Vol 12, Issue 3 (March 2011)

Need to know

• SELLING THINGS

  * Veolia Environnement announced its figures for 2010 earlier this month.

• LOOKING EAST

  * Singapore’s Public Utilities Board has appointed Hyflux preferred bidder for the 318,500m3/d Tuas II desalination plant, although what it is proposing to build is much more of a power plant than a water plant (see Analysis opposite and stories pp28-29).

• NAMING NAMES

  * Ebara Engineering Services is to be remaned Swing Corporation on 1st April. JGC and Mitsubishi Corporation bought into the operating services company last year, and currently own a third of the stock each.

• BUYERS’ BAZAAR

  * Singapore’s Sinomem, which has contracts for 18 wastewater treatment plants in China, saw its shares rise 30% this month after a Chinese private equity fund made a US$276 million bid for the company.

• PRIVATE FRICTION

  * Gelsenwasser is having a difficult time in Algeria, where the German communally owned utility has a management contract for the city of Annaba.

Analysis

• Great deal or great desal?

  Christopher Gasson takes his hat off to Hyflux’s Olivia Lum for her Tuas II bid.

• David Lloyd Owen - Factoring the human factor into the DALY formula.

  Do people merely exist to work, or to learn how to work?

• Chart of the Month - Veolia Environnement: share performance vs. revenue performance

  This month’s chart shows Veolia’s share price and the CAC 40 index of French stocks on the left-hand scale, and the percentage change in the company’s reported revenues for each six-month period on the right.

General

• PPP from the inside

  Emma Welsh predicts that GWI’s PPP short school will be top-class.

• Operating assets on a whole new level

  American Water’s star has been in the ascendent since Jeff Sterba took over as CEO last August. How will investors respond to his new plans for the contract operations business?

• Water stocks unchanged amid contagion

  An essentially flat month for water stocks belied the wider contagion in the markets. Meanwhile, renewed hopes of a new M&A wave in the UK regulated water sector were short-lived.

• A model approach to Mexico’s water future

  The plan to roll out more than a dozen Mexican water concessions has struggled to get off the ground. New legislation and a “model contract” scheme could help get the programme back on track. Mark Walsh reports.

• Aquarion preps debt refinancing

  Macquarie will have to pay up to roll over the acquisition debt it took out to buy Aquarion. It is also under pressure to streamline group liquidity.

• CAB Ambiental IPO plans cancelled

  Risk-averse investors have stymied the concessionaire’s hopes of a flotation.

• South Sudan faces up to its water challenge

  The world’s newest economy will need to address basic infrastructure needs before it can begin to grow. Richard Nield reports from Juba.

• New Algerian body to promote domestic desal

  Algeria has reaffirmed its intention to procure future desalination capacity without relying on international expertise. It has created a new organisation to further its aims.

• Algerian contracts criticised ahead of audit result

  Bureaucratic delays have been blamed for slow progress on Algeria’s water management contracts. The results of an audit later this month will throw further light on the situation.

• Middle East to lead growth for new IP

  International Power’s Middle East chief executive Shankar Krishnamoorthy believes the effects of the current unrest on project finance in the region will be short-lived. He is relishing new greenfield opportunities in power and water.

• Barka 2 IPO moved to December

  The partial flotation of the Omani IWPP was set to take place in 2010. Construction delays mean it will now be floated by the end of 2011.

• FEWA assesses bidders for Ghalilah RO plant

  The list of bidders for the new RO plant at Ghalilah in the UAE makes interesting reading. Is the membrane desalination market opening up?

• IWPPs to underpin global growth at TAQA

  The power and water projects transferred to the energy company by Abu Dhabi have been the backbone of its global success. General manager Carl Sheldon says more projects in the region are an important target for TAQA.

• Veolia defends its position after Gabon audit

  A recent study found that Gabon’s water concessionaire is falling short of expectations and will not meet its infrastructure investment targets. The report fails to represent the whole picture, argues Veolia’s Patrice Fonlladosa.

• Waterleau still flush with Aqua cash

  A year after the Aqua Resources Fund invested €20 million in the Belgian company, the money is still sitting on the balance sheet. With all four of its markets growing fast, how will management find time to spend the cash?

• Europe gets tough on Abruzzo

  The Italian region has failed to satisfy the Urban Wastewater Directive.

• New hurdle for RWE in Berlin

  The plan to re-municipalise part of Berlin’s water company has taken a new turn following a referendum in February. The question remains as to whether the local government can afford to buy RWE out.

• Hyflux powers ahead at Tuaspring

  The inclusion of a captive power plant in Singapore’s new desal package could be indicative of Hyflux’s wider ambitions as a developer. It has the option to go ‘asset-lite’ further down the line.

• The influence of power over water

  Hyflux is proposing to build a power plant to support its Tuas II desalination plant. Is this why its bid was so low?

• Water Corp finally embraces private finance

  The naming of a preferred bidder for Western Australia’s first water BOT shows that Water Corp is serious about the idea of using private finance in infrastructure. It has not turned its back on the alliance model.

• Record Aussie water sale draws overseas interest

  A multi-state package of permanent water entitlements in Australia has already quickened pulses within the international investment community. What is all the fuss about?

• China’s water fleet prepares to set sail

  Chinese water companies are taking their first steps overseas. Kathy Liu assesses the challenges and opportunities.

• Cleaning up in the Indian wastewater sector

  The rapid growth of the Indian market is benefiting some more than others. GWI’s Rama Rastogi reports.

• Marubeni bolsters global water offering

  The acquisition of a 40% stake in Osmoflo will add membrane expertise and industrial water references to the Japanese trading house’s water portfolio. It offers some intriguing synergies.

• Getting the ball rolling again in Selangor

  The resolution of the dispute surrounding water asset sales in Malaysia’s richest state is far from over. Elections later this year could change everything.

Brief

• AMERICAS WATER IN BRIEF

  * Shares in Heckmann Corporation rose by more than 7% after the company announced encouraging full-year results on 14 March.

• MIDDLE EAST WATER NEWS IN BRIEF

  * Veolia has been awarded the $180 million contract for the Az-Zour South SWRO hybridisation project in Kuwait.

• EUROPE WATER NEWS IN BRIEF

  * The EBRD is considering extending its first public sector loan in the Turkish water sector, and is readying a €7.5 million facility for the resort town of Bodrum.

• ASIA WATER NEWS IN BRIEF

  * Sinomem shares shot up 28% on 5th March following news of a takeover bid from Clean Water Investment, an offshore investment vehicle of Chinese private equity firm CDH.

Opinion

• The titillating teaser at Tuas

  Charles Bodhi assesses the commercial feasibility of Singapore’s newest desal project.

Market Profile

• Water’s growing role in oil and gas

  Produced water is attracting the attention of an increasing number of water technology companies. With rising volumes and increased treatment needs, it looks like a good market. But can water companies find their way in?