Vol 7, Issue 11 (November 2006)

Need to know

• CENTRE OF THE WORLD

  * The water world revolves around Jeddah this month, as the Water and Power Forum gets underway.

• FSA WARNING

  * As the market digests the full implications of the Thames Water acquisition, and the deadline for the take-over of AWG by the Osprey consortium was extended again after only 65% of the target’s shares had been validly accepted by 9 November, the FSA laid down perhaps the most public warning yet in a discussion paper on the private equity market.

• INDONESIA INFRASTRUCTURE

  * Indonesia held its 2006 Infrastructure Conference and Exhibition in Jakarta from 1-3 November, and is seeking US$12 billion in private investment to fund infrastructure development.

• SUEZ IN CHINA

  * It has been a busy month for Suez in China.

• TARIFF CORRECTION

  * We have three corrections to make to the Global Water and Wastewater Tariff Survey published in the September issue.

Analysis

• California dreaming

  Christopher Gasson is dumbfounded by a California court’s decision.

• CHART OF THE MONTH

  The liberalisation of China’s water sector has created a booming market for equipment suppliers, according to Frost & Sullivan’s latest report on the sector.

• Insight – David Lloyd Owen

  A Stern reminder: the water sector must face up to climate change.

General

• Acuamed tenders new batch

  The roll-out of Spain’s desalination programme continues. Will there be an opportunity for a foreign company in the new tranche?

• Algeria serves up Hyflux–Malakoff cocktail

  The Algerian government looks East to get its next desal plant underway, giving its partners the chance to flex their muscles as never before.

• Befesa puts down its roots overseas

  The Spanish company is looking to make the most of its high-profile successes by setting up an international network of offices.

• Black & Veatch broadens its appeal to UK clients

  The acquisition of Gleeson’s water business could open up international opportunities, as well as offering a “onestop shop” for existing UK customers.

• Buenos Aires to receive $5.7 billion investment boost

  Government funding and a new watchdog will improve services in the Argentine capital. Some, however, will still be left without basic sewerage provision when the funding runs out in 2020.

• Chennai desal clears hurdle

  A new local government is helping to smooth the path for Chennai’s first desalination project at Minjur. To keep in with the new administration, the construction company has already been forced to renegotiate on price.

• Chile’s Essbío continues to leverage up

  Southern Cross wants to add more debt to Essbío’s balance sheet. The utility still has plenty of room to borrow, so why not?

• Could Thames turn the tide?

  As the full implications of the Thames sale begin to sink in, we ask: how long before the UK water bubble bursts?

• Diverse forces spur German consolidation

  Accounting and tax changes could change the face of the German water industry. Private companies are already rubbing their hands.

• EAAB optimises debt portfolio

  In an inspired move, the Colombian water utility has mitigated foreign exchange risk and extended the duration of its liabilities by issuing “TABs”.

• Electrical engineer to take the helm at Thames

  As syndication of the £4 billion Thames Water acquisition loan gets underway, the Kemble consortium unveils its choice for the new Thames CEO – an electrical engineer.

• New cities bloom in desert

  Saudi Arabia is planning a series of new cities with major water requirements.

• New Mexico municipalities gear up for “Year of Water”

  Three municipalities are addressing local water shortages by introducing indirect potable water reuse systems. There is still some convincing to be done.

• Ofwat continues to peddle five-year cycle

  The UK regulator has set the scene for its future approach to water regulation. How will it reconcile long-term investment needs with a five-year price review cycle?

• Remondis Aqua strengthens Hungarian outpost

  The German company hopes to take advantage of opportunities brought about by Hungary’s EU accession. Will consumers accept the cost?

• Siemens targets water reuse

  Siemens’ Chuck Gordon believes the wastewater reuse market will double in size within the next 10 years. Is he suffering from “membrane mania”?

• Spain to double wastewater spending in ten years

  BOT opportunities are set to flourish under Spain’s new urban wastewater plan. It remains to be seen how much of the business will remain in domestic hands.

• Suez continues Chinese offensive with Changshu deal

  The French giant continues to make an impact in China, with a quartet of new deals.

• Thai Tap Water plans share listing

  The Thai concessionaire will undergo yet another change in its ownership structure when it floats 25% of its share capital next year.

• The biggest small company in design-build

  VWST’s most feared competitor is a mid-sized company that comes up with a very clever offering. That is one of the reasons it has 58 specialist subsidiaries. Ian Elkins talks strategy with CEO Jean-Michel Herrewyn.

• The Global Water Awards 2007

  Alison Ireland invites nominations for next year’s awards.

• The new ITT: realigned and ready to go

  ITT Fluid Technology has been building a broad portfolio of water-related technologies. Now it wants to make the most of them, divisional president Hank Driesse tells Ian Elkins.

• Tiger’s head and snake’s tail

  The push-pull nature of Chinese water tenders often results in a frustrating deadlock. Kathy Liu reports.

Brief

• IN BRIEF – AMERICAS

  * The winners of the 2006 Canadian Consulting Engineering Awards were announced at a gala celebration in Ottawa at the end of October.

• IN BRIEF – ASIA

  * Doosan Heavy Industries is to acquire UK-based Mitsui Babcock Energy Limited, one of the global leaders in the field of boiler design and engineering.

• IN BRIEF – EUROPE

  * Akzo Nobel has agreed to sell its MPP Systems business to Veolia Water Solutions & Technologies.

• IN BRIEF – ISRAEL

  * Israel’s Mekorot Water Company has signed a contract to purchase electricity from Delek IPP – the independent power supplier for the 330,000m³/d Ashkelon desalination facility.

• IN BRIEF – MIDDLE EAST

  * Dubai Municipality recently invited 13 prequalified groups to bid for the 300,000m³/d wastewater treatment plant located at Jebel Ali.

Market insight

• Two steps forward, one step back

  In his annual review of the international private water industry, David Lloyd Owen finds a proliferation of smaller deals, but still some big disappointments.

• Two steps forward, one step back (cont.)

  (See accompanying tables)