WATER Operations in EASTERN EUROPE. Athens European Week November 22, 2012

Transcription

1 WATER Operations in EASTERN EUROPE Athens European Week November 22, 2012

2 AGENDA Main drivers for the water market in Eastern Europe Case studies: Bucharest & Prague European Union Funds Questions & answers

3 Veolia Water Key figures 12.1 billion euros in 2010 revenue employees Operations in 60 countries 78 million people provided with drinking water and 53 million with wastewater services 4,650 water production plants managed 3,150 wastewater treatment plants managed 6.9 billion cubic meters of water distributed 5.6 billion cubic meters of municipal waste water collected 3 - Veolia Water Europe David Alexandre

4 Veolia Water expertise and business: management of water cycle Municipalities 2 segments of one unique business: Potable water and Wastewater services management for Municipalities and industrial clients Implementation of technological solutions and construction of related facilities Technological solutions and construction Industrial management 2011 turn over : 12,5 billion

5 Veolia Water R&D More than 50 water treatment technologies have been developped over the past 20 years, among which: Settling with ballasted flocs : ACTIFLO (more than 300 sites) Trestment with fixed biological beds : BIOSTYR (more than 80 sites) Refined treatment with membrane filtration: from microfiltration to reverse osmosis Sludge oxydation in aquous and pressurised atmosphere : ATHOS «intelligent» field vehicules for network technicians Research and innovation are essential to our profession. 100 M /Y

6 Veolia Eau Europe Belgique Pop (EH) : 1,1 M hab. CA : 63 M 70 employés Pays-Bas Pop (EH): 1,7 M hab. CA : 27 M 50 employés Danemark Pop : 0,05 M hab. CA : 2 M 10 employés Norvège Pop : 0,05 M hab. CA : 1 M 5 employés Suède Pop: 0,1 M hab. CA : 5 M 45 employés Allemagne Pop : 5 M hab. Irlande CA : 1280 M employés Pop.: 0,8 M hab. CA : 13 M 130 employés Royaume Uni Pologne Pop: 0,1 M hab. CA : 6,5 M 142 employés Pop: 4 M hab. CA : 485 M employés Portugal Pop.: 0,3 M hab. CA : 54 M 330 employés République tchèque Pop: 3,9 M hab. CA : 533 M employés Slovaquie Pop: 1 M hab. CA : 68 M 1889 employés Espagne Arménie Pop (EH): 1,4 M hab. CA : 10 M 93 employés Italie Pop: 1,6 M hab. CA : 104 M 785 employés Hongrie Pop: 2,1 M hab. CA : 145,3 M employés Roumanie Pop: 2 M hab. CA : 120 M employés Turquie Pop: 0,1 M hab. CA : 2 M 70 employés Pop: 1,2 M hab. CA : 18 M 1380 employés

7 Some European tariffs in /m3 Romania Spain Hungaria Czecheq Norway Austria UK France Belgium Germany Luxemburg Danmark /m 3

8 Veolia Water in Eastern Europe in 2010 Yearly Turn Over 1000 millions employees Population disserved 7.6 millions drinking water 8.3 millions waste water

9 AGENDA Brief presentation of Veolia Eau Main drivers for the water market in Eastern Europe Case studies: Bucharest, Prague, Yerevan European Union Funds Questions & answers

10 Some Eastern Europe common characteristics Before the fall of Berlin Wall (9/11/1989), Soviet Union economy: Low tariffs (means high consumption, 800l/inh/d in Bucharest, 1000l/inh/d in Tbilisi); Low maintenance (means high leakages); Low tariff + high leakages (means additional investments in capacity); Regulation: cost plus fee system (no favourable for investments financed on tariffs)= investments with subsidies; No care of environment (means no efficient WWTP). Conclusion: no capacity problem (over investments financed by the states) BUT urgent need of investments on quality, on systems upgrading and in WWTP.

11 Basic elements favourable to PPP After the fall of Berlin wall: Political will and objectives favourable to the general scheme of Public Private Partnership (PPP), depending of local context, on national laws and on EU Directives, The form of the PPP depends on each case (genuine case). Stakeholders interests must be taken into account (municipality, customers, employees, private partners, NGOs), In any case regulation has to be clear and predictable.

12 European simplified regulation scheme Consumers Regulation by Subscription contract Shareholders Water Co Regulation by Shareholders Agreement If any Regulation by Contract if any Local government if any Control and/or Regulation by Laws and National Regulator if any State Water Framework Directive and others EU

13 AGENDA Brief presentation of Veolia Eau Main drivers for the water market in Eastern Europe Case studies: Bucharest & Prague European Union Funds Questions & answers

14 BUCHAREST CONCESSION CONTRACT

15 Bucharest: Concession model Employees Veolia Municipality 10% 74% Shareholders Agreement 16% Consumers Apa Nova Bucuresti Concessionaire Municipality of Bucharest Concession Contract REGULATION - ANRSC (economical) -ARBAC (Level of Services) - Int. expert Panel

16 Main Contractual Points Concession including all activities (production, distribution, financing, consumer care etc ); Duration:25 years Partnership: 74% Veolia, 16% Municipality and 10 % Employees; Contract with levels of services to be attain on specific dates (investments levels to decided by the Concessionaire); Equity by Strategic Investor: 35 M in cash; Regulation by the Contract (Governmental decree); Investment required (Water Treatment Plant 3 m3/s); Take over by Concessionaire of a public debt (17 M ) to World Bank; Concession does not include WWTP financing (out of tariff).

17 Regulation Regulator Technical Regulator (municipal organisation - Arbac -) Economical Regulator (Government) International Expert Panel (finance, technical, regulator specialists). Level of Services Controlled by Technical Regulator. Tariffs adjustments Contractual Base Tariffs Ordinaries Tariff adjustments (inflation): Economical Regulator Extraordinary Tariff adjustment: Expert Panel and Economical Regulator

18 Some Bucharest achievements Evolution of the tariff The average bill doubled in 8 years -The evolution was in line with the GDP/cap and did not affected negatively the purchasing power of the population

19 Some Bucharest achievements (2) Investments first 6 years Around 140 M Around 20 M a year (quality, networks renovation & extensions, pumping stations & water treatment plants renovations, etc) 50 M for a new WTP (Crivina) operation started in June 2006 Financed out of: Veolia Equity 35 M Project Finance EBRD + DEG 68 M Cash flows 37 M

20 Some Bucharest achievements (3) Consumer Satisfaction Customer oriented company: creation of 5 operational centres, call centre, leaflets and water magazine; clarification of bills etc Number of written complaints received Satisfaction surveys done every November of each year by an independent organisation 46% 60% 66% 67% 67% 75%

21 Some Bucharest achievements (4) Leakages reduction Evolution hebdomadaire du nombre des fuites "Apparues" et du "Stock de fuites" durant la periode Stock de fuites Apparues Annee 2001 Annee 2002 Annee 2003 Annee 2004 Annee 2005 Annee Semaine Decrease of yearly lost volumes: 165 Mm3. No. fuites apparues

22 Some Bucharest achievements (5) Drinking Water sold annual volumes v o lum e s e a u po ta ble millions M Sold volumes estimations around 136 Mm3 correspond to 180 l/d/inh

23 PRAGUE LEASE CONTRACT

24 Prague Main Czech water contract Contract: Started: 2001 Ends: 2028 Lease and O&M Republic Company s name: Pražské vodovody a kanalizace, a.s. Shareholder: Veolia VODA SA (100%) Activities: Water treatment and distribution, sewage collection and treatment Key indicators (2010 year): Population served Water volumes billed (million m 3 ) 104,2 Sewage volumes charged (million m 3 ) 94,5 Personnel Revenues (M ) 200

25 Prague: Lease model The City of Prague owner of the water and wastewater infrastructure City of Prague (owner of infrastructure) 100% Lease contract O&M contract PVS Asset administrator Lease payments Sublease contract PVK Operating company PVS PVK representing the owner controlled by the City of Prague Operating company for water and wastewater infrastructure at 100% controlled by Veolia Water Tariff approval 100% Payment of bills Supply of services Veolia Water Customers

26 Prague Lease Contract 1998 signature of the lease contract for the infrastructure between the City of Prague and PVS 1999 signature of the sub-lease contract between PVS and PVK 2001 acquisition of 66% of PVK by Veolia Voda after the success in an international bid offer 2002 signature of the main operator contract of the infrastructure between the City of Prague and PVK direct relationship between the owner and the operator consequence of the new legislation on the water and wastewater networks 2002 acquisition of 34% of PVK 2006 signature of the new sub-lease contract between PVS and PVK

27 CONTRACTUAL FRAMEWORK 1. Indirect support to investments The city defines the amount of the rent the rent is utilised to invest into infrastructure The operational company optimizes the investment program it reduces investment needs The operational company is engaged on a long term business plan it increases the confidence of financing institutions The operational company optimizes the operations costs it generates savings for investments with limited impact on tariffs The city defines the tariff it controls social impacts 2. Direct investments from the operational company The operational company commits on an investment program it directly improves part of the infrastructure

28 Prague contract, Some achievements (1) Reduction of consumption million m Volume sold in Prague Volume sold divided by 2 in 15 years Reduction of water losses Evolution of Non Revenue Water 40% 35% 30% 25% 20% 35% 34% 32% 31% 31% 29% 27% 26% 25% 24% 24% 23% 22% Volume of losses divided by 2 in 10 years 15% 10% 5% 0%

29 Prague Prague, Some achievements (2) Terms of cooperation - professionalism Professionalism in crisis situations (flood in 2002) High production efficiency Performance indicators % of satisfactory analysis results at water treatment plants 98,7 99 % of satisfactory analyses on the main wastewater plant 50% 89,9% Inspection of wastewater network (km)

30 Prague, Some achievements (3) New Customer Services Information system (call center) Sms information Communication clients Espace client - identification

31 AGENDA Brief presentation of Veolia Eau Main drivers for the water market in Eastern Europe Case studies: Bucharest, Prague, Yerevan European Union Funds (Public vs. private) Questions & answers

32 PPP and European subsidies Complementarities (1) European Funds in water sector EU Funds: ISPA or IPA (Instrument for PréAdhesion), Cohesion Funds (for EU member countries), etc Funds = donations which partially finance the projects, Loans are necessary to complete the financing Municipalities often request EBRD and /or EIB Calculation of % of Funds is done taking into account capacity of the population to pay (affordability) Public financing and private financing must be clearly separated, and properly allocated How does it work within a PPP?

33 PPP and European subsidies Complementarities (2) How it applies in Bucharest Wastewater treatment plant (120M for phase1) is financed by European subsidies (65%) and loans to the Municipality (35%) EBRD Loan EU Subventions The municipality organised in 2008 a tender to build the facility Apanova will operate the new facility Apanova will collect on behalf of the Municipality a wastewater treatment tax Bucharest Municipality Collection of wastewater treatment tax Investment WWTP The facility is a municipal asset and, as such, does not appear in Apanova balance sheet The tariff includes only the operating costs but no amortization of the WWTP Clients Payment of bills Apanova Operation

34 Conclusion for PPP s in East Europe PPP is a tool to help public authorities to implement their water and wastewater policy All Public Private Partnerships are Taylor made to fit to the expectations, to the priorities, to the history and to the physical situation of each municipality. The PPP system is not rigid: it has always adapted to new expectations on the part of elected officials and public authorities; Forcing a healthy clarification of the roles, a precise definition of the expected results, and focusing on service performance are the main advantages of these partnerships; Through PPP, cities access to advanced expertise and to the international research network of Veolia Water to improve the efficiency and quality of their water services; PPP and European funds are complementary and they can coexist onthe same project. 34

35 AGENDA Brief presentation of Veolia Eau Main drivers for the water market in Eastern Europe Case studies: Bucharest, Prague, Yerevan European Union Funds Questions & answers