A Failed Partnership for Lanzarote’s Water
On one side, Pedro San Ginés; on the other, Adrián Martín López de las Huertas. This is how the story of Canal Isabel II in Lanzarote began. The Madrid-based public company landed on the island in 2013 to take over the comprehensive management of the water supply through its subsidiary, Canal Gestión. The then President of the Island Council (Cabildo), the current Canarian Coalition senator Pedro San Ginés, opted to outsource the service and awarded the contract to the company for €120 million. The agreement was signed for 30 years, meaning Canal Gestión was supposed to remain in Lanzarote until 2043.
However, although San Ginés described the company’s arrival as a blessing, its failure to manage the service properly has pushed it towards an early exit that everyone now welcomes. Canal Isabel II does not want to stay, the Insular Water Consortium (formed by the Cabildo and the seven Municipal Councils) is already moving to rescind or transfer the contract, and the users on the island and also on La Graciosa are just waiting for the constant supply cuts to finally end.
Broken Promises and Persistent Leaks
The conditions of the contract have not been met, nor has its primary mission: to reduce the percentage of water lost in the network before it reaches homes. The island’s Councillor for Water, Domingo Cejas, maintains that the operating contract stipulated that the 55% loss rate recorded at the time should drop to 30%. “This has not happened at all,” he asserts. The latest published data indicates the percentage has actually risen to 56%.
On 17 December, the Water Consortium approved a three-month extension to the suspension of the contract termination proceedings with Canal Gestión. During this period, as the water councillor explained to this newspaper, the only proposal currently on the table will be studied: that Canal Gestión transfers the management of the service to another company that will take over the full water cycle until the contract ends in 2043.
The Search for a New Manager and a Legacy of Underinvestment
Cejas explained that, although the French-capital company Canaragua showed interest in taking over the service, the only proposal formally presented by Canal Isabel II is a transfer to a Temporary Business Union (UTE) between Sacyr and Aqualia. “It is a transfer with the same conditions as the current contract. It would be to fulfil the remaining years of the contract, until 2043,” indicated the councillor.
A technical and documentary analysis by the Water Consortium notes that Canal Gestión committed to executing €54 million in investments. However, only investments worth €32.6 million are considered duly justified and validated. Thus, as the Cabildo made public this month, this represents a 40% underinvestment compared to what was promised: €21 million less.
Among the main investments that have not been executed or justified are the implementation of leak detection measures, the installation of isobaric chambers to recover energy, and the complete renewal of the meter park. Deficits have also been noted in works to adapt reservoirs and improve treatment plants.
Political Pressure and Financial Losses
Ariagona González, a PSOE councillor in the Lanzarote Cabildo, insists that “the contract with Canal Gestión has been a failure for the island from the beginning. At no point has the water situation in Lanzarote improved, and we are getting worse. The only way is to terminate the contract and provide the service again publicly, with oversight bodies and quality controls so that the mistakes of the past are not repeated,” she asserts.
Asked about the possibility of water management in Lanzarote returning to public hands, Cejas responds that “now is not the time for that. I cannot get ahead of what I have today, which is not little, but a concession until 2043. We have to see if there is a termination of the contract or a transfer of the contract,” he points out.
Canal Gestión carries accumulated losses of €75.4 million. According to accounts for 2024, published on its website, the company lost €11.4 million last year.
A Reluctant Operator and a Battle Over Bills
On 4 November, the CEO of Canal Isabel II, Mariano González, appeared before the Madrid Assembly at the request of the Más Madrid parliamentary group to account for future plans for companies participated in by Canal outside the community. “We do not want to leave in a rush,” González responded regarding the termination of the contract with the Lanzarote Water Consortium. “There is a concession. Is there a possibility of divestment? We are working on it. Will it materialise? Well, I don’t know. I hope so! Because that is the goal, and I think we all agree,” he emphasised.
On reducing losses, the Canal Isabel II delegate stressed that “it is impossible to reduce them if there is no investment. The investment does not have to be made by Canal Gestión Lanzarote, it has to be made by the owner of the network, of the infrastructure,” he said, referring to the Water Consortium.
Another open front between the two parties relates to price increases on water bills. The contract states in its fifth clause that the contract price will be reviewed in the fourth year of the concession according to the following formula: CPI (Consumer Price Index) plus 1%. However, despite this clause leading Canal Gestión and the Consortium into a legal battle, tariffs have not been increased at any point.
The Lanzarote Cabildo justifies not complying with this part of the contract based on a report by the Price Commission of the Government of the Canary Islands, responsible for public service prices. This document, the island corporation assures, concluded in 2024 that circumstances do not justify raising prices. “Everyone knows the scandalous percentage of losses there is,” asserts Cejas.
On the possibility of the Cabildo having to pay compensation to Canal Gestión for terminating the contract early, the councillor responds bluntly: “We will see it in the courts.”
No post found!