51765 PPI data update note 23 June 2009 Private activity in water supply declined in 2008 In 2008 nine low- or middle-income countries implemented at least 65 water projects with private participation, involving investment of more than US$3.1 billion, according to just-released data from the Private Participation in Infrastructure Project Database (figures 1 and 2). 1 The number of new projects involving the private sector declined by 20% compared with the peak of 2007, while annual investment commitments (hereafter, investment) fell by 12%. 2 Figure 1 Private participation in water in developing countries, Figure 2 Water projects with private participation in developing 1990­2008 countries by subsector, 1990­2008 Investment commitments New projects New projects 18 90 90 (2008 US$ billions)* 80 80 15 70 70 12 Manila 60 60 concessions Chilean Johor privatizations 50 50 concession 9 Buenos Aires concession 40 40 6 30 30 Malaysia Indah Region Syabas 20 concession 20 Sewerage 3 10 10 0 0 0 1990 1995 2000 2005 2008 1990 1995 2000 2005 2008 Utilities Treatment plants Other investment commitments Large commitments Projects Source: World Bank and PPIAF, PPI Project Database. * Adjusted by US CPI Source: World Bank and PPIAF, PPI Project Database. Highlights of 2008 New private activity was highly concentrated in 2008. The number of developing countries implementing new private water projects was the lowest since 1995. Even more, three of the nine--China, Brazil, and Algeria--accounted for 89% of new projects and 85% of investment. China alone accounted for 71% of new projects and 31% of investment. As in the previous three years, private activity in 2008 focused mainly on water and sewage treatment plants (see figure 2). These accounted for 53 of the 65 water projects and US$2 billion in investment. This level of activity is comparable to that reported in 2007, when 56 treatment plant projects, involving US$1.6 billion in investment, reached closure. Projects involving sewerage facilities accounted for most of the treatment plant projects in 2008 (40 of the 53). These projects attracted investment of US$780 million. The 13 projects for water treatment plants attracted investment of US$1.2 billion. The other 12 water projects were for utilities and attracted investment of US$1 billion. Seven of the utility projects combine water and sewerage services, three involve only sewerage services, and two provide only water supply services. This note was written by Ada Karina Izaguirre, infrastructure specialist, and Edouard Perard, consultant, in the Finance, Economics, and Urban Development Department of the World Bank's Sustainable Development Network. 1 Data on water projects with private participation include primarily medium-size and large projects as reported by the media and other public sources. Small-scale projects, which also play an important role in the water sector, are generally not included because of a lack of public information. Others may have been omitted for the same reason. Equatorial Guinea, Hungary, Oman, and the Slovak Republic became high-income countries according to the 2008 World Bank country classification (released in July 2008) and are therefore excluded from the PPI Project Database beginning with the 2008 update. 2 All dollar amounts in this note are expressed in 2008 U.S. dollars adjusted by using the 2008 U.S. consumer price index. 1 The 65 new water projects included 42 build-operate-transfer (BOT) contracts, 16 concessions, 3 management contracts, 2 divestitures, and 2 lease contracts. The number of concessions was down sharply from the 25 in 2007, while the number of BOT contracts remained stable (43 were implemented in 2007). The 2008 data suggest that the global financial and economic crisis has affected the closure of new water projects. In the second semester of 2008, the first months of full-scale financial crisis, the number of projects reaching closure declined by 45%, and the associated investments by 29%, compared with the same period in 2007 (figures 3 and 4). Annual activity in 2008 declined by a smaller rate, however, thanks to higher activity in the first semester that offset some of the slowdown in the second. That slowdown affected both subsectors (treatment plants and utilities), though water supply projects had a larger relative decline. Only four water utility transactions, representing investment of US$330 million, closed in July­ December 2008. Investment in treatment plant projects in that semester was down by 12%, to US$1.1 billion, compared with the same period of 2007. Figure 3 Investment commitments to water projects with private Figure 4 Water projects with private participation in developing participation in developing countries by semester, 2002­08 countries by semester, 2002­08 New projects 2.5 2008 US$ billions* 60 50 2.0 40 1.5 30 1.0 20 0.5 10 - 0 2002 2003 2004 2005 2006 2007 2008 2002 2003 2004 2005 2006 2007 2008 First semester Second semester First semester Second semester * Adjusted by US CPI Source: World Bank and PPIAF, PPI Project Database. Source: World Bank and PPIAF, PPI Project Database. Activity by region. Six developing regions had new water projects reaching financial or contractual closure in 2008 (tables 1 and 2). · In East Asia and Pacific only China and Malaysia had new projects. In China 46 projects reached financial closure, with investment of US$974 million. Of these, 44 are for treatment plants (40 sewage and 4 water treatment plants). The other 2 are for water utilities: a 30-year concession contract for the water utility of Yingtan City and a partial divestiture of the water company of the Chongqing municipality. In Malaysia a 27-year concession contract was signed for the Sungai Sireh potable water treatment plant. · In Europe and Central Asia private activity was limited to one project in the Russian Federation, a 15-year lease for the water utility of the city of Volgograd. · In Latin America and the Caribbean only Brazil and Guatemala had new projects reaching financial or contractual closure. Brazil had seven, with investment of US$800 million. In the state of Bahia the federal government and the Brazilian company Odebrecht signed an 18-year BOT contract for the Bahia Outfall sewage collection and treatment plant. In the state of Rio de Janeiro the federal government and Odebrecht signed a 15-year concession for sewerage services for the Rio das Ostras municipality, and the municipality of Resende signed a 30-year concession with Aguas das Agulhas Negras for its water utility and sewerage services. In the state of São Paulo the Brazilian company Cab Ambiental signed a 15-year concession for the Taiacupeba water treatment plant with Sabesp (São Paulo's state-owned water utility), a 30-year concession with the Mirassol municipality for the operation of its water and sewerage utility, and a 30-year concession with the municipality of Guaratingueta for sewerage services. In addition, the Spanish company OHL secured financing for a 30-year BOT contract for a wastewater treatment plant in Mogi Mirim, São Paulo. In Guatemala the departmental government of Izabal signed a 25-year concession with the Uruguayan Grupo Seinco for the water and sewerage utility of the municipalities of Santo Tomas de Castilla and Puerto Barrios. · In the Middle East and North Africa Algeria implemented five projects, with investment of US$874 million. Four were 25-year BOT contracts for desalination plants with a total capacity of 2 720,000 cubic meters a day: Mostaganem (200,000 cubic meters a day), Tenes Lilmiyah (200,000), Souk Tleta (200,000), and Fouka (120,000). In addition, the Algerian government signed a 5.5-year management contract for the water supply and sanitation company of the city of Constantine. · In South Asia India implemented two projects, representing investment of US$76 million. In the state of West Bengal the Haldia Development Authority signed a 25-year concession agreement for a potable water treatment plant in the city of Haldia. In the state of Karnataka, the City of Mysore signed a 6-year management contract for water supply operation. · In Sub-Saharan Africa Côte d'Ivoire and Sodeci, a consortium led by the French Bouygues, signed a new 15-year lease contract for the national water utility, Société de Distribution d'Eau de Côte d'Ivoire, under private management since the 1960s. Mauritius implemented one project, a 7-year management contract for the operation of the St. Martin wastewater treatment plant. Potential new projects. Besides the 65 projects implemented, 9 projects were awarded in 2008 but had not reached financial or contractual closure by the end of the year. In Mexico one BOT contract was awarded for the El Ahogado wastewater treatment plant and another for the expansion of the Los Cabos treatment plant. In Peru a BOT contract was awarded for the Huascacocha water transfer project. In Haiti a management contract was awarded for water services for the city of Saint Marc. In Algeria three BOT contracts were awarded for the desalination treatment plants of Magtaa, Oued Sebt, and Cap Djinet. In Indonesia a 25-year concession contract was awarded for drinking water supply in the regency areas Sepatan, Pasar Kemis, Cikupa, Balaraja, Jayanti, and Tangerang. And in Djibouti a BOT contract was awarded for the desalination treatment plant of Doraleh. Canceled and distressed projects. One contract was canceled in 2008: the Aguas del Valle water utility and sewerage concession for the Argentine towns of San Fernando del Valle de Catamarca, Valle Viejo, and Fray Mamerto Esquiu, canceled in April. That brought the total number of water contracts canceled in 1990­ 2008 to 49, representing 7.4% of all water projects and 26.8% of investment commitments in that period. In addition, seven projects became distressed in 2008. In Malaysia the state government of Selangor announced that it would buy back five water treatment projects and the Syabas water utility concession, out of a belief that these contracts make water supply in the state too expensive and unsustainable. In Panama the government requested the early termination of Aguas de Panama's BOT contract for a potable water treatment plant. These projects brought the total number of water contracts becoming distressed in 1990­ 2008 to 11, representing 1.7% of all water projects and 7.9% of investment commitments in that period. Concluded projects. Two contracts were concluded in 2008: the water utility management contract for four towns (Durres, Fier, Lezhe, and Saranda) in Albania, in August, and the management contract for water supply in Beira, Quelimane, Nampula, and Pemba in Mozambique. Table 1 Summary of water projects reaching financial or contractual closure in developing countries in 2008 Investment Subsector Type of private participation Region Country Projects commitments Treatment Greenfield Management Lease Utilities Concession Divestiture (US$ millions) plants project contract contract China 46 974 44 2 36 8 0 0 2 EAP Malaysia 1 0 1 0 0 1 0 0 0 Russian ECA 1 369 0 1 0 0 0 1 0 Federation Brazil 7 800 2 5 2 5 0 0 0 LAC Guatemala 1 7 0 1 0 1 0 0 0 MENA Algeria 5 874 4 1 4 0 1 0 0 SA India 2 76 1 1 0 1 1 0 0 Côte 1 0 0 1 0 0 0 1 0 SSA d'Ivoire Mauritius 1 0 1 0 0 0 1 0 0 Total 65 3,100 53 12 42 16 3 2 2 Source: World Bank and PPIAF, PPI Project Database. Note: EAP = East Asia and Pacific; ECA = Europe and Central Asia; LAC = Latin America and the Caribbean; MENA = Middle East and North Africa; SA = South Asia; SSA = Sub-Saharan Africa. 3 Table 2 Water projects reaching financial or contractual closure in developing countries in 2008 Note: .. = not available; n.a. = not applicable. BOT = build, operate, transfer; BROT = build, rehabilitate, operate, transfer; ROT = rehabilitate, operate, transfer. East Asia and Pacific Type/subtype of Investment Project private commitment Capacity Country Project name status Subsector participation (US$ millions) type Capacity Sponsor 1 China Cangwu Construction Treatment Greenfield project 15.9 Cubic meters 60 Western Water Wastewater plants (BOT) per day Corporation (100%, Treatment Plant (thousands) United States) 2 China Cenxi City Construction Treatment Greenfield project 5.4 Cubic meters 30 Guangxi Huahong Water Wastewater plants (BOT) per day Affairs Investment Co. Treatment Plant (thousands) Ltd. (100%, China) 3 China Changle County Construction Treatment Greenfield project 15.6 Cubic meters 100 Salcon Bhd (100%, Raw Water Supply plants (BOT) per day Malaysia) Project (thousands) 4 China Changle County Construction Treatment Greenfield project 14.3 Cubic meters 100 Salcon Bhd (75%, Wastewater plants (BOT) per day Malaysia) Treatment Plant (thousands) 5 China Chongqing Water Operational Utilities Divestiture 228.9 Cubic meters .. SUEZ (8%, France), NWS Affairs (partial) per day Holdings Limited (8%, (thousands) Hong Kong, China) 6 China Daye City Construction Treatment Greenfield project 6.9 Cubic meters 30 Beijing Sound Wastewater plants (BOT) per day Environment Industry Treatment Plant (thousands) Group (80%, China) 7 China Debao Wastewater Construction Treatment Greenfield project 3.5 Cubic meters 15 Guangxi Huahong Water Treatment Plant plants (BOT) per day Affairs Investment Co. (thousands) Ltd. (100%, China) 8 China Dingzhou City Tiexi Construction Treatment Greenfield project 5.0 Cubic meters 40 Kardan Water Wastewater plants (BOT) per day International Group Co. Treatment Plant (thousands) Ltd. (100%, China) 9 China Dongchuan District Construction Treatment Greenfield project 4.3 Cubic meters 20 Anhui Guozhen City Wastewater plants (BOT) per day Environmental Protection Treatment Plant (thousands) Science & Technology Co. Ltd. (100%, China) 10 China Fusui Wastewater Construction Treatment Greenfield project 8.5 Cubic meters 40 Guangxi Huahong Water Treatment Plant plants (BOT) per day Affairs Investment Co. (thousands) Ltd. (100%, China) 11 China Guangrao County Construction Treatment Concession (ROT) 11.3 Population 50 Chongqing Kangda Wastewater plants (thousands) Environmental Treatment Plant Protection Co. Ltd. (100%, China) 4 12 China Haerbin Qunli Construction Treatment Greenfield project 55.6 Cubic meters 150 Chongqing Kangda Wastewater plants (BOT) per day Environmental Treatment Plant (thousands) Protection Co. Ltd. (100%, China) 13 China Heilongjiang Muling Construction Treatment Greenfield project 6.1 Cubic meters 20 Dalian Dongda City Wastewater plants (BOT) per day Environmental Treatment Plant (thousands) Engineering Co. Ltd. (100%, China) 14 China Heilongjiang Operational Treatment Greenfield project 22.0 Cubic meters 100 Beijing Herocan Zhaodong City plants (BOT) per day Environmental Water Supply and (thousands) Engineering Tech Co. Drainage Project Ltd. (100%, China) 15 China Huangshi City Ci Construction Treatment Greenfield project 16.1 Cubic meters 125 Asia Water Technology Lake Wastewater plants (BOT) per day (100%, Singapore) Treatment Plant, (thousands) Phase II 16 China Hubei Tianmen Construction Treatment Greenfield project 25.3 Cubic meters 150 Beijing Sound Wastewater plants (BOT) per day Environment Industry Treatment Project (thousands) Group (100%, China) 17 China Hubei Zhijiang City Construction Treatment Greenfield project 7.7 Cubic meters 35 Beijing Sound Wastewater plants (BOT) per day Environment Industry Treatment BOT (thousands) Group (80%, China) Project 18 China Jiangsu Jintan City Operational Treatment Concession (ROT) 10 Cubic meters 30 Golden State No. 1 Wastewater plants per day Environment (100%, Treatment Plant (thousands) United States) 19 China Jiangsu Shanghu Construction Treatment Greenfield project 2.1 Cubic meters 35 Zhongchuang Water Wastewater plants (BOT) per day (100%, China) Treatment Plant (thousands) 20 China Jiangxi Wannian Operational Treatment Greenfield project 2.8 Cubic meters 15 China Water Affairs Wastewater plants (BOT) per day Group Ltd. (100%, Hong Treatment Plant (thousands) Kong, China) 21 China Jiangxi Yingtan City Operational Utilities Concession (ROT) 10.7 Cubic meters 100 China Water Industry Water Supply Co. per day (51%, Hong Kong, Ltd. (thousands) China) 22 China Jilin Liaoyuan Operational Treatment Concession (ROT) 12.9 Cubic meters 100 Sinomem Technology Wastewater plants per day Ltd. (100%, Singapore) Treatment Plant (thousands) 23 China Jingbian County Construction Treatment Greenfield project 5.6 Cubic meters 15 Beijing Sound Wastewater plants (BOT) per day Environment Industry Treatment Plant, (thousands) Group (100%, China) Phase I 24 China Jingdezhen No. 2 Construction Treatment Greenfield project 18.6 Cubic meters 80 Asia Environment Wastewater plants (BOT) per day Holdings Ltd. (100%, Treatment Plant (thousands) Singapore) 5 25 China Langfang City Construction Treatment Greenfield project 19.6 Cubic meters 80 Hyflux (100%, Railway North plants (BOT) per day Singapore) Wastewater (thousands) Treatment Plant 26 China Nanjing City Operational Treatment Greenfield project 1.8 Cubic meters 10 Grupo Tradebe (..%, Wastewater plants (BOT) per day Spain), Easen Treatment Plant (thousands) International Company Ltd. (..%, United States) 27 China Ning'an Construction Treatment Greenfield project 6.1 Cubic meters 20 Dalian Dongda Wastewater plants (BOT) per day Environmental Treatment Plant (thousands) Engineering Co. Ltd. (100%, China) 28 China Pingfang Construction Treatment Greenfield project 51.9 Cubic meters 150 North America Wastewater plants (BOT) per day Environmental Tech Treatment Plant (thousands) (70%, Canada) 29 China Qianchuan Construction Treatment Greenfield project 22.9 Cubic meters 120 Asia Water Technology Wastewater plants (BOT) per day (100%, Singapore) Treatment Plant (thousands) 30 China Shandong Sishui Operational Treatment Concession (ROT) 0 Cubic meters 20 Longquan Group (100%, County Wastewater plants per day Malaysia) Treatment Plant (thousands) 31 China Shenyang Shenbei Construction Treatment Greenfield project 8.6 Cubic meters 50 Shenyang Zhenxing Wastewater plants (BOT) per day (100%, China) Treatment Plant (thousands) 32 China Shizong Construction Treatment Greenfield project 17.2 Cubic meters 30 Hans Technologies Wastewater plants (BOT) per day (100%, United States) Treatment Plant (thousands) 33 China Shuangyashan Construction Treatment Greenfield project 21.0 Cubic meters 50 Haerbin Wanxinglong Wastewater plants (BOT) per day Co. (100%, China) Treatment Plant (thousands) 34 China Six Wastewater Construction Treatment Greenfield project 57.2 Cubic meters 140 Asia Environment Treatment Plants in plants (BOT) per day Holdings Ltd. (100%, Danyang City (thousands) Singapore) 35 China Taizhou City No. 4 Construction Treatment Greenfield project 7.5 Cubic meters 40 Golden State Wastewater plants (BOT) per day Environment (100%, Treatment Plant (thousands) United States) 36 China Tangshan County Construction Treatment Greenfield project 5.2 Cubic meters 25 Anhui Guozhen Wastewater plants (BOT) per day Environmental Treatment Plant (thousands) Protection Science & Technology Co. Ltd. (100%, China) 37 China Taohua River Construction Treatment Greenfield project 5.0 Cubic meters 20 Lianheruntong (100%, Wastewater plants (BOT) per day China) Treatment Plant (thousands) 6 38 China Xigu Wastewater Construction Treatment Greenfield project 18.5 Cubic meters 100 Beijing Sound Treatment BOT plants (BOT) per day Environment Industry Project (thousands) Group (100%, China) 39 China Xinyigou Construction Treatment Greenfield project 61.5 Cubic meters 100 North America Wastewater plants (BOT) per day Environmental Tech Treatment Plant (thousands) (60%, Canada) 40 China Xuancheng Construction Treatment Greenfield project 10.0 Cubic meters 50 Bio-Treat Technology Wastewater plants (BOT) per day Ltd. (100%, China) Treatment Plant (thousands) 41 China Yancheng City Operational Treatment Concession (ROT) 28.6 Cubic meters 235 China Water Group Inc. Huijin Water Affairs plants per day (49%, China) Co. Ltd. (thousands) 42 China Yuanping City Operational Treatment Concession (ROT) 17.1 Cubic meters 50 GreenTech Engineering Wastewater plants per day Co. Ltd. (..%, China) Treatment Plant (thousands) 43 China Zhejiang Deqing Construction Treatment Greenfield project 20 Cubic meters 100 Darco (100%, Water Plant plants (BOT) per day Singapore) (thousands) 44 China Zhoukou City Operational Treatment Concession (ROT) 9.2 Cubic meters 120 Asia Environment Wastewater plants per day Holdings Ltd. (100%, Treatment Plant (thousands) Singapore) 45 China Zhuanghe City Construction Treatment Greenfield project 7.5 Cubic meters 30 Dalian Dongda Wastewater plants (BOT) per day Environmental Treatment Plant (thousands) Engineering Co. Ltd. (100%, China) 46 China Zhumadian Water Operational Treatment Divestiture 61.1 Cubic meters 120 China Water Group Inc. Supply Project plants (partial) per day (51%, China) (thousands) 47 Malaysia Sungai Sireh Water Distressed Treatment Concession (ROT) .. .. .. Puncak Niaga Holdings Treatment Plant plants Berhad (100%, Malaysia) Europe and Central Asia Type/subtype Investment Project Sub- of private commitment Capacity Country Project name status sector participation (US$ millions) type Capacity Sponsor 1 Russian Volgograd Utility Operational Utilities Management and 369 Population 1,000 Integrated Energy Federation lease contract (thousands) Systems Holding (IES) (lease contract) (37%, Russian Federation), Lukoil (16%, Russian Federation) 7 Latin America and the Caribbean Type/subtype of Investment Project Sub- private commitment Capacity Country Project name status sector participation (US$ millions) type Capacity Sponsor 1 Brazil Aguas das Agulhas Operational Utilities Concession 74.2 Population 112 Construtora Queiroz Negras (BROT) (thousands) Galvao (..%, Brazil), Carioca Christiani-Nielsen Engenharia (..%, Brazil), Trana Construcoes Ltd. (..%, Brazil) 2 Brazil Alto Tiete PPP Operational Treatment Concession 170 Cubic meters 1,296 Cab Ambiental (100%, plants (BROT) per day Brazil) (thousands) 3 Brazil Bahia Outfall PPP Construction Utilities Greenfield project 112.6 Population 1,100 Odebrecht SA (100%, (BOT) (thousands) Brazil) 4 Brazil Cab Guaratingueta Operational Utilities Concession 39.6 Population 116 Cab Ambiental (100%, Sewerage System (BROT) (thousands) Brazil) 5 Brazil Mirassol Water and Operational Utilities Concession 22.5 Population 55 Cab Ambiental (90%, Sewage Concession (BROT) (thousands) Brazil) 6 Brazil Mogi Mirim Construction Treatment Greenfield project 175 Cubic meters 13 Obrascon Huarte Lain plants (BOT) per day (OHL) (57%, Spain) (thousands) 7 Brazil Rio das Ostras Construction Utilities Concession 206.5 Population 120 Odebrecht SA (100%, Sanitation PPP (BROT) (thousands) Brazil) 8 Guatemala Aguas de Izabal Operational Utilities Concession 6.7 Number of 6 Grupo Seinco (100%, (BROT) connections Uruguay) (thousands) Middle East and North Africa Type/subtype of Investment Project Sub- private commitment Capacity Country Project name status sector participation (US$ millions) type Capacity Sponsor 1 Algeria Fouka Desalination Construction Treatment Greenfield project 180.0 Cubic 120 Acciona (26%, Spain), Plant plants (BOT) meters per SNC Lavalin (26%, day Canada) (thousands) 2 Algeria Mostaganem Construction Treatment Greenfield project 250.0 Cubic 200 Fomento de Desalination Plant plants (BOT) meters per Construcciones y day Contratas SA (FCC) (thousands) (26%, Spain), Obrascon Huarte Lain (OHL) (26%, Spain) 8 3 Algeria Société des Eaux Operational Utilities Management and n.a. Population 1,200 Société des Eaux de et de lease contract (thousands) Marseille (100%, l'Assainissement de (management France) Constantine contract) 4 Algeria Souk Tleta Construction Treatment Greenfield project 213.0 Cubic 200 Malakoff Bhd (41%, Desalination Plant plants (BOT) meters per Malaysia) day (thousands) 5 Algeria Tenes Lilmiyah Construction Treatment Greenfield project 231.0 Cubic 200 Abengoa (51%, Spain) Desalination Plant plants (BOT) meters per day (thousands) South Asia Type/subtype of Investment Project private commitment Capacity Country Project name status Subsector participation (US$ millions) type Capacity Sponsor 1 India Haldia Water Operational Treatment Concession 75.9 Cubic 114 Ranhill Bhd (34%, Management plants (BROT) meters per Malaysia), Infrastructure Limited day Development Finance (thousands) Company Ltd. (IDFC) (34%, India), Tata Enterprises (34%, India) 2 India Water Operational Utilities Management and n.a. Number of 133 Tata Enterprises (100%, Management lease contract connections India) Contract for (management (thousands) Mysore City contract) Sub-Saharan Africa Type/subtype of Investment Project private commitment Capacity Country Project name status Subsector participation (US$ millions) type Capacity Sponsor 1 Côte Société Operational Utilities Management and n.a. Population 9,000 Bouygues (46%, d'Ivoire Distribution d'Eau lease contract (thousands) France) de Côte d'Ivoire (lease contract) Renewal 2 Mauritius St. Martin Operational Treatment Management and n.a. Cubic meters 70 Berlinwasser Wastewater plants lease contract per day International AG Treatment Plant (management (thousands) (100%, Germany) contract) 9