Vol 9, Issue 10 (October 2008)

Need to know

• CR-R-RUNCH!

  * The first place the credit crunch has impacted the water world is the last place the rest of the financial world is concerned about: the Gulf.

• DUBAI PROPERTY

  * On the subject of things that aren’t allowed to fail, what about the Dubai property market?

• GARWOOD TO GO

  * GE Water is expected to announce the departure of Jeff Garwood as CEO shortly after GWI goes to press.

• GOING SHOPPING

  * Turmoil in the capital markets is likely to shake a few assets loose from the water sector.

• NOT FOR SALE

  * Shares you can’t buy as a result of the financial turmoil are UK-based wastewater treatment specialist Bluewater Bio, which has delisted from the Alternative Investment Market of the London Stock Exchange only months after floating.

• TARIFF SURVEY DOWNLOAD

  From 20 October,

Analysis

• Projected municipal capex in the Australian water market - CHART

  This month’s chart comes from our Water Market Australia report.

• Gulf project finance market sucked dry

  The international project finance market has dried up, forcing project developers in the Gulf to look elsewhere for funding. What alternatives are on offer?

• Insight - David Lloyd Owen

  The costs of capital – Ofwat’s next periodic review just got complicated.

• Technology worth its salt

  Christopher Gasson poses the question: just how many strawberries grow in the sea?

• Water and the credit crunch

  Christopher Gasson untangles how the crisis in the banking sector might affect the water market.

General

• Alabama’s debt crisis gets dirty

  Jefferson County is on the brink of the biggest local government default if it does not reach agreement on its USD3.2 billion sewer bond.

• Algeria readies new batch of WWTPs

  The authorities in Algeria will tender 11 new wastewater treatment plants later this year. It is predicted a further 30 will be required by 2020.

• Andalucía tackles its water problems on two fronts

  Spain’s most populous region has outlined a dual-fronted approach to address infrastructure funding and groundwater conservation. It wants to de-politicize the water debate.

• Brazilian bond market seeks direction

  Sabesp and Nova Cedae are looking to access the local bond market. The current lack of liquidity is making things difficult.

• Buy bonds, not equities

  HSBC sees better value in bonds than equities at the moment. In future, the biggest issue for investors is the extent to which Ofwat pushes competition.

• BWA targets Gulf growth under new ownership

  Close Brothers’ private equity arm has sold water treatment chemicals specialist BWA less than three years after buying it. New owner UIB will be hoping to build on the company’s leading position in the Middle East.

• Canal Isabel II IPO plan hit by political flak

  The proposal to float 49% of Madrid’s water company has already hit political opposition. It may require CYII’s existing contracts to be rescinded and retendered.

• Christ Water’s near-death experience

  For three days, the Swiss ultrapure water specialist saw its market capitalisation languish below €45 million – then it rose again after the company issued a trading statement outlining its proposed restructuring.

• CPI stifles tariff rises in China

  The prospect of Chinese water utilities moving closer to full cost recovery is being curbed by rising inflation. GWI’s China Editor Kathy Liu reports.

• Guilty as charged

  Emma Welsh attempts to kick her guilty habit.

• Italian passions run high over reform

  Rumours over the shape of water sector reform in Italy have stakeholders up in arms. Tariffs and regulation are at the heart of the argument.

• Metito and Berlinwasser to launch JV

  A new joint venture between Metito and Berlinwasser International will focus on the MENA region and China. Metito’s Rami Ghandour and BWI’s Dieter Ernst spoke exclusively to GWI’s Adam Heffill.

• Munis frozen out as credit crunch bites

  The latest financial crisis is hitting US municipalities hard. It will inevitably delay vital infrastructure projects, as Kathy Shandling finds out.

• Praying for stormy weather

  An Australian town is turning to stormwater harvesting to augment its potable water supply. It could be the shape of things to come.

• Redefining the chemicals supply chain

  Southern Water has revolutionized the way it procures its water treatment chemicals. Kemira is looking to roll out the initiative across Europe.

• Report highlights West Bank’s wastewater problems

  Sewage flows from the West Bank are threatening Israel’s water supplies. The necessary treatment infrastructure could be a long time coming.

• UK water companies weather the storm

  The fact that UK water companies are so well funded means the banking crisis may to a large extent pass them by. It could even work to their advantage at the next periodic review.

• Veolia Water and Mubadala team up in MENA

  The rush to sign joint ventures in the Middle East this month has seen Veolia join forces with Mubadala. The mix of financial muscle and water expertise is mouthwatering

• Water stocks maintain a slight edge

  The GWI Water Index fell steeply in the month to 10th October, but it stillmanaged to outperform the market as awhole. Some stocks did very well indeed, underscoring water’s defensive reputation.

• ‘Water’ unaffected by ‘credit crunch’

  Interest in water is on the up, despite the advance of the credit crisis. By contrast, global warming is no longer creating the buzz it once did.

Brief

• In Brief - America

  * Consolidated Water announced on 10 October that it intends to seek shareholder approval to authorize a share buy-back programme.

• In Brief - Asia

  * US-based private equity group Shah Capital Management has gradually been increasing its holding in Bio-Treat Technology, and currently owns 9.62% of the company.

• In Brief - Europe

  * The EIB is lending £100 million to Dwr Cymru Welsh Water to support the second phase of the company’s 2005-2010 investment programme.

• In Brief - Middle East

  * A recent Eurostat report lists six Turkish cities among the ten driest places in Europe (Izmir, Manisa, Adana, Antalya, Konya and Gaziantep).

Market insight

• The end of the road for Big Pipe?

  The concept of centralized wastewater treatment is being challenged. The alternative – decentralization – is growing in importance, but will not provide a universal solution, as Gord Cope discovers.