Annual Report 2010 - AdP

10. Future Perspectives
The presentation of future perspectives, given the prevailing circumstances, whether internationally, for the national economy or for
the water and sanitation service sector in Portugal as well as for the AdP Group, represents an exceptionally difficult exercise.
The nuclear accident in Japan has reopened discussions around the nuclear option to the extent of forcing the early foreclosure of
many older plants and bringing about the suspension of projects ongoing, with delays caused due to the need to review and reevaluate
their risks and even forcing their cancellation. Consequently, in the short term, we are witnessing a rise in fossil fuel prices
(bad news both for the country and for its companies) and a recovery in the level of interest in renewable energies (good news for
the group). The world economy is going to slow and the difficulties posed to weaker economies are going to rise. The Portuguese
economy may be negatively impacted within this scenario.
While the national economy retains a negative outlook, to adopt the terminology in vogue at rating agencies, the difficulties in financial
companies and the limits on debt levels contracted by the state owned sector are set to continue, restricting the implementation of
projects in the portfolio and severely curtailing the opportunity to launch new projects however important such might be. New
projects, new partnerships, new commitments to partners involving major financial commitments, as is indeed invariably the case,
shall very probably have to await better days.
Nevertheless, the sector in Portugal continues to display many problems requiring resolution that may be summarised in three
words: financing, efficiency, sustainability. There is a need to attract financial resources into the sector to complete still non-existent
infrastructures able to boost the levels of coverage in addition to the rehabilitation and renovation of others. Furthermore, many
management models, especially in the state sector, remain inefficient due to a lack of market competition and stimuli for efficiency
(that ERSAR benchmarking in itself cannot overcome). Many operators remain unsustainable, including some within the AdP Group
as has been made clear. These problems should be faced up to within the triennial now beginning and the AdP Group may, once
again, be called upon to provide its input into their resolution. The question of deficits in the recovery of costs remains pending but
should finally be approaching resolution.
The circumstances are now as diverse as they were at the end of 2006, when the new strategic plans, PEAASAR II and PERSU II,
were approved for the sector. Decisions on new projects, particularly new multi-municipal systems and new partnerships with local
government that have been subject to negotiations, are the responsibility of the national authorities that need to take all interests
into account. This should very much take into consideration how the attainment of objectives set out in strategic plans, compliance
with legal European Union objectives and the execution of the POVT may all be seriously jeopardised.
At the beginning of March 2011, the AdP SGPS Board of Directors presented to the authorities its Activity and Investment Plan, in
compliance with Dispatch no. 896/10-SETF. This document sets out the project portfolio and the respective financing needs and the
corresponding level of group indebtedness for the purpose of observing the limits set down in the Stability and Growth Program.
The response provided to this proposal very much determines the agenda for the forthcoming mandate.