Cabildo de Lanzarote inicia procedimiento para resolver contrato de concesión de Canal Gestión.
The Extraordinary General Assembly of the Water Consortium approved unanimously this morning to initiate the procedure for the resolution of the concession contract to Canal Gestión Lanzarote for the water supply, sanitation, and reuse services of the islands of Lanzarote and La Graciosa.
The unity and coherence of the Water Consortium members, mayors of the island municipalities, supported by the report issued by the contracting authority, led to the unanimous vote to initiate the resolution procedure, despite Canal Gestión’s attempt to coerce the Consortium members by sending them a burofax, personalized to each of them, in an attempt to usurp their decision-making capacity.
At the beginning of the assembly, the mayors opened the burofax they received, whose content did not affect the well-considered decision they intended to make. Instead, it was seen as a sign of weakness on the part of Canal Gestión Lanzarote and an impulse to the unity of the local and insular government representatives that make up the Water Consortium of Lanzarote, who mostly labeled the content of the letter as «blackmail,» denying any breach of contract and shifting the responsibility for the service situation to the Consortium itself.
The General Assembly also approved, by majority vote, with the dissent of the Town Councils of Tías, San Bartolomé, and Haría, and the abstention of Yaiza, the initiation of a procedure for the award of a new contract, conditioned on the completion of the resolution process (according to article 213.6 of the Law of Public Sector Contracts (LCSP).
Regarding this point and the refusal of the socialist mayors to approve it, the President of the Cabildo, Oswaldo Betancort, clarified that «the initiation of the procedure for a new contract does not mean that water management will be outsourced again, but the Consortium cannot stand still, we have an 8-month deadline and we must have all options prepared, including not ruling out either public management or the creation of a mixed public-private company. This has not yet been decided.»
Betancort added, «we could not stand idly by watching the deterioration of the water supply service, which is why we have been working for over a year to prepare a detailed legal report to terminate the contract with Canal Gestión. This report has been developed after carefully examining each invoice and investment made by Canal Gestión. It has not been an easy task, and that’s why I want to congratulate the entire legal and technical team of the Consortium, and of course, Councilor Domingo Cejas for this meticulous work, for which they have not had the cooperation of the concessionaire.»
The legal report by the contracting authority in charge of the Canal Gestión contract concludes that the breaches by the concessionaire are of such severity that they lead to the termination of the contract for violating essential obligations of the contractual agreement.
The Public Sector Contracts Law (LCSP) establishes a maximum period of 8 months for the final resolution of the contract. The General Assembly of the Consortium also approved a period of 10 business days for Canal Gestión to submit allegations or documentation on the file, and subsequently, once analyzed, the Consortium will make a proposal for a definitive resolution that will be sent to the Advisory Council of the Canaries for a mandatory, but non-binding opinion.
The Water Councilor, Domingo Cejas, also highlighted «the enormous effort made by his team at the Consortium and the detailed report prepared by the contracting authority, supported by documents and technical reports produced in the last year, based on management audits, leakage control reports, process audits in sewage treatment plants, maintenance reports, and operation of facilities, and especially on reports on the degree of compliance with the investment commitment presented by Canal Gestión.»
An underinvestment of 21 million euros
Among the serious breaches that motivate the termination of the contract, the main objective of the contractual agreement to reduce losses to 30% after the first 5 years of the contract (in 2018) stands out. Therefore, the report indicates that the Exploitation Plan has been breached, leading to water losses exceeding 56%, far from the required target.
The report reveals that Canal Gestión Lanzarote, regarding the development of the investment program committed in its offer for an amount of €54,455,128.00, has carried out justified actions that have resulted in an investment worth €32,633,088.09, leaving an underinvestment of €21,822,039.91 unaccounted for.
The report also states that there has been a unilateral modification of investments and execution of works not included in the investment offer, and that the exploitation plan offered by Canal has not been fulfilled due to inaction in leak detection, which would have decisively contributed to reducing losses in the network.
The list of breaches in the report also points to the obligation to settle the variable fee (Fee C) for applied tax deductions, estimating the debt at €833,000, and the obligation to provide continuous service, reflected in the frequent, numerous, and repeated supply cuts to entire population centers.
The obligation not to subcontract services that are inherent to the concessionaire, to provide information at the Consortium’s request, and to submit documents with annual reports on services rendered is also not met.
FUENTE
