Vol 11, Issue 3 (March 2010)

Need to know

• TAKEOVER TAKEAWAYS

  * It has been a month of mergers.

• OVERSEAS STRATEGIES

  * The Japanese export technology development organisation NEDO held a wellattended symposium in Tokyo last month in a bid to get local water companies to do more overseas.

• CONTRACT GRIEF

  * Meanwhile, the agonizing wait for the winner of France’s €371 million-a-year SEDIF contract continues.

• RAINING ON DESAL’S PARADE

  * The El Niño effect

Analysis

• Veolia’s ‘skeleton in the attic’ vision

  Christopher Gasson argues that Veolia has been living a lie by pretending there is growth in the long-term municipal operating contract model. It needs to make a fresh proposition to investors.

• David Lloyd Owen - Are the buccaneers back?

  The SouthWest Water buyout looks like a one-off.

• Chart of the Month - Kemira: quarterly revenues by market segment

  This month’s chart is a look back at years of financial turmoil through the eyes of Kemira, which is the market-leading supplier of coagulants to the water industry, as well as a major supplier of flocculants and specialist water treatment chemicals for the paper industry.

General

• Glamorous analysis

  Emma Welsh charts the progress of GWI’s new Global Water Market report.

• Veolia punished for lack of vision

  Veolia Environnement and Suez Environnement published their 2009 results within two weeks of each other. Despite facing similar market conditions, there is no doubt which company the market favours today

• The big one threatens to splinter

  A group of communities has broken away from the Île-de-France region, reducing the future scope of the SEDIF water services contract. The client is pressing ahead regardless.

• March M&A bolsters water index

  A series of high-profile acquisitions in the US ensured an outperformance in the Americas portion of the GWI Global Water Index this month. Weak guidance numbers from American Water limited the upside.

• Taking advantage of good connections

  Eighteen months ago, Sacyr Vallehermoso was rumoured to be looking to dump its water division. Director-general Pablo Abril-Martorell tells GWI why it was right to hold on.

• The value of counter-cyclical lending

  Despite the crisis, the EBRD committed more money to the water sector in 2009 than ever before. It also broadened its sphere of influence in anticipation of future investment needs in Turkey and Belarus’.

• Putting Central Asia on the map

  The EBRD stepped up its water sector lending activities in Central Asia last year. Wastewater needs will demand further support in the future.

• New targets for Acciona Agua

  The Spanish water operator has been told to double its revenues by 2013. It is looking abroad to generate growth.

• Italy drafts anti-ATO legislation

  Plans by the Italian government to abolish local authority control over ATOs have attracted the wrath of both industry and consumers.

• UU may re-assess sale of UK outsourcing unit

  Recent contract losses have dramatically reduced the value of United Utilities’ UK outsourcing business. Interest in its Australian arm, meanwhile, has never been greater.

• Industry fights back over Italian leakage

  The latest leakage numbers published by the Italian statistics office are misleading, according to Federutility. The true figures are less pessimistic.

• Water price ruling threatens municipal utilities

  A court ruling in favour of a 29% tariff cut at a German water utility may be the first of many. Is it time for a re-think on private sector involvement in the sector?

• The push to prioritise investments in Bulgaria

  Bulgaria’s water infrastructure needs cannot be tackled until they have been prioritised. With so much at stake, pressure on the government is mounting.

• Japanese bet on Saudi membrane market

  A new Saudi-Japanese JV will manufacture hollow-fibre membrane elements in the Kingdom. It has set some ambitious investment targets.

• Salalah debt closing delayed

  Despite breaking ground back in February, financial close has still not been reached on the Salalah on IWPP in Oman. The deal structure is complex.

• Bid deadline extended at Ras Azzour

  The bidders vying for the world’s largest power and desalination plant have secured some breathing space, though an uphill struggle lies ahead for both bidders and client.

• FEWA rolls out Al Zawrah contracts

  A new tender promises 45,000m3/d of new reverse osmosis desalination capacity for the Emirate of Ajman. The client also wants to equip future plants to deal with algal blooms.

• Kuwait offers new flexibility at Az-Zour North complex

  Desalination contractors stand to benefit from a loosening of Kuwait’s notoriously tough contract terms. One firm in particular will be relieved.

• AEC sets the record straight on Oued Sebt

  The Algerian Energy Company has taken issue with GWI’s February article on the failure of the Oued Sebt desalination contract. It has laid the blame squarely at Biwater’s feet.

• Tunisian wastewater BOTs get back on track

  Two years after pre-qualifying companies, the Tunisian authorities have still not released an RFP for a combined wastewater treatment package. The wait could soon be over.

• Israeli water tech incubator comes home to roost

  A clean-tech venture fund has taken over the Kinrot water incubator in Israel. It is banking on some lucrative exits.

• Foz gears up for international growth

  Fernando Santos-Reis, president of Odebrecht’s rebranded environmental engineering arm, talks to GWI about his plans for the future.

• Foz do Brasil seals IFC investment

  A loan from the World Bank’s private sector promotion arm will help fund FdB’s expansion. There is also an option to subscribe to equity

• SouthWest Water’s private future

  Water Asset Management has taken advantage of the investor-owned utility’s accounting irregularities to make an offer for the company. Private ownership may be the best thing that has happened to the California-based company.

• EPA stimulus funds fly out of the door

  The US Environmental Protection Agency had allotted 99% of its stimulus money by the 17 February deadline. Some argue that the process has merely diverted attention from the greater issue of reducing tariff subsidies.

• Better stimu-late than never

  The US and Canada have reached agreement over the ‘Buy America’ clause in the stimulus package. It will not be applied retro-actively.

• Chinese water companies show their stripes

  Who will dominate the Chinese water sector in the year of the Golden Tiger? Kathy Liu looks ahead and assesses how the different contenders are shaping up.

Brief

• EUROPE WATER NEWS IN BRIEF

  * Following the closing of the voluntary public takeover offer for Christ Water Technology, GLV Inc. now holds 92.6% of Christ’s voting rights.

• MIDDLE EAST WATER NEWS IN BRIEF

  * IDE Technologies has revived plans for a partial stock exchange flotation, after a previous attempt at an IPO failed in 2007.

• AMERICAS WATER NEWS IN BRIEF

  * Consolidated Water affiliate Ocean Conversion has signed a definitive offtake agreement with the British Virgin Islands government for the purchase of at least 0.6MGD (2,271m3/d) from OC’s Bar Bay desalination plant. The 7-year contract comes with a further 7-year extension.

• ASIA WATER NEWS IN BRIEF

  * Hyflux has posted record profits for the second year in a row, generating a net profit of S$75.0 million (US$53.8 million) in 2009, up 27% on 2008.

Market insight

• Applying underground hydro-logic

  ASR offers a low-cost alternative for strapped water providers to extend their resources, according to Gord Cope. It is gaining traction in water-scarce areas around the world.

• A recipe for contingency in the MENA region

  Adam Heffill and Emilie Filou look at the challenges of aquifer storage in the Middle East and North Africa.

• Selling the right to withdraw water

  Does an innovative twist in the ASR concept in Arizona point to a new market for private investors?

Opinion

• Virtual waters run deep

  Charles Bodhi unearths a forgotten butterfly in the Asian water sector