Vol 7, Issue 9 (September 2006)

Need to know

• FUNDAMENTAL BUYERS

  * Water’s irresistible attraction to fund managers burst into the open on 14 September with news that the UK’s Anglian Water Group had received an approach from a group of investors said to be 3i, Colonial First State of Australia, CPP Investment Board of Canada and a fourth unnamed investment group.

• FUNDAMENTAL INVESTORS

  * The craze for private equity funds in the water sector has also reached China.

• INCOMPREHENSIBLE

  * Siemens announced that it had acquired 70% of Chinese systems integrator (see p18) CNC.

• SAUDI ADVANCES

  * We are still waiting to hear whether the giant Ras Azzour power and water project in Saudi Arabia will be split in two or tendered as two separate projects.

• SPANISH MOVES

  * Spain’s desal market shows no letup. Two new projects are announced this month (one at Almuñecar, Granada and a second one at El Prat del Llobregat, Catalunya). Competition is hotting up too. There were 14 bids for Acuamed’s El Mojón phase II tender.

Analysis

• CHART OF THE MONTH

  This month’s chart comes from the World Bank’s IBNet database, which is rapidly becoming the must-see website for all water industry number crunchers (see www.ib-net.org).

• Insight – David Lloyd Owen

  Summertime blues – back to dirty realities.

• Pay more, it's cheaper

  Christopher Gasson looks at the paradox of water pricing.

General

• Brazil’s concessions overcome early obstacles

  With a buoyant economy and political stability, Brazil is once again looking like an attractive market for international private water. GWI Brazil correspondent John Kolodziejski looks at the outlook.

• Concern over water data

  Israel’s Water Commission finds an acute water shortage.

• Dubai’s ghost plant comes to life

  ITT’s showcase reverse osmosis plant has been hit by inexplicable delays, but it is now on schedule for completion.

• EPC contractor shortage hits desal projects

  Engineering, procurement and construction (EPC) contractors can choose what projects to pursue. Why don’t they seem to want to pursue public sector contracts in Dubai and Kuwait?

• Flat revenues disappoint GE

  GE Water has some way to go before it justifies its price. With a new man in charge of the infrastructure division, is it time for a new direction?

• Investors caught by China’s new merger policy

  China’s new restrictions on foreign ownership look worse than they are. GWI China correspondent Kathy Liu looks for the loopholes in the law.

• Letter from China

  GWI's marketing director Alison Ireland writes her column this month from the International Water Association in Beijing.

• Nanjing tariff debate puts privatisation on the agenda

  A public discussion of proposed tariff increases has led to bitter criticism of public mismanagement of the city’s water services. Private water could benefit.

• New role for Israel’s commissioner

  Having brought integrated water resources management to Israel, Shimon Tal is taking his expertise to the world.

• No shortage of ambition at Umm Al Quwain

  It may be the smallest of the seven emirates, but with its 50-year integrated water management concession with Al Rajhi, it is certainly thinking big.

• Red-Dead feasibility study starts

  The money was there a year ago – now there seems to be action on one of the most ambitious water projects in the world.

• Shareholder activists target Suez

  Suez may have the political support for the Gaz de France merger. But it may need to spin off its water business to win over shareholders.

• Siemens buys in China

  Buying China's leader in water reuse is the first major step Siemens Water Technologies has taken outside the US. Was it worth waiting for?

• Tariffs flat ahead of cost crunch

  GWI's 2006 Water and Wastewater Tariff Survey shows utilities still resisting price increases, but with energy costs rising steeply, it will be a difficult policy to maintain.

• Thames refinances and retrenches as sale approaches

  A bond issue and a cost cutting programme seemed to be aimed at firming up the price for the UK water utility, while keeping open the option of a stock exchange flotation.

• Three options for SWCC privatisation

  There are no easy options for the Saline Water Conversion Corporation's board, as it considers its future.

• Veolia Wasser clinches strategic partnership in Austria

  The French firm has found a forward-looking municipal partner in Austria.

• Wabag nurtured back to health under Siemens’ wing

  The Austrian water technology company has spent an unhealthy amount of time up for sale. Fortunately, it has not been wasted.

• Why is US water so cheap

  North American water tariffs are 1% lower than European ones. How long can it be sustained? See also: <b>Tariffs flat ahead of cost crunch</b>

Brief

• IN BRIEF – AMERICAS

  * The Jalisco state government in western Mexico recently launched the tender for the design, construction and operation of two wastewater plants for Guadalajara, valued at $270 million.

• IN BRIEF – ASIA

  * Sino-French Holding, has been awarded preferred bidder status to manage the water services for the city of Changshu.

• IN BRIEF – EUROPE

  * The Spanish government is reported to be considering introducing a technical qualification stage to large project tenders to prevent companies with insufficient experience and resources bidding for projects.

Market insight

• Ebb and flow of valve market

  Although the water valve market is expected to grow at a respectable pace, various challenges face the sector. Gord Cope examines obstacles and opportunities within the industry.