Vol 9, Issue 6 (June 2008)

Need to know

• FRENCH MANOEUVRES

  * Suez Environnement (as it now wishes to be known in English), has set the date of 22 July for its debut on the stock exchange.

• MIDDLE EAST TRENDS

  * Bahrain’s move towards the liberalisation of its water sector has continued with the appointment of HSBC, Fichtner and Norton Rose to advise on the country’s wastewater privatisation strategy.

• RUSSIAN DEAL

  * The EBRD is looking to deepen its involvement with Russian Communal Systems (RKS) by taking a minority equity stake in the company.

• SECOND ACTS

  *Veolia Water North America’s former boss Joe Burgess has survived his baptism of fire at Insituform.

Analysis

• Development of EPC costs for DEWA’s desalination projects - CHART

  This month’s chart shows the frightening rate at which the engineering, procurement and construction costs of large thermal desalination plants have been rising.

• Insight - David Lloyd Owen

  Over the past few years, the price of oil has risen from what you might call the USD40 per barrel paradigm to its current USD120-140 per barrel trading range, with a medium term price target of USD200-250 per barrel no longer embracing the realms of the absurd.

• What if Big doesn’t work?

  Christopher Gasson looks for the upside in the failure of big water projects to get off the ground.

General

• ACWA Power eyes first IWPP outside Saudi

  Bahrain has received two bids for its next independent power and water project. The battle pits reverse osmosis against a thermal solution on the site of one of RO’s most infamous failures.

• Ankara lurches into another water crisis

  The hospitalisation of 10,000 people has renewed concerns over potable water quality in Turkey. An untimely revelation from Ankara’s mayor has not helped matters.

• Aquavitae shows no signs of life

  The evolution of competition in the Scottish water market has encountered another hurdle. It seems Aquavitae’s new private equity owners have taken a vow of silence.

• Bahrain’s sewerage spin-off

  Bahrain has appointed an advisory team of HSBC, Fichtner and Norton Rose in its bid to produce a privatisation strategy for its wastewater services.

• Bi-partisan bill to boost infrastructure investment

  Access to tax-exempt financing for US water infrastructure has long been the privilege of municipalities. A new bill is set to change all that, as Kathy Shandling explains.

• Brave new worlds

  Emma Welsh reflects on grabbing the bull by its proverbial horns.

• Brazilian Water 1 – ROW 0

  Brazilian water stocks have offered one of the few consistent growth areas in the global water sector this year. Copasa’s successful secondary offering in May will be followed by the IPO of Nova Cedae in 2009.

• California’s drought emergency

  The drought has forced Schwarzenegger to take drastic action, writes Kath Shandling. His USD11.9 billion bond proposal will be ballotted in November.

• China's earthquake response

  The water community’s response to the China earthquake has concentrated on short-term solutions. BOTs could help fast-track infrastructure repairs.

• Coming out of hibernation

  American Water has emerged from under RWE’s shadow with a new logo and a new sense of identity. CEO Don Correll talks to Ian Elkins about his plans to restore the company to its full potential.

• Damascus on the road to wastewater DBOs

  Syria has started the pre-qualification process for a series of wastewater DBOs. The EIB is providing 50% of the financing under the Euro-Med Mandate scheme.

• Essal in a day’s work for Aguas Andinas

  Aguas Andinas’ purchase of Essal will take it close to the legal limit of its water penetration in Chile. Where can i go next?

• Gwi water index

  The market performance of water stocks this month

• Here comes Hutch with a fat chequebook

  Hutchison Whampoa’s new water division is set to take on the world. Hutchison Water’s Dan Eldar explains to GWI why established developers should be quaking in their boots.

• IFC breaks new ground in MENA financing

  A sub-national guarantee will enable Moroccan utility RADEEJ to borrow 15-year money to fund sewerage upgrades. It is the IFC’s first commitment of this kind in the region, and other utilities are already looking to follow.

• Israel unveils drought-busting water strategy

  Israel has announced a series of emergency measures to deal with its water crisis. The price at which it is offering to buy desalinated water has raised a few eyebrows.

• Italy’s new national water champion

  The three-way merger between Enìa, Hera and Iride will create Italy’s second largest water supplier. The withdrawal of Acea from the merger talks could provide Suez with a chance to boost its stake.

• Ohio joins the Great Lakes club

  The ratification process for the Great Lakes Compact is moving forward. It is an important piece of legislation affecting 75% of the US’s surface water.

• Samsung seals International City

  Samsung Engineering and Nakheel have finally inked the letter of agreement for an 88,000m3/d STP to serve the International City. The EPC contract is said to be worth USD220 million.

• Séché moves to take control of Saur

  CDC is looking to offload part of its stake in Saur just one year after buying into the company. 33% owner Séché Environnement wants to boost Saur’s profitability before it commits to the purchase.

• Spanish water reuse and irrigation abuse

  The Segura river basin is leading the national charge in Spanish wastewater reuse. It is also a hotbed of environmentally unsustainable irrigation.

• Suez to set up Qatari multi-utility JV

  Suez has taken the first step towards forming a multi-utility company with Qatari Diar & Barwa. It is an ideal model to take advantage of forthcoming city developments.

• Tariff freeze hurts profits at Hamburg Wasser

  Despite its optimisation efforts, Hamburg Wasser saw a decline in both revenues and profitability last year. It is still refusing to raise tariffs, and is further than ever from signing a deal with a private strategic partner.

• The end of Russian roulette in water

  A new EBRD loan to Rosvodokanal marks a turning point in the way Russian private water contracts are structured. It will force foreign operators to take the Russian market seriously.

• The rain in Spain means transfer falls again

  With Catalunya’s reservoirs back above 50% capacity, the Barcelona water transfer scheme has been called off. The cost of shipping in water will hurt government budgets for months to come.

• The rising tide of energy recovery

  Pump Engineering is riding the crest of the membrane desalination wave. Now it has cherry-picked a private equity deal which will enable it to maintain its stellar growth rate.

• UK braces for higher operating costs

  The latest round of results show that the remaining quoted UK water companies continue to be profitable. The threat of higher operating costs could spell leaner times ahead.

• UU poised for double DBO victory

  The city of Townsville in Queensland needs two new water treatment plants to sustain its rapid growth. A reuse initiative could mean only one reaches completion.

• Victory for IDE as court orders Ashdod re-tender

  Mekorot is licking its wounds after a Tel Aviv court ruled in favour of re-tendering the Ashdod desal plant. The company may be down, but it is not out.

• Watchdog to investigate ATO awards

  The Italian public contracts watchdog is talking to 64 ATOs about possible breaches of the Galli law. It has sparked new calls for a single national regulator.

Brief

• In Brief - America

  * New York City’s failure to collect overdue water bills has taken a new turn. It has come to light that one of the biggest water bill deadbeats is actually one of the city’s own agencies

• In Brief - Asia

  * China’s Yunnan Province plans to raise its urban wastewater treatment coverage rate from 40% to 80% by the end of 2012.

• In Brief - Europe

  * The French majors continue to make inroads at home, with Veolia subsidiary OTV announcing that it has been awarded two major design-build contracts by SIAAP, the Paris wastewater authority.

• In Brief - Middle East

  * Eaux de Marseille looks set to take the water and wastewater management contract for the city of Constantine in Algeria.

Market insight

• Take one a day with water

  The pharma industry needs water to sustain its growth. Gord Cope explores the opportunities and pitfalls of this niche market.