Vol 10, Issue 3 (March 2009)

Need to know

• HOW ARE WE DOING?

  * Full-year results are in from Veolia, Suez Environnement and American Water, the three biggest quoted water companies.

• RULERS OF THE HEAVENS

  * China celebrated its mastery of the elements this month when a squadron of aeroplanes accompanied by ground-based rocket launchers sprayed enough silver iodide on the clouds to help start a snowstorm.

• NOT FOR SALE

  * One of the side-effects of the credit crunch has been to make selling businesses very difficult. Valoriza, the division of Sacyr which includes desalination subsidiary Sadyt is no closer finding a buyer, despite posting excellent results (see story p14).

• INFRA PENNY

  * The failure of Australian infrastructure investor Babcock & Brown has put the spotlight back on the infrastructure fund sector.

• BIG BLUE MEMBRANE

  * One of the first announcements to come out of the World Water Forum in Istanbul was from IBM, which unveiled a portfolio of smart water services and technologies, including a new fluorine-based membrane.

Analysis

• Istanbullish about tariffs

  Christopher Gasson takes the Sustainable Water Alliance to the World Water Forum.

• Insight - David Lloyd Owen

  Looking beyond a recession – lessons from the last downturn have their uses.

• The big dipper: contracted desalination capacity forecast-CHART

  This month’s chart comes from our freshly published Water Market Middle East 2010 report.

General

• Aqua and American eye earnings growth

  Both Aqua America and American Water seem set to post double-digit earnings growth in 2009. The drop-off in regulated acquisition activity could be a blessing in disguise.

• Pain and pleasure

  Emma Welsh reflects on giving birth, and extols the virtues of GWI’s new Water Market Middle East report.

• Suez revises guidance as GDP growth slips

  Suez Environnement is predicting EBITDA growth in the low single digits this year – a far cry from last summer’s bullish outlook. The company is also preparing to roadshow its inaugural bond issue.

• Veolia slashes investments to boost profits

  After a disappointing 2008, Veolia’s management has redoubled its commitment to improving profitability. It will be a slow process.

• New survey reveals financeability fears

  A new survey on behalf of Water UK demonstrates how much investors’ views have changed since the beginning of 2008. The finance ability of the sector has never been more important.

• S&P loses patience with Yorkshire Water

  The lack of developments on the refinancing of acquisition debt led S&P to cut Kelda’s credit rating by two notches in early March. Was the move premature?

• Andalucía to double reuse

  Golf and horticulture are creating demand for additional water resources in southern Spain. Increased reuse capacity could provide part of the solution.

• The true value of Valoriza

  The environmental services division of SyV has posted rosy results for 2008, increasing its attractiveness as a saleable asset.

• Spain signs regional reuse agreements

  Two Spanish regions have agreed wastewater financing programmes with Madrid. Regional elections could threaten the outcome in Galicia.

• Prudence dominates 2008 results season

  Weak results may have contributed to this month’s fall in the GWI Water Index, but prudence is the name of the game as far as outlooks for 2009 are concerned.

• Spanish desal success continues in Adelaide

  The French dominance of large-scale desal plants in Australia sustained a further blow with the award of the Adelaide project to an Acciona-led consortium. The timescale for delivery is tight.

• Now you see ’em, now you don’t

  Falling inflation in China means the time is ripe to raise water tariffs. This has not stopped accusations of profiteering. GWI’s Kathy Liu reports.

• Banobras sees boomtime for investment

  Despite the financial crisis, Mexican state development bank Banobras says it is still boomtime for water infrastructure. Mark Walsh finds out how it aims to keep the money flowing.

• Taboada award cast under a cloud

  In late February, it seemed as though Spain’s Grupo ACS had the Taboada concession in the bag. A subsequent appeal threatens to cast a cloud over Peru’s tendering procedure.

• Tuscany’s early progress hits the buffers

  A forerunner in the complex process to reform the Italian water sector, Tuscany is now reviewing its decade-long record. Where can it go from here?

• US stimulus spending divided up

  And there will be more funding on the way for water and wastewater if Congress has its way.

• Israel unveils $300m temporary desal plan

  Israel is considering temporary desalination plants to bridge the gap until its large-scale facilities come online. The price it is prepared to pay shows the seriousness of the situation.

• Making water – but only while the sun shines

  Solar desal remains unproven on a commercially viable scale. A new initiative in Israel could change that.

• Mekorot boosts bond supply

  The Israeli bulk water supplier has funded most of its 2009 investment programme via a new bond. Scarcity value underpinned the demand.

• Kharafi looks for solo breakthrough

  Kuwait’s leading project developer is increasingly going it alone when bidding for wastewater projects. Ibrahim Al Ghusain and Ark Pang spoke to GWI about what the future holds for Kharafi National.

• New GE Water boss makes his mark

  GE Water’s incoming president Heiner Markhoff tells Christopher Gasson why the industrial giant is committed to water, and how he intends to honour that commitment.

• Ad Dur financial close set for 31 May

  The international response to the Ad Dur financing has been positive – if protracted. Some last-minute renegotiation may be required.

• Agadir desal project moves forward

  The advisory team on the Agadir desalination plant in Morocco must now thrash out the finer details of the procurement strategy. The client insists that past delays merely reflect the complexity of the project.

• A consultant worth its salt

  How did a consulting company go from nothing to bagging the industry’s biggest references in under four years? ILF’s Thomas Altmann talks to GWI.

• Episkopi award in the lap of the gods

  WTE Wassertechnik is on the brink of winning its first major desalination contract, at Episkopi in Cyprus. Three rival consortia are unhappy with the decision.

• JBIC pumps up the volume

  Gulf power and water developers have become increasingly reliant on JBIC funding. A $5bn cash infusion from the Japanese government should help.

Brief

• In Brief - Europe

  * Moody’s has downgraded the rating of Italian water operator Acquedotto Pugliese (AQP) to Baa3, mirroring a similar move by Standard & Poor’s last month.

• In Brief - Asia

  * Hyflux has entered into a RMB617 million ($90.3 million) 15-year loan agreement with the Bank of China.

• In Brief - Americas

  Oasys Water, Inc., the leading developer of “Engineered Osmosis” desalination technology, has closed a $10 million round of financing with key investors in the US.

• In Brief - Middle East

  Suez Environnement has won two contracts in Algeria totalling €133 million.

Market insight

• From barren desert to investment oasis

  GWI’s new Water Market Middle East report spells out the private sector opportunities on offer in the Maghreb. As reuse gains in importance, wastewater spending will take off like never before.