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VEOLIA WATER inEASTERN EUROPE
Athens European Week
VEOLIA WATER inEASTERN EUROPE
Athens European WeekNovember 17, 2011November 17, 2011
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AGENDAAGENDA
� Brief presentation of Veolia Eau� Main drivers for the water market in Eastern Europe� Case studies: Bucharest & Prague� European Union Funds� Questions & answers
3
Veolia Water – Key figuresVeolia Water – Key figures
Veolia Water Europe – David Alexandre 29.05.20083 -
12.1 billion euros in 2010 revenue
80 000 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
4
A single business line : environmental servicesA single business line : environmental services
European leader
€5.8 billion
World leader
€12.1 billionEuropean leader
€7.6 billion
World No. 2
€9.3 billion
World leader
€34.8 billion310 000 employees
2010 annual turn over
Veolia Environment is the only company to operate i n all environmental services: water, waste management, energy services and passen ger transportation
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Technological solutions and construction
Industrialmanagement
Municipalities
2 segments of one unique business:
Our expertise and business: management of water cycleOur expertise and business: management of water cycle
2009 turn over : €12,5 billion
Potable water and Wastewater services management for
Municipalities and industrial clients
Implementation of technological solutions and construction of related
facilities
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Identify, Anticipate and Develop SkillsIdentify, Anticipate and Develop Skills
Campus Veolia Environnement, the training and skills development center for the Veolia Environnement group, is designed to ach ieve several objectives:
Paris, UK, Germany, ….
Training expenditure (as % of total payroll costs): 2.24% worldwide
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More than 50 water treatment technologies have been d eveloppedover the past 20 years, among which:More than 50 water treatment technologies have been d eveloppedover the past 20 years, among which:
Settling with ballasted flocs : ACTIFLO (more than 300
sites)
Trestment with fixedbiological beds : BIOSTYR
(more than 80 sites)
Refined treatment withmembrane filtration: frommicrofiltration to reverse
osmosis
Sludge oxydation in aquous and pressurised
atmosphere : ATHOSResearch and innovation
are essential to our profession.
100 M€/Y
« intelligent » field vehiculesfor network technicians
Veolia Water R&D
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ItaliePop: 1,6 M hab.
CA : 104 M €785 employés
RoumaniePop: 2 M hab.
CA : 120 M €2 311 employés
Allemagne
Pop : 5 M hab.
CA : 1280 M €7 820 employés
Royaume UniPop: 4 M hab.
CA : 485 M €1 980 employés
HongriePop: 2,1 M hab.
CA : 145,3 M €1 700 employés
SlovaquiePop: 1 M hab.
CA : 68 M €
1889 employés
Veolia Eau Europe
Arménie
Pop: 1,2 M hab.
CA : 18 M €
1380 employésTurquiePop: 0,1 M hab.
CA : 2 M €
70 employés
République tchèque
Pop: 3,9 M hab.
CA : 533 M €5 440 employés
Pologne
Pop: 0,1 M hab.
CA : 6,5 M €142 employés
SuèdePop: 0,1 M hab.
CA : 5 M €45 employés
Norvège
Pop : 0,05 M hab.
CA : 1 M €5 employés
Danemark
Pop : 0,05 M hab.
CA : 2 M €10 employés
Pays-Bas
Pop (EH): 1,7 M hab.
CA : 27 M €50 employés
BelgiquePop (EH) : 1,1 M hab.
CA : 63 M €
70 employés
Irlande
Pop.: 0,8 M hab.
CA : 13 M €130 employés
Espagne
Pop (EH): 1,4 M hab.
CA : 10 M €93 employés
Portugal
Pop.: 0,3 M hab.
CA : 54 M €330 employés
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Main Veolia Eau Contracts in EuropeMain Veolia Eau Contracts in Europe
ErevanArménie
BerlinAllemagne
Bucarest, Ploiesti
Roumanie
19992000
1994
2002
Bruxelles NordBelgique
Acqualatina,SAGIDEP
Italie
2001Three Valleys(Clay-Lane)Royaume Uni
PragueRépublique tchèque
La HayePays-Bas
2003
1996
Pilsen République
tchèque
Bohême du NordRépublique tchèque
Poprad,Banska Bystrica
Slovaquie
1994
MafraPortugal
OuremPortugal
1996
2001
2001
2000
ValongoPortugal
20082008
1999
2001ParedesPortugal
2004
BraunschweigAllemagne
2006
Tarnowskie GoryPologne
2002
2007200720062006
Veolia Water Outsourcing Ltd.
ArtéliaPortugal
19971997
SiceaItalie
Szeged Hongrie
19891989
TendringHundred
Water Services
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Some European tariffs in €/m3Some European tariffs in €/m3
0
1
2
3
4
5
6
7
Danmark
Lux embur g
Germany
Belgi umFranceUK Austri aNorw
ayCzecheqHungariaSpainRom
an ia
€/m3
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Veolia Water in Eastern Europe in 2010Veolia Water in Eastern Europe in 2010
� Yearly Turn Over 1000 millions €� 11 700 employees� Population disserved
� 7.6 millions drinking water� 8.3 millions waste water
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AGENDAAGENDA
� Brief presentation of Veolia Eau� Main drivers for the water market in Eastern Europe� Case studies: Bucharest, Prague, Yerevan� European Union Funds� Questions & answers
13
Some Eastern Europe common characteristicsSome 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.
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Basic elements favourable to PPPBasic 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.
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Regulation by Subscription
contract
European simplified regulation scheme
Consumers
Water Co
Shareholders
Local government
if any
State
EU
Regulation by Shareholders
AgreementIf any
Regulation by Contract if any
Control
Water Framework Directive and
others
Regulation by Laws and National
Regulator if any
and/or
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AGENDAAGENDA
� Brief presentation of Veolia Eau� Main drivers for the water market in Eastern Europe� Case studies: Bucharest & Prague� European Union Funds� Questions & answers
BUCHAREST
CONCESSION CONTRACT
BUCHAREST
CONCESSION CONTRACT
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Apa Nova BucurestiConcessionaire
Municipality of Bucharest
ConcessionContract
MunicipalityVeolia
REGULATION- ANRSC (economical)
-ARBAC (Level of Services)- Int. expert Panel
16%74% Shareholders Agreement
Bucharest: Concession model
10%
Employees
Consumers
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Main Contractual PointsMain Contractual Points
� Concession including all activities (production, distribution, financing, consumer care etc );
� 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 Wold
Bank;� Concession does not include WWTP financing (out of tariff).
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Regulation 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
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Some Bucharest achievements (1)Some Bucharest achievements (1)
100.3*78.663.756.663.860.157Turn Over (EURO)
3100290027702200212019701700
PIB /Hab. Euro
3,383,73,854,013,42,72,4Change rate (31/12) ROL/Euro
4,9 9,09,314,117,834,540,7Inflation
2006200520042003200220012000
Affordability
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Some Bucharest achievements (2)Some Bucharest achievements (2)
� 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 €
Investments first 6 years
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Some Bucharest achievements (3)Some Bucharest achievements (3)
46%
60%66% 67% 67%
75%
2002 2003 2004 2005 2006 2007
Consumer Satisfaction
Satisfaction surveys done every November of each year by an independent organisation
Number of written complaints received
11 24510 687
7 586
4 3063 738
2002 2003 2004 2005 2006
Customer oriented company: creation of 5 operational centres, call centre, leaflets and water magazine; clarification of bills etc
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Some Bucharest achievements (4)Some Bucharest achievements (4)
Evolution hebdomadaire du nombre des fuites "Apparu es" et du "Stock de fuites" durant la periode 2001 - 2007
0
100
200
300
400
500
600
700
800
900
1 20
01
5 20
01
9 20
01
13
2001
17
2001
21
2001
25
2001
29
2001
33
2001
37
2001
41
2001
45
2001
49
2001
1 20
02
5 20
02
9 20
02
13
2002
17
2002
21
2002
25
2002
29
2002
33
2002
37
2002
41
2002
45
2002
49
2002
1 20
03
5 20
03
9 20
03
13
2003
17
2003
21
2003
25
2003
29
2003
33
2003
37
2003
41
2003
45
2003
49
2003
1 20
04
5 20
04
9 20
04
13
2004
17
2004
21
2004
25
2004
29
2004
33
2004
37
2004
41
2004
45
2004
49
2004
53
2004
4 20
05
8 20
05
12
2005
16
2005
20
2005
24
2005
28
2005
32
2005
36
2005
40
2005
44
2005
48
2005
52
2005
4 20
06
8 20
06
12
2006
16
2006
20
2006
24
2006
28
2006
32
2006
36
2006
40
2006
44
2006
48
2006
52
2006
4 20
07
8 20
07
Semaine
No.
fuite
s ap
paru
es
Stock de fuites Apparues
Annee 2001 Annee 2002 Annee 2003 Annee 2004 Annee 2005 Annee 2006
Decrease of yearly lost volumes: 165 Mm3.
Leakages reduction
25
Some Bucharest achievements (5)Some Bucharest achievements (5)
v o lume s e a u po ta ble
298
266
220
195
173
145138 136
160
142
100
150
200
250
300
350
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
mill
ions
M3
Drinking Water sold annual volumes
Sold volumes estimations around 136 Mm3 correspond to 180 l/d/inh
PRAGUE
LEASE CONTRACT
PRAGUE
LEASE CONTRACT
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Aqua Příbram
Zlín
Kladno Mělník
1997
1998
1999
1996
2001
VODÁRNA Plzeň a.s.
VOSS Sokolov, s.r.o.
SčVK (Severní Čechy)1.JVS AQUA PříbramVODOSPOL Klatovy
PVK (Praha)VaK ŘíčanyHYDRIA
2002 PVKVHS Dobřany
2003 Synthesia Pardubice
2000 SMVAQUA SERVISRychnov nad KněžnouVAK Turnov
Plzeň Sever
2004
Hradec Králové
Slaný2006
2005
Prostějov
20072008
RakovníkSale of 1 JVS
Mělník
DěčínÚstí nad Labem
TepliceMost
Plzeň
Hradec Králové
Olomouc
Prostějov
Zlín
Czech Republic – 43% market share
Veolia Voda in the Czech Republic
4 million inhabitants served with water
3,4 million inhabitants served with ww services
538 MEUR turnover5 685 employees
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Prague – Main Czech water contract
Contract: Lease and O&M
Started: 2001
Ends: 2028
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 1 205 000 Water volumes billed (million m3) 104,2Sewage volumes charged (million m3) 94,5Personnel 1 235Revenues (M€) 200
Veolia Voda in the Czech Republic
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City of Prague(owner
of infrastructure)
PVKOperating company
PVSAsset administrator
Sublease contract
100%
Lease payments
Veolia Water
Customers
Payment of bills Supply of services Tariff approval 100%
Lease contract
O&M contract
Example of Czech operating model– model of PRAGUE
Prague: Lease model
The City of Prague – owner of the water and wastewater infrastructure
PVS – representing the owner controlled by the City of Prague
PVK – Operating company for water and wastewater infrastructure at 100% controlled by Veolia Water
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� 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
Prague Lease Contract
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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
CONTRACTUAL FRAMEWORK
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Prague contract, Some achievements (1)
Leakage from the water supply network laved in 5 ye ars
The high quality Costumer Service Center was built and provide today complete centralized services, included Call center with 24 hours a day and 7 days a week service
SMS information's System, payment facilities (loto stands, internet,…)
Prague Environmental Institute and Foundation
Important social responsibility on internal and ext ernal level
Transformation from engineer culture to costumer culture
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Volume sold in Prague
020406080
100120140160180
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
mill
ion
m3
Prague contract, Some achievements (2)
Volume solddivided by 2 in
15 years
Volume of lossesdivided by 2 in
10 years
Reduction of consumption
Reduction of water losses
Evolution of Non Revenue Water
35%34%
32% 31% 31%29%
27%26% 25%
24% 24% 23%22%
0%
5%
10%
15%
20%
25%
30%
35%
40%
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
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Terms of cooperation - professionalism� Professionalism in crisis situations (flood in 2002)� High production efficiency
132107Inspection of wastewater network (km)
89,9%50%% of satisfactory analyses on the main wastewater plant
9998,7% of satisfactory analysis results at water treatment plants
20052001Performance indicators
Prague contract, Some achievements (3)
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� New Customer Services� Information system (call center)� Sms information� Communication clients Espace client -
identification
Prague contract, Some achievements (4)
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AGENDAAGENDA
� 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
37
PPP and European subsidies Complementarities (1)PPP and European subsidies Complementarities (1)
� EU Funds: ISPA or IPA (Instrument for Pré Adhesion), 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 ?
European Funds in water sector
38
PPP and European subsidies Complementarities (2)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%)
� 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
� 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
Bucharest
Municipality
Apanova
WWTP
Operation
Investment
Collection of wastewater
treatment tax
Clients
Payment
of bills
EBRD Loan EU Subventions
39
39
Conclusion for PPP’s in East EuropeConclusion for PPP’s in East Europe
� 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 on the same
project.
PPP is a tool to help public authorities to implement their water and wastewater policy
40
AGENDAAGENDA
� Brief presentation of Veolia Eau� Main drivers for the water market in Eastern Europe� Case studies: Bucharest, Prague, Yerevan� European Union Funds� Questions & answers