Paris-based co has already bagged contracts for water supply, treatment in Delhi, Mumbai

Suez Environnement is looking to get a large share of the nascent Indian water concessions market. Chief Executive Officer Jean-Louis Chaussade is confident that the time is ripe.

“India is now getting a sense of urgency of its water problems. The rapid industrial development in India is escalating demand for fresh water. It is an unstable situation and India as a modern country cannot live with such high unstability,” Chaussade told Business Line.

Stating that India’s large coastline ensured that desalination was one of the most viable water supply alternatives, the CEO drew parallels to the company’s Victorian Desalination plant in Wonthaggi, Melbourne.

In September 2012, the Melbourne salt water desalination plant began producing drinking water. The plant is expected to reach its full capacity of 450,000 cubic metres per day by the end of this month.

Stating that management of the water network in Indian cities was of utmost importance, the CEO noted that the first contract bagged was a step in the right direction.

Initial contract

Paris-based Suez Environnement and Indian infrastructure company SPML have bagged a $95 million contract to improve water supply services in the Malviya Nagar area of New Delhi.

The 12-year contract has been awarded by New Delhi’s water management authority, the Delhi Jal Board to a consortium led by Suez Environnement (with 74 per cent stake) and SPML (with 26 per cent stake).

Slated to start by the end of December 2012, the project will include renovation of 100 km of the existing 200-km pipeline, and construction of 26 km of extensions. The water upgrades, including renovation and extensions, will enable district residents to have a continuous supply of water 24 hours a day, as compared to the current 3-8 hours a day.

Mumbai shortage

Despite its close proximity to the Arabian Sea, India’s financial capital Mumbai will encounter the effects of water shortages in the next few years.

In 2008, the Brihanmumbai Municipal Corporation signed a deal worth $74 million with Suez Environnement’s subsidiary Degremont to design a 990-million-litre per day water treatment plant at Bhandup.

The Suez-Degremont deal designed Asia’s biggest water treatment plant in Mumbai. Degremont is finalising the construction of the drinking water treatment plant and should commission the plant early 2013. It is also catering to the TK Halli water treatment plant in Bangalore.

Though Mumbai has a high per capita water consumption, the demand for water in Chennai is expected to increase four times by 2025. As both Mumbai and Chennai are located near the coast, desalination is deemed the most feasible option.

Suez-Degremont is already present in Hyderabad, Kozhikode (in Kerala), Kolkata, apart from Delhi, Mumbai and Chennai. It has built more than 153 factories in the country and operates 17 of them.

PPP

The desalination market is in its growth stage in India and has substantial opportunities for the next ten years.

Jean-Louis Chaussade said, “The Delhi contract is very encouraging for the development of public private partnerships (PPP) in India, and it reflects the current energy in the market.”

Keen that the company should engage in more PPP projects, Chaussade said PPPs facilitate the execution of such projects by allowing the private sector to transfer its managerial, financial and technical expertise to the public sector.

“The private sector can add value to regional governments by improving operational cost efficiency and by engaging in targeted research and development (R&D). India is a reservoir of manpower. We hope to develop more R&D in the country,” he said.

Investment rationale

As demand for clean water grows and supply becomes more volatile, investment in the global industrial water sector is set to cross $80 billion over the next five years. The rise in investment will take place across areas like waste water purification, seawater desalination and other water and waste treatments — swelling the market’s size by 65 per cent from 2013 to 2017.

Speaking about investments, the CEO said, “There will be lots of assets in 2015 and 2016 that could come on the market and interest us.”

Stating that India was not a mature market in terms of waste generation, the CEO added, “We will hopefully pick up more management contracts in the water business in India. Time is not an issue. Nobody is in a hurry, but given the water shortage issues and the water storage optimisation, India will soon seek answers.”

amritanair.ghaswalla@thehindu.co.in

(This correspondent’s visit to Australia was sponsored by Suez Environnement)

(This article was published on December 9, 2012)
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