Vol 11, Issue 8 (August 2010)

Need to know

• DROUGHT WATCH

  This summer’s droughts and floods have been in all the wrong places for desalters.

• DELISTINGS

  Water asset holding companies seem to be losing favour on the public markets.

• RESULTS

  The International Centre for Settlement of Investment Disputes (ICSID) has ruled in favour of Suez Environnement in its dispute with the Argentine government over losses related to the Aguas Argentinas concession.

• BIG PLANS

  The number one power-desal developer in the world, GdF Suez, is merging its international project portfolio with International Power, which is the number three in the market.

Analysis

• The real cost of capital

  Christopher Gasson looks at what the sale of Cascal and Hyflux Water Trust says about the cost of capital for water project developers.

• David Lloyd Owen - The BP moment – hoping that your networks will hold out.

  The economics columnist John Kay recently recalled an observation made by one of the directors of the then recently privatised UK water companies that the essence of managing a water and sewerage company is to let the service run itself and to concentrate on laying off staff and cutting costs to the applause of all.

• Chart of the Month - EPC capacity costs for reverse osmosis desalination plants

  This month’s chart comes from GWI’s new report, Desalination Markets 2010.

• Out with the old, in with the new

  A re-shuffling of the GWI Water Index has strengthened the European segment, and gives first-time exposure to the largest listed Chinese water stock. Meanwhile, fears over near-term dilution at American Water have subsided.

General

• The new power behind International Power

  The proposed reverse takeover of International Power by GdF Suez will bring together two of the leading players in the Middle East power and water market. What will the regulators make of it?

• Australia’s urban water resourcing challenge

  A new report predicts that water demand in Australia’s major cities will rise by 76% to 7.3 million m3/d between now and 2056. GWI’s Australia Editor Max Borchardt reports on the challenges facing today’s utility managers.

• Aussie water rights investor seeks A$100m

  A unique new vehicle which will invest in Australian water entitlements is going on tour to drum up investor interest. MD Richard Lourey believes he has a powerful proposition.

• Storing up water supplies for a sunny day

  A new initiative in Australia could provide farmers with increased water security, even in dry years.

• Flooding exposes Chinese infrastructure woes

  Extreme rainfall has left China’s wastewater networks unable to cope. Authorities have acknowledged the problem, but the solution will not come cheap.

• Mitsui and Hyflux’s stars align in new Galaxy

  The delisting of Hyflux Water Trust will give Hyflux a more robust vehicle to recycle capital. It will also give Mitsui a foothold in the Chinese water treatment market.

• Mitsui’s strategy to take on the world

  The trading house has quietly been building its portfolio of water projects around the world. It wants to do more, Koichi Wakana tells GWI.

• Aquarion looks for double-digit growth

  Aquarion’s growth strategy was derailed after former owner Kelda became frustrated with the US market in 2005. Now, with suppert from new owner Macquarie, CEO Chuck Firlotte is back on the acquisitions trail.

• Treating the big P in Wisconsin

  Wisconsin’s decision to adopt more stringent phosphorus reductions in wastewater effluent indirectly addresses the problem of agricultural run-off.

• Suez seeks $1.2bn in damages in Argentina

  Suez Environnement and Agbar have won the right to claim limited damages for lost revenues associated with Argentinian water concessions. Was the ruling tribunal’s judgement flawed?

• CH2M Hill sees growth in a supporting role

  With clients looking for better value, and international opportunities available, the US engineer has scope for growth. Ambivalence about the EPC market remains.

• Italy’s €50bn investment gap

  A new report has revealed the cracks in Italy’s water infrastructure spending. Tariff reform could yet prove to be the answer.

• Turning water and wires into growth

  EPCOR’s commercial approach to the water market is a clear vindication that the public-public partnership market is alive and well. CEO Don Lowry spoke to GWI about his vision for growing the business.

• Consolidated Water broadens its horizons

  The desal developer has reacted to increased competition and a slow pipeline in its core Caribbean market by pursuing opportunities abroad. It is still early days.

• MBIA looks to exit water bonds

  The troubled insurer is likely to have to recompense debt investors in order to extricate itself from existing guarantee obligations.

• Earthquake capex to boost Chile’s water spend

  Chile will have to spend an extra $100 million over the next ten years to repair and replace water infrastructure damaged by the 2010 earthquakes. The impact on tariffs will be negligible.

• Ofwat softens its stance on competition

  The economic regulator looks to have bowed to the demands of debt investors by adopting a less aggressive position on competition in the water sector. Was the concept always destined to fall at first base?

• An end in sight for Vigo’s wastewater problem

  EU compliance beckons as the Spanish city of Vigo prepares to tender its new WWTP. The design-build firm will put up 30% of the construction cost.

• Italy enters new era of private water

  Critics are arguing for a longer transition period on new tendering rules.

Brief

• ASIA WATER NEWS BRIEF

  VA Tech Wabag CEO Rajiv Mittal and CFO Subramanian Varadarajan led a roadshow team which met with investors in Singapore on 5th August and Hong Kong on 6th August ahead of an IPO later this year.

• AMERICAS WATER NEWS BRIEF

  California approved legislation on 9th August that would delay a public vote on its water bond until November 2012.

• EUROPE

  Bluewater Bio International (BBI) has secured £4 million of new investment as it shifts its strategy towards acquisitions.

• Europe Water

  Leak detection specialist Water Intelligence plc (formerly Qonnectis) began trading on London’s Alternative Investment Market

• Europe Water- News in brief

  More than one million people in Italy signed up this spring to a petition requesting a national referendum to annul a law paving the way for further privatisation.

• Europe-News in Brief

  The recently approved Andalucian water law “prioritises drinking water supply and the ecological flow of rivers” and “paves the way for a wastewater treatment plan”,

• Europe-News in Brief

  Agbar has secured a 50-year drinking water concession worth €980 million in Calvia (Mallorca).

• Europe-News in Brief

  Moody’s has downgraded

Companies

• Sembcorp pushes municipal growth strategy

  The acquisition of Cascal has allowed the Singapore-listed developer to diversify away from its traditional industrial customer base. EVP for business development Tan Cheng Gua talks to GWI about the rationale behind the move.

• Biwater plc gets back to its roots

  Having strengthened its balance sheet by selling Cascal, the contractor is looking to capitalise on its unique record of bringing borrowers and lenders together to make innovative projects happen.