoring Data

6. SUMMARY INFORMATION ON PRIVATIZED OPERATIONS WITH AGUAS DE BARCELONA (AGBAR) HAVANA FACTS (a) : Aguas de la Habana JV of Interagua (AgBar subsidiary) & INRH Capital = $8 Million US Population = 1,272, 000 Clients = 376, 000 Started in 2000, 25 year duration New water lab (2007) (a) Source: AgBar Annual Report (2007) (numbers rounded) VARADERO FACTS (b) : Aguas de Varadero Similar JV of AgBar & INRH Started circa 1995 (b) Source: University of Greenwich AGBAR FACTS (c) : Spanish domicile 25% owned by Lyonnaise des Eaux 12% owned by Endesa Electricity Co. Owns Interagua (c) Source: University of Greenwich

7. CURRENT OR RECENT TARIFFS IN HAVANA V. PUERTO RICO & MIAMI-DADE COUNTY PUERTO RICO MIAMI-DADE COUNTY RESIDENTIAL USER CLASS: TARIFF: (b) (PER CUBIC METER) TARIFF: (c) (PER CUBIC METER) AVERAGE FOR WATER: US $1.18US $0.46 AVERAGE FOR WASTEWATER: US $0.99US $0.90 AVERAGE FOR WATER PLUS WASTEWATER: US $2.17US $1.36 Comment: Convertibility of peso to U.S. dollar is a complex issue. (a) Source: Article by EFE News Agency on Agbar (June 7, 2002) as cited in Wikipedia. (b) Source: Puerto Rico Water and Sewer Authority (PRASA) (2007). Assumed average residential use and 5/8-inch meter. (c) Source: Miami-Dade Water and Sewer Department (MDWASD), 2008. Assumed 2.5 persons/household and 100 gal/person/day. Includes fixed charge and per volume charge. Assumed 5/8-inch meter. HAVANA,CUBA MAJOR USER CLASS: TARIFF: (a) (PER CUBIC METER) RESIDENTIAL:1 PESO (US $0.04) HOTELS AND EMBASSIES: US $1.00

8. COMPARISON OF SECTOR ACCOMPLISHMENT INDICATORS AMONG SELECTED COUNTRIES (a)Comparison country chosen previously by economist Carmelo Mesa-Lago. (b)Chosen for geographic proximity & similarity, tourism growth. (c)Chosen for near-compliance to US Standards, lessons learned. INDICATOR YARDSTICK CUBACHILE (a) COSTA RICA (a) DOMINICAN REPUBLIC (b) PUERTO RICO (c) WATER: PERCENT POPULATION SERVED 7491928096 WATER: PERCENT FLOW DISINFECTED 84100 WATER: PERCENT NON-REVENUE (LEAKS/LOSSES) 5034>5040-6540 WASTEWATER COLLECTION: PERCENT POPULATION SERVED 3878305057 WASTEWATER: PERCENT FLOW TREATED 1916.70449100 (PAHO 2000)

9. RECEIVING WATER OCEAN RIVER (AQUIFER BELOW RIVER) Source Water COMMUNITY WATER SUPPLY AND DISPOSAL Collection INDIVIDUAL WATER SUPPLY AND DISPOSAL Distribution WATER TREATMENT PLANT SEPTIC TANK INDUSTRIAL WASTE Effluent Disposal INFLUENT WASTEWATER TREATMENT PLANT How Engineers View the Sanitary Infrastructure

10. 47% Almendares-Vento Watershed – –Almendares River (25 mi. long, shallow, contaminated) – –Vento Aquifer - located directly beneath the Almendares River Source Water: Havana Olivares-Rieumont et al. 2005 ALMENDARES RIVER VENTO AQUIFER COD = 32 to 291 mg/L EF >10, Pb, Cu, Cd, Zn

11. Water Treatment Source water quality - poor Treatment limited – –Facilities for producing chlorine no longer operational according to International Development Research Centre – –Chlorine metering systems in need of repair/replacement Population self treating water – –Boiling – –Chlorine tablets

12. Potable Water Distribution Overall Cuba (PAHO 2000) – –72% household connection – –21% easy access – –7% without access Havana: Estimated hours of service per day (Cereijo ed. 1992) – –15% in good working condition – –70% provide water 2 to 4 hours per day – –15% carry water from collection tanks Needs: repair leaks, replace valves, metering, back up power, surge surpressors on pumps, maintenance for chlorination systems (Alonso Hernandez) Privatization in Havana and Varadero ($8M investment by AgBar, finanzas.com ) 330 million m 3 /yr pumped (finanzas.com) potential revenue of $300 M/yr

13. Wastewater Collection 38%, sewage collection 56%, latrines (Belt and Velazquez 2007) Havana: Sewage collection system in disrepair (bulk over 80 years old) Cereijo ed. 1992 – –1913 designed for about 600,000 users – –1950s it serviced 1,000,000 million (Scarpaci et al. 2002) $30 Billion needed to renovate Havanas sewer system (Chicago Tribune 2007) 1946, Sewer Construction U.Miami Photo Archive

14. Wastewater Treatment Estimate that 4% of wastewater collected is treated (Wikipedia) Havana: (Alonso Hernandez) – –Sedimentation Plant (Outfall to Playa El Chivo, population served = 950,000) Outfall in need of repair – –Biological Treatment Plant (Maria del Carmen, population served = 22,000) not operational untreated sewage to a tributary of the Almendares River – –3 Other Collection Networks (population served 200,000), No treatment and problems with sewage pump stations

15. Effluent Disposal Havana: Disposal to – –Luyano: untreated sewage, oil refinery waste, gas plant waste – –Havana Bay: 4 slaughter houses, paint plant, 2 thermal power plants, food processing factories – –Almendares: Raw sewage and industries near river New wastewater treatment plant on Luyano River – – –$24 Million to treat population of 62,000: ($20 Million from Cuba government, $4 Million from international partners, UNDP- GEF) Luyano River

16. ALTERNATIVES: CONSERVATION, REUSE, TARIFFS PROCESS FOR WATER GAP ASSESSMENTS INCLUDES ECONOMISTS MAN-MADE DEMANDS (POPULATION & INDUSTRY) ECOLOGICAL DEMANDS ASSESSMENTS OF PHYSICAL CONDITIONS PUBLIC HEALTH STANDARDS SOURCE ALTERNATIVES TRANSMISSION ALTERNATIVES TREATMENT ALTERNATIVES STORAGE/ DISTRIBUTION ALTERNATIVES COST ESTIMATES PLANNING-LEVEL COST ESTIMATING TOOLS (COST CURVES, ETC.) (CANF, 1992; U.S. EPA, ETC.) NON- MONETARY CRITERIA PLAN SELECTION AFFORDABILITY CRITERIA PHASING PLAN = Collaboration with Economists. INTEGRATED WATER RESOURCES PLAN (IRP) (EXAMPLE: PUERTO RICO)

17. INSTITUTIONAL TRANSITION LESSONS LEARNED FROM OTHER COUNTRIES Eastern Europe Transition: Critical success factors and relationship between tariffs and fluctuating affordability. (Infrastructure Department, Europe and Central Asia, World Bank, 2006) Latin America: Reform of politicized mode, regulatory agency for tariffs and quality, geographic regionalization of service. (Vivien Foster, Water Supply and Sanitation Board, World Bank, 2005) Analysis of departure of international operators, role of local operators, de- privatization trends. (Environmental Division, Inter-American Development Bank, 2007) Puerto Rico: Integrated water resources (population/ecology balance), de-privatization, tariffs, geographic regions. (PR Department of Natural Resources, PR Aqueduct and Sewer Authority, various dates)

18. POTENTIAL FUTURE GEOGRAPHIC PLANNING/ SERVICE AREAS: BALANCING CRITERIA ENGINEERS & PLANNERS: MATCH HYDROLOGIC BOUNDARIES: RESOURCE MANAGEMENT & REGULATION. MATCH HYDROLOGIC BOUNDARIES: RESOURCE MANAGEMENT & REGULATION. ENCOMPASS ENTIRE PROVINCE(S): MATCH GOVERNMENTS AND DEMOGRAPHIC DATA. ENCOMPASS ENTIRE PROVINCE(S): MATCH GOVERNMENTS AND DEMOGRAPHIC DATA. REGIONALIZE TREATMENT PLANTS: ECONOMY OF SCALE, CONCENTRATE SKILLED OPERATORS. REGIONALIZE TREATMENT PLANTS: ECONOMY OF SCALE, CONCENTRATE SKILLED OPERATORS. ECONOMISTS: ECONOMY OF SCALE: 100,000 CONNECTIONS (YEPES, 1990). COMMERCIAL ATTRACTIVENESS: INCLUDE LARGE CITIES. SOLID REGULATORY AGENCY: TARIFFS & QUALITY (e.g., CHILE & COLOMBIA). OPTIMIZATION MODELS.

19. GEOGRAPHIC (TOPOGRAPHIC) SUB-REGIONS: BUILDING BLOCKS ALONG WITH PROVINCE BOUNDARIES FOR BIGGER SERVICE AREAS NOTE: Reproduced from The Cuban Economy: Blueprint for Reconstruction, The Endowment for Cuban American Studies of the Cuban American National Foundation (Editor: Dr. Manuel Cereijo), October 1992.

20. CONTACT INFORMATION FOR SPONSORING ORGANIZATIONS CUBAN-AMERICAN ASSOCIATION OF CIVIL ENGINEERS (C-AACE) PRESIDENT: PEDRO GIRALT, P.E. pg-gei@earthlink.net LIAISON WITH COMMITTEE: MARIA F. PORRATA mfporrata@marlinengineering.com U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT (USAID) AS ADVISOR JUAN BELT, Ph.D. (DIRECTOR OF INFRASTRUCTURE & ENGINEERING) jubelt@usaid.gov LUIS VELAZQUEZ, P.E. (SR. INFRASTRUCTURE ENGINEER) lvelazquez@usaid.gov *Special Acknowledgements to: University of Miami Library Cuban Heritage Collection staff, Manuel Cereijo, Rafael Robayna, Jose A. Gonzalez, Victor Pujals, and many others!

21. QUESTIONS?

22. CUBA WATER/WASTEWATER INFRASTRUCTURE ASSESSMENT COMMITTEE COLLABORATION OPPORTUNITIES FOR ENGINEERS & ECONOMISTS: A WORK-IN-PROGRESS TO: ASSOCIATION FOR THE STUDY OF THE CUBAN ECONOMY (A.S.C.E.) MIAMI, FLORIDA AUGUST 7, 2008 BY: HELENA SOLO-GABRIELE, Ph.D., P.E. (ACE) ARMANDO I. PEREZ, Ph.D., P.E. (C-AACE) AS ADVISED BY: JUAN BELT, Ph.D. (USAID) LUIS VELAZQUEZ (USAID)

23. WATER/WASTEWATER INFRASTRUCTURE COMMITTEE OBJECTIVES Identify major issues of water quantity and water quality. Identify major issues of water quantity and water quality. Assemble and interpret data. Assemble and interpret data. Help prepare the way for eventual funding of major improvements by: Help prepare the way for eventual funding of major improvements by: –International agencies and lenders; and/or –Private sector

24. ABBREVIATED ORGANIZATION OF INRH Source: INRH Website www.hidro.cu (June 2008). Instituto Nacional de Recursos Hidràulicos President: René Mesa Villafaña Delegaciones Provinciales (14 + Isla de la Juventud) Sistema Empresarial Grupos Empresariales Grupo Empresarial Aprovechamiento Recursos Hidràulicos (14 EARH) Grupo Empresarial de Ingenieria y Logistica Hidràulica Empresas Independientes Empresa Mixta Aguas de la Habana: Director: Jose María Tura Torres Asociación Económica Internacional Aguas Varadero: Director: Julio A Becerra Infante

25. HIERARCHIAL APPROACH TO WATER MANAGEMENT CYCLE Potable Water Distribution Treat Water to prevent -acute illness -long-term illness and improve -aesthetics Identify/Protect Water Source Effluent Disposal Wastewater Treatment Wastewater Collection

26. Source Water Total water use (potential $1 to 4 billion/yr industry) – –5.2 billion m 3 (Cereijo ed. 1992) – –1.6 billion m 3 /yr (11.5 M people at 100 gpd) 64% groundwater (Cereijo ed. 1992) Susceptible to saltwater intrusion

27. NEEDS FOR HAVANA Funds to: – –Protect source water quality (two tiered approach) Minimize discharges Dredging – –Repair/rebuild chlorine production plants – –Repair/rebuild distribution system – –Provide sanitary collection system – –Treat wastewater – –Dispose of effluent properly (ocean outfalls?) Regulatory system to maintain sanitation standards (e.g. drinking water standards, industrial wastewater standards, etc…) (Belt and Velazquez 2007) potential $1 to 4 billion/yr industry

28. PRIVATIZATION/ RE-STATIZATION/ BUSINESS- LIKE OPERATIONS: PUERTO RICO PRIVATIZATION STUDIES OF PRASA INTERNATIONAL PRIVATE OPERATOR (ISLAND-WIDE) PRASA SELF- MANAGEMENT PRASA DE-CENTRALIZED MANAGEMENT BY 5 SERVICE AREAS, BUSINESS-LIKE OPERATIONS PRIVATIZATION PROCUREMENTS RE-STATIZATION (CONTRACT TERMINATION) STUDIES (INTERNAL & PRIVATE SECTOR ASSISTANCE) Comment: Privatization of the water/wastewater sector is not easy!

29. POTENTIAL COLLABORATION BETWEEN COMMITTEE AND A.S.C.E. Institutional issues (especially regulatory). Institutional issues (especially regulatory). Boundaries of service areas based on tradeoffs of economy of scale vs. manageability, sustainability, commercial factors, etc. Boundaries of service areas based on tradeoffs of economy of scale vs. manageability, sustainability, commercial factors, etc. Timing of tariff increases to match affordability improvements after transition income dip. Timing of tariff increases to match affordability improvements after transition income dip. Prioritization of capital improvements to foster economic engines (ports, airports, etc.) to accelerate growth. Prioritization of capital improvements to foster economic engines (ports, airports, etc.) to accelerate growth.