Dec 28, 2000

CG/LA Predicts Strong Privatization Growth in Brazilian Water

WASHINGTON, Jan. 24 -- CG/LA Infrastructure today
released the latest report in its series on Latin American water and wastewater
markets, "Making Money in the Brazilian Water Market." The
privatization market in Brazil is estimated to be approximately $15 billion,
according to CG/LA's 60-page Strategic Market Review. The Review identifies the
state water companies of Manaus, Bahia and Pernambuco as the first to be
privatized.
CG/LA's Water and Wastewater Advisory Service is
an annual subscription service in which a majority of the world's water and
wastewater firms participate. The service addresses the daily and strategic
needs of executives through a series of bundled products, including weekly
briefings (analysis and strategy), strategic market reviews, enquiry privileges
with the firm's analysts, and access to the firm's data bases.
According to Anand Hemnani, Director of CG/LA's
Brazil office, "We expect the process to move quickly once a regulatory
framework is in place primarily because of the overwhelming need for investment
in Brazil's water sector -- a need that the states cannot meet." Revenues
in Brazil's public water industry in 1999 surpassed $6.5 billion and spending on
services and equipment topped $2.2 billion. Under privatization these figures
would double in five years, according to Hemnani.
The market's valuation is low relative to other
markets in the region, attracting all of the key international players.
"Whereas the per connection bid prices in Chile have so far been in the
$700-800 range (assuming a 100% stake), we believe that Brazilian prices will be
much lower, around $300 per connection," says Anjali Duva, CG/LA's senior
water analyst. The report finds that competition will be fierce for these
utilities, but that there will not be a repeat of last year's overpayments seen
in Argentina and Chile. "Brazilian water utilities are not in very good
shape; the political necessity of extending the network of connections has led
to years of neglect on the maintenance side" remarked Duva.
The three main sections of the review are
designed to provide hard-to-find market analysis for leading industry
participants, according to Norman Anderson, President and CEO of CG/LA. "We
have put together a comprehensive description of the marketplace, and are making
this available to clients over the internet so that they have updated
information at their fingertips." Perhaps the most important contribution
of the document, according to Anderson, is a rigorous evaluation of all of the
state water companies according to a key set of metrics. "We spent a
tremendous amount of time making sure that we had the most useful metrics for
our clients' critical decision-making — including water loss rates, tariff
rates, payment ratios, workers per thousand connections, profitability and other
critical information that is organized into easy to use tables."
SOURCE: CG/LA Infrastructure

expand_less