Vol 9, Issue 12 (December 2008)

Need to know

• BLOOD IN THE WATER

  * It has been a terrible month for the UK water utilities sector, with more than £2.3 billion or 20% of the value knocked off the value of the four quoted companies (the FTSE index slipped by only 0.8% over the same period).

• CRUNCH-FREE

  * Befesa has closed the financing of its 200,000m3/d Ténès desalination plant in Algeria.

• FOREIGNERS

  * Suez Environnement has appointed Bertrand Camus to replace Tony Harding as CEO of its North American business.

• FROZEN SPORK

  * Remember Otto Spork of Sextant Capital Management?

• SPANISH SPENDING

  * Madrid’s regional assembly is set to agree the sale of a 49% interest in its 150-year-old water company Canal Isabel II by the end of this year (see story p16).

Analysis

• Beyond the primordial sow

  Christopher Gasson looks forward to 2009 – a year for greater competition in the water sector.

• Global trends in cost recovery from water tariffs - CHART

  This month’s chart comes again from the World Bank’s IBNET database of utility performance indicators.

• Insight - David Lloyd Owen

  Ofwat beware! Will competition drive a wedge between England and Wales?

General

• A wastewater treatment plant for every home

  Mexico City is aiming to boost its sewage treatment capacity. The plan is for all new buildings to house their own wastewater reuse plant, as Leticia Lozano discovers.

• Abu Dhabi to introduce new wastewater regulations

  The emirate’s regulator will phase in a pair of new wastewater policies over the next two years. They underline the growing importance of water reuse in the Gulf.

• Aguas de Valencia battle goes to court

  Suez Environnement has approached the Spanish courts to protect its investment in Aguas de Valencia. It shows just how serious the French company takes the threat of being marginalised.

• Befesa takes a new approach to the US

  After struggling to make the numbers add up on Poseidon’s Californian desalination projects, the Spanish company has made an acquisition to fully realise its new strategy.

• Bluewater goes shopping for business

  Just days after de-listing from London’s AIM market, wastewater technology specialist Bluewater Bio announced a breakthrough deal with aqualia. CEO Daniel Ishag talks to GWI about the way ahead for the company.

• Canal Isabel II sell-off awaits approval

  Officials in Madrid are due to sign off on the part-privatisation of CYII before the end of the year. The local government desperately needs the funds to shore up its finances.

• Cave charts the path for competition

  Professor Martin Cave’s interim report claims that retail competition for business customers could generate benefits of £600 million over the next 30 years. It is more reticent on the benefits of upstream competition.

• Deflationary fears trim UK trading premia

  The UK water companies are trading closer to RAV than they have been all year. It could be time to re-appraise.

• Finn forces the pace of change

  Ofwat CEO Regina Finn wants to squeeze greater efficiencies out of the UK water companies by tinkering with the value chain. Is she trying to fix a model that ain’t broke?

• Haya hopes for Muscat WWTPs

  Contracts for five new plants will be on offer in 2009-10 as the drive to modernise the governorate’s wastewater system continues.

• Indian utilities eye alternative funding sources

  As liquidity dries up, Indian urban local bodies are starting to explore low-cost finance options to fund water infrastructure. Municipal bonds are one possible route, but they do not offer a universal solution.

• Israel considers offering wastewater BOTs

  As part of a new USD275 million initiative, Israel may look to boost the role of the private sector in its wastewater programme. The treated effluent would be used for irrigation.

• Israeli government breaks logjam at Ashdod

  A new tender strategy for the Ashdod desalination plant will see Mekorot’s development arm take overall responsibility. Prospective bidders seem happy with the arrangement.

• Kuwait ponders next step for Az-Zour North

  The tender for the Az-Zour North power and water plant has been delayed into next year. There is growing uncertainty over the scope of the first phase.

• Learning to be discerning

  USFilter bought everything that moved. Owning it was a bitter experience for Veolia, but the French company learned and emerged stronger. VWST North America boss Klaus Andersen explains.

• Mekorot renews efforts to cut its energy bill

  Israel’s bulk water supplier uses 7% of the country’s power output. It is investigating ways of cutting its annual bill by investing in renewable energy projects.

• NWC stands firm over Riyadh financing

  The Saudi National Water Company has dismissed the possibility of converting the flagship Riyadh wastewater project into a DBO. It has still to release a request for expressions of interest.

• Obama’s infrastructure surge

  Obama wants to create 2.5 million jobs through infrastructure investment. Will his workers be building roads rather than laying sewer pipes?

• Ofwat clamps down on water efficiency

  The economic regulator has set improved water efficiency targets for the English and Welsh water companies. It has looked abroad for inspiration.

• Queensland recycles its water policy

  Australia’s National Water Commission has come out strongly in favour of water reuse. Queensland, by contrast, appears to have reversed its previous position. Max Borchardt reports.

• Rating agencies fire warning shot at Ofwat

  The major rating agencies have published their views on competition in the UK water sector. It may make Ofwat think twice.

• Redefining China’s water cycle

  The concept of water reuse in China has gained ground over the past year. There are still barriers to be overcome, finds GWI’s China Editor Kathy Liu.

• Reflections one year on

  Emma Welsh reflects on her first year at GWI and describes the beauty of Water Market USA.

• Santander secures its first Latin American water asset

  A new bid from a Spanish infrastructure fund has put the challenger out of the picture in the battle to acquire Chilean water giant Aguas Nuevas.

• Saudi banks to prop up Ras Azzour financing

  Local support means that international project finance will now provide less than 20% of the debt for Ras Azzour. Meanwhile, a USD900 million bridge loan should keep the Shuweihat 2 IWPP on track.

• Spanish pair preferred for new Perth plant

  A consortium led by Técnicas Reunidas and Valoriza Agua has secured preferred bidder status on the Southern Seawater Desalination Plant. It will be a breakthrough reference for both firms.

• UK profitability under scrutiny at half-time

  Profitability at the listed UK water companies has been lagging behind that of many privately held operators. Increased fears over customer bad debts could hit full-year figures hard.

• US infrastructure feels the crunch Part 1

  GWI has just completed its biggest ever market research exercise: calling 1,000 major US water utilities to find out about their spending plans. The results are fascinating – if overshadowed by the crisis in the financial markets.

• US infrastructure feels the crunch Part 2

  Of course, the forecasts are ultimately subjective. The report does, however, carry plenty of other opinions.

• Veolia and Sedapal hook up in Latin America

  Veolia CEO Henri Proglio wants to generate more business in Latin America. Leticia Lozano uncovers a joint venture plan that could give a new face to private water in the region.

• Vigo to tender new wastewater DBO

  As part of a deal to avoid an EU fine, the Spanish city of Vigo is looking to build a new wastewater plant. It will not solve all the city’s problems.

• Water underperforms the wider market

  A weak performance from the remaining UK listed water companies helped drag the GWI Water Index down by 8% this month. Where will the recovery come from?

Brief

• In Brief - America

  * Inima has been awarded the contract to expand the desalination plant in Los Cabos, Baja California, said Roberto Contreras, head of drinking water and sanitation at Conagua in Mexico.

• In Brief - Asia

  * The Aqua Resources Fund intends to establish a joint venture with the Ranhill Group to invest in water and wastewater operations in China and Thailand.

• In Brief - Europe

  * Modern Water has invested £400,000 to take a 45% stake in AguaCure, a UK-based company specialising in electrochemical water treatment technologies.

• In Brief - Middle East

  * Degrémont signed a contract in early December for the design, purchase of equipment and training of personnel for a 910,000m3/d drinking water treatment plant at Al Rusafa in Baghdad, Iraq.