veolia water in eastern europe - hypotheses.org · 2010-11-17 · brief presentation of veolia eau...

VEOLIA WATER inEASTERN EUROPE

Athens European Week

VEOLIA WATER inEASTERN EUROPE

Athens European WeekNovember 16, 2010November 16, 2010

2

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

3

Veolia Water – Key figuresVeolia Water – Key figures

Veolia Water Europe – David Alexandre 29.05.20083 -

10.9 billion euros in 2007 revenue

82,867 employees

Operations in 60 countries

78 million people provided with drinking water and 53 million with wastewater services

4,652 water production plants managed

3,156 wastewater treatment plants managed

6.92 billion cubic meters of water distributed

5.57 billion cubic meters of municipal waste water collected

4

The four activities of VeoliaThe four activities of Veolia

Veolia Water Europe –20.10..20084 -

European leader

€5.6 billion

World leader

€10.9 billion

European leader

€6.9 billion

World No. 2

€9.2 billion

5

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 (7 Campus: Paris suburbs, China, G ermany ..):

- Develop employee professionalism and expertise- Strengthen corporate culture and vision - Support job mobility- Promote the company to its customer….

Training expenditure (as % of total payroll costs): 2.24% worldwide

6

More than 50 water treatment technologies have been developpedover the past 20 years, among which:More than 50 water treatment technologies have been developpedover 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

7

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.


Royaume UniPop: 4 M hab.


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.


Pologne

Pop: 0,1 M hab.

CA : 6,5 M €142 employés

SuèdePop: 0,1 M hab.


Norvège

Pop : 0,05 M hab.


Danemark

Pop : 0,05 M hab.


Pays-Bas

Pop (EH): 1,7 M hab.


BelgiquePop (EH) : 1,1 M hab.

CA : 63 M €

70 employés

Irlande

Pop.: 0,8 M hab.


Espagne

Pop (EH): 1,4 M hab.


Portugal

Pop.: 0,3 M hab.


8

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

9

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

10

Veolia Water in Eastern Europe in 2009Veolia Water in Eastern Europe in 2009

� Yearly Turn Over 920 millions €� 11 700 employees� Population disserved

� 7.6 millions drinking water� 8.3 millions waste water

11

AGENDAAGENDA


12

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.

13

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.

14

Regulation by Subscription

contract

European simplified regulation scheme

Consumers

Water Co

Investors

Local government

if any

State

EU

Regulation by Shareholders

AgreementIf any

Regulation by Contract if any

Control

Water Framework Directive and

others

Regulation by National regulator

if any

and/or

15

AGENDAAGENDA


BUCHAREST

CONCESSION CONTRACT

BUCHAREST

CONCESSION CONTRACT

17

Apa Nova BucurestiConcessionaire

Municipality of Bucharest

ConcessionContract

MunicipalityVeolia

REGULATION- ANRSC (economical)

-ARBAC (Level of Services)- Int. expert Panel

16%74% Shareholders Agreement

Concession model: Bucharest

10%

Employees

Consumers

18

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).

19

Regulation (1)Regulation (1)

� 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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AffordabilityAffordability

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

21

Some Bucharest achievements (1)Some Bucharest achievements (1)

� 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 6 first years

22


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

23


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

24

Drinking Water Sold VolumesDrinking Water Sold Volumes

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

Sold volumes estimations around 136 Mm3 correspond to 180 l/d/inh.

PRAGUE

LEASE CONTRACT

PRAGUE

LEASE CONTRACT

26

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

27

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 (2007 year): Population served 1 204 800 Water volumes billed (million m3) 104,2Sewage volumes charged (million m3) 94,5Personnel 1 235Revenues (M€) 171


28

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


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

29

� 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 PRAGUE CONTRACTCONTRACT

Veolia Water in the Czech Republic

30

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

31

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

32

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

Reducing of losses - Prague

0

5

10

15

20

25

30

35

40

2000

2001

2002

2003

2004

2005

losses in Mm3


33

� New Customer Services� Information system (call center)� Sms information� Communication clients Espace client -

identification


YEREVAN

LEASE CONTRACT

YEREVAN

LEASE CONTRACT

35

Erevan, capital of ArmeniaErevan, capital of Armenia

� ARMENIA� 3,2 millions inhabitants� GNP/ inhabitant : 1 200 $

� Yerevan� 1 million inhabitants

36

Geopolitics

37

Tender ProcedureTender Procedure

� Organised by Government and World Bank� State Committee for Water Economy (Territorial Administration

Ministry)

� Two offers to prepare for September 2005:� Technical offer (minimum note: 75/100) � Financial offer (10 tariffs for 10 years)

� Competition� Saur, Cascal, Gelsenvasseur, Veolia Eau

� Contract signature� Veolia Eau and dedicated subsidiary, Yerevan Djur, signed the

Contract on 15 December 2005

� Start date� After conditions precedent period contract started on 1 of June

2006

38

YEREVAN DJURYEREVAN DJUR

� Activity:� Production, distribution, sewage� Billing

� Main data� TO 2007 : 18 M€ (6 M€ in 2003)� 1715 employees en 2005 to reach 1200� Collection rate of 64% in 2005 � 1 unique tariff for all clients

� Previous Management Contract d’ACEA (2000-2005)� Worls bank loan of 30M$� Meters installed (90 % of clients billed according to meters in 2005)

39

CONTRACTUAL ARRANGEMENTCONTRACTUAL ARRANGEMENT

� WORLD BANK Financing 18,75 M$� Target: energy savings, water quality , environmental impact;� Investment Plan prepared in cooperation with the Client (SCWE -

PMU)� Works in 5 years

� Lease Contract of 10 years� Operation of the whole system� Implementation and financing of a 17,6M€ renewals and

investments plan � Implementation and financing of equipments (6.4 M€)� Rent of 9,5M$

40

Yerevan Water & Wastewater Financing SourcesYerevan Water & Wastewater Financing Sources

Yerevan Djur(Veolia Company)

Gov.ACEAOperator Name

15 M €

( infrastructures and private domain)

0 M $0 M $Operator financing

18.75 M $ No forecasted(infrastructures et publics

equipments)

0 M $30 M $World Bank Financing

June 2006 June 2011June 2011 June 2016

05/ 0506/ 2006

January 2000May 2005

Years

41

Three main targetsThree main targets

� Increase sold volumes

� Improve collection

� Decrease electrical consumption

42

Yerevan Sold volumesYerevan Sold volumes

2006/2007 2010/2011 2015/2016Clients domestiques 36 242 43 460 45 950 Clients industriels 17 585 19 790 21 850 Clients institutionnels 6 544 6 676 6 845

Total en 000'm3 60 371 69 926 74 645

43

CollectionCollection

� Payment rates stable at 92 %� Improvement of billing

� Reduction of clients paying following norms- From 22 000 in 2006 to 3 000 in 2013

� Improvement of billing system

44

Technical elementsTechnical elements

� Domain:� Network length: DW: 2250 Km; WW:1300 Km

� WWTP Aeratsia� Management of existing system� Only mechanical treatment

� Technical Auditor� Rambol

� Level of services� Service continuity: 78.7% of the population deserved permanently to be

improved to 95 % after 10 years

� Quality� Consumers services (time to respond etc)

45

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

46

European Union Funds for Water & Wastewater project sEuropean Union Funds for Water & Wastewater project s

� 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 usually request EBRD and /or EIB� Calculation of % of Funds is done taking into account

capacity of the population to pay (affordability)� When a PPP is in force public financing and private

financing must be clearly separated, and properly allocated� How does it work ?

47

Example of Bucharest Concession Specific case of WWTP (Glina)

Example of Bucharest Concession Specific case of WWTP (Glina)

Bucharest Municipality Owner and project management

Tender for constructionLoan from EBRD and EIB

WWTP Glina220 M€ 2 steps65 % EU Funds;

35 % Municipality

UEFinance (donation)

ISPA / Cohesion Funds& Project Supervision

Apa Nova BucurestiConcessionaire

Participation to steering committeeOperation of Glina

Collection special Tariff

Special tariff for loans reimbursement

48

AGENDAAGENDA


veolia water in eastern europe - hypotheses.org · 2010-11-17 · brief presentation of veolia eau...

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