Uruguay inches closer to water rationing as key project held up

Uruguay is facing potential additional water rationing measures as the country grapples with intense drought, even after banning non-essential use of potable water in capital Montevideo last week. 

Authorities are backing the US$200mn Neptuno water project, designed to supply the metropolitan area of the city, as a possible solution.

The project “should already be underway” according to the vice president of state-owned water utility OSE, Susana Montaner, who also criticized political opposition to the project, which mostly comes from the center-left Frente Amplio coalition.

She also said that Neptuno is the most feasible option at the moment, as the alternative projects that are currently being pushed by Frente Amplio depend on water sources that are already under stress, while the Plata River, the source of the water for Neptuno, is under less pressure and desalination plants would be much more expensive. 

“We will be taking measures on a daily basis. If we have to make planned water cuts, they will be done,” she told Radio Doble Click.

The Neptuno project, which was approved by OSE’s board back in November, entails a potable water plant with capacity to process 169,000m3 per day. It also includes a 72km water adduction pipeline. 

The main argument against the initiative is that it is a private sector proposal and opponents say it therefore does not comply with a 2004 referendum establishing that water distribution and sanitation would be publicly-run services.

Despite the ongoing conflict, it will not affect Uruguay’s overall image among private investors, according to Perla Juián, CEO of Montt Group's Uruguayan subsidiary.

“When the UPM pulp mill that is being built at Tacuarembó was analyzed, negotiations were also stuck in some form, but Uruguay wasn’t seen in a bad light because of that,” Julián said in response to a question from BNamericas during a webinar on the environment for investors in Uruguay, adding that disputes like this are common for projects of this scope.