Deadline for Lanzarote’s Water Management Company

December 12th is the deadline for Canal Gestión Lanzarote, the island’s main water supplier, to find another company willing to take over the contract for Lanzarote’s water supply.

In October, the Lanzarote Water Consortium, a committee composed of the Cabildo President and the seven Council Mayors, agreed to pause legal actions alleging breach of contract if Canal could find a company to take over the existing contract, which extends until 2042. The Consortium accuses Canal of not fulfilling contractual agreements regarding investment, maintenance of the supply and reducing water losses.

Rural areas of Lanzarote have suffered continuous water cuts in recent years, and the resulting political pressure has resulted in a change of attitude by the ruling group on Lanzarote’s Cabildo, who had previously been supportive of Canal Gestión.

Mariano González, the CEO of Canal’s Madrid-based parent company, claimed in November that water management on Lanzarote had been “disastrous” and placed the blame on the Consortium. The company expected to start making a profit in 2021, but has instead accumulated losses of €70 million.

González attributed the Lanzarote company’s losses to the waste of more than 50% of the water produced. “It is impossible to reduce losses without investment. And the investment is not the responsibility of Canal Gestión Lanzarote; it is the responsibility of the owner of the infrastructure network,” said González.

He also pointed out that water tariffs have not been updated for years while production costs have risen, and that this made water production unprofitable “no matter how much is produced.”

“The first thing that needs to be done is to update the tariffs,” he claimed, pointing out that two Supreme Court rulings had supported Canal Gestión’s right to raise charges, which have not been increased for almost 15 years. Lanzarote’s public water utility, Inalsa, was dissolved in 2013 and the service was privatized after incurring huge debts and entering receivership. However, a return to public ownership is favoured by three Mayors, although this option would also involve huge legal costs.