Vol 12, Issue 6 (June 2011)

Need to know

• EMPTY POCKETS

  Two of Europe’s basket-case Mediterranean economies are looking at their water assets as they act to reduce their deficits.

• OFWAT WORRIES

  Times are tough for the private water operators in the UK in the first year after regulator Ofwat enforced a new tougher pricing regime.

• INFRA OPPORTUNITIES

  Over in Chile, the state economic development agency (CORFO) has raised nearly $1 billion from the successful public sale of a 30% stake in its largest water utility, Aguas Andinas.

• GET SMART

  Smart water networks seem to have become the big new thing in water this year.

• ROCK THE BOT

  The Sultanate of Oman has announced its latest water demand projections, along with plans for two new desalination plants to cover it for the next seven years.

• CUT AND RUN

  Bordeaux has become the latest French city to consider re-municipalising its water supply service, complaining of overcharging and a lack of transparency from current operator Lyonnaise des Eaux.

Analysis

• Hooray for small desal!

  Christopher Gasson finds something positive in the gloomy desal outlook.

• David Lloyd Owen - Analysing water: how CP Snow’s ‘Two Cultures’ have become several prisms

  In 1959, the writer and physicist CP Snow warned about how the drifting apart of science and the humanities would impair our ability to address the problems we will be facing in the future.

• CHART OF THE MONTH - Top ten desalination markets by expected contracted capacity

  This month’s chart is part of GWI’s updated desalination market forecast.

• Eurozone debt crisis crimps stock performance

  Water stocks had their worst month since May 2010, as the market digested the wider implications of the Eurozone debt crisis. The establishment of the Cambodian securities exchange on 11 July will be interesting to watch.

General

• Election result positive for AdP privatisation

  The reform of state-owned water company Águas de Portugal is a priority for the newly elected government. Partprivatisation may not be as simple as it looks.

• Ambitious timing for Greek water sell-off

  Stakes in Greece’s two listed water companies are among the assets being sold off to shore up the country’s ailing economy. How can the state avoid fire-sale prices?

• UK water companies feel the pinch

  The tougher price limits imposed during the first year of the new regulatory cycle have hit UK water and sewerage companies’ profits hard. Things may get worse before they get better.

• No BOTs, please – we’re British

  The response to Defra’s consultation into privately financed water projects in the UK has been less than welcoming.

• Bristol Water back on the block

  Could the sale of Bristol Water trigger a new wave of M&A in UK water?

• Referendum derails Italian water sector

  Italy has resoundingly voted against private water and cost recovery tariffs in the sector. The full implications of the decision are only beginning to play out.

• Italy’s grasshoppers presage a bleak winter for water

  The yes vote in Italy’s referendum was virtually inevitable. So are the consequences, writes Christopher Gasson.

• Smart thinking as GE and Suez join forces

  A new co-operation agreement between Suez Environnement and GE should enhance both companies’ value proposition to municipal clients. It is not an end in itself.

• Bordeaux to vote on re-municipalisation

  Bordeaux could become the latest French municipality to take the operation of its water and wastewater assets back in-house. Terminating the drinking water contract early may prove expensive.

• Aquarion completes debt restructuring

  A new loan package will reduce debt service costs going forward. Terminating the original deal early was not cheap.

• Aguas Andinas share sale raises $980m

  Chile has divested the first of four packets of shares in its water utilities.

• Ovivo draws a line under Christ losses

  GLV’s water technology subsidiary has staunched the red ink flowing from its Swiss acquisition. It is looking up.

• Oman plans IWPs to meet water needs

  The sultanate has decided that the urgent demand for water means IWPPs are no longer practical. Authorities are confident that their two new desalination-only plants will still be a juicy prize for developers.

• Planning to plug the leaks

  Desalination building plans will be wasted unless paired with a matching campaign to reduce network water losses, Omani authorities have said.

• Aquatech win brings end to Ghalilah saga

  The US firm has taken a significant step into the Gulf municipal desal market by winning the contract for a new SWRO plant in the UAE. It is keeping quiet over the low-energy technical design that put it ahead of the pack.

• GCC aid package threatens Bahrain BOT

  Bahrain could be dropping its ambitious wastewater privatisation programme after the GCC ‘stabilisation’ package nearly doubled its infrastructure budget. Does paying for future projects up front make financial sense?

• $20m revamp for old Tubli

  Bahrain’s biggest WWTP is overused and sorely in need of an overhaul.

• Looking for a bright side

  The civil troubles have made it a depressing time for private companies in the Middle East. Tom Scotney looks for some potential opportunities.

• Power risk matrix key to Soreq financing

  The financing package for the world’s largest reverse osmosis project was finally signed off at the end of May. Plans for a co-located independent power plant gave the deal a unique risk profile.

• Israeli reaches desal price accord

  Round-the-clock water production has already begun at Palmachim following an agreement over top-up water prices for private developers.

• Earthquake shakes open a market

  The devastating earthquake and tsunami that hit Japan in March may help to kick-start the implementation of long-awaited reforms in the country’s water sector. GWI’s Asia editor Olivia Jensen assesses the opportunities.

• Keeping a close watch on monitoring markets

  Central government expenditure on water monitoring equipment in China is set to rise dramatically. It is only a tiny fraction of the potential market, as Kathy Liu discovers.

• Essar to enter the Indian concessions market

  The Indian conglomerate wants to follow its compatriots and make the leap into the water infrastructure market. It is looking for international partners, writes Rama Rastogi.

• Doshion Veolia strengthens municipal business

  Ashit Doshi, managing director of Doshion Veolia Water Solutions, explains the rationale behind his latest acquisition, and how it will drive municipal business growth.

• Sunny outlook for new Aussie water fund

  The launch of a new investment vehicle in Australia could be evidence that smaller investors are finally realising the attraction of the water rights market. Max Borchardt reports.

• Adelaide gears up for new delivery model

  The appointment of KBR to oversee South Australia’s project management and procurement works is the final step in the overhaul of the state’s water service delivery model. Max Borchardt reports.

• Victoria and SA settle trading dispute

  How will a new water trade agreement affect Adelaide’s desalination plant?

• Cloudy, with a chance of floods

  Charles Bodhi gets ready to join the poolside party at Singapore International Water Week.

Brief

• EUROPE WATER IN BRIEF

  Marseille Provence Metropolitan Council (MPM) will on 8th July vote to radically change the configuration of its water distribution and sewerage contracts for 16 out of its 18 municipal districts.

• AMERICA WATER IN BRIEF

  Shares in Insituform plummeted by 13% on 16 June after the company drastically reduced its full-year EPS guidance from $1.75-1.90 to a new range of $1.30-1.40.

• MIDDLE EAST WATER IN BRIEF

  Oman’s BankMuscat has been confirmed as the advisor for the upcoming IPO of SMN Power Holding, the company that owns and operates the 120,000m3/d & 678MW Barka 2 IWPP.

• ASIA WATER IN BRIEF

  Malaysia’s slow-moving sector reforms took a step forward at the end of May when the federal government reached agreement with Penang State on the transfer of its water assets to the national asset holding company.

Market Profile

• SWAN’s way – in search of lost water

  The next generation of water information technology technology promises network optimisation on a grand scale, saving energy, money and the environment. Gordon Cope investigates.