International Private Water Association quarterly report

Included in this report is an update of selected developments in the water industry in:

• Europe
• The Middle East
• Africa

Europe

New UK Legislation

The UK Government’s Water Bill was published on 20 February 2003. The Bill makes a number of regulatory changes in relation to the water industry including:

(a) Establishing a regulatory board to replace the existing individual Director General of Water Services (OFWAT).

(b) Providing greater powers to fine Companies up to 10% of their turnover if they fail to meet performance requirements.

(c) A requirement for Directors to disclose links between their pay and Companies performance.

(d) Proposing significant changes to the system regulating ground and surface water abstractions.

(e) Removing the right to compensation in some circumstances where existing abstraction licences are varied or revoked in order to protect the environment.

(f) A new right for those who have suffered loss or damage as a result of the abstraction of water to bring a civil claim against the abstractor, even where the abstraction was in accordance with a licence.

United Kingdom News

• Following the ruling of the competition minister, Melanie Johnson, last year against the Competition Commission’s finding that Vivendi Environment (“VE”) should be allowed to purchase Southern Water subject to divesting itself of its 31.4% stake in South Staffs Water Company, VE and Royal Bank of Scotland are considering a revised structure. They hope their structure will satisfy the competition commissioner previous objections to VE’s purchase of Southern Water. The intention is that VE will emerge with a much smaller stake than originally envisaged, but a chance of winning regulatory approval without the need to sell off VE’s other UK water companies.
• It has been reported in the press that West LB made a bid to acquire AWG which has been rejected by management. In addition, it is also understood that members of the Morrison family may also be looking to buy back their former enterprise, the construction part of AWG.
• As part of their restructuring programme, it has also been reported that Suez Ondeo may be seeking to sell its interest in Northumbrian Water possibly in conjunction with the sale of its North East Water and Essex & Suffolk Water affiliates. Candover Investments, Royal Bank of Scotland, West LB and Macquarie Bank have all been reported in having an interest in the sale.
• United Utilities have been named as the preferred bidder for Scottish Water’s Management Contract for the upgrade and maintenance of Scotland’s pipes, reservoirs and sewers. It is expected to manage the 4 year contract in partnership with Galliford Try, Stirling Water (which includes Thames Water, MJ Gleesan, Alfred McAlpine) and Scottish Water itself.
• The Brey Utilities Consortium has been appointed preferred bidder for the first package of Project Aquatrine, the 25 year contract to provide water and wastewater services to the Ministry of Defences’ UK sites under the Private Finance Initiative.

Germany

• Vivendi Environment has acquired 74.9% of the utility Weisswasser Stradtwerke in a €30m deal.
• It has been reported in the press that Gelsenwasser may have persuaded certain opponents to retract their appeals against a ministerial permit for its planned merger with gas company Ruhrgas.
• Due to the fragmented nature of the water sector, it is interesting to note that Thuringas state government are offering financial incentives to water associations if they agree to mergers that will help rationalise the sector.

Spain

• A €1.1bn, 9 year irrigation project has been awarded to a consortium led by Aquas de Barcelona (AGBAR) and FCC in the Catalan province of Lleida. The Segana-Ganigues project is the biggest irrigation contract in Spain

Czech Republic

• A water treatment project is being undertaken in the Vsetin region of Moravia, to provide water and sewerage services to 59 municipalities. Financing is being provided by the European Commission.

Italy

• A 20 year concession for water supply and sanitation has been won by a consortium including Acea and Ondeo and local bank MPS in Tuscany’s ATO-2 area based in and around Pisa.

Middle East

Israel

• A $2bn master plan for desalination through to the year 2020 has been prepared by the Israeli Government.
• Mekorot Water Company has announced plans to raise $350m from local banks and through a bond issue to help finance the Ashdod desalination project. Construction of the project has been awarded to the Via Malis Consortium.

Turkey

• It has been reported that the Istanbul Water and Sewerage Administration (ISKI) has $450m for spending on infrastructure projects in 2003.
• The tender to construct two wastewater treatment plants in Bursa has been won by a consortium company of Emit, OTVSA and Sisteve Yapi. The Bursa Water and Sewage Authority (BUSKI) and the European Investment Bank are intending to finance the €58m deal.
• The European Investment Bank is currently discussing with Turkey’s State Planning Organisation (DTI) and the Municipality of Samsun for the provision of funding for a waste water treatment plan, expected to cost in the region of €110m.

UAE

• Offers have been submitted for a 20 month contract to supply and install new multi-effect distillation (MED) capacity in the Gulf Emirate state of Ras al – Khaimah. The client is the Federal Electricity Water Authority.

Iran/Kuwait

• A protocol has been signed by the Kuwait and Iranian governments to supply Iranian water to Kuwait. The $2bn pipeline project is intended to be implemented on a build-operate-transfer basis.

Iran

• A $44m contract to supervise construction of a trunk sewerage line in the Iranian capital of Tehran is to be tendered. The client is the Tehran Sewerage Company (TSC). The above contract is part of a large programme to install a comprehensive sewerage network in Tehran, the first phase of which has been reported as costing approximately $340m.

Jordan

• Tender packages for Jordans $600m Disi water transfer scheme have been issued. It is reported that the four bidding groups include the local Arab Bank group; Saudi Oger; Salini Construction of Italy and the UK’s Thames Water.

Africa

Egypt

• A number of companies have been invited to tender for the $120m Alexandra Water and Wastewater rehabilitation Contract. The client is the Alexandria General Water Authority.

Morocco

• The European Investment Bank has granted €20m for 7 drinking water project plants in northern and central Morocco to the state-run water utility of Morocco, ONEP.

Tanzania

• Biwater International, in conjunction with German engineering consultancy Gauff Ingenieure, has been selected to manage and operate the Dar es Salaam Water and Sewerage Authority (DAWASA) concession in Tanzania, on a 10 year lease.

Tunisia

• Invitations to bid for contracts to expand two wastewater treatment plants in Tunis are likely to be requested. The client is the state water agency Office Nationale de Assainissement (ONAS). The Jeddah-based Islamic development bank has pledged $42.7m for the scheme.

For further information, please contact Richard Temple, Chairman of IPWA and Partner at CMS Cameron McKenna at [email protected] or on +44 (0)20 7367 3738.