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For the second time in 7 years, the new Cuenca wastewater plant is back at square one

Published on February 27, 2023

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The construction of the Guangarcucho wastewater treatment plant in Cuenca has been a necessity since 2015. For the second time since then the project was put on hold.

A year and a half after starting the process, the Cuenca Telecommunications and Potable Water Company (ETAPA) canceled the tender to build a second wastewater treatment plant for Cuenca.

Rubén Benítez, ETAPA Manager, explained that the tender was canceled because none of the three offers that were submitted met the established requirements.

The construction of the Guangarcucho wastewater treatment plant is budgeted at $70 million. For its execution, ETAPA signed two financing contracts, one with the European Investment Bank (EIB) and another with the Development Bank of Latin America (CAF).

The ETAPA manager explained that, for this reason, the tender had to be adjusted to the instructions of the international organizations. For example, the provision of the European Bank was that only the offer with the lowest cost would be analyzed.

This offer was presented by the BA PTAR Cuenca consortium, for $62.9 million. After several months of analysis, the European Bank objected to the bidder because, in its opinion, the project manager did not have the required experience.

After ruling it out, the ETAPA technical commission evaluated the second bidder, which is the Ecuadorian company Hidalgo & Hidalgo, which proposed to execute the project for $63 million. But it didn’t meet the requirements either.

The third bidder was discarded because its economic proposal exceeded the budget. For that reason, both the municipal company and the banks agreed to cancel the tender and launch a new process.

According to Benítez, for the new tender, the conditions that did not allow the previous process to advance will be reviewed. He said that the objective is to have “clearer and more specific terms of reference” and that international banks propose a more accelerated process.

ETAPA has already spent $480,000

Although the project to build the new wastewater treatment plant is not advancing, ETAPA has already had to disburse resources related to the loans.

The two financing contracts include the payment of a commission for non-use of funds. The company from Cuenca has paid CAF and the European Bank $480,000 for this clause.

The financing contract with CAF was signed in December 2019, the one with European Bank in January 2020. ETAPA has one more year left to start using that credit, as established in the contract.

Benítez maintains that the credit agreement includes clauses that allow extending the term to dispose of the funds. “If we are close to the expiration date, an extension will have to be agreed to,” he insists.

This is the second time that the process to build Cuenca’s second wastewater treatment plant has been suspended. The same thing happened in 2014, during the transition of the administration of Paúl Granda and Marcelo Cabrera.

The Municipality of Cuenca had obtained a fund from the State Bank, but the Cabrera administration decided to cancel the award and update the studies to build a plant with more technology.


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