Rerouting Water to Quench a Desert Megacity's Thirst

Peru’s largest water company wants to tap international bond investors to help pay for a project to reroute water to the arid Pacific coast to serve Lima’s 10 million citizens.

Sedapal, as the public utility is known, plans to tap the overseas bond market next year to help finance 20 billion soles ($6.1 billion) of projects, one of the country’s largest investment portfolios, said Chairman Rudecindo Vega in an interview at his office in Lima.

A fifth of Peruvian homes lack running water and President Pedro Pablo Kuczynski, a former Wall Street banker, aims to close that gap in five years with $14 billion of investments. In Lima, about 8 percent of the population live in homes with no drinking water or sanitation. Vega said Kuczynski’s experience in finance and the water sector -- he founded an organizationin the 2000s to build water supplies for the poor -- will help Sedapal obtain the money it needs to build more dams, tunnels and processing plants.

“His vision and knowledge, and his identification with water, gives me hope that we won’t have problems with financing,’’ said Vega, who was the minister responsible for water in the 2005-2006 government of Alejandro Toledo. Kuczynski was cabinet chief at the time.

Servicio de Agua Potable y Alcantarillado de Lima would be following in the footsteps of Petroleos del Peru, the state oil company, which made its bond market debut this week with the sale of $2 billion in overseas notes. It was Peru’s biggest corporate debt issue.

Growing Urgency

Sedapal sources most of its water from three rivers that originate about 5 kilometers (3.1 miles) up in the Andes mountains. To increase supply, Sedapal needs to build four new dams to capture more of the water flowing east down to the Atlantic basin, and two tunnels to channel it through the Andes and down toward the coastline where Lima is situated.

It also plans to build three more water treatment plants in Lima, a desalinization plant and lay additional kilometers of pipes beneath the city.

Vega said Sedapal aims to invest at least 700 million soles this year, which would be twice its historic annual average, before accelerating outlays next year.

Read more: Bloomberg

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• Resource Management
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• Water Supply
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