Nevertheless, sanitation still remains relatively low in mountain rural areas and some people have their own sources of water controlled by municipalities.

In 1997 Portugal created a national regulatory agency, which is now called the Water and Waste Services Regulation Authority Entidade Reguladora dos Serviços de Águas e Resíduos (ERSAR).

Thus, a total of about 80% of the population receives water directly or indirectly multi-municipal companies established under private law.

According to the local government law (Lei das autarquias locais) the country's 308 municipalities are responsible for providing water supply and sanitation services, either directly or indirectly through concessions.

With total assets amounting to around €7.5 billion, the AdP Group is the largest entity operating in the environmental sector in Portugal.

The AdP Group was founded in 1993 and set the mission of developing multi-municipal water supply and wastewater sanitation systems and currently providing services to over 80% of the Portuguese population.

The core activity involves the integrated management of the urban water cycle and spanning all of its respective phases, ranging from the capture, treatment and distribution of water for public consumption to the collection, transport, treatment and disposal of urban and industrial wastewaters and including their recycling and reutilisation.

In recent years, in association with local partners as well as other Portuguese companies in this sector, the group has undertaken a diverse range of projects in countries including Angola, Algeria, Brazil, Cape Verde, East Timor, Morocco, Mozambique and Sao Tome e Principe, whether in the format of technical assistance or the management of water and wastewater concessionary services.

Currently, the group is present in Angola, where it set up a subsidiary in 2010; in Mozambique through its stake in Aquatec; and in various other countries following the signing of service provision and technical assistance contracts.

In terms of its bulk operations, EPAL supplies water to 35 municipalities on the north bank of the river Tagus and, since 2015, delegated management responsibility for the multi-municipal water supply and sanitation systems of Lisbon and the Tagus Valley, which integrates 86 municipalities and a population of around 3.8 million inhabitants in a territorial area making up 33% of mainland Portugal.

Portugal's membership of the European Community in 1986 and the EU Urban waste water framework directive of 1991 triggered a series of reforms undertaken by the government of then Prime Minister Aníbal Cavaco Silva in order to modernize the sector, to improve service quality and to effectively use EU funds destined to the sector.

Until then service provision had been the sole responsibility of the municipalities, with the exception of the metropolitan area of Lisbon which was served by the multi-municipal company called Empresa Portuguesa das Águas Livres (EPAL).

The government provided preferential access to EU structural funds to those municipalities that agreed to participate in the new multi-municipal companies, which were gradually created beginning in 1995.

In 2000 the government published the first strategic plan for water and sanitation, further promoting the modernization of the sector and the consolidation of service provision.

In March 2007 the European Commission launched infringement procedures against Portugal for not complying with three Court judgements on the quality of drinking water.

It also referred Portugal to the European Court of Justice over its failure to implement the EU wastewater framework directive.

The decree determines the basic rules for tariff setting and aims at achieving full cost recovery, in line with the EU Water Framework Directive.

Concerning investments in water distribution and sewers (vertem "alta"), they were only 0.9 billion euro and thus much lower than expected.

In October 2006 the EIB approved a 925 million euro loan for investments in eleven regional water and sanitation utilities in Portugal.

[18] Such national sector investment plans are an interesting feature that is specific to Portugal and are not common in other EU countries.