Peru will increase the coverage of drinking water and basic sanitation services for some 380 rural communities and small towns in the regions of Apurímac, Ayacucho, Cusco, Huancavelica, and Puno—the country's poorest—improving the lot of some 206,000 people who currently either lack or receive substandard services.

The project, which requires a $90 million investment, will receive an unprecedented grant from the Spanish Cooperation Fund for Water and Sanitation in Latin America and the Caribbean (Spanish Fund). The Inter-American Development Bank (IDB), which provided technical assistance for the project's preparation, will develop it together with the Peruvian government and the Spanish cooperation over a five-year period. The government of Peru will provide an additional $18 to the project.

The program will finance mostly infrastructure and other works needed to expand and improve drinking water and sanitation networks in small towns of between 2,000 and 15,000 people and rural localities of fewer than 2,000 inhabitants.

The project will promote a model that integrates water and sanitation solutions with community development activities and strengthening of service providers in order to ensure that drinking water supply and wastewater disposal treatment services are delivered in an efficient, sustainable fashion. The program will promote gender equity, a key feature that should help boost the efficiency and sustainability of investments.

The funds will also help strengthen the sector's management capacity in the areas of technical assistance, development of technical standards, sector planning and research.

Additionally, the program will promote the strengthening of new forms of partnering with local governments, for integrated, sustainable management of water resources in the framework of watersheds.

The program will focus on 20 districts, covering district capitals, their peri-urban areas, and their neediest rural communities. Area selection will be based on service access criteria, poverty level, and the intervention of other government social programs. This methodology will increase the impact in each region and provide economies of scale in the use and allocation of resources, increasing efficiency gains.

The $72 million grant is the fifth drinking water and sanitation coverage expansion and improvement project by the IDB and the Spanish Fund. The Fund was launched in 2008 by initiative of Spanish President José Luis Rodríguez Zapatero.

The IDB and the government of Spain signed in July 2009 an agreement to partner on water and sanitation projects in the region to be co-financed by Spanish Fund grants. This partnership brings together the IDB's ample water and sanitation projects portfolio and its network of sector specialists in its country offices, and the vision and experience of Spanish cooperation. This has paved the way for the quick and efficient implementation of projects assigned top priority by the IDB's 26 borrowing members in Latin America and the Caribbean.

"This historic Spanish Fund grant is a sign of solidarity from the people of Spain," IDB's President Luis Alberto Moreno said. "This is the Fund's fifth grant in less than one year. Once again, the project being financed aims to improve the health and quality of life of hundreds of thousands of people living in some of the hemisphere's poorest communities."

Besides the project approved for Peru, the IDB and Spain are expanding and improving drinking water and sanitation services through projects either approved or already under way in countries such as Haiti, Bolivia, and Guatemala (see links on the right). Both institutions are also preparing projects focusing on rural and peri-urban areas of Brazil, Costa Rica, Ecuador, El Salvador, Honduras, Uruguay, Haiti (Port-au-Prince) and Panama.

With this $72 million grant, Spain's contributions to the sector have reached $252 million in less than one year. Within the framework of its partnership with the IDB, Spain will make contributions totaling some $450 million in grants for water and sanitation projects, while the IDB will provide about $300 million in grants and loans, besides financing a large part of the projects' preparation and execution costs. Nearly 4 million people living in the region's low-income peri-urban and rural communities are expected to benefit from these projects.

The government of Peru will provide an additional $18 million to the newly approved program, which will be initially executed by the Vice Ministry of Construction and Sanitation through the "Water for All" program.