Vol 9, Issue 5 (May 2008)

Need to know

• GIANT OVERHANGS

  * This year\'s biggest water initial public offering, American Water, reached the market on 23 April, with a slightly damp offer price of USD21.50 (see story p21).

• OPENING BIDS

  * The Abu Dhabi Water and Electricity Authority has opened bids for its 454,600m3/d (100MIGD) & 1500-1600 MW Shuweihat 2 IWPP.

• RUNNING ON EMPTY

  * Barcelona began importing water by ship from Tarragona, Marseilles and Almería to offset the impact of Catalunya’s worst springtime drought in years.

• RWE TO LAUNCH WATER CO?

  * With Thames Water sold and the American Water IPO complete, now is the time for RWE to get back into the international water market.

Analysis

• A right to invest in water

  Christopher Gasson sees opportunities in the market for water rights. Investors will need low profiles and thick skins to profit from them.

• Water services versus mobile phones in Africa - CHART

  This month’s chart compares the proportion of the population with access to piped water connections against the proportion with access to mobile phones in selected African countries.

• Insight - David Lloyd Owen

  Is Brighton on the rocks? Desalination is coming our way.

General

• Aguas de Valencia heads for de-listing

  Local shareholders are looking to squeeze Suez out by buying up the listed portion of the stock. They have already consolidated control at the holding company level.

• American Water takes USD750m hit in Q1

  RWE has been forced to inject USD245 million into American Water after the April IPO fell short of expectations. The goodwill from RWE’s 2003 acquisition is still burning a hole in American’s balance sheet.

• Aqualia continues Portuguese penetration

  The Spanish firm has won its fourth municipal concession in Portugal, giving local firms a run for their money.

• Australia’s AUD 12.9 billion water future

  The new Australian government has announced its blueprint for managing the nation’s water resources. It will need the support of the individual states.

• Bio-Treat bond behaviour beggars belief

  Bio-Treat has officially defaulted on its Singapore dollar convertible bond. This has not stopped the company from asking bondholders to forgive and forget.

• Court action threatens future of Ashdod plant

  Mekorot’s claims that IDE is trying to monopolize the Israeli desal market have fallen on deaf ears. Nevertheless, construction at Ashdod may soon be suspended.

• DEWA retenders P1 Station, but with reduced scope

  The bid prices for Dubai’s P Station development are rumoured to be high. It has rekindled the debate over DEWA’s preferred procurement method.

• Directory of the leading water law firms

  To view the full directory of Law Firms please click <a href=\"http://www.globalwaterintel.com/index.php?page=lawfirmdir\">here</a>.

• Fisia prepares to enter MED market

  Fisia Italimpianti is aiming to end Sidem’s monopoly on large-scale MED technology. It is just what the industry needs.

• Funding water through micro-finance

  The poor aren’t always uncreditworthy. The growth of WaterPartners International’s WaterCredit Initiative has proved the veracity of this maxim, as Kathy Shandling finds out.

• Future Pipe postpones Dubai IPO

  Conditions on the local market led Future Pipe to postpone its flotation in early May. The Makhzoumis can comfortably wait to cash in the family silver.

• Gazing through a clearer crystal ball

  Better climate change modeling will help water companies plan future expenditure more effectively. New initiatives could improve things a thousand-fold within eight years.

• Gelsenwasser expands sales thanks to French deal

  Gelsenwasser’s water turnover increased last year, partly thanks to a deal with French concessionaire NES. A proposed mega-merger means that the company now has bigger fish to fry.

• German communal water’s €87bn investment need

  A new study argues that the investment backlog in German municipal infrastructure requires a front-loaded investment programme, with PPPs taking up some of the slack. Their application in the water sector remains unclear.

• Helm steers a collision course with Ofwat

  A new report by Professor Dieter Helm criticises what he sees as Ofwat’s widespread opposition to reform. His proposals could herald the end of financial engineering in the sector.

• Madrid welcomes careful drivers

  Agriculture heavyweights have taken control of water policy after the latest Spanish government reshuffle. A penchant for water transfers could have implications for the country’s desalination programme.

• Mixed fortunes in China

  Beijing Capital’s 2007 results justify the meteoric rise in its share price last year. Kathy Liu finds that the Year of the Pig was not kind to everyone.

• New IWPPs to satisfy Kingdom’s thirst

  In a bid to keep pace with Saudi Arabia’s continuing growth, the Kingdom is planning further desalination capacity totalling 1,475,000m3/d over the next five to seven years.

• Selling water down the river

  The Australian water rights market has finally come of age. Max Borchardt asks whether the government’s new AUD 3 billion buyback programme is destined to go down the Swanee.

• Thai Tap Water IPO raises USD129m

  Thai Tap Water’s long-awaited initial public offering finally priced on 14 May. International investors would have needed a degree in Thai to fully appreciate the prospectus.

• The myth of global law firms

  What does it take to be a global law firm in the water sector? Mario Alemi finds that the reality does not always match up to the marketing material.

• US mayors show their bottle

  New figures released by the US Conference of Mayors underline the importance of local government investment in water. They also show just how much value consumers are getting.

• USD240m Copasa share sale boosts liquidity

  Two of Copasa’s major shareholders liquidated their stakes in the company on 24 April. Was it worth waiting seven months for?

• Your feet’s too big

  Emma Welsh says hello and reflects on her shoe size.

• \"A national vision for infrastructure investments\"

  Two new bills are helping to refocus attention on water infrastructure needs in the US. Kathy Shandling reports.

Brief

• In Brief - Americas

  * Aqua America’s share price dropped more than 6% after the company again failed to hit quarterly earnings targets. Aqua’s Q1 revenues were up just 1.4% at USD139.3 million,

• In Brief - Asia

  * Hyflux Ltd. posted an impressive set of first quarter results on 13 May, announcing profit after tax of SGD5.7 million (up 395%) on revenues of SGD89.6 million (up 412%).

• In Brief - Europe

  * Agbar’s net profits fell 17.3% in the first quarter of 2008 to €37.9 million, despite a 9.7% rise in operating income to €753.9 million and a 23.8% increase in profits from operations to €112.6 million.

• In Brief - MIddle East

  * Abu Dhabi Water and Electricity Authority chairman, His Highness Sheikh Diab bin Zayed Al Nahyan, unveiled ADWEA’s 5-year strategic plan on 15 May. The plan identifies four