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Veolia Water Linking cities to finance

Veolia Water Linking cities to finance. 27 September 2010. Contents. Overview of Veolia Environnement and Veolia Water Veolia Water in China Types of contract: BOT and Concessions BOT – case study in China: Chengdu Concession – case study in China: Shanghai. Veolia Environnement .

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Veolia Water Linking cities to finance

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  1. Veolia Water Linking cities to finance 27 September 2010

  2. Contents • Overview of Veolia Environnement and Veolia Water • Veolia Water in China • Types of contract: BOT and Concessions • BOT – case study in China: Chengdu • Concession – case study in China: Shanghai

  3. Veolia Environnement Key figures Veolia Environnement as of end 2009: • More than 155 years of experience in environmental services • 312,590 employees • Operations in 74 countries • €34.6 billion in consolidated revenue The global benchmark for waste management and resource recovery €9 billion The standard for managing safe and sustainable mobility solutions €5.9 billion The global benchmark in water services €12.55 billion European leader €7 billion

  4. Veolia Water Worldwide Key figures Veolia Water as of end 2009: • Activities: • Water services • Wastewater services • Construction/Technologies Key figures: • €12,560 million in consolidated revenue • 95,789 employees • Operations in 66 countries • 4,500 contracts managed around the world Technical Data: • 5,263 water production plants around the world • 3,229 wastewater treatment plants around the world

  5. 31/12/2009: 12 889 employees Veolia Water in China Population in China: 1,321 million inhabitants Population concerned by our projects: 35.91 million inhabitants (with 25,55 people served under full-service contracts)

  6. Types of contract Types of contract • 1 - BOT = Build – Operate – Transfer • The Company is responsible for design, construction and operation of a specific plant and for the capital investments (mainly for the construction funding). • The Company is paid on the basis of guaranteed volume (Take or Pay formula), for a certain period of time (from 15 to 30 years). • After this period, the facility is transferred to the client in good working condition. • Volume and tariff are guaranteed

  7. Types of contract Types of contract • 2 - Concession • Full services contract covering production, distribution and customer services. • The company bears all costs (salaries, energy, chemicals and maintenance) and all capital investments. • The company is paid by the final consumerson a m3 basis. • Concessions are long-term contracts - often 20 to 30 years, sometimes 50 years. • Risks on volume and tariff

  8. BOT Case study in China China Chengdu Project • First BOT water treatment plant organized through an international tender in China • Contract was awarded in 1998 for a duration of 18 years • Capacity of 460,000m3/day

  9. Chengdu Project – Contractual structure BOT Case study in China • Contract awarded to a Joint-Venture between Veolia (60%) and Marubeni Corporation (40%) • Project company managed and controlled through a board of directors: • - 3 from Veolia including the chairman • - 2 from Marubeni

  10. Chengdu Project – Key milestones BOT Case study in China • Early 1998: five companies short listed in the international bid • 1998: Veolia Water and Marubeni Corporation selected • Sept 1998: syndication negotiations • Nov 1998: ADB Credit Committee Approval and EIB approval in principle • Nov 1998 to March 1999: road shows • March 1999: syndication in place • March to Nov 1999: negotiations of lending agreements • Aug 1999: financial closing • Oct 1999: commencement of construction • During the Asia Financial Crisis in 1997, the Chengdu project successfully obtained robust financial backing • Confidence of investors in the project

  11. Chengdu Project – Financial structure BOT Case study in China • Initial investment, including interests and operating costs during construction : USD106.5 million financed through: • equity (30%) • limited recourse long term loans (70%) • 75% of long-term loans reimbursed at the end of 2009 • 90% of the principal repaid at the end of 2011 DEBT FINANCING STRUCTURE

  12. Concessions Case study in China China Shanghai Pudong Project • Contract to operate and maintain the water services in the key business district of Pudong, Shanghai • Full water services (covering water treatment, network distribution and customer services) • Population served: 2.65 millions

  13. Working in partnership with Shanghai Pudong Concessions Case study in China • A milestone in water industry: • First significant public-private partnership for full water services in China • First time a private foreign water operator has shared the entire management of a Chinese water company • Pudong Water Corporation formed in 1999 when the Shanghai Water Authority separated the city’s water supply system into four companies. • International bid launched in 2001 • Veolia Water designed in May 2002 as the successful bidder for the purchase of a 50 percent stake in Pudong Water Corporation. • Licence for the 50-year water supply operations in the Pudong area started in September 2002. • Veolia purchased 50% of the stocks of the Pudong Water • Corporation (no project finance).

  14. Shanghai Pudong – Contractual structure Concessions Case study in China

  15. Shanghai Pudong – Investments Concessions Case study in China • VW initial investment amounts to RMB 2,026 million for the acquisition of 50% of the JV shares. • Shanghai Pudong is today considered as a mature project. • Impressive modernization and improvements realized in less than 7 years. • Major investments done since 2002 to meet the water demand (total cumulated CAPEX amount to approx. 2 billion), • JV will continue to invest at a lower level, in particular for equipment renewals.

  16. Thank you for attention

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