water and sanitation activities in rural areas. some 46 service providers have formed the national peruvian association of sanitation service providers (aneppsa) to "promote the excellence in sanitation services management" through training and exchange of experiences. economic efficiency it is estimated that 45% of the water produced is not counted due to physical and commercial losses, which is higher than the other 40% average of water and sanitation in latin america. this coefficient has not changed a lot during the last 12 years. the highest levels are detected in the provinces of marañón and barranca (greater than 70%). some companies had water levels not accounted for at less than 10%, however, these values do not seem viable given the low level of household metering (50%). financial aspects water tariffs in peru are somewhat low compared to other latin american countries and water bills are often not paid. as a result, according to an estimate, 95% of the country's urban service providers can be considered bankrupt. in many urban areas it is common to spend significant sums to water tanker operators, which are prevalent because of intermittent supply and deficient coverage. in rural areas, tariffs are even lower than the already low tariffs in urban areas, making it impossible to properly maintain water systems. urban areas tariffs in 2004, water tariffs in peru were on average sol 1.29/m3 (us$0.38/m3) in urban areas. average urban tariffs increased slightly from sol 1.04/m3 in 1997 (us$0.40/m3 with 1997 monetary values) to sol 1.45/m3 in 2000 (us$0.42/m3), however dropped in real terms thereafter. each provider has its own tariffs, with significant differences between them, ranging from sol 0.45/m3 in valle del mantaro (us$0.14/m3) to sol 2.60/m3 in ilo (us$0.79/m3) in 2005. users in urban areas that do not have access to piped water pay much higher prices for water from water tankers. according to a 2008 national survey by radio rpp, respondents indicated that, on average, they paid 44 soles (close to us$15) per month and per household for water. 44% of respondents said that they paid "much or too much" for water. cost recovery in 1999, water companies billed only 55% of the produced water and of this value only 50% was actually paid. payment arrears were equivalent to 140 days of billed revenues. there are significant differences in levels of cost recovery among service providers. for example, sedapal had an operating margin of 35% in 2000, while the eps had an average operating margin of only 16%. 6 out of 46 eps had a negative operating margin. only five years later in 2005, according to the world bank's water and sanitation program, no more than 5% of the eps and of the municipalities had the financial capacity to carry out their functions. the rest are considered financially bankrupt. in the same year, the government decided to apply a new tariff regulation model. the government contracted studies for the elaboration of this model with the support from the public-private infrastructure advisory facility (ppiaf), a world bank trust fund, and later from the idb. rural areas in rural areas, the water committees apply fixed monthly tariffs independently of use as the use of water meters is not common in these areas. the tariff is estimated to be the equivalent of us$0.50/month and household. at a consumption of 20 cubic meter per month and household this corresponds to us$0.025 per cubic meter, or about 15 times less than the average tariff in urban areas. needless to say, the revenues generated are insufficient for the operation and maintenance of the systems. ability to pay in 1997, the average the peruvian household spent 1.8% of their total expenses in water, including water bought from carro-tanques, but without spending in sanitation. in urban areas they spent 1.9% of the expenses for water and only 0.8% in rural areas. the poorest (first decil) spent 2.4% in urban areas and 1.7% in rural areas. investments and financing as shown in the bar chart below, investment levels increased substantially during much of the 1990s, from us$39 million in 1990 to a peak of us$422 million in 1997. since then investments have declined again to us$106 million in 2004 and us$190 million in 2005. total investment between 1990 and 2005 was at us$43.3 billion, the average being at us$205m p.a. investments are financed through programs providing subsidies to municipal utilities, as well as to a limited extent by internal cash generation and debt. in the 1990s between 1990 and 1998, an annual average of us$228.9 million was invested for water and sanitation infrastructure, equivalent to 0.5% of the gdp. in this period the investments in the sector increased from us$1.1/per capita in 1990 to us$15/per capita in 1998, the latter being an unusually high investment level compared to other latin american countries. these investments were financed as follows: 26% by sedapal, financed by internal cash generation and debt; 17% by grants from the central government through the social fund foncodes, destined primarily at rural areas, 10% by grants through the program for the support of water sector reform (parssa), destined primarily at provincial cities; 22% by municipal companies, municipalities and ngos; 23% by debt from the national housing fund fonavi; and 2% by the southern zone lima metropolitan sewer system improvement project (mesias), a project to improve the sanitary conditions of southern lima, reducing the coastal contamination from wastewater. in 2000 total debt contracted by service providers stood at us$1.15 billion, equivalent to the operating margin of all service providers over 9 years. 46% of this debt contributed to reimbursable contributions by the national housing fund fonavi. 2000-2005 the period between 2000 and 2005 witnessed investments of us$833.1 million (us$166.6 million/year) in the sector, carried out by the following entities: program share of investment sedapal 45% parssa 14% mesias 12% eps 10% municipalities 7% foncodes 7% others 5% total 100% plaza de armas in the city of piura future investments the government's draft national sanitation plan considers that investments of us$4,789 million would be needed in 2005-2015 (us$497 million/year) to achieve the millennium development goals in the sector. however, billions more would be needed to divert water along tunnels beneath the andes if glacial melting accelerates. external cooperation multilateral financial institutions including the world bank, the inter-american development bank, and the andean development corporation (caf) as well as bilateral cooperation agencies (the german kfw and gtz, the canadian cida, and the japanese jica (ex-jbic), among others) play an important role in investment financing and in technical assistance in the sector. assistance to segments of the sector, differentiated by the size of localities, is provided by different donors: the world bank provides support to rural areas as well as to small towns with populations less than 30,000 through the pronasar (see above). larger towns and small cities — such as ayacucho, cajamarca or puno — receive support from kfw. larger cities — such as tumbes, piura or cusco — receive support from kfw, idb and jica. the caf, the world bank, and the jica support sedapal in lima and callao. an example of this support is the agreement signed in september 2009 by the japan international cooperation agency (jica) to provide a loan for up to $60 million for the north lima metropolitan area water supply and sewerage optimization project. the purpose of the project is to improve the quality of water and sanitation services by renovating the water supply network and improving its operation and management. it aims at reducing non-revenue water and increasing the continuity of water supply. the project complements another jica-supported project to build a water treatment plant, water distribution systems, and sewerage systems in marginal areas of the same place.