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OPPORTUNITIES IN THE WATER & WASTEWATER SECTOR (NWC TRANSFORMATION JOURNEY)
LOAY AL MUSALLAM, CEO
NATIONAL WATER COMPANY
JAPANESE-SAUDI BUSINESS FORUM
1ST FEBRUARY 2012, TOKYO, JAPAN
2
AGENDA
INTRODUCTION
NWC KEY ACHIEVEMENTS, 3 YEARS OF OPERATION
STRATEGIC INTENT, 2012 AND BEYOND
MAJOR BUSINESS OPPORTUNITIES
3
WATER & WASTEWATER INFRASTRUCTURE MARKET FORECAST BY
REGION (USD 1.4 TRILLION IN 7 YEARS)
Western Europe 23%
South Asia 2%
Middle East North Africa 7%
East Asia Pacific 39%
Eastern Europe Central Asia 2%
North America 20%
Latin America & Caribbean 6%
Sub-Saharan Africa 1%
Source: Global Water Intelligence, Water Technology Markets 2010
451
125.3
300.2
138.4
83.2
192.7
94.6
Utility Operating Expenditure
Wastewater Rehab
New Wastewater Network
New Water Networks
Water Network Rehab
Water Resources
4
PROJECTED CAPEX & OPEX SPEND FOR TOTAL KSA (2012-2022)
66.4 BILLION US$
137
112
OPEX CAPEX
Combined Water & WW (in Bio. SAR)
TOTAL = 66.4 Billion US$
67.2
47.9
OPEX CAPEX
Requirements for Water
TOTAL = 30.7 Billion US$
44.8
89.1
OPEX CAPEX
Requirements for Wastewater
TOTAL = 35.7 Billion USD
5
VALUE OF WASTEWATER INFRASTRUCTURE PROJECTS IN THE GCC, 2012 to 2016
TOTAL = 31.2 BILLION US$
Source: MEED Report “MEED Wastewater Reuse Summit 2011”
20,671
3,687
738 2,287
1,610 2,185
Saudi Arabia UAE Bahrain Kuwait Oman Qatar
Saudi Arabia = 66% of Total infrastructure spend in GCC or 20.7 Billion US$
6
AGENDA
INTRODUCTION
NWC KEY ACHIEVEMENTS, 3 YEARS OF OPERATION
STRATEGIC INTENT, 2012 AND BEYOND
MAJOR BUSINESS OPPORTUNITIES
7
ACTUAL RESULTS 2011 – LEAK DETECTION AND WATER SAVING
Volume of Water Saved due to Leak Detection (Million m3)
65 67
53.9
23
7.2
+3% +110%
2011 2010 2009 2008
Actual
Target
Average Time for Leak Repair (Hours)
26303648
96
16
3033
48
96
2010 2009 2008
-52%
-28%
2011 (Act) 2011 (Tar)
JCBU
RCBU
Year 2011 Riyadh Jeddah Total
No. of Leaks Identified and Repaired (Nos) 38,799 16,516 53,315
Volume of Water Saved (M m3) 51 16 67
Approximate value of Water saved (Million
SAR) 306 96 402
8
ACTUAL RESULTS 2011
Average Time to Install Water Connection (Days)
28 243030
70
-14%
-30%
2011 2010 2009 2008
Target
Actual
Average Time to Install Wastewater Connection (Days)
26 2347
60
180
2008
-11%
-50%
2011 2010 2009
Actual
Target
Water Supply (Million m3) Quality of Water Testing Compliance (%)
-0.4% +7%
2011
99.3% 99.7%
2010
99.3%
2009
99.1%
2008
82.0%
Actual
Target
1,035 1,002942
827753
2009 2008
2010
-3% +10%
2011
Actual
Target
9
ACTUAL RESULTS 2011
Cum Vol of TSE Agreements and MOUs Signed (m3/day)
475,000524,000
395,000
287,200
+10%
2011 2010 2009
+35% Actual
Target
Avg. Lead Time to Award Capital Projects (Working Days) Number of Projects behind Schedule (#)
140128
180
-29%
-9%
2011 2010
Actual
Target
23 1827
61
104
-22%
-44%
2011 2010 2009 2008
Target
Actual
No. of New Wastewater Connections (#)
30,000 28,426
20,700
40,000
27,600
-5%
2010 2011 2008
2009
Actual
Target
10
ACTUAL RESULTS 2011
Total Cash Inflow (Million SAR)
873930
732699
561
+7% +18%
2011 2010 2009 2008
Actual
Target
Customer Satisfaction Index (%)
2010
84%
2009
85%
45%
-2% +23%
2011
83% 85%
Actual
Target Conducted by MASMI, a reputed 3rd Party company
11
HIGHLIGHTS OF KEY ACHIEVEMENTS
NWC Accomplishments
in its short 3-year journey
12
LAUNCHED JEDDAH WASTE WATER SYSTEM W/ TOTAL INVESTMENT OF MORE THAN 2.2 BIO US$
Project Accelerated from 5 years to 3 Years
• Combined
total
treatment
capacity for
Jeddah
WWTP to
reach
1,000,000
m³/day.
• A total of
132,000
house
connections
and 2,500
kilometers
of networks,
pipelines &
mainlines.
13
LAUNCH OF COMPASS INTEGRATED SYSTEM
PROJECT WAS COMPLETED IN 14 MONTHS – SYSTEMS WENT LIVE IN RECORD TIME.
•COMPASS,
a valuable
tool towards
customer
service
excellence
• It integrates
- CC&B,
EAM, GIS &
SCADA
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DRYING AND DE-SLUDGING OF AL NATHEM LAKE
COMPLETELY DRIED UP A 17-YEARS OLD SEWAGE LAKE IN RECORD 2 MONTHS
Before During After
•Size of the
lake, 5
Million m2
•100% of the
sludge has
been
treated
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DRIED UPAN 18 YEARS OLD WASTEWATER LAKE IN JEDDAH CITY IN RECORD 3 MONTHS
Before During After
• NWC
successfully
drained
Jeddah Misk
lake, treated
the
contaminated
soils ahead of
the scheduled
time by 9
months.
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NWC, WITHIN A SHORT PERIOD OF TIME HAS BUILT MODERN & SOPHISTICATED
CUSTOMER SERVICE INFRASTRUCTURE (Customer Centers/ Call Centers/ etc.)
17
NWC, WITHIN 3 YEARS, BROUGHT HOME SOME OF THE MOST COVETED AWARDS AND
RECOGNITION IN THE WATER SECTOR
NWC bagged the
2011 Best in
Innovation Award
for SCADA
Insights Award for
Best Customer
Win-Back Program
2011
Bagged GWI’s
Best Water Reuse
Project for 2011
Award
18
NWC VENTURES INTO RENEWABLE ENERGY USAGE IN OIL-RICH KSA
• Living up to its strategy in the sustainable
management of the environment, NWC had
started construction of the 1st WWTP
equipped with “combined heat & power
generation” – Al Kharj WWTP to served
Riyadh w/ 200,000 m³/day capacity and
generation capacity of 2.5 megawatt
• Bidding process for yet another heat-to-
power WWTP in Jeddah Airport2 has
commenced which will, after completion, be
the 2nd biggest plant in its kind in the Middle
East with a generation capacity of 7
megawatt and treatment capacity of 500,000
m³/day.
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EMTYAZ CONTRIBUTES TO INSTILL A PERFORMANCE BASED CULTURE
Improved Communication
Alignment with Strategy
Performance Monitoring.
KPI Cascading
20
AGENDA
INTRODUCTION
NWC KEY ACHIEVEMENTS, 3 YEARS OF OPERATION
STRATEGIC INTENT, 2012 AND BEYOND
MAJOR BUSINESS OPPORTUNITIES
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NWC, Shifting to High Gear by Adopting a New Business Model
Cost Optimization
Treated Sewage Effluent
(TSE)
High Value Customers
Customer & Operations
Capital Project Delivery
22
COULD TSE BECOME THE GROWTH ENGINE OF NWC?
Sizable TSE vs. potable water growth revenues in million SAR over the next 20 years for 6 cities
Potable Water revenue
TSE Revenue
2012 2014
2016 2018
2020 2022
2024 2026
2028 2030
-00
500
1,000
1,500
2,000
2,500
3,000
3,500
1576
2297
1998 2066 2106 2234 2370 2515 2668 2830
99
573
1179
1774 2068
2343 2577
2841 3044
3282
Potable Water revenue TSE Revenue
Source: 2012-2016: NWC actual projections. 2018-2030 Fichtner projections
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NWC ACHIEVEMENST IN TSE SALES/ MoU Agreements (in 3 years only)
Cumulative TSE Sales/ MoU Agreement (m³ per
day)
0
100,000
200,000
300,000
400,000
500,000
600,000
20 years Prior to NWC
2008 2009 2010 2011
300,000
0
287,200
395,000
524,000
The Growth for TSE volume sales/ MoU
agreements in 3 years versus the last 20 years
(m³ per day)
0
100000
200000
300000
400000
500000
600000
700000
800000
2008 2009 2010 2011 2012
0
287,200
395,000
524,000
724,000
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AGENDA
INTRODUCTION
NWC KEY ACHIEVEMENTS, 3 YEARS OF OPERATION
STRATEGIC INTENT, 2012 AND BEYOND
MAJOR BUSINESS OPPORTUNITIES
25
NWC TOTAL CAPEX REQUIREMENTS FOR THE NEXT 5 YEARS FOR 5 MAJOR CITIES
TOTAL = 31 BILLION SAR/ 8.3 BILLION US$
Types of Investments
in M
illio
n S
AR
3,760
3,230
3,740
1,255
5,470
7,345
4,433
1,755
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
Water Plants , Wells &
Reservoirs
Water Mains Water Networks
Water House Connections
WWTP Wastewater Mains
Waste Water Networks
Waste Water House
Connections
RCBU JCBU MCBU TCBU
26
MAJOR BUSINESS OPPORTUNITIES
Opportunities in TSE
27
WASTEWATER REUSE OPPORTUNITIES (TSE) – RECENT SUCCESSES AND FUTURE PLANS
Creation of financially sustainable businesses from NWCs existing wastewater assets
by developing an environmentally friendly and financially sustainable long term market
for treated sewage effluent.
Structured into the formation of business units, which are incubated for period,
followed by private participation at a later date and subsequent spinoff into a SPV.
TSE has potential to become a growth driver for NWC….
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TSE FORECAST
TSE usage in 6 major cities of the Kingdom is likely to increase from 0.8 Million m3/day to 4
Million m3/day by 2030
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
3,000,000
3,500,000
4,000,000
4,500,000
Dammam & khober. Madinah Makkah Jeddah Riyadh
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MAJOR BUSINESS OPPORTUNITIES
Opportunities in
Operations & Maintenance JV’s
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BY 2015, FOUR O&M GEOGRAPHIC CLUSTERS WILL HAVE BEEN FORMED WITH A
POTENTIAL FOR COMBINING THE WESTERN REGIONS INTO ONE CLUSTER
Jeddah
O&M services contract clustering # of contracts/ annual value (SAR mil)/ Thousands of inhabitants
Makkah
Taif
Yanbu
Madinah
Abha/ Khamis-
Mushayat
Riyadh
Buraida/ Onaizah
Tabuk
NWC captive city
Captive in 2011/ 2012
Captive planned after 2012
Map legend
Dammam/ Al Khobar
Jubail
Al-Hofuf & Al-Mubarraz
13 22
62
21
35
Value
153
4
2
Contracts
9
1 1
1
Population Served
2,639
* *
2011
2012
2013
2014
2015
2010
Potential to combine into single cluster if West (north) SPV partner is the same partner as West (south)
East
Southwest
*
Proposed
1 Population base year is 2009
3
86
22
32
Value
8 20
4
3
Contracts
15
1
3
4
Population Served
1,745
82
121
Value
14
74
493
202
92
26
Contracts
13
1 1
Population served
5,905
Value
672
11
627
35
1
Contracts
6
1
4
Population Served
4,583
Northwest
Central
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Notes: (1) Riyadh network contracts (2) Riyadh plants and hybrid contracts Source: NWC , Economist Intelligence Unit, MOWE, Global Water Intelligence, Datamonitor, NCB capital, Expert interviews, Market Research World, Frost & Sullivan, A.T. Kearney analysis
THE O&M & TSE INITIATIVE LEADS INTO A SIZABLE OPPORTUNITY ITS REVENUE EVOLUTION IN THE NEXT 20 YEARS WILL BE A CUMMULATIVE REVENUE OF
32.9 Billion SAR / 8.8 Billion US$
61
129
606
1572
2280
2831
3258
3740
3956
99
303 619
954
1498
2068
2577
3044
3282
7 27
106 281
500 629
723 839
885
50 151
310 477
749 920
1267
1605 1777
2012 2013 2014 2015 2016 2020 2024 2028 2030
Revenue (TSE) Revenue ( O&M) EBITDA (O&M) EBITDA (TSE)
7,238
6,784
5,835
4,899
3,778
2,526
1,225
432 160
32
THANK YOU