73204 PPI data update note 70 January 2012 Private activity in water and sewerage continues to contract in the first semester of 2011 In the first semester of 2011, twelve new water and sewerage projects with private participation reached financial or contractual closure in four lower- and upper-middle income countries.1 Additionally, a second phase of the divestiture of Aguas Andinas -- Empresa Metropolitana de Obras de Santiago de Chile (EMOS), took place in Chile bringing total investment commitments (hereafter, investment) in water and sewerage projects amounted to US$1.6 billion a 12% increase compared to 2010 first semester levels. The Chilean divestiture, however, accounted for 62% of the total investment in 2011 (figure1) involving investment commitments of US$986 million.2 Therefore, for new projects only, investment actually decreased by 33.3% compared to 2010 first semester levels, reaching the lowest level in the last five years. By the number of projects, private activity declined by 25% from first semester 2010 (figure 2), also reaching the lowest level in the last five years.3 Figure 1 Investment in water projects in developing Figure 2 Water projects with private participation in countries, by implementation period, 1990‒2011 developing countries, by subsector, 1990‒2011, first semesters only 2011 US$ billions* 16 90 Projects 14 80 12 70 60 10 50 8 40 6 30 4 20 2 10 0 0 1990 1995 2000 2005 2010 2011 1990 1995 2000 2005 2010 2011 1st semester 2nd semester Additional investment Treatment plant Utility Water Transfer System * Adjusted by US CPI. Source: World Bank and PPIAF, PPI Project Database. Source: World Bank and PPIAF, PPI Project Database. The activity by number of projects was concentrated in China which accounted for nine out of twelve new projects (75%) and 22% of total investment (58% of the investment for new projects only). Water treatment plants accounted for eight projects (67%) and 14% of total investment (38% of investment in new projects). Water utilities accounted for the remaining four new projects and the second phase Chilean divestiture, and 86% of total investment (62% of the investments in new projects). In East Asia and Pacific, there were nine new projects implemented in China amounting to US$343.3 million. Out of total number of projects, three were management and lease contracts, three were greenfield BOTs while This note was written by Andreea Militaru, Consultant, Finance Economics and Urban Development Department, Sustainable Development Network, World Bank 1 The PPI Project Database currently uses the FY12 World Bank country classification released in July 2011. Investment data are in 2011 US dollar using the US CPI to adjust to 2011 values. Data at http://ppi.worldbank.org/ are reported in millions of current U.S. dollars unless otherwise indicated. 2 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/. 3 When compared to first semester activity only. 1 two were concession ROTs. Seven of these projects were wastewater treatment plants with a combined capacity of 315,000 cubic meters per day. They were located in the provinces of Hebei, Shanxi, Fujian, Guizhou and in the district of Xuanhua. The remaining two water projects consisted of utility facilities with a combined capacity of 964,400 cubic meters per day. One of these projects consists of a portfolio of assets for eighteen towns in Changsa County involving investments of US$42 million and the operation and maintenance of two existing facilities, Beishan and Jinjin, and the construction and operation of sixteen new wastewater treatment facilities. The remaining project, Jiangsu Jiangan Water Co., Ltd consisted of a partial divestiture and sale of 34.41% of its capital through an IPO on the Shangai Stock exchange for US$223.49 million. In Latin America and the Caribbean there were two new projects implemented in Peru and Brazil amounting to US$154.2 million in investment. The Taboada Wastewater Treatment Plant project in Peru is a 25-year BOT that provides waste water services for Lima and Callao provinces and has a total capacity of 1,210,000 cubic meters per day. The project in Brazil is a utility concession involving the expansion, rehabilitation and operation of water utility facilities of the City of Uruguaiana. This project attracted investments of US$104.2 million and is serving 140,000 people. Additionally, in Chile, in the second phase of the divestiture of Aguas Andinas, the Chilean government sold 30% of its shares for US$986 million. In Middle East and North Africa there was only one new project implemented in Jordan - a 5-year management contract for Yarmouk Water Company, a water utility company serving 250,000 people in the governorates of Ajloun, Irbid, Jerash and Mafraq. The agreement is a performance based-contract that involves management, maintenance and operation of the Yarmouk Water Company. There were no new water and sewerage projects in Europe and Central Asia, South Asia or Sub-Saharan Africa. 2 Table 1: Water projects reaching financial or contractual closure in the first semester of 2011 Note: .. denotes missing data; n.a. means not applicable. East Asia and Pacific Country Project name Project Segment Type/subtype of Investment Capacity Capacity Sponsor status private commitment type participation (US$ millions) 1 China Dihe Wastewater Operational Sewerage Management and n. a. Cubic meters 20 Shandong Hezheng Treatment Plant in Treatment lease contract per day Environment Protection Lincheng County (Management (thousands) Engineering Co. Ltd. contract) [China] 2 China Fenxi County Operational Sewerage Management and n. a. Cubic meters 10 Hebei Yongyi Ecological Watewater Treatment lease contract per day and Environment Treatment Plant (Management (thousands) Engineering Co. Ltd. contract) [China] 3 China Fujian Anxi Construction Sewerage Greenfield .. Cubic meters 12.5 South Water Co. Ltd. Longmen Town Treatment (BOT) per day [China] Waste Water (thousands) Treatment Plan 4 China Guizhou Kaili City Operational Sewerage Concession 18 Cubic meters 80 Herocan [China, 100%] Wastewater Treatment (ROT) per day Treatment Plant (thousands) 5 China Hebei Zhangjiakou Operational Sewerage Concession 42 Cubic meters 120 Kaidan Water City Xuanhua Treatment (ROT) per day International Group, part District Yangfang (thousands) of TAHAL Group [Israel, Wastewater 100%] Treatment Plant 6 China Shaanxi Yang Construction Sewerage Greenfield 18.2 Cubic meters 40 Sound Group [China] County Urban Treatment (BOT) per day Wastewater (thousands) Treatment Plant or Hanyuan Water Affairs Co 3 7 China Wastewater Operational Sewerage Greenfield 42 Cubic meters 29.4 Sound Group [China] Treatment Collection (BOT) per day Portfolio for 18 (thousands) towns in Changsha County 8 China Xiong County Operational Sewerage Management and n. a. Cubic meters 20 Hebei Delong Wastewater Treatment lease contract per day Environmental Treatment Plant (Management (thousands) Engineering Co. Ltd. contract) [China] 9 China Jiangsu Jiangnan Operational Water utility Divestiture 223.49 Cubic meters 930 Jiangyin Water Co., Ltd. with (Partial) per day Urban/Suburban Water sewerage (thousands) Supply and Sewerage Co., Ltd [China, 34.9%]; Jiangyin City State Owned Assets Operation Co., Ltd.[China, 23.18%]; the private sector [34.41%] 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 Peru Taboada Construction Sewerage Greenfield 150 Cubic meters 140 ACS [Spain, 100%] Wastewater Treatment (BOT) per day Treatment Plant Plant (thousands) 2 Brazil Uruguaiana Water Operational Water Concession 104.2 Number of 120 Foz do Brasil, and Sewerage utility with (BROT) connections subsidiary of Odebrecht Services sewerage (thousands) [Brazil] 4 Middle East and North Africa Country Project name Project Segment Type/subtype of Investment Capacity type Capacity Sponsor status private commitment participation (US$ millions) 1 Jordan Yarmouk Water Operational Water Management and n. a. Number of 250 Veolia Aqua Jordan Company utility with lease contract connections [a joint venture of Management sewerage (Management (thousands) Veolia Water and Contract contract) Aquatreat] Note: Greenfield BOT= Build, Operate, and Transfer; Greenfield 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