2008 - 2009 - Pinsent Masons Water Yearbook 2012 - 2013

INTRODUCTION
contracts in 1999 against 935 in the current edition) the balance of growth moves away from
Western companies with well staffed press offices to combing annual reports, conference
presentations and sectoral studies. Thus a time lag of a year or more can emerge between a
contract’s award and its being identified.
A new set of forecasts looks to 2025
Our revised forecast for the extent of PSP in 2015 is 1,161million, an upwards adjustment of
13million on the forecast made in 2007. As a proportion of the forecast 2015 global population it
remains steadily at 16%. It is gratifying to realise that in ten sets of forecasts, the proportion has
remained within a 15-17% range. But 2015 is not as distant as it appeared back in 1999 so it is
timely to introduce a new set of forecasts, that project PSP covering 1,538million people by
2025, or 19% of the population. That may not appear to be wildly ambitious.
And to grow more diverse
The entire nature of the market has changed over the past half decade. While the ‘big two’
remain the clear market leaders, the perceived global domination of the former ‘big five’ is
rapidly becoming a memory. As Agbar and SAUR develop more focussed strategies and RWE
winds up its interests outside Germany and Central & Eastern Europe, the market share
enjoyed by the ‘big five’ is set to slip from a peak of 73% reached in 2001 to 39% by the end of
2008. Once RWE eases its holding in American Water Works below 50%, this will fall to a pro
forma 37%. The ‘Big Five’ is becoming an increasingly fluid concept, as Suez takes control of
Agbar and RWE continues to experience contractions. Perhaps a new member ought to come
from one of the major companies in China and Brazil.
The number of stable, long term international contracts held by Veolia Environnement and Suez
Environnement has shown a steady rise since 2006. Meanwhile, the stated numbers served in
France by Veolia and Suez have both been pared back since 1995, due to the elimination of
double counting as jointly held contracts are prised apart. In addition, by the time the next
edition comes round, we will have a proper idea about what the changes in Eau de Paris will
mean for the companies. To what extent will the ending of the original contract be replaced by a
plethora of outsourcing and other sub-contracts?
Still a contentious sector to operate in
Since 1997, contracts involving 64million people have ended, some 10% of all identified
contracts, and it thus represents a high attrition rate. Encouragement is to be drawn from the
stabilising of this attrition rate since 2006, but according to the World Bank, 29% of contracts (in
terms of total investment) were either cancelled or in distress in 2006, compared with 4-9% for
telecoms, electricity and transport, even if this represents an improvement from 37% in 2005.
And one which needs to be taken seriously
Water will never be a simple sector to operate in and communicating its complexities remains
an urgent priority. Since 2006, there has been a dearth of new initiatives by the sector to provide
serious, engaged research into their role. Working with UNCTAD on this year’s World
Investment Report was sometimes an exercise in firefighting, as myths about the sector (just
one million people connected by PSP since 1993 for example) have taken hold due to the
absence of accessible evidence to the contrary.
The grim progress being made towards the water and sanitation Millennium Development Goals
especially in Sub-Saharan Africa and South Asia are a direct result of water and sanitation not
being taken seriously by politicians, companies and civic society as a direct result of their being
de-commodotised. Expecting the informal operators, such as water vendors to fill this gap is
missing the point. They exist because there is nothing being provided by the incumbent utilities.
They in effect exploit underinvestment by forcing the poor to pay more for an even poorer
service. That people are willing to pay should not be a question – the challenge is to informal
services within the formal sector to boost the level of people with adequate water and sanitation
services at affordable prices.
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Pinsent Masons Water Yearbook 2008-2009