Local players emerge in complex global market

Mason's Water Yearbook 2003-2004, just published in November, presents the most comprehensive and detailed coverage of the global water industry to date.

By Pamela Wolfe

Not too long ago, giant water companies from France and the UK, such as Lyonnaise des Eaux, Vivendi Water, Thames Water and United Utilities and others aggressively competed for privatisation contracts to provide long-term water supply services for major cities in many countries throughout the world; but the millennium year of 2000 seems far away.

Vivendi Water is now Veolia Environnement SA. Lyonnaise des Eaux is renamed Suez SA, and the German multi-utility RWE acquired Thames Water in December 2000. Competition continues, but much has changed.

Political and economic trends, fewer private sector participation (PSP) contracts, company acquisitions by major players, emerging local companies in India and Southeast Asia, and even strong growth in the industrial outsourcing market are changing the global water and wastewater industry, making it more complex.

Fortunately, the fifth edition of Mason's Water Yearbook 2003-2004 was published last month and it's proven to be a great resource in keeping up to date with these current developments and industry trends on the global, national and, in many cases, municipal level (Website: www.masons.com).

Dr. David Lloyd Owen, who runs the consultancy Envisager, and Masons, the UK-based international law practice that specialises in infrastructure projects, collaborated to produce this reference work, which provides the most comprehensive and detailed information available today on the international water industry. Its key insights on emerging trends are useful for any professional involved in the international water industry.

The Yearbook notes: "Talk about a crisis in the development of international privatisation is not wholly far-fetched." Fewer major privatisations took place in 2002 and 2003 than in previous years, and quite a few major contracts were lost or handed back. Private-sector partnerships increased water supply coverage to 16 million people in 2003, a significant drop from 23 million in 2002, which compares quite unfavourably with statistics from the previous three years, Dr. Owen observed. The Yearbook reports that Suez Ondeo and Allete lost contracts serving 3.7 million people in 2003.

Another noteworthy trend is that major water companies are backing away from pursuing ambitious water concessions outside of Europe and North America, such as in Manila, Philippines or Buenos Aires, Argentina. This change in market focus is creating more room for new local players in particular regions, such as Asia. One example cited by Dr. Owen's research is the Indian company IVRCL Constructions & Projects Ltd of Hyderabad, which is working on three build-own-transfer (BOT) concessions.

According to the Yearbook, the growing demand for industrial outsourcing services is also opening up many opportunities for international companies in Europe, the USA and Japan; however Suez and Veolia Environnement share the majority of this emerging sector. Other major contenders include Cascal (UK), CH2M Hill (USA), RWE (Germany) and United Utilities (UK).

Significantly, companies based in Singapore and Malaysia are also actively pursuing and winning major industrial water and wastewater outsourcing contracts in China and Southeast Asia. The Yearbook's compilation of 95 company reports includes the background history and recent notable contract awards for each company. For example, Sembcorp of Singapore was awarded a BOT for a wastewater facility for the Nanjing Chemical Industrial Park in Jiangsu Province, China. Malaysia's Salcon Engineering Berhad won a 10-year operations and maintenance contract worth RM 200 million for a water treatment plant in Negeri Sembilan. The O&M contract also includes five dams and a pumping station.

Dayen Environmental Limited of Singapore, once mainly carried out contracts awarded by the Public Utilities Board in Singapore until it opened up an office in Beijing in 2002. By mid-2003, Dayan signed an agreement to build and operate a water and wastewater treatment facility for an industrial area in Beijing. In July 2003, a consortium of Singapore companies, including Dayan, will develop a township in Shenyang, China. Dayan will develop water and wastewater services for the new township.

The year 2004 promises to be quite interesting for the global water industry judging from this Yearbook, and I highly recommend that readers check it out. Coincidentally, Dr. David Owen will be a featured speaker during the Water & Wastewater Europe 2004 Conference, which will be held in Barcelona on 25-27 May.

Pamela L. Wolfe, Mangaging Editor

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