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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
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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
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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
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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.
CA : 1280 M €7 820 employés
Royaume UniPop: 4 M hab.
CA : 485 M €1 980 employés
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.
CA : 533 M €5 440 employés
Pologne
Pop: 0,1 M hab.
CA : 6,5 M €142 employés
SuèdePop: 0,1 M hab.
CA : 5 M €45 employés
Norvège
Pop : 0,05 M hab.
CA : 1 M €5 employés
Danemark
Pop : 0,05 M hab.
CA : 2 M €10 employés
Pays-Bas
Pop (EH): 1,7 M hab.
CA : 27 M €50 employés
BelgiquePop (EH) : 1,1 M hab.
CA : 63 M €
70 employés
Irlande
Pop.: 0,8 M hab.
CA : 13 M €130 employés
Espagne
Pop (EH): 1,4 M hab.
CA : 10 M €93 employés
Portugal
Pop.: 0,3 M hab.
CA : 54 M €330 employés
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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
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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
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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
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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
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
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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
BUCHAREST
CONCESSION CONTRACT
BUCHAREST
CONCESSION CONTRACT
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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
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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).
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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
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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
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Some Bucharest achievements (2)Some Bucharest achievements (2)
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
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Some Bucharest achievements (3)Some Bucharest achievements (3)
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
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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
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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
Veolia Voda in the Czech Republic
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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
Veolia Voda in the Czech Republic
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
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� 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
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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
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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
Prague contract, Some achievements (2)
33
� New Customer Services� Information system (call center)� Sms information� Communication clients Espace client -
identification
Prague contract, Some achievements (3)
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
� Brief presentation of Veolia Eau� Main drivers for the water market in Eastern Europe� Case studies: Bucharest, Prague, Yerevan� European Union Funds� Questions & answers