Hard going for water projects in post-currency crisis Asia
- From: Vol 3, Issue 3 (March 2002)
- Category: General
- Region: Asia
- Country: China and Malaysia
- Related Companies: ABN Amro, AWG, Credit Agricole Indosuez, Indah Water Konsortium, Mitsubishi and Veolia Environnement (formerly Vivendi Environnement)
Private sector participation in Asian water supply and sewerage projects has slowed dramatically since 1997/98. Regulatory and tariff uncertainties are holding up deals, water utilities remain subject to political interference, and the downturn in the Asian project finance market has meant that non-recourse lenders are reluctant to provide funding for projects. However, the growing availability of local currency financing in Asia is allowing projects to close in spite of the difficult market conditions.
The currency crisis of 1997 has had a severe impact on the role of private companies in developing Asia’s water sector. Most notably, it has shown that the mismatch between local currency revenues and US dollar debt used in project and corporate financing is not sustainable in the long-term. Tariff structures have been unable to bear increased costs, passed ...
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