Outlook: 2018 set to be Mexico's desalination year

By
Friday, December 29, 2017

The year 2018 is forecasted to be a defining year for Mexico's desalination industry due to the three major projects that will begin to be developed, including a facility that is set to become the largest desalination plant in the Western Hemisphere.

Two of those facilities will be built in Baja California, a drought-prone state located at the border with the US, which often suffers from water scarcity due to its climate. The third one will be located in Sonora, also a northern border state. 

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BNamericas takes a look at those projects, the obstacles they faced since they were first conceived and what the future may hold for them in 2018.

BAJA CALIFORNIA 

This northern state has long been suffering the effects of drought. The water scarcity scenario that Baja California faces has at times been described as a water crisis. The construction of desalination facilities to treat saline waters has been considered as an option to supply water to the local population.

While a plant is already under construction in the coastal city of Ensenada, reporting a progress of 92%, the current government administration has been pushing for the development of two other similar facilities. 

San Quintín plant

The idea of building a facility in the San Quintín valley, also in the municipality of Ensenada, was first conceived shortly after the passing of the state's public-private partnership law in 2014. Since the beginning, the authorities decided to put the contract out for concession and develop the initiative under a PPP model - the first of its kind in the state.

A tender was launched in June 2015, with the contract being awarded to Desaladora Kenton, a consortium comprised of Libra Ingenieros Civiles, RWL Water and R.J. Ingeniería. 

The project, called Sistema Integral Hídrico San Quintín, consists of the design, construction and operation of a 250l/s plant. It also includes the drilling of six wells for seawater intake, as well as the installation of a 7.4km seawater pipeline, a 2.5km brine discharge pipeline, a 1.33km desalinated water pipeline, a 2,000m3 master tank, a 10km power line and two electric substations. 

The concession for the project will last 30 years and the construction requires investments of 870mn pesos (US$44.2mn). 

More than 86,000 residents of the San Quintín valley are set to benefit from the initiative.

PICTURED: A view of Tijuana, Baja California. CREDIT: AFP.

Playas de Rosarito plant

Another project that was conceived some years ago to supply potable water to the state's coastal areas, which currently rely on the Colorado-Tijuana aqueduct, entails the construction of a desalination facility in the Playas de Rosario municipality.

Following the decision to develop the initiative under a PPP model, the state government launched a tender and subsequently awarded the contract in June 2016 to the Aguas de Rosarito consortium, comprising French firm Degrémont, a subsidiary of water solutions powerhouse Suez group, local company NSC Agua and Singapore's Nu Water. 

The 40-year contract includes three years for design and construction and 37 years of operation and maintenance, before handing it over to the state.

The contract was signed in August.

Once completed, the facility will become the largest desalination plant in the Western Hemisphere. It will ensure the Tijuana-Rosarito beach region's water needs are met for the next 50 years, benefitting over 1.7mn residents in the cities of Rosarito, Tijuana and Tecate.

Through the use of reverse osmosis technology, the facility will in a first stage have a production capacity of 2,200l/s or 50mn gallons per day.

A road paved with obstacles

The launch of construction works of the two facilities was pending the local legislature's approval of the project's fee payment structure, which entailed amending some articles of the local PPP law. The tense social situation created by the passing of a water law in 2017 that enabled private sector participation in the management and operation of water services - and which was subsequently repealed by the state government - made the approval of the amendments a very long process.

Although the proposal faced significant opposition from civil society groups and opposition parties, the bill to amend the law was finally approved by congress in December.

Based on the approved fee payment structure, the public operator of water services in Tijuana (CESPT) will be mandated to pay 150mn pesos (US$7.63mn) plus VAT a month to Aguas de Rosarito over 37 years beginning June 2019.

Meanwhile, the water utility of Ensenada will have to pay 11.1mn pesos plus VAT per month to Desaladora Kenton over 30 years beginning January 2018.

The monthly payments will be funded with revenues collected from users' charges. In case the local utilities fail to make the payments, the state government has agreed to pay with revenues collected from local payroll taxes (ISPT).

Opposition legislators have announced that they will shortly file a constitutional challenge against the approval of the payment structure.

Construction works on the two facilities are scheduled to begin in March, with the Rosarito plant set to be completed in two years, and the San Quintín facility in 18 months.

Is the Rosarito plant financially feasible?

In addition to those voices saying that other most cost-effective solutions could be implemented to address the water supply problems facing Tijuana and its surrounding municipalities, a study from the state's superior audit office (ORFIS) concluded that the established payment amounts would not be financially feasible unless water tariffs are significantly raised. 

According to the document, which analyzed the financial situation and payment capacity of CESPT, domestic water charges would have to be increased by 54% so the utility can obtain enough revenues to pay for the plant's production. Similarly, non-domestic charges would have to be increased from 47.1 pesos to 74 pesos.

The state government has however refuted claims that the approval of the PPP project would entail a hike in water charges. 

SONORA

A third desalination plant for which works are set to begin in 2018 will be built in Sonora. The initiative for the facility was conceived back in 2015 to address recurring water shortages in the drought-prone municipalities of Empalme and Guaymas.  

Following a long structuring process, the local legislature approved the project in April 2017, with the tender being launched in August.

The 20-year contract for the construction, equipment, start-up, operation and maintenance of the plant was recently awarded to a consortium comprised of Spanish water solutions firm FCC Aqualia and its Mexican subsidiary Aqualia México.

The project requires investments of 767mn pesos and will also be developed under a PPP model. 

Based on this structure, 51% of the required investment will be provided by the consortium and 49% will come from federal funds.

Once completed, the plant will supply 200l/s (6.3mn cubic meters a year) to the aforementioned municipalities, benefitting 226,000 residents in a first phase.

Construction works are expected to begin during 1Q18 and the facility is expected to start operations by 4Q19.