VZCZCXYZ0058
RR RUEHWEB

DE RUEHSN #1887/01 2091645
ZNR UUUUU ZZH
R 281645Z JUL 06
FM AMEMBASSY SAN SALVADOR
TO SECSTATE WASHDC 3245

UNCLAS SAN SALVADOR 001887 
 
SIPDIS 
 
INFO DEPT EPA WASHDC 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON ENRG EAGR SENV ES
SUBJECT: THE GOES PUSHES FOR A CHANGE IN WATER LEGISLATION 
 
¶1. SUMMARY:  The Salvadoran Ministry of Environment presented to 
Embassy officials a review of a draft Water Law to be submitted to 
the Assembly later this year.  This new law would represent an 
important change in the management of water in El Salvador.  The 
government-owned water utility (ANDA) is currently responsible for 
regulating and distributing water in the entire country.  The new 
legislation will create an independent water regulator (CONAGUA), 
and ANDA will remain only as a distributor for certain areas.  The 
law will include charges for the extraction of raw water and allows 
for concessions and permits for water use.  The Salvadoran 
Ecological Unit (UNES), an environmental NGO also presented a Water 
Law proposal to the Assembly.  The spirit of their proposal focuses 
on the conservation of water resources and limits any kind of 
privatization.  END SUMMARY. 
 
----------------------- 
GOES WATER LAW PROPOSAL 
----------------------- 
 
¶2. The GOES through the Ministry of the Environment (MARN) has been 
working for several months on a draft Water Law that would 
significantly change the current water management model for El 
Salvador.  MARN Executive Director Roberto Bara told Econ Officer 
that the Water Law would be the most progressive and modern in Latin 
America, establishing institutions for better and more integrated 
management of water resources.  The Water Law will establish 
guidance for the quantity and quality of water use between the 
central government, industry, and the public.  It is important to 
note that the Water Law will not regulate water services such as 
drinking water, agricultural irrigation, electricity generation, or 
industrial and tourism use; a separate legal framework must be 
developed to complement the new law.  Currently there are several 
water laws serving different institutions (CEL, MAG, ANDA) which 
cause confusion and contradiction.  ANDA currently acts as a 
distributor rather than a regulator. 
 
¶3. The Law envisions the creation of several institutions to manage 
water on a country-wide basis.  The GOES will create an autonomous 
body, the National Water Commission (CONAGUA), to enforce the new 
Water Law.  CONAGUA will be responsible for the planning, control, 
facilitation and supervision of water management.  CONAGUA will 
charge fees for the use of water, depending on the type of water and 
end use.  These fees will be paid into a water fund, FOAGUA, and be 
used for administrative purposes, as well as to pay local and 
national, public and private entities to carry out water management, 
conservation, and treatment.  A system of sanctions, fines, and 
incentives will also be used to promote conservation.  The law will 
favor incentives over sanctions and these will be financed through 
FOAGUA and/or through the concession process.  CONAGUA will have the 
ultimate responsibility to investigate, resolve, and sanction/reward 
all water use in the country. 
 
¶4. CONAGUA will have a presence country-wide through decentralized 
operations in three Watershed Zonal Organizations, each comprised of 
a Technical Committee and Watershed Committees.  The Watershed 
Committees will supervise the water usage and compliance with 
regulations (to be drafted) for water service.  The law also 
envisions inclusion of End User Organizations in the Watershed 
Committees, composed of private organizations such as NGOs that will 
scrutinize the control and supervision of water distribution within 
their area of influence.  Issues relating to water resources from 
rivers and water tables shared with other countries will be defined 
through regulations to this law.  Comment.  An issue here is the 
centralized water fund FOAGUA.  Businesses may be reluctant to pay 
into a fund that may or may not address specific conservation needs 
related to the water source they are using.  End Comment. 
 
¶5. The President of CONAGUA will be appointed by the President of El 
Salvador.  CONAGUA will have representation from the Ministries of 
Governance, Finance, Economy, Agriculture and Livestock, Public 
Health, Public Works, Environment, the Superintendent of 
Telecommunications and Electricity, the office of the Technical 
Secretary to the President and a representative for each of the 
 
SIPDIS 
three watershed zones in the country. 
 
¶6. The proposed law includes a series of instruments that will 
enable CONAGUA to plan at a national and regional level, create 
water inventories, and establish information systems.  Through the 
Law, the GOES commits to public participation and to respond to 
civil society through the End User Organizations.  The GOES has not 
yet presented their proposal to the Legislative Assembly and it is 
very likely they will not do so until late in the year; first they 
have to finish the discussions with state owned power generation 
company, CEL, regarding the pricing policy for the water used in 
electricity generation.  Comment.  It is very unlikely CEL is going 
to allow a charge for the water used in electricity generation, 
saying it could lead to an increase in the end user electricity 
tariffs.  End Comment. 
 
¶7. Government at the national and local level will be granted rights 
to use water resources through assignments, subject to periodic 
review by CONAGUA.  The duration of these assignments is still under 
 
review.  Private use of water resources to organizations and 
companies will be granted through concession contracts of a maximum 
duration of 30 years.  These contracts will clearly define use and 
conservation responsibilities and will require the posting of 
performance bonds and be subject to audits.  Water use permits will 
be granted to individuals for uses of no more than five years. 
Block titling will be carried out for existing users who will be 
placed under one of the three water grant mechanisms.  All 
assignments, concessions, and permits will be granted, managed, and 
controlled by CONAGUA. 
 
 
----------------------------------- 
SALVADORAN ECOLOGICAL UNIT PROPOSAL 
----------------------------------- 
 
¶8. The Salvadoran Ecological Unit (UNES), a left wing NGO, presented 
an alternative Water Law proposal to the Legislative Assembly for 
discussion and approval.  The spirit of their proposal is to limit 
any kind of privatization of water services, and focuses on the 
conservation of water.  Contrary to the GOES proposal, their 
proposal includes regulation of water services. 
 
¶9. UNES proposes the creation of a Water Commission similar to the 
GOES proposal, but the election of the members would be made by the 
Legislative Assembly from a list of experts proposed by local 
environmental NGOs.  Among the responsibilities of this Commission 
would be water planning, regulation, supervision, conservation and 
protection.  The UNES proposal delves further into environmental 
protection of water sources, and limits the use of water for 
industrial, tourism, and electrical generation purposes. 
 
¶10. The proposal presented by UNES mandates the creation of a 
National Water Policy that will provide general guidance for 
sustainable and equitable usage of water, sufficient water supply, 
and prioritize water used to satisfy basic human needs.  The UNES 
proposal regulates water services such as household consumption, 
supply for settlements, ecosystem maintenance, agricultural use, 
electrical generation, industrial usage and tourism.  The proposal 
states that the Government will be the only provider of potable 
water in the country and explicitly states the service will not be 
privatized under any circumstances.  The proposal also says the 
government-owned electric utility (CEL) will only be responsible for 
electricity generation with water resources, prohibiting any type of 
concession or privatization of the facilities.   The proposal also 
places a 10-year moratorium on further dam building on the Lempa 
River to avoid further ecological damage. 
 
¶11. Comment.  When the MARN proposal is presented to the Assembly 
there will likely be vigorous public debate over the issues of 
concessions and permitting, which are seen as privatization by the 
left.  MARN officials do not think this will be a deal breaker, as 
the UNES proposal has not generated any strong discussion about 
privatization, and MARN believes their draft will be approved, even 
though there may be some hue and cry from the left.  More critical 
to the passage of the bill will be the acceptance by the business 
community that they may be charged by CONAGUA for water that is 
currently free, such as drinking water pumped from wells by ANDA. 
Said charges will begin to place a value on water, which should lead 
to more responsible use.   It is very unlikely that the proposal 
presented by UNES will be approved by the Legislative Assembly. 
Even though they have the support of the main opposition party, the 
FMLN, they will not get support from the moderate or center right 
parties.  End Comment. 
 
Barclay