Global water giants' market shares diminish

Nov. 11, 2010
LONDON, England, Nov. 11, 2010 -- The five dominant forces of the global water sector have subsided as a result of a fundamental shift in the market with developing countries exporting services and technologies from the Far East...

LONDON, England, Nov. 11, 2010 -- The five dominant forces of the global water sector have subsided as a result of a fundamental shift in the market with developing countries exporting services and technologies from the Far East.

This was one of the trends identified in the Water Yearbook, now in its 12th edition and published by infrastructure law firm Pinsent Masons this week in London.

The Yearbook revealed the dominance of the “big five” companies (Suez, Veolia, SAUR, Agbar Water and RWE), as seen in previous editions, is now starting to diminish.

Back in 1999 the five companies accounted for 68% of a market serving 350 million. In 2009, the market share decreased to 34% of a market which had increased to serve 802 million.

Report author David Lloyd Owen said that the sector has grown but that these top five companies had not kept up with the market.

Back in 2002 Pinsent Masons declared that the acquisition of market share by the leading five companies was a "remorseless process". It went onto say that "it is evident that a retreat may be equally remorseless".

Continuing a trend identified last year, the Yearbook also highlighted a narrowing gap between the 927 “top tier” companies, which cover 695.7 million people and the “second tier” companies (often local players), who now cover 54.5 million people and represent a growing force.

Researchers also found that the private sector is becoming more diverse. In 1999, 84% of companies covered by the Yearbook were in the OECD (Organization for Economic Co-operation and Development), now this figure stands at 45%. In particular, China and Singapore are looking westwards towards new markets such as the Middle East.

David Lloyd Owen, report author, said: “One of the most encouraging developments for the private water industry was the UN resolution on 30th September 2010 recognising the role of non-state service providers and re-affirming that the delegation of services to third parties still means that the state is responsible for ensuring that people receive safe water and sanitation services.

"This is a setback for those who believe water to be a tool for state control and whilst the private sector is not a panacea, it has shown itself to be an engine for unplugging administrative and political bottlenecks, enhancing transparency in public administration and combating corruption.”

Mark Lane, partner and head of the Water Sector Group at Pinsent Masons, added: “We are still seeing a higher than expected attrition rate in contracts being cancelled ahead of time. There remains a pressing need to re-launch the World Water Vision’s target of universal access to water and sanitation by 2025 as it is clear that the water and sanitation targets for the 2015 Millennium Development Goals will only be partially met. Much work needs to be done to convince people that investing in these assets and services makes good economic sense, especially in a recession.”

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- A full review and analysis of the Water Yearbook will be published in the December-January issue of Water & Wastewater International. To sign up and receive a copy, please click here.

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