Veolia builds on Ashkelon success

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With the largest reverse osmosis desalination plant in the world now in the operating phase, Veolia Water director Patrice Fonlladosa is looking around the world for new challenges.

There was a certain amount of pride surrounding Veolia’s recent press tour of its newly inaugurated 326,000m3/d Ashkelon desalination plant. Hailed as the world’s largest reverse osmosis desalination plant, it is an impressive achievement, but Veolia has yet to win another 100,000m3/d RO plant order.

Competitors Befesa, GE Ionics, Degrémont and Hyflux have a greater backlog of large plant orders, raising questions over Veolia’s ability to capitalise on its involvement in the project. During the visit, GWI took the opportunity to put this, and other questions, to Patrice Fonlladosa, Veolia Water’s executive vice president for the US, Africa, Middle East and India.

Fonlladosa is unfazed by the observation. He believes revenues will continue to be generated through new tenders won but emphasises that Veolia cannot forget the need to maximise the value of their current contracts. “Efficiency gains are a priority, not only at Ashkelon but at every project we are part of.”

In his opinion, Veolia now holds a privileged position within the Israeli desalination market. As frontrunner, it has built strong relationships within the water sector and he believes there will be a natural tendency for potential investors to consult Veolia regarding future Israeli projects. Its primary goal is to ensure that Ashkelon demonstrates it can deliver.

With the Israeli government keen to expand its desalination capacity to 863,000m3/d by 2010, Fonlladosa believes there is scope for development. One possibility is the proposed 326,000m3/d facility at Hadera. He says Veolia will wait to see the tender documents.

Elsewhere in the world, Veolia is leading a consortium which has been shortlisted for the proposed desalination plant in Sydney, Australia (which may reach a capacity of 500,000m3/d). IDE, its partner at Ashkelon, was part of a competing consortium, which failed to make the shortlist.

In the current marketplace, Fonlladosa recognises that in terms of desalination, the Gulf States appear to be where the money is. “However, we are also witnessing a new desire for municipal water treatment
schemes,” he says. One such scheme is the contract to run potable water and electricity supply in Abu Dhabi. Veolia is prequalified for both sides of the contract. He believes that in 2006 there will be a renewed focus on wastewater in the Gulf States, with water reuse now a priority across the region.

Elsewhere in his portfolio, Fonlladosa warns against ignoring Africa. “There is no one Africa. There aren’t bad countries to invest in, only bad investments. Each project must be appraised on its merits and risk must be considered on a case-bycase basis. The challenge is to find those opportunities.” He stresses the importance of good governance and believes public sector reform is key to the success of projects in the developing world, citing Cameroon as a country benefiting from reforms. He believes the World Bank has an important role to play in the region, both in terms of providing ad hoc development expenditure and in setting policy to enhance the delivery of public services.

Veolia is keen to promote operation & maintenance contracts where the state owns the infrastructure. The belief is that when the government defines the level of service, an expectation gap is less likely to
develop. With access to cheaper debt, such arrangements generally result in a lower product cost for the end-user, an especially important factor in the developing world.

Fonlladosa acknowledges that the Indian subcontinent has some serious water problems on the horizon.

He believes Veolia can offer solutions to many of these but is aware that public perception is a problem. “There is currently some resistance to privatisation of utilities. Veolia needs to demonstrate we can add
value. Indians are pragmatic, and if they see a project is working for the benefit of the people, they will be keen to expand.”

Veolia recently signed a management contract with the state of Karnataka for the 24-hour distribution and supply of water. The four-year pilot scheme is worth about €4 million and covers an estimated 30,000 people in three towns. It is something both parties are keen to make a success. Fonlladosa acknowledges that it won’t be a multi-billion dollar success overnight, but he is sure projects such as Karnataka will provide a model that can be replicated in other Indian states should the relationship prove successful.

He adds: “In the past, the industry has suffered from an inability to explain facts. Companies like Veolia must strive to communicate with the communities they work with and build trust through honest business relationships. We [the industry] must learn from past mistakes.” Fonlladosa is keen to point out that this constructive dialogue must extend to NGOs working in developing countries. He notes the ‘us and them mentality’, often born out of ideological differences, must be overcome if sustainable solutions are to be achieved effectively.

See also: Big is beautiful for Ashkelon