Bumper crop of contracts for SUEZ Environment in China

SUEZ Group unit continues strategic offensive in China with four new contracts for water and wastewater services: Two for design and construction of drinking water plants in Macao and Tianjin; a 30-year contract for water services management the city of Changshu; its 10th contract signed with the Chinese iron and steel industry, using its know-how to assist industrialists in improving environmental protection. Parent group announces merger reorganization with Gaz de France...

Oct 30th, 2006

Unit of SUEZ Group continues strategic offensive and development in China with four new contracts for water and wastewater services:
-- Two contracts signed for the design and construction of latest-generation drinking water plants in Macao and Tianjin
-- A 30-year EUR 1 billion [US$1.27 billion] contract signed for the complete management of water services for the city of Changshu
-- Its 10th contract signed with the Chinese iron and steel industry, using its know-how to assist industrialists in improving environmental protection

PARIS, Oct. 30, 2006 -- After recently signing the utility rights for the city of Chongqing, one of the largest conurbations in the world, and becoming the first foreign firm to supply both water and wastewater treatment services to the same municipal authority in China, SUEZ Environment confirmed its ambitions for the country by announcing Oct. 26 that it won four new contracts in water and wastewater services.

The new agreements further the partnerships set up over the last 30 years with China, and underline SUEZ Environment's intent to assist the Chinese authorities in facing the environmental challenges created by the high rate of economic growth in the country. The Chinese authorities recently estimated that EUR 100 billion [US$127.1 billion] would be required over the next 5 years in drinking water treatment, the re-use of wastewater and in protecting the natural environment.

Macao and Tianjin
To face the increasing water demand of the inhabitants in the city of Macao, Degremont, a subsidiary of SUEZ Environment, has just signed a contract worth EUR 13.5 million [US$17.16 million] for the design and construction of a drinking water plant with a capacity of 60,000 m3/day. The new plant will be equipped with ultrafiltration membranes, developed by Group R&D. Macao will benefit from the most compact water treatment technology ever installed in China and the largest ultrafiltration unit in Asia.

With this new plant, SUEZ Environment once again applies its know-how to serve the quality of drinking water in China by providing its most advanced technologies.

In this way, the 480,000 inhabitants in the city of Macao will have the benefit of an uninterrupted, high-quality water supply meeting the international standards in terms of the phytosanitary quality of the water.

Degremont also has just signed a contract worth EUR 6.5 million [US$8.26 million] for the design and construction of a drinking water plant for the city of Tianjin, the 2nd largest city in China with a population of almost 10 million inhabitants.

The drinking water plant, with a treatment capacity of 500,000 m3/day, will be equipped with DENSADEG® technology for primary decantation, and AQUAZUR® technology for filtration. It is one of only two plants of this type in China, the second being developed in Nanshi, the site for the World Fair scheduled to take place in Shanghai in 2010.

The Jinbin plant will enable the distribution of high-quality water to the Binhai new area of Tianjin, one of the most dynamic sectors in the country, after Shenzhen in the south of China and Pudong, a new area of Shanghai in the east of the country.

The Binhai New Area covers nearly 2,300 km2 and is on the way to becoming the bridgehead for Northern China as a trade centre and hub for logistics, research and development.

Changshu
After being named "preferred bidder" at the start of September, SUEZ Environment has just signed the utility contract for the management of the water services for the city of Changshu, located in the Yangtze delta under the administration of Suzhou, near Shanghai. Allocated after an international invitation to tender, the 30-year contract represents a first-year turnover of EUR 30 million [US$38.13 million]. The cumulated value of the overall contract will be more than 1 billion euros, excluding a forecast annual growth rate for the conurbation of +10%. The contract is scheduled to enter into effect at the end of 2006.

The contract is the 19th joint venture of SUEZ Environment (49% Sino-French Holding, 51% Changshu Water Supply Company Limited) in China in the field of water production.

For the purposes of the project, SUEZ Environment joined with New World, its historical partner in China, through their Sino-French Holding joint venture in buying up 49% of the shares in the Changshu Water Supply Company Limited, the other 51% remaining the property of the city. A joint venture will be set up, managed by SUEZ Environment. The latter will be in charge of the production and distribution of drinking water (involving 3 plants with a total capacity of 675,000 m3/day, and 2,500 km of piping networks) as well as management of the customer service for a population of 1.5 million. As part of the contract, SUEZ Environment will also be required to provide its know-how in terms of managing the water asset, optimising its yield, and increasing the coverage rate. Changsu has an important tourist trade and is one of the richest cities in China with a GNP per capita of EUR 5,500 [US$6,991].

Steel Industry Gains
The prevention and control of pollution of industrial origin are given priority focus in China's environmental policy. With the development of the iron and steel industry in the country, SUEZ Environment has been chosen by the largest companies of the sector -- including Capital Steel, Baoshan Steel, Benqi Steel and Anyang Steel -- to assist them in treating and re-using their wastewater, and in setting-up a sustainable management policy for their water resource.

SUEZ Environment, through its subsidiary Degremont, has just signed a contract with Tianjin Tiantie Group Co. Ltd. for the construction of a treatment plant to re-use wastewater, with an overall capacity of 55,200 m3/day. The plant will make use of DENSADEG and AQUAZUR technologies, thereby actively contributing to the sustainable development and environmental protection of the region.

It's the 10th contract to be won by SUEZ Environment in the Chinese iron and steel industry.

SUEZ Environment is also involved in the Chinese petrochemical industry and has just finalised the construction of the first incinerator of hazardous industrial waste in China.

In the weeks to come, Swire SITA, a Chinese subsidiary of SUEZ Environment in waste services, is to start up the largest incineration plant for hazardous industrial waste in China, with a capacity of 60,000 tons a year. The plant is located in the petrochemical park of the city of Shanghai (SCIP), which includes the largest companies of the sector in China and the world. The plant is equipped with advanced technology for transforming waste into energy, thereby reducing its environmental impact and preserving fossil fuels.

It's the first hazardous industrial waste incinerator in China. The incineration plant also benefits from the research programs carried out by the first laboratory dedicated to waste output by the petrochemical industry in China to be developed by SUEZ Environment.

In order to anticipate as much as possible the coming changes in the Chinese regulations in terms of pollutant emissions, the incinerator is equipped with an air pollution control system designed to meet the most stringent requirements, equivalent to European standards. This example illustrates the additional steps taken by SUEZ Environment to assist the Chinese authorities in implementing their policy in favour of sustainable development.

SUEZ in China:
-- The SUEZ Group has been present in China for more than 30 years, through its subsidiaries Sino French Water Development (SFWD), Swire SITA Waste Services and Degremont, with more than 7,800 associates.

Today, nearly 20% of the Chinese urban population (approximately 250 million inhabitants) are connected to water treatment facilities designed and built by Degremont, a subsidiary of SUEZ Environment specialised in water treatment.

-- Sino French Holding (created in 1985), a 50-50 joint venture with the New World group in Hong Kong, manages the drinking water services of 16 Chinese municipal authorities (Chongqing, Qingdao, Sanya, Tanggu, Shanghai, etc), representing the supply of 12 million inhabitants. Since the middle of the 1980s, the SUEZ Environment subsidiary in China also ensures the production and distribution of drinking water in Macao.

-- Swire SITA Waste Services (created in 1989), a 50-50 joint venture with the Swire group in Hong Kong, is involved in the waste services sector in Hong Kong and Macao, and in Hong Kong operates two of the largest and most modern landfills in the world, WENT and NENT.

The Group's investments in China primarily focus on its activities in water management through Sino French Holding, a subsidiary of SUEZ Environment. In 2005, these investments represented some 237 million euros, or three-quarters of the overall value of the company's investments that year.

Suez Environment (www.suez-environnement.com), a branch of the Suez Group, supplies services, plant and equipment essential to life and to environmental protection: drinking water production and distribution, wastewater collection and treatment, waste processing and recycling. Backed by its experience in the water and waste sectors, Suez Environment has a wide-ranging portfolio of know-how, providing sustainable solutions for local authorities and businesses. Suez Environment employs over 72,130 people worldwide and generated EUR 11.1 billion in sales in 2005.

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Also see: "SUEZ-Gaz de France Merger update: Proposed structure of the new group - Environment will be managed by Jean-Louis Chaussade and will remain identical to the current SUEZ Environment set-up which includes the Water and Waste activities."

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