Notes on Global Corporate Dominance in the Fresh Water Sector
Posted on December 12 2003 |
Presented by Ana Maria R. Nemenzo
President, Freedom from Debt Coalition
at the Asia Pacific Conference on Debt and the Privatization of Water and Power Services
8-14 December 2003
Prepared by:
Mae Buenaventura & Bubut Palattao
Freedom from Debt Coalition
The lucrative “mission’ to quench the world’s thirst…
Giant water companies are cashing in on the increasing scarcity of water brought about by problems of environmental degradation in various parts of the world – problems that other multinational corporations, aided and abetted by international financial institutions, created in the first place.
“…the water companies are chasing a business with potential annual revenue estimated at anywhere from $400 billion to $3 trillion, depending on how you do the math.”
(International Consortium of Investigative Journalists (ICIJ)
as cited in The Water Barons)
• The market base of the “six most globally active” water companies has increased six-fold over a 12-year period.
• “In 1990, about 51 million people got their water from private companies…That figure is now more than 300” with operations spanning 56 countries and two territories.
(International Consortium of Investigative Journalists (ICIJ) as cited in The Water Barons)
• Global trade in water is currently estimated to be US$ 800 billion, involving about 6 percent of the world population receiving services from corporations
• May soon be a multi-trillion dollar industry when privatized water systems expand to serve about 17 percent of the world’s population by 2015.
(European Water Corporations and the Privatization of Asian Water Resources: The Challenge for Asian Water Security by Charles Santiago (MSN) Malaysia)
“The Big Ten”
(Charles Santiago (MSN) Malaysia, European Water Corporations
and the Privatization of Asian Water Resources:
The Challenge for Asian Water Security.)
Vivendi Environment and Suez Lyonnaise des Eaux
Suez Lyonnaise: the world’s largest water and wastewater business operating in about 130 countries; serving 125 million individuals, 25 million of which are in Asia Pacific (Suez, A Corporate Profile, Public Citizen, August 2003)
Vivendi Environment: operates in about 100 countries through 3,371 companies with a 110 million customer base.
“Both …collectively control approximately 70 per cent of the existing world water market and enjoy combined annual revenue of over US$ 70 billion, including over US$ 10 billion in direct water services. In 2001, almost half of Vivendi Environnement's US$ 26 billion in revenue came from water and about one quarter of Suez's US$ 38 billion in revenue was generated by its water division, Ondeo.” (Santiago)
Bouygues-SAUR, RWE Thames Water, Bechtel-United Utilities,
Enron-Azurix
• Bouygues operates in 80 countries through its subsidiary SAUR; considering ‘massive expansion’ in China.
• 1999, Thames Water was acquired by the German electrical company
RWE for US$ 9.8 billion
• French domination of the global water trade currently being
challenged by a third global player, RWE - Thames Water.
Severn Trent, Anglian Water and the Kelda Group; American Waterworks Company
The 3 British corporations together with RWE-Thames Water control the British water market.
American Water Works Company acquired the financially troubled Azurix, a subsidiary of Enron.
Six highest earners in the global water industry that have set foot in the Asia Pacific region:
1. Ondeo (Suez Environnement)
2. Veolia (Vivendi Environnement)
3. Thames Water (RWE-AG)
4. Saur (Bouyges Group)
5. Bechtel
6. United Utilities
(Sources:
International Consortium of Investigative Journalists, “The Water Barons”, 2003.
Public Citizen, “Suez: A Corporate Profile”, August 2003.
Public Citizen, “Bechtel: Profiting from Destruction”, June 2003.
Official water company websites of Thames-water, Suez., Bechtel, Saur, Vivendi Environnement, United Utilities )
1. ONDEO
- the water division of Suez;
- 2002, Ondeo generated 6.4 billion euros in revenues.
Subsidiaries/2 concessionaires:
PT PAM Lyonnaise Jaya (W. Jakarta, Indonesia)
PT PAM Thames Jaya (E. Jakarta)
- 95% owned by ONDEO involved in raw water supply, water treatment, delivery, metering and billing
2. VEOLIA
- Highest income earner – water distribution through Vivendi Water
- Present in 5 countries providing water-related services to 110 million people in more than 100 countries which includes China, Philippines, Indonesia, Kuala Lumpur, India, Japan, Korea, Australia, Shanghai
3. THAMES WATER
- water division of German utility firm RWE. It is the world’s third largest water company providing service to 70 million people worldwide.
- 1995: Thames Water jumped in to get a share of the international water market and has since secured over 15 million customers “outside its core markets in Europe and the Americas.” http://www.thames-water.com)
4. Saur
- Saur worldwide serves 40 million people.
- active through 22 local subsidiaries in 17 countries across the globe including South Africa, Algeria, Argentina, China, Côte-d'Ivoire, Spain, Italy, Mali, Morocco, Mayotte, Poland, Central African Republic, UK, Russia, Senegal, Vietnam and Zambia.
- consolidated sales amounted to 835 million euros in 2002 and can be broken down as follows: Africa : 60 %, Europe : 36 %, America-Asia : 4%.
5. BECHTEL
- primarily an engineering and construction company
- expanded operations recently to include environmental restoration, water services, energy and telecommunications
- working on 950 projects in 67 countries worldwide
- most of the international water operations of Bechtel have been conducted in partnership with United Utilities
6. UNITED UTILITIES
- largest provider of water and wastewater in the UK, serving more than 2.9 million residential and business customers
- operations range from sewage treatment to water purification and distribution, electricity distributions to telecommunications, but water-related services remain the company’s primary business
- expanding its operations internationally as a response to rate cuts in the domestic market; since 1994, the company has been partnering with Bechtel in nearly all international water operations, which include contracts in the US, Australia, Malaysia, Mexico, Thailand, Indonesia, Argentina and Kuwait
- currently serves 15 million people worldwide
Expanding corporate influence and control
over water sectors/projects in the region
China:
(VIVENDI, SUEZ, THAMES WATER)
Thames Water has operated in the People’s Republic of China since 1989 and has been operating in Hong Kong for decades. As one of the country’s leading private water companies, it has built a customer base of 6.5 million customers.
In 1995, the company won the contract for China’s first privately funded water treatment project in Da Chang, Shanghai.
Starting in 1996, construction of the major water treatment works for the city was completed in 1998. That year, Thames Water took charge of running the new plant.
In July 2002, Thames Water acquired the largest single shareholding in the China Water Company, which has four million customers in China The purchase made Thames Water the second largest foreign private water company in China with 6.5 million customers.
Thames Water’s involvement in Hong Kong includes the building of a major water treatment plant ahead of schedule for the new International Airport. The company has also signed a memorandum of understanding with the Ministry of Water Resources in Beijing to do integrated water resource management activities across China.
Vivendi secured in March 2001 a US $ 20 million, 20-year contract to operate and renovate a water plant in Tianjin, China.
In December 2001: the ADB extended a US $ 130 million loan to support the construction of the plant.
In 2002: both Suez and Vivendi signed long-term deals, some for up to 50 years, to manage municipal water systems in China, which faces huge water shortages.
March 2002, ONDEO, Suez’s water division, was given a 50- year contract worth 600 million euros to design, finance, and manage water treatment installations and services for the Shanghai Industrial Park’s industrial wastes.
Vivendi's Generale des Eaux and Marubeni Waterworks Company Limited are involved in bulk water schemes in Chengdu, China, with ‘take or pay’ contracts which ensure profits by requiring consumption regardless of need. The European Investment Bank loaned US$ 26.5 million and the ADB lent US $ 48 million towards financing the projects.
Saur has been operating a drinking water production plant in Harbin, China (225,000 m3/day) since 1995 which serves 2.8 million people. The BOT project is a partnership between Saur and the Harbin Water Company. The contract term is 28 years. Turnover for 2000: 36 million French francs (5.49 million euros)
Since January 2001, SFSW (Shanghai Fengxian Saur Water), a Saur subsidiary, has been operating the Shanghai Fengxian drinking water plant which serves 700,000 inhabitants (south-west district of Shanghai). The contract will last for 28 years.
India:
(VIVENDI, SUEZ & THAMES WATER)
New Delhi’s water supply is being privatized to Vivendi.
2000: Vivendi secured a US $ 7.2 million drinking water management in the State of Calcutta, according to the Global Water Report
Degremont, a subsidiary of Suez is undertaking a design build and operate drinking water production in Sonia Vihar, New Delhi. The contract is worth Euro 50 million. The plant is expected to provide water services to a population of 3 million people in New Delhi. The water for the Suez-Degremont plant in Delhi will come from Tehri Dam.
Vivendi’s Onyx which specializes in waste management, was awarded the contract to manage garbage and street litter in Chennai, a major port city in southern India. The company is paid US $ 13,700 a day to collect and dispose garbage in three key areas in the city. Its sister organization, Vivendi Water, was given the contract to manage the water services in the city.
Thames Water has provided technical advice and assistance in India to improve Indian sewerage systems as part of the Ganga Action Plan. The project involves developing practical methods
The company also worked on a major consultancy contract in Mumbai, a thickly populated city in India. The 18-month project will assess the operation and management of the water supply in Mumbai and develop a programme to raise the technical and managerial capacity of the local company.
Other projects in India include leakage control in Chennai, provision of training on groundwater issues for India’s Department of Rural Development and the urban river corridor management for senior Indian officials.
South Korea
(VIVENDI & SUEZ)
2000: Vivendi Water Korea, a subsidiary of Vivendi Environment, was established, acquiring the industrial water treatment facilities of Hyundai Petrochemicals for US$ 125 billion, located in the Daesan Industrial Complex, South Chungchong Province.
March 2001: Vivendi Water Korea established Vivendi Industrial Development by acquiring industrial water and wastewater treatment facilities at Hynix complex in Incheon. The contract with Incheon municipality provided for the construction and 20-year operation of two wastewater treatment plants in partnership with Samsung Engineering.
March 2001: Vivendi secured a contract with the state of Chilgok for the operation of two existing wastewater treatment plants over a 23 year period and the design, financing, and construction of a new plant. This project is in partnership with the Hyundai Construction.
Both the Incheon and Chilgok projects were made possible after the introduction of legislation to attract foreign direct investment in the waster water sector in Korea.
Expected revenues from the two contracts are estimated to be over 20 million euros annually.
January 2002, Ondeo signed a build- operate- and -transfer wastewater contract worth 200 million euros with Yangju, an urban city located outside of Seoul.
April 2001, the Korean city of Pusan contracted Ondeo to manage its wastewater management.
The Philippines
(SUEZ, VIVENDI, BECHTEL & UNITED UTILITIES)
1997: the World Bank arranged the privatization of the water services in Manila. The contracts were awarded to Maynilad Water Services, Inc. (MWSI) and Manila Water. MWSI is owned by the wealthy Lopez family's Benpres Holdings, and partly owned by Ondeo, a subsidiary of Suez Lyonnaise des Eaux. Manila Water is owned by the Ayala family, and backed by Bechtel.
2001: 11 French consultants were paid 168 million pesos by Ondeo. Of this amount, P110 million was for consultancy services. These consultants were taxed at a rate of 5 percent as opposed to the standard rate of 10 percent.
Vivendi Water Philippines: 25- year build-operate- transfer proposal to operate and develop the water systems in Roxas City, Capiz, has been put on hold by the Regional Development Council Region VI. The Regional Development Council indicated that Vivendi’s proposal was not clear in the way the loans of the Metro Roxas Water District would be assumed by the global water corporation.
United Utilities has an investment of six million pounds in 20% of Manila Water Company, the remainder is held by Ayala, Bechtel and Mitsubishi with an annual turnover of 40 million pounds.
Indonesia
(SUEZ & THAMES WATER)
1997: 25-year Contracts for taking over the public water system were awarded without benefit of public bidding to Suez and Thames Water.
Thames’ partnership with Sigit Group (owned by Suharto’s eldest son) was called PT Kekar Pola Airindo and the Suez partnership with Salim Group (controlled by a Suharto crony) became PT Garuda Dipta Semesta; government bailed out these companies after the 1997 financial crisis.
The new 25-year contracts with PAM Jaya, the municipal water supplier, were expected to be lucrative for both the international and local partners.
October 2001: Ondeo won a 25-year contract for servicing and distribution of
drinking water in Tangerang, Indonesia.
Malaysia
(VIVENDI & THAMES WATER)
Through its subsidiaries, Thames Water has operated in Malaysia for the past 30 years. It provides specialist management and operations support to both Johor Water and Timatch Water, who operate water treatment facilities in Sabah.
1998: Vivendi acquired a 26 percent stake in Intan Utilities, the concessionaire
for the potable water production in the state of Perak, Malaysian for FF 144
million. It expects to tripe Intan’s annual turnover of FF 90 million by 200854.
Bangladesh
(SUEZ)
The Degremont, a subsidiary of Suez Lyonnaise, is involved in building, designing and operating a drinking water production in Bangladesh.
Vietnam
(SAUR & SUEZ)
The Quang Ninh Water Supply Company (QNWSC, Quang Ninh province Water Company) of Vietnam chose Saur to rehabilitate and extend the drinking water network for Ha-Long City and Campha. Turnover for 2000: 26 million French francs (3.96 million euros)
The network serves the cities of Ha-Long, Campha and the districts of Viet Hing and Hoang Bo. The La Quang Ninh Water Supply Company thus intends raising the percentage of the population served to 60% with a consumption capacity of 110 liters of water per person per day.
July 2001: Suez Lyonniase subsidiary, Lyonnaise Vietnam Water Company
(LVWC) was given the contract to construct and operate a treatment plant with a
daily capacity of 300,000 cubic meters under a 25- year build-operate-transfer
(BOT) contract in Ho Chi Minh, Vietnam.
The LVWC is a private company. Suez owns 70 percent; Tractebel of Belgium owns 20 percent and Pilecon Engineering Berhad of Malaysia owns 10 percent of LVWC. The ADB views this project as encouraging step towards promoting private sector participation in the country.
Japan
(THAMES WATER)
Thames Water is working in partnership with Mitsui & Co Ltd, a world-class trading company. It aims to develop long-term relationships with local water and wastewater authorities in Japan.
The company also works with the local authorities on a range of operational and maintenance projects, including in non-revenue water projects.
Singapore
(THAMES WATER)
The Thames Water Projects team in Singapore has supplied water and wastewater treatment plants to countries including Indonesia, Malaysia, Thailand, the Philippines and Japan.
Most recently RWE Thames Water has secured a prestigious contract from the Public Utilities Board of Singapore to design and construct a new water treatment plant using the latest immersed membrane technology at its Chestnut Avenue Waterworks. When completed in end 2003, it will be the largest immersed membrane water treatment plant in the world. RWE Thames Water, along with its partner SembCorp, will operate and maintain the works prior to handing it over to the local clients.
Thailand
(THAMES WATER)
Thames Water has worked in Thailand for over 10 years. It has grown to become the largest private water company in the country, serving some 1.5 million customers.
In 1995, the company was awarded the country’s first privately financed water supply scheme. The aim of the project was to secure a reliable, safe and affordable supply of drinking water for the rapidly expanding Pathum Thani and Rangsit industrial districts to the north of Bangkok, Thailand’s capital.
Subsidiary Thames Water Projects, designed the new 288 million litres a day treatment works. Construction was undertaken in partnership with a local company but Thames Water now operates the plant.
In 2001, Thames Water was awarded the US$240 million contract for a major water treatment works, as well as the associated trunk mains, reservoirs and main distribution system, in west Bangkok. The project, which will provide the 400,000 people in the area with up to 320 million litres of drinking water a day, is one of the largest water treatment projects under construction in Asia. Completion date is for July 2004.
In addition to these major construction projects, Thames Water works on behalf of the local waterworks authorities, which operate the water distribution systems.
United Arab Emirates
(THAMES WATER)
Thames Water has been building relationships in the Middle East for a number of years and was awarded the first privately funded wastewater project in the Gulf at the beginning of 2002.
The 27-year concession contract involves establishing a new sewerage system for Ajman Emirate, which is 20 minutes north of the commercial centre of Dubai in the United Arab Emirates. Within four years the system, which includes a sewage treatment works and a sewerage system with some 20 pumping stations, will supposedly serve the existing Ajman population of 100,000 as well as the growth in population over the concession period.
From Charles Santiago (MSN) Malaysia; The Water Barons, 2003; Public Citizen, Suez, A Corporate Profile (August 2003) and official water company websites of Thames-Water, Suez., Bechtel, Saur, Vivendi Environnement, United Utilities
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