Environmentally Sound Solutions for Cuba can be Profitable

 

Interview with Roberto Fusaroli, president of the Italian TECOFIL company, which has installed over 300 wastewater treatment plants in Cuba.

Por Julio Batista Rodriguez  (Periodismo de Barrio)

HAVANA TIMES – Before 2000, Cuba was tantamount to volleyball in Roberto Fusaroli’s mind. Not Revolution. Not utopia or socialism. Not Che Guevara or Fidel Castro. Not to mention a possible market where he could do business. Maybe that’s why he had to sit down with a map to try and locate the island when he decided to come with his company.

His work isn’t what we could “traditional” either. Ever since he founded the company TECOFIL in 1991, Fusaroli has worked in designing and assembling wastewater treatment plants (WWTP).

He graduated as a Chemical Engineer in 1987 and at 53 years old, he has become one of the most successful businessmen in his field on the island. His presence on the national market for eighteen years and TECOFIL International LLC having assembled over 300 plants in sectors such as tourism, public health and food production are all proof of this.

Even though the company he heads now has offices and direct representation in 49 different countries worldwide (across Europe, the Middle East and Latin America), Cuba represents 40% of his annual turnover today. If we translate that into numbers, it means his work on the island brings in between 4-5 million euros per year.

Fusaroli believes that children can and must be educated in how important it is to care for the environment and our water resources; but he has had to convince older people with statistics, with words such as “profitability” and “investment”.

Even though he defines himself as a businessman and not an eco-warrior, and he doesn’t act like a philanthropist, the reality is that water is much more for Fusaroli than his business. “It’s an environmental and also a financial issue, but it’s a human issue more than anything else. Available drinking water is a minute and fixed resource, because even though the world is surrounded by water, drinking water only makes up a bare 3% of all the water we have. This means that water which becomes contaminated and isn’t recovered is water which is being taken away from humanity,” he says.

How did TECOFIL come to Cuba?

Roberto Fusaroli: In early 2000, a delegation [from the tourism group] Gaviota Ltd. [under the army’s Gaesa holding company] saw us at an industrial laundry fair, which is one of the types of company that use the greatest amount of water and contaminate it the most by using detergents and other chemical products which take many years to break down naturally. At that time, Gaviota was rebuilding its laundry in Varadero (Cuba’s main tourist resort) and they had this problem because it was in very close proximity to the towns people.

We came to carry out an inspection at their request, although back then I didn’t think they would give us good business because I though Cuba would be the last ones to be interested in spending money on a WWTP. However, when we sat down with Gaviota and the military-run Administrative Group of Businesses (GAE) and we explained our technology and the guarantee of resource recovery (today, we can recover up to 85% of treated water and another 15% can be used for cleaning or sanitary services), they were spellbound. So, we were soon putting our experience on show in front of Cuban investors at a fair which was organized in 2001.

It was quite staggering from a promotional point of view because of what GAE represents in the Cuban economy. Plus, the country has tons of these kinds of installations for hotels and that opened up a market for us which was unexpected. Ever since then, we have branched out to other sectors within the national economy.

During the Battle of Ideas years, we worked a great deal and installed WWTPs at Havana’s hospitals. For example, we designed an underground WWTP with COPEXTEL at the Cancer Hospital (one of the most contaminating which had been emptying its wastewaster straight into the Malecon until 2006). Today, the Cancer Hospital discharges wastewater in full accordance with Cuban laws on the subject. The same thing now happens at other hospitals such as the Cimeq, Ameijeiras hospitals and Sancti Spiritus’ provincial hospital. And that was inconceivable 15 years ago and wasn’t even on people’s minds.”

Back then, Cuba’s legal framework on wastewater discharges was, quite frankly, scarce: only Law 81 of the Environmental Act (1997) and Decree-Laws 200 (1999) and 212 (2000) set out rules for this. We would have to wait for Cuban Laws 521 in 2007 and 27 in 2012 to lay out wastewater discharge parameters in coastal areas and to waterways, respectively; and then, for the National Water Act to be approved (2017) so that in Article 86.1, it demanded: “Natural or legal persons authorized to use water for technical/production or services purposes, which create wastewater, are responsible for recycling and reusing them according to the technical regulations of the process and treat the rest accordingly before discharging them into waterways or the ground, according to the law.

In TECOFIL’s 27 years of working experience and presence in 49 different countries, what do you think about Cuba’s legal framework regarding water and wastewater discharge?

Roberto Fusaroli: The law is good, the problem is applying it. And the same thing happens in other countries. The world is very aware, especially when it comes to the subject of separating their trash depending on its source: paper, glass, organic…

Some countries like Sweden, Finland, Norway or Denmark are able to recover over 70%. Other countries, like Italy, only recover 20% or 22% and that is a lot if we take into account the fact that only 5% was being recovered 10 years ago. So, want I mean to say is that the law allows you to respect the environment and save energy, but if you don’t educate the population, if you don’t force them to abide by the law, making a law is all well and good but it doesn’t fix anything.

Today, in Italy, children know that they have to separate their garbage in their homes when they go to throw it out. People from my generation, or older, continue to throw out the trash like they’ve always done and that’s because they haven’t been taught to or there isn’t an incentive to do it.

Further to the country’s regulatory body which now exists, Fusaroli is one of the people who are opting for a change in mentality, to transform the vision which has placed wastewater treatment on companies’ expenses list for many years. Investment is a key word in his vocabulary. He repeats it every time he can, he explains initial costs, he plays with figures, he calculates variables and gives environmentalism a new dimension by transforming it into a profitable business and, as a result, attractive to investors.

In Cuba, we are trying to make people see WWTPs as an investment. Today, water costs over a dollar per cubic meter for a Cuban company. But, water that is recovered at a treatment plant costs 0.25 dollars per cubic meter. That means that the company using this kind of WWTP saves around a dollar for every cubic meter it uses. Also, the plant is designed to consume low levels of energy, renewable mostly, whether that’s by using solar panels or wind energy.

Thus, when you analyze it as a whole, the plant has a zero environmental impact and also yields profits thanks to the money it saves by recovering water.

What happens: as Cuba is a country with very little economic resources, it invests in sectors where there is hard-currency: tourism. I am perfectly aware that a city like Havana will have to wait some time before it has a wastewater treatment plant. However, they are investing a great deal in the keys, which is something they didn’t do 10 years ago. Every hotel being built today, from Cayo Santa Maria to Cayo Guillermo, Cayo Coco, Cayo Romano, Cayo Cruz, Cayo Paredon, until you reach Guardalavaca and Ramon Antilla, will have a water treatment plant.

TECOFIL began doing business in Cuba in 2000 (when a National Water Act or Wastewater Discharge Regulations still didn’t exist), was it very difficult to make Cuban  investors understand that looking after the environment can also be financially profitable?

Roberto Fusaroli: It wasn’t hard to explain it to them. Making them believe it was harder. The only advantage we have is that we can prove it because we have so many plants installed in the country.

This idea and built-up experience already exists somewhat and this has served as a reference. When I sit down with project designers, I explain the investment costs to them and I give them the potential for recovery using water and energy costs which they all know, costs which can go up but will never decrease. So, I show them energy efficiency indicators at the plants we already have running in Varadero or Santa Marta.

Every time we give a conference, the classic question is: How can a plant not have expenses and create profits? This is a typical and obvious question because the environmental issue is always dealt with a lot when we talk about these kinds of systems, but we don’t talk about the financial side of things. Getting them to understand that is the hardest part.

Renewable energies are being taken into account today because, after putting it to one side, Cuba has taken them on recently with a lot of vigor. The same thing has happened in much of Europe.

Today, people talk a lot about seawater desalination but that’s the most expensive way to produce drinking water. So, if I use a lot of energy to create it and then throw it away, instead of recovering it, that’s an expense which continues to grow. However, if I use renewable energy to generate this water and then recover it with a WWTP, I’m closing the cycle. This is what is understood to be a circular economy.

Plus, using renewable energies means that a plant doesn’t rely on the national energy network and doesn’t become a burden for the national economy. The final goal is to have water without this being an expense, the only expenses being the initial investment when you buy the plant and maintenance costs.

In Cuba, TECOFIL has stood apart for offering seminars, workshops and conferences to Cuban engineers, which it has done for several years. Sharing our expertise means that investors make the right decisions as they have greater information. And by making the right decision in this field, read here: choosing the right company.

Our idea to train comes from a sense of belonging, from the years we have been here, but also from TECOFIL’s willingness to pass on the expertise it has acquired during this time,” Fusaroli says.

We don’t introduce ourselves as a company which only sells plants. Our success lies in passing on knowledge on what a WWTP or desalination plant is. This has allowed us to have a much more comprehensive dialogue with our clients about the knowledge-building process and, also, peace of mind as we know that whoever buys our plants will continue to do their work in the right way.

So, passing on this information and leaving our doors open (many Cuban engineers, clients or company representatives have visited TECOFIL in Italy to see how we build, assemble and test our equipment) has allowed us to create empathy which is also needed when doing business.

Of course, the capitalist business issue is important, but how you manage to build people’s knowledge is more important.

What are the costs for an average-sized plant and how long does it take to make the investment back?

Roberto Fusaroli: Normally, it doesn’t take longer than three years for any of our plants to make back the initial investment. If we combine water recovery and energy saving (by using renewable energies), most of our WWTPs are paid off in two years.

Investment in industrial wastewater plants (laundry, rum factories etc.) is approximately 1000 USD per cubic meter, and in the case of wastewater treatment in hotels, it’s 500 USD per cubic meter, tops.

In a laundry, we’re talking about an average investment of 500,000 USD to treat 500 cubic meters of water per day and 85% of that water is then recovered. That means that they won’t spend more than 400 USD per day for water, not to mention what they will save in terms of energy.

After two or three years, depending on the plant, everything saved becomes profit. This is also a basic concept of development.

Before, a WWTP was built because it was required by the law. In Italy, my country, anyone who installed a WWTP up until the early ‘90s did it because they were forced to and if you didn’t, you’d have your company shut down. That’s why they’d buy the cheapest things they could, because they saw it as an expense.

Today, it’s Cuba’s turn. But, things are changing slowly. Now, when a laundry installs a WWTP, they already know that they will receive financial profits in three years and they start to see it as an investment, just like when they see a boiler that saves gas or a tunnel washer which uses less water.

Does the new Cuban legal framework “create” a niche in the market for companies such as TECOFIL?

Roberto Fusaroli: Yes. Companies like TECOFIL are tools to reach a solution. Our job is to give clients the resources and mentality they need in order to respect the environment.

The important thing now is that there is a law is for Cuban companies to be put in a position where they have to abide by it. Then, whether water being discharged into seas or rivers comes from a TECOFIL plant or another company’s plant is irrelevant.

What is competition like with companies similar to TECOFIL in the Cuban market?

Roberto Fusaroli: Like always: wherever a market develops, so does the competition. In Cuba’s case, there are companies from different countries like Germany, France, China and Korea. We are an Italian company and there are around 15 companies here from Italy alone who are selling water treatment systems. However, we have a significant advantage: with 18 years of experience here in Cuba, we know the market well and we have always had the opportunity to develop a sense of belonging here in the country. I know that, if I’m going to work and I don’t have all of the conditions I need, I need to find a solution along with my client, I can’t just sit down and say: “I’m not going to do anything until everything gets fixed.” Because that’s not the way Cuba works.

We have learned that if it takes 40 days to assemble a WWTP for an industrial laundry in Italy, it’ll take four months here in Cuba. Plus, TECOFIL keeps up-to-date with the supplies and repairs its installed plants need. We don’t disconnect from the client once we hand the plant over.

You spoke about there being a lot of competition and that Cuba, because of its situation, is unable to make large investments like a WWTP in urban areas, today. So, after nearing 20 years on the island, is the Cuban market running out of short or medium term opportunities for TECOFIL?

Roberto Fusaroli: No. The Cuban market is in full swing and there are many foreign companies investing in projects here in Cuba. And this allows the country to invest in these kinds of things. For example, in the Camaguey province, the city’s water supply system is being rebuilt with a loan from Saudi Arabia; a company like TECOFIL would also take on a project like this.

Water will always be needed wherever there is development, cities and people. It’s vital. The market is changing, it’s not what it was in 2000 and it will be different in 10 years, but it will never end.

What setbacks has TECOFIL faced in order to insert itself here in Cuba, in such a specific market like wastewater treatment?

Roberto Fusaroli: There are two important points: the economy and bureaucracy. In terms of economy, the country only invests if there is funding, as it doesn’t generate the money it needs to make these kinds of investments; and then there are many institutions and it’s take a long time to process and get documents from them.

However, there is also a lack of knowledge. When I sit down to negotiate with an engineer, he has to know what I’m talking about and that doesn’t always happen because wastewater treatment is still a relatively fresh subject here in Cuba and hydraulic engineers who work within this field have very limited experience when compared to other countries, for example. So, we have to try and explain to them why one solution is better than another. Especially when the right solutions are nearly always the most expensive.

TECOFIL has lost several bids because of this: because people buy the cheapest there is, or because a technical assessment isn’t always carried out, or because whoever is doing the assessment doesn’t have the right training or knowledge, or because we haven’t been able to meet the person who makes the decision to explain our vision to them. And that’s bad, mainly for us from a financial point of view, but also for the country because lots of investments are being made and you only realize some of them aren’t right when they are already in progress. There’s a Cuban saying that I really like: “Whoever buys something cheap has to buy it twice.”

Our company could have three times the presence it does today on the Cuban market, but the infrastructure doesn’t exist and things aren’t very well organized. Cuba is making progress, but slowly. Although, I have to say it’s getting better every year that goes by.

How do you compete for bids in a market where cheap solutions are given priority and not the best solutions?

Roberto Fusaroli: For us, it’s like sports. When we can’t sit down with clients and present them with our solutions, we nearly always lose. Plus, as a company, we don’t take part in projects which we believe aren’t providing the right solution to the problem. When that happens, I send an email to request a meeting with the client and try to explain to experts why they are wrong in their request and we offer them a fair proposal. I always say that TECOFIL doesn’t sell plants, it sells solutions.

Sometimes it works, sometimes it doesn’t. However, eight years ago it was much worse: you either sold what they were asking for, or you didn’t sell. At least now things have changed in that regard. TECOFIL’s technical structure works alongside with our clients and we sit down to try and provide solutions to their problems.

So, as a company, you prefer not to take part in projects which aren’t the best solution?

Roberto Fusaroli: Absolutely. Whoever works in the field of water, whoever works in public health, has a mission. This isn’t only a job that pays the bills. From a moral and technical standpoint, we don’t sell something which we know won’t work from the beginning. I always tell our engineers: “When you’re planning a wastewater plant, always think about the people who will work there and that your own children might swim wherever that plant discharges.”

If you don’t interiorise that, you’ll never be good a project designer when it comes to water-related projects. I prefer to lose a request, not take part in a bid, if I understand that the final result of the project isn’t what it needs to be.

Of course, that’s hard for me because TECOFIL is a capitalist company and its growth depends on turnover, but I always say it’s better to do a thousand things right than do four thousand things wrong. This has been our company’s concept since 1991 and it’s the reason for our success.

As a consequence of trying to do things properly, I can tell you that we aren’t the cheapest nearly half the time. But, I have to admit that our technical solutions are approved a lot of the time, even though we aren’t the cheapest out there. That means that there has been a breakthrough in the way people think, people want to find the best solution and not only buy the cheapest in order to tick off what they need to do. And that’s a key step forward, although it’s still a long road. I’m sure that Cuba will be a much better country in 15 years.