Friday, September 28, 2007

Timing is Everything: Water Deals in China

As I was about to post Veolia's news release on their $3.7 Bil. contract, I am informed that the Energy Roundup is pointing us to the NYT's story on water in China:

China’s runaway economic growth is putting many parts of the country at risk of running short of clean water, the New York Times reports. “China is scouring the world for oil, natural gas and minerals to keep its economic machine humming,” the paper writes. “But trade deals cannot solve water problems.”

Here's Veolia:

Veolia Water wins major contract to supply 3 million inhabitants with drinking water in Tianjin, China

Veolia Water has been selected to supply 3 million inhabitants with drinking water in Tianjin, one of China's most rapidly growing and important economic cities. The contract, for a period of 30 years, is worth an estimated cumulated turnover of around 2,65 billion Euros for Veolia Water, and involves a participation of 49% in the Tianjin Shibei Water Company Ltd.

Tianjin, Port of Beijing and key city for China, is where the country's third stock exchange is set to be built. It includes the largest comprehensive seaport in the North and many industries requiring large amounts of water. Several sporting events for the Olympic Games will be hosted by the city.

The contract was signed with the Tianjin Water Works (Group) Company Ltd, that launched, together with the Municipal Department in charge of State Owned Assets, an international tender for the acquisition of 49% of its subsidiary's equity, Tianjin Shibei Water Company Ltd and its conversion into an Equity Joint Venture. The project will cover the district of Shibei, the Northern part of Tianjin, and the Binhai district on the Eastern coast.

It will include managing the Xinkaihe water production plant (1 million m3/day) which uses classic clarification technology, with 1988km of linear network, as well as the Jinbin water production plant under construction, which will provide 500,000m3/day. The Jinbin plant will incorporate clarification, ozonation and activated carbon filters. In addition, the company will develop the water conveyance network to all the industrial areas in the Binhai area, situated along the coast of Bohai Bay.

The project will run alongside a comprehensive development and reconstruction plan by the Central Government along the River Haihe, which will eventually be linked up with China's three other major rivers, the Yangtze, the Yellow and the Huaihe rivers.

Commenting on the contract, Antoine Frérot, Chief Executive Officer of Veolia Water said, "With this project, Veolia Water illustrates its proven and long standing expertise in anticipating and accompanying the development of major cities like Tianjin that are faced with strong economic and demographic expansion. Veolia Water has formed many successful long term partnerships in China, and with the Tianjin contract, we are continuing to develop our presence in China's large cities".