Vol 11, Issue 6 (June 2010)

Need to know

• NON-PRIVATISATION

  The sale of Indianapolis Water Works to Citizens Energy has taken a step forward, with the utility’s board voting to accept the proposal.

• MINORITY MANIA

  Like the US, Italy has a big water infrastructure investment gap, and a suspicion of private sector participation.

• DESAL DIFFICULTIES

  Energy Recovery Inc. has had a torrid time on the stock market.

Analysis

• Déjà vu all over again

  Christopher Gasson looks back at 10 years of GWI and asks whether investment in closing the infrastructure gap will ever drive the market.

• David Lloyd Owen - Never say never again – Suez subtly slips back into South America

  Now that Agbar is more or less a part of Suez Environnement, Suez’s perceived exit from Latin America is a little less farreaching than it had appeared.

• Chart of the Month - Where the money goes: per capita water and wastewater capex

  This map shows which countries are expected to spend the most per head on water and wastewater infrastructure over the period 2007 - 2016.

• Strong UK results help outperformance

  The positive UK results season was a major factor behind the outperformance of the GWI Water Index this month. MIddlesex Water, meanwhile, priced the first of a series of expected share offerings from US water utilities this year.

General

• Good debt versus bad debt: UK results in focus

  The quoted UK WASCs continued to improve their operating profits during the last fiscal year. Investors, meanwhile, have been forced to swallow growing bad debt and restructuring charges.

• Fitch warns of dividend pressure

  The ratings agency has outlined a series of challenges that could put further pressure on dividend payouts amongst the UK water utilities.

• French antitrust probe takes a new twist

  Lyonnaise des Eaux has been left red-faced after the European Commission launched a separate investigation connected with the ongoing antitrust probe into French private water operators.

• Greece forced to reconsider stake sales

  As part of its €110 billion bailout package, the Greek government has committed to selling stakes in two statecontrolled water companies. It marks a clear U-turn in strategy for the socialist administration.

• DRACE in pole position for growth

  DRACE medioambiente is using its domestic strength to further its international ambitions. General manager Alejandro Sánchez talks to Richard Weyndling about the prospects for growth.

• Bucharest water PPP saves city $350m

  The IFC and Castalia have published a study evaluating ten years of Bucharest’s private water concession. The model has the potential to save the city $1 billion, but is it replicable?

• Iride reshuffles its water portfolio

  A new injection of capital should enable Iride to expand its operations in northern Italy. The deal involves the de-listing of Mediterranea delle Acque.

• IFC doubles equity commitment to Veolia Voda

  Veolia Voda has taken on more equity in order to further its expansion plans in Eastern Europe. The €100 million commitment from the IFC is twice that initially planned.

• Veolia takes UU’s European non-reg business

  United Utilities has continued its disposals programme, offloading most of its remaining international interests to Veolia. The price was less than it had hoped for.

• Nigerian water sector embraces PSP

  Rampant population growth and urbanisation have forced the authorities in Lagos to seek private finance to construct a series of drinking water plants. Implementing tariff reform will be more difficult.

• Desal focus for Ghubrah refurb

  Urban expansion has forced a rethink at Muscat’s ageing Al Ghubrah facility. It is one of the many challenges facing the new CEO of Oman PWP

• Bahrain considers wastewater IPO strategy

  Manama has acquired a taste for unexplored territory in the Gulf’s wastewater sector. It could offer local investors a share of the spoils through a series of wastewater spin-offs.

• IDE eyes new developer opportunities

  A partial IPO in early 2011 could give the Israeli desalter the capital it needs to pursue new developer opportunities in Asia. First, it will have to convince potential investors that a revenue tail-off in 2010 is reversible.

• Calder returns to form at Soreq

  The Soreq award proves the ERD market is as competitive as ever.

• Indianapolis votes for $425m water windfall

  Cash-strapped municipalities dream of selling their water utilities to shore up their finances. One city has found a way of making it not look like privatisation.

• Can other cities copy Indy?

  Christopher Gasson looks at the options for raising money without the dreaded p-word.

• US wastewater investment gap grows again

  Investment in renewing America’s wastewater infrastructure is not keeping pace with growing needs, according to the latest Clean Watershed Needs Survey from the Environmental Protection Agency. What is the outlook?

• PRASA seeks private help on NRW

  Puerto Rico’s Aqueduct and Sewer Authority wants to reduce non-revenue water through a PPP. The project could bring in $800 million over 15 years.

• End of an era for Thames Water

  The termination of Thames Water’s contract in Puerto Rico will mark an inauspicious end to the company’s once-strong international empire.

• NYC scraps water O&M outsourcing plans

  New York City’s Department of Environmental Protection has decided against outsourcing the operation of two key drinking water facilities. It is a major blow for the US contract ops market.

• Winnipeg’s new PPP model: design-build-assist

  Canada’s resistance to public-private partnerships in water has taken a new twist. The lack of transparency regarding Veolia’s compensation under a 30-year “assistance” contract in Winnipeg has caused a stir.

• Building value from the ground up in China

  Kathy Liu reports on a process which uses sludge from wastewater treatment plants to manufacture bricks for the construction industry. It could be an important revenue earner for plant owners.

Brief

• EUROPE WATER NEWS BRIEF

  Suez Environnement priced a €500 million 12-year bond into €2.3 billion of demand on 15 June.

• MIDDLE EAST WATER NEWS BRIEF

  Haya Water, the wastewater concessionaire in the Omani governorate of Muscat, is rescheduling its ongoing network and treatment plant procurement programme.

• AMERICAS WATER NEWS BRIEF

  The City of Trenton in New Jersey voted resoundingly in a referendum on 15 June not to sell part of the city’s water assets to American Water for $80 million.

• ASIA WATER NEWS BRIEF

  Siemens and Windesal have signed a joint venture which aims to develop small-scale desalination plants in rural communities, initially in South Australia.

Market insight

• Mixing the new Balashi cocktail

  A rash of contract opportunities in the Caribbean desal market has attracted attention to the region as never before. Do the newbies know what they’re letting themselves in for?

Opinion

• Water by any other name

  Charles Bodhi turns on the taps ahead of Singapore’s third Water Week.