Veolia and Sedapal hook up in Latin America
- From: Vol 9, Issue 12 (December 2008)
- Category: General
- Region: Americas
- Country: United States
- Related Companies: FCC, SNC Lavalin and Veolia Water
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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.
Peruvian state water utility Sedapal and Veolia aim to create a joint venture to bid for water projects in Peru and across Latin America, as the French company seeks to extend its business across the region and governments try to attract private investment into ageing sanitation infrastructure.
The Sedapal-Veolia venture would be the first of its kind in water in Latin America, taking the public-private model one step further, and could help ease some governments’ concerns about too much private involvement in sanitation. Presidents and lawmakers from Bolivia to Mexico have shown more willingess to work with foreign state-owned companies than with multinationals in other areas such as oil.
While nothing has yet been signed and individual projects have yet to be targetted, Veolia says both sides are keen to form the alliance after top executives met Sedapal president Guillermo León last month. “Sedapal provides services in the Peruvian capital, so it would make sense to bid together for other projects outside Lima and to go beyond Peru to neighbouring countries,” said Veolia’s spokeswoman for Latin America, Janis Rey. “We believe we have an answer to water issues in many Latin American cities,” she added. Sedapal, long neglected until Peruvian president Alan García made water a central policy of his government, is also considering listing some of its shares on the Lima stock exchange as it seeks to raise financing to improve woeful Peruvian sanitation and provide drinking water to millions of poor citizens.
Veolia teamed up with Spanish construction group FCC several years ago to create the Proactiva joint venture to bid for water contracts in Latin America. Rey said the Sedapal tie-up would not affect that alliance, but could complement it if Veolia were to bring FCC into the deal at a later stage, or make use of its specialist technical know-how.
Veolia and FCC recently bought 51% of Interagua, the water company which serves Ecuador’s largest city Guayaquil, and Veolia Environnement CEO Henri Proglio told GWI on the sidelines of an event in Colombia that he is confident the contract, which involves supplying water to about 2.5 million people, will go forward with the support of the current constitution, despite the recent clashes between the Ecuadorian government and private companies. The group holds a concession to operate the city’s water network until 2031.
Proglio views Latin America as a region with great potential for growth, and said that Veolia is actively seeking concession contracts to run and upgrade water and sewage networks in the region. “The needs are there and, in a certain number of countries, the economic conditions and legal stability are there,” he told GWI. Veolia already has a strong presence in Mexico and Colombia, and intends to build on its existing footprint in these countries. The company also expects to grow in Chile and Brazil, and recently started operating in Peru. It is currently bidding for the USD155 million La Chira treatment plant and underground pipeline project in the Chorrillos district of Lima in a consortium with Canada’s SNC Lavalin.