Banco de Desarrollo del Ecuador, B.P. (BDE) The water sector and its financing in Ecuador The last years have seen several reforms of the institutional set-up of the water sector. At the moment, the Vice-Ministry of Water is leading the sector, and defining the policies. ARCA (the Agency for the Regulation and Control of Water) is responsible for the regulation and control functions. Empresa Pública del Agua del Ecuador) (EPA-EP - Public Water Company) is responsible for execution of infrastructure development projects and capacity strengthening. These three national-level institutions have a mandate for both water resources management and water, sanitation and irrigation services provision. The responsibility for the actual service provision lies with the Autonomous Decentralized Municipal Governments (GADM). Some 62% of the GADM provide services directly, through the municipal administration, whereas 36% have a publicly-owned company. In rural areas, service provision is done by Water and Sanitation Boards (JAAPs). The national water and sanitation strategy (2016) estimates that there is need for investments of 733 million US$/year over the period 2014-2024 in order to reach universal access to water and sanitation services. This amount includes both investments in expansion of services and rehabilitation of existing infrastructure. That strategy also foresees that 38% of the investment would need to come from own sources of the GADM (which they get from own taxes and from intergovernmental transfers), 14% from subsidies and other non-municipal funds and 48% from debt. The last category would include credits that local governments and municipal-owned companies take on to do the investments, and which would then be paid back from revenue from tariffs and taxes. It was foreseen that BDE would be the main entity providing such credit, and that BDE would need to increase its loan portfolio for water and sanitation with some 30%. Finally, the strategy indicates that large and intermediate local governments in the Sierra (mountain) region would also need to explore other sources of finance, including project finance for investments in wastewater treatment. In order to achieve this increase in loans, the national water and sanitation strategy identifies a number of measures include: development of credit lines with preferential conditions for water and sanitation, the establishment of technical assistance programmes in order to improve performance and efficiency of service providers and strengthening of pre-investment processes. About the institution and its role in the water sector The Banco de Desarrollo del Ecuador B.P. (BDE) is a financial institution of the public development bank. It is an autonomous legal entity, falling under private law but with social and public aims. It has administrative, financial and Budget autonomy. It provides financing for: 1) pre-investment, 2) investment in infrastructure and public services, 3) technical assistance and strengthening, 4) publicprivate partnerships and 5) social housing. Historically, the sector called ‘environmental sanitation’ has played an important role in the targets and objectives of BDE, given its role in public health, social equity, economic development and environmental sustainability. Moreover, it is a sector prioritised by the national government. This sector covers: drinking water supplies, sewers and latrine construction and solid waste. The last 5 years (2016-2020), out of the 2,571 billions of US$ provided in loans by BDE, 37% went to the environmental sanitation sector. This includes 5,429 loans with a value of 926 million US$, or on average 185 million US$/year, with average loan value of 170,000 US$. Within this sector, 53% of the disbursements went into drinking water supplies, 40% to sewers, and the remainder to solid waste, latrines and other minor investments. There are two other sectors of relevance, but with a smaller size of loans: environment and natural disasters. These include amongst others investments in reduction of deforestation and protection of
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