Vol 4, Issue 12 (December 2003)

Need to know

• ACQUISITIONS

  ITT Industries continued to build its position in the water sector with the 3 million acquisition of Wedeco, a German manufacturer of ozone oxidation and ultraviolet (UV) disinfection equipment.

• COMPANY NEWS/PUBLICATIONS

  Veolia’s third-quarter figures showed top line sales dip 1% to €8,334 million, primarily as a result of a 4.9% negative exchange rate movement.

• DISPUTES

  The courts have provided Covanta Tampa Construction with more time to get the Tampa Bay desalination facility to meet its performance targets.

• PROJECTS

  The UK’s Ministry of Defence (MoD) awarded Package C of Project Aquatrine to the C2C consortium of Costain, Ove Arup & Partners and Severn Trent.

Analysis

• A gift from God

  Low tariffs are one of the most significant barriers to the expansion of desalination.

• Not quite dead in Kyoto

  Actually it has been a good year for the Millennium goals.

General

• ADWEA sets agenda for Taweelah IWPP

  The project involves the acquisition of existing assets and a capacity extension. At 2,000MW and 825,000m3/d, it is a big deal.

• Apulia and Basilicata move towards deal

  An agreement over water transfers would remove a significant obstacle to privatising one of Italy’s largest water authorities.

• Arbitrators up the stakes in Manila

  Maynilad water is probably a write-off, but the fight to stop further cash going into the failed project goes on.

• Cartel office bars RWE acquisitions

  Germany’s Federal Cartel Office has capped RWE’s domestic ambitions: creating an opportunity for others.

• China BOT deals: are they for real?

  Even the insiders have their doubts.

• Corporate deals in 2003

  See attached image.

• Covanta gets more time to save Tampa Bay

  The troubled contractor’s bankruptcy move has won it at least three more months. GWI’s US correspondent Larry Chertoff looks at the chances of the desal plant’s success.

• DEWA considers Jebel Ali hybrid option

  Mott MacDonald is to carry out a pilot plant study. The main question is can RO handle the harsh gulf waters?

• Essan & Essco concessions sold

  Chile continued the trend of awarding deals to local companies last month.

• Evolving the UK regulatory regime

  Stone & Webster’s Dr Tony Ballance argues for mergers and a better alignment of interests in the UK market.

• Germany split over water liberalisation and privatisation

  Private sector participation seems to be advancing at a very slow rate in Germany. GWI looks at what might speed it up.

• Ministry endangers Israel’s desal plans

  The finance ministry doesn’t want to carry the cost of increasing the capacity of four proposed desalination plants by 50% but the banks may not finance the projects without the increase.

• Private water rises above setbacks

  The private water industry was up 6.1% in 2003 despite high-profile contract losses.

• Sao Paulo City guns for Sabesp

  It is setting up a regulator in a bid to control Sabesp. But it might do a deal instead.

• South East Water goes for thin equity

  Macquarie Bank is looking at options to gear up its newly acquired water company.

• The deals that made a difference

  GWI has selected five deals which we believe broke new ground for the international water industry in 2003.

• Tianjin faces water shortages

  Developing new water sources will be a priority for the Chinese city.

• United tries new partnership model

  With the big city contract operations market shutting down, Suez’s US arm has been trying a new way of packaging its expertise.

• Water projects in 2003

  See attached image.

• Who gained what in 2003

  Suez and AWG are out of the picture, but RWE/Thames has bounced back.

• Zecon secures $1billion works contract

  If NS Water wins the concession for Malaysia’s Negeri Sembilan state, it wants a related company to do the works.

Market insight

• Some joy for UK water companies at half way

  Pennon and Kelda did well. AWG is improving, but doubts continue about United and Northumbrian.