63641 PPI data update note 49 July 2011 Private activity in water and sewerage remains subdued In 2010, 25 water and sewerage projects with private participation reached financial or contractual closure in 7 low- and middle-income countries, involving investment commitments of US$1.8 billion1. In addition, a second partial divestiture of a water utility in China raised US$516 million, bringing total investment commitments for 2010 to US$2.3 billion. That investment remained in the US$2 billion to US$3 billion range of the last six years (figure 1). However, by number of projects, private activity in 2010 declined by 34% compared with 2009, reaching the lowest level in the last 15 years (figure 2). The lower activity in China accounted for most of this decline. Overall, investment was highly concentrated in a few projects. The three largest projects (one water treatment plant in Mexico, a wastewater treatment plant in Egypt, and a partial divestiture of a water utility in China) accounted for 76% of investments. Figure 1 Investment in water projects with private Figure 2 Water projects with private participation in participation in developing countries 1990‒2010 developing countries, by subsector, 1990‒2010 2010 US$ billions* 100 Projects 15 Manila concessions 80 12 Malaysia's Indah region sewerage Chile divestitures concession 60 9 Johor concession 40 6 Syabas Buenos Aires concession concession 20 3 0 0 1991 1995 2000 2005 2010 1990 1995 2000 2005 2010 Treatment plant Utility Water Transfer System Remaining investment Large commitments Large commitments Source: World Bank and PPIAF, PPI Project database. * Adjusted by US CPI. Source: World Bank and PPIAF, PPI Project database. The activity by number of projects was also concentrated on a few countries and on wastewater treatment. Brazil and China accounted for 20 of the 25 new projects and 36% of investments. Wastewater treatment accounted for 16 of new projects and 57% of investments. In addition, water utility accounted for six new projects and 24% investments; water transfer system for one new project and 5% of investments; potable water treatment for one new project and 4% of investments; and wastewater utility for one new project and 1% of investments. In East Asia and the Pacific, China implemented 15 new projects representing US$119 million investments (table 1). Fourteen of these projects were small and medium size wastewater treatment plants of a total capacity of 615,000 cubic meters per day. These plants were located in Chongqing Municipality and in the Provinces of Anuhi, Guangxi, Hebei, Hunan, Jiangsu, Liaoning, Sichuan and Shandong. The other new project was a BOT contract for a water supply project in Liaoyang Municipality. In addition to new projects, Chognqing Water Affairs Company, which serves more than 84 million customers, proceeded to a second partial divestiture and sold 6% of its capital through an IPO on the Shanghai Stock Exchange for US$513 million. This note was written by Edouard Perard, research analyst, Finance, Economics, and Urban Development Department, Sustainable Development Network, World Bank. 1 Data on water projects with private participation include primarily medium-size and large projects in low and middle income countries as reported by the media and other public sources. Small-scale projects are generally not included because of lack of public information. More information is available at http://ppi.worldbank.org/. Latvia and Poland became high-income economies according to the World Bank country classification released in July 2010 and are therefore excluded from the 2010 update of the PPI Project Database. 1 In Latin America and the Caribbean, three countries (Brazil, Mexico and Peru) implemented seven new projects representing US$1.1 billion investments. Five of these projects were located in Brazil and represented US$215 million investments: four water utility concessions in the cities of Santa Gertrudes, Piquete, Castilho and Andradina and one wastewater collection and treatment concession in the city of Blumenau. In Mexico, the Atotonilco wastewater treatment plant project representing US$ 793 million in investments reached financial closure under a BOT agreement. Peru implemented one BOT water transfer project representing US$120 million in investments to connect Lake Huascacocha to Rimac River to provide water to Sedapal, the capital city’s water utility, and Edegel, an electricity generator. In the Middle East and North Africa, two countries (Egypt and Tunisia) implemented two new projects representing US$570 million investments. In Egypt, the US$475 million New Cairo wastewater treatment plant project reached financial closure under a BOT agreement. Tunisia implemented a BOT desalination treatment plant project near Djerba representing US$95 million investments. In South Asia, only one project was implemented in Nepal: a 4-year management contract for the Kathmandu water utility covering a population of 160,000. No new project was reported in Europe and Central Asia or in Sub-Saharan Africa. 2 Table 1: Water projects reaching financial or contractual closure in 2010 Note: .. denotes missing data; n.a. means not applicable. East Asia and Pacific Country Project name Project Segment Type/subtype of Investment Capacity Capacity Sponsor status private commitment type participation (US$ millions) 1 China Hunan Yongshun Construction Sewerage Greenfield project 13.5 Cubic meters 20 Kaiyuan Enrionemtnal County Wastewater treatment (BOT) per day Protection Equipment Co Treatment Plant plant (thousands) Ltd (100% / China) 2 China Liaoyang City River Construction Water utility Greenfield project 36.03 Cubic meters 198 United Envirotech East New City Water without (BOT) per day (100% / Singapore) Affairs Project sewerage (thousands) 3 China Nantong Pingchao Construction Sewerage Greenfield project 1.48 Cubic meters 5 Suzhou Zhongsheng Wastewater treatment (BOT) per day Environmental Treatment Plant plant (thousands) Engineering Co., Ltd (100% / China) 4 China Nantong Shigang Construction Sewerage Greenfield project 1.48 Cubic meters 5 Suzhou Zhongsheng Wastewater treatment (BOT) per day Environmental Treatment Plant plant (thousands) Engineering Co., Ltd (100% / China) 5 China Ningguo Construction Sewerage Greenfield project .. Cubic meters 10 Zhejiang Shangda EP Gangkouzhen treatment (BOT) per day Co. Ltd. (China), Wastewater plant (thousands) Ningguo Huanneng Treatment Plant Construction Co. Ltd. (China) 6 China Panjin City No. 2 Operational Sewerage Concession 0 Cubic meters 100 BerlinWasser (100% / Wastewater treatment (ROT) per day Germany) Treatment Plant plant (thousands) 7 China Qinzhou Economic Operational Sewerage Greenfield project 9.4 Cubic meters 15 SembCorp Industries Development Zone treatment (BOO) per day (80% / Singapore) Wastewater plant (thousands) Treatment Plant 8 China Shaoyang Hongqiqu Construction Sewerage Greenfield project .. Cubic meters 40 Hunan Capital Wastewater treatment (BOT) per day Investment Co. Ltd Treatment Plant plant (thousands) (100% / China) 9 China Shenze County City Construction Sewerage Greenfield project 5.18 Cubic meters 25 Changye Group (100% / South Wastewater treatment (BOT) per day China) Treatment Plant plant (thousands) 10 China Tongliang County Construction Sewerage Greenfield project 3.82 Cubic meters 10 Chongqing Taixing City East treatment (BOT) per day Environmental Wastewater plant (thousands) Protection Engineering Treatment Plant Co., Ltd (100% / China) 3 11 China Yibin City Yangwan Construction Sewerage Greenfield project 8.82 Cubic meters 40 Sichuan Huajian uanbo Wastewater treatment (BOT) per day Investment Co., Ltd Treatment Plant plant (thousands) (China), Ziyang Haitian Water Affairs Co., Ltd. (China) 12 China Zaozhuang City Operational Sewerage Concession .. Cubic meters 40 Lianheruntong (100% / Yicheng District treatment (ROT) per day China) Wastewater plant (thousands) Treatment Plant 13 China Zengcheng Xintang Construction Sewerage Greenfield project .. Cubic meters 200 Shenzhen Zhujiang EP Wastewater treatment (BOT) per day Investment (China), Treatment Plant plant (thousands) Citic Pacific (Hong Kong, China) 14 China Zhangjiakou Operational Sewerage Concession (ROT) 38.97 Cubic meters 80 Kaidan Water Affairs Co Xuanhua District treatment per day Ltd (100% / Israel) Yangfang plant (thousands) Wastewater Treatment Plant 15 China Zhuozhou Construction Sewerage Greenfield project .. Cubic meters 25 Hubei Keliang Bio-Tech Songlindian treatment (BOT) per day Co (100% / China) Wastewater plant (thousands) Treatment Plant Latin America and the Caribbean Country Project name Project Segment Type/subtype of Investment Capacity Capacity Sponsor status private commitment type participation (US$ millions) 1 Brazil Andradina Water Operational Water Concession 16 Population 55 Cab Ambiental (70% / and Sewerage utility with (ROT) (thousands) Brazil) System sewerage 2 Brazil Blumenau Sewerage Operational Sewerage Concession 174.9 Population 300 Odebrecht SA (100% / System collection (BROT) (thousands) Brazil) and treatment 3 Brazil Castilho Water and Operational Water Concession 4.4 Population 18 Cab Ambiental (70% / Sewerage System utility with (BROT) (thousands) Brazil) sewerage 4 Brazil Piquete Water and Operational Water Concession 3.3 Population 14 Cab Ambiental (100% / Sewerage System utility with (BROT) (thousands) Brazil) sewerage 5 Brazil Santa Gertrudes Operational Water Concession 17 .. .. Odebrecht SA (100% / Water and utility with (BROT) Brazil) Sewerage System sewerage 4 6 Mexico Atotonilco Waste Construction Sewerage Greenfield project 793 Cubic meters 1990 Acciona (25% / Spain), Water Treatment treatment (BOT) per day Impulsora Del Desarrollo Y Plant plant (thousands) El Empleo En América Latina SA de CV (IDEAL) (41% / Mexico), Mitsui (25% / Japan) 7 Peru Huascacocha Water Construction Water Greenfield project 119.8 .. .. Construtora OAS (100% / Transfer Project Transfer (BOT) Brazil) System Middle East and North Africa Country Project name Project Segment Type/subtype of Investment Capacity Capacity Sponsor status private commitment type participation (US$ millions) 1 Egypt, New Cairo Construction Sewerage Greenfield project 475 Cubic 250 Orascom (50% / Egypt, Arab Arab Rep. Wastewater treatment (BOT) meters per Rep.), Fomento de Treatment Plant plant day Construcciones y Contratas (thousands) SA (FCC) (50% / Spain) 2 Tunisia Djerba desalination Construction Potable Greenfield project 95 Cubic 50 Abengoa (51% / Spain), plant water (BOT) meters per Princesse Holding (49% / treatment day Tunisia) plant (thousands) South Asia Country Project name Project Subsector Type/subtype of Investment Capacity Capacity Sponsor status private commitment type participation (US$ millions) 1 Nepal Kathmandu Operational Water Management and n.a. Number of 160 BerlinWasser (100% / Upatyaka utility with lease contract connections Germany) Khanepani sewerage (Management (thousands) Limited (KUKL) contract) Note: BOT= Build, Operate, and Transfer; BOO = Build, Own, and Operate; Concession (ROT) = Rehabilitate, Operate, and Transfer; Concession (BROT) = Build, Rehabilitate, Operate, and Transfer. *in current US$ millions Source: World Bank and PPIAF, PPI Database. 5