Vol 8, Issue 8 (August 2007)

Need to know

• COMPETITION TIME

  * Another stock which may be reaching its peak is Consolidated Water.

• FLOOD NEWS

  * Floods have been pushing water scarcity out of the news, here in the UK, in the US, Switzerland, China and South Asia.

• REACHING A PEAK

  * The signs are that interest in the UK’s regulated water utilities sector is peaking (see chart p23).

• THAMES TIDIES UP

  * More details of Thames Water’s forthcoming whole business securitisation came to light in early August, as the ratings agencies assigned provisional opinions of A3 (Moody’s) and BBB+ (S&P) to the £1.2 billion of unwrapped Class A bonds to be issued later this year.

Analysis

• World water and wastewater chemicals market 2007 - CHART

  This month’s chart comes from McIlvaine’s World Water and Wastewater Chemicals Report.

• Insight – David Lloyd Owen

  Water peace? An ancient lake may solve the Darfur crisis.

• The first water shock

  Christopher Gasson looks at the crisis facing agricultural water.

General

• AFPs to fund Peru’s water infrastructure

  Peru’s private pension funds are set to play a key role in financing the rehabilitation of the country’s ageing infrastructure. Leticia Lozano reports.

• And then there were four. . .

  Out of the fifty companies which expressed interest in the Riyadh management contract, only four consortia remain. Success here will set the tone for the remainder of the Saudi privatisation roll-out.

• Betting on the long term

  Alison Ireland is on a mission to convert Las Vegas to a new game.

• Between a rock and a hard place – Ankara’s water future in crisis

  Ankara’s water supply is running seriously low. The “quick fix” solution involves piping in polluted water from a river 125km away, but the local treatment plant cannot cope. Locals are now baying for the mayor’s blood.

• Christ enters Libyan water market

  The Austrian technology provider is hoping to capitalise on Libya’s infrastructure rehabilitation programme through a new joint venture. It already has local expertise on board.

• Cross-border agreement signed

  An historic agreement will see water from the German state of NRW supply customers in nearby Rheinland-Pfalz.

• “Disproportionate costs” and the WFD

  James Winpenny, an independent consultant on the water sector with Wychwood Economic Consulting, offers his views on the thorny subject of applying cost-benefit analysis to the Water Framework Directive.

• Emaar awards Saudi water contracts

  SETE Energy has snagged its biggest desal contract to date, serving Saudi Arabia’s King Abdullah Economic City. There are more opportunities to come.

• Hamriyah SWRO goes to Aqua Engineering

  Christ Water subsidiary Aqua Engineering has secured its largest contract to date, winning the 91,000m³/d SWRO plant at Hamriyah. With luck, it should be in pole position when the capacity is expanded.

• How to run a successful water utility

  A sound management strategy is the key to any successful water utility. A new report from leading US bodies provides the necessary tools for success, writes Kathy Shandling.

• IP and Marubeni sign F2 PWPA

  Abu Dhabi’s largest greenfield IWPP is on track after the signing of a key project document earlier this month. The financing structure remains open.

• Italy seeks €62bn for revamp

  The private sector will be expected to fund the majority of Italy’s water infrastructure improvements. Most concessions are still in public hands.

• Jeddah outlines wastewater BOTs

  Population growth and sewerage network expansion will determine the timing of Jeddah’s wastewater treatment capacity growth. With a series of BOTs on offer, the concessionaire must focus on the long term.

• LEED-ing by example

  The race to achieve “green” buildings certification will provide increased opportunities for suppliers of small-scale water reuse systems. Kathy Shandling investigates.

• M&A war hots up in Chile

  The battle for control of Chilean water utility Esval is gaining momentum. It will not necessarily remain just a two-horse race.

• Ministries at loggerheads over Israeli tariff policy

  Israel’s Finance Ministry wants to dramatically lessen the gap between consumer tariffs and the price of desalinated water. Colleagues elsewhere in the Government are not so sure.

• Murray-Darling Basin suffers another setback

  The State of Victoria has already voiced its opposition to the Murray-Darling Basin plan. Now there is dissent within the government’s own ranks.

• NWRB steps in to end Cebu deadlock

  The Philippines National Water Resources Board is to rule on a reimbursement of project development costs after the July 15 deadline passed without agreement.

• Ofwat keeps close eye on linkers

  The predominance of index-linked fundraising among UK water firms is likely to affect the way Ofwat tackles the next pricing review.

• Ofwat launches competition consultation

  The regulator wants to deliver improved competition in England and Wales. At least it has Defra’s support.

• Pennon extends borrowing profile out to fifty years

  South West Water has become the first UK water company to issue an unrated 50-year bond. It could pave the way for others to enter the market.

• Return of the Jeddah roadshow

  The ambitious timing of the second Saudi privatisation roadshow seems to have paid off. MOWE officials now have their work cut out juggling the various tender processes.

• Riyadh to flush out bidders with wastewater PPP package

  The Riyadh wastewater PPP is one of the largest in the region, involving 1,700,000m³/d of design capacity. The tender strategy is still being fine-tuned.

• RWE rejects municipal interest in water subsidiary

  A pair of German municipal water firms are seeing synergies slip away. They are dealing with the might of RWE.

• Southern reduces refinancing flexibility

  Southern Water’s latest bond issue leaves potential purchasers with limited balance sheet flexibility. It could mean owner RBS gets less for the asset than it had bargained for.

• Sowing seeds in the sky

  They’ve tried Aboriginal rain dances. Now the Australians are turning to cloud seeding to try and beat the drought.

• SPA rebranded after 15 years of service

  Aqualia hopes to enhance its international appeal by renaming its plant construction division. The new name still has a Spanish ring to it.

• The key to solving Jeddah’s water crisis

  The focus of the gradual unbundling of Saudi Arabia’s municipal water infrastructure has moved on to Jeddah. The timescales are tight.

• The route to reuse

  Saudi Arabia’s approach to water reuse has been sporadic in the past. A new study is set to change that.

• UK flood crisis reopens old wounds

  The UK floods have brought the infrastructure spending debate to a new head. The path to climate change-proof cities will not be a smooth one.

• UN initiatives target global water sector

  Kathy Shandling assesses the role of global corporations in the sustainability debate, and looks ahead to an October round table with water and finance on the menu.

• Wabag in limbo as it awaits new owner

  The summer season has frustrated attempts to wind up the sale of Wabag quickly. The Austrian company is keen to push ahead with new projects.

Brief

• IN BRIEF – AMERICAS

  * Earl Jones of GE Water & Process Technologies has been promoted from his position as Director of Structured Projects. He is now General Manager of Global Commercial Development.

• IN BRIEF – ASIA

  * GE and Siemens have been awarded contracts to spearhead the low pressure membrane replacement programmes at the Bedok and Kranji NEWater plants in Singapore.

• IN BRIEF – EUROPE

  * One or more mergers between Italian water operators look likely in the autumn, according to the local press.

• IN BRIEF – MIDDLE EAST

  * Israel’s Water and Sewage Authority and the Civil Administration in the occupied West Bank have approved the construction of a pipeline to transfer purified treated sewage water from the Jerusalem and Bethlehem area to the northern Jordan Valley.

Market insight

• Molecule with a mission

  Lower energy costs and strict environmental regulations are helping to drive demand for ozone water treatment facilities, says Gord Cope. How much longer can the market sustain double-digit growth?