The catastrophic state of the infrastructure for water treatment, purification and supply in Romanian cities has given birth to a huge business, estimated at several hundred million dollars annually. The pipes had been crumbling for some time, but the business is now soaring for a simple reason: money is coming from the European Union, through the ISPA programme, aimed at infrastructure funding.
This business opportunity was "smelled" first by the strong European companies - after all, this is European money Romania is getting. In fact, private companies follow very closely the public EU financing in Eastern Europe.
Companies such as Swedish Water (Sweden), Va Tech (Austria), Cascal (Holland), Acea or Astaldi (Italy), but also giants like Veolia (former Vivendi) and Suez group, both French, are battling in auctions held in the big cities for projects aimed at building or modernising water purification stations, wastewater treatment systems and even for winning water supply concessions.
Furthermore, even other groups whose core business is not water treatment have changed their strategy for the Romanian market, focusing on this opportunity.
This is the case of Italian construction company Astaldi, which has been operating in Romania through Italstrade for several years, building highways and modernising airports.
"According to our estimates, some 30 such projects (water treatment/purification, i.e.) will be launched this year and the next. Considering an average project value worth $20-30m, then we have a market worth at least 600-700 million dollars in only two years. It is only natural for us to be interested in such works," Francesco Scaglione, Astaldi's general manager for Romania told Ziarul Financiar.
Interest in such projects has soared over the past few years, as the European Union has funded up to 75% (and sometimes even 85%) of a project, through non-reimbursable ISPA financing.
In 2000-2002 alone, ISPA financing memorandums for such projects were worth 682.2 million euros. The value of a project could reach up to 100 million euros, with the execution period taking 3-4 years.
"The market has great potential. Why? No investments have been made in the past 50 years, and huge amounts of water are lost across the supply networks," says Giovana Soare, development director at Veolia Romania, the local branch of Veolia Environnement (former Vivendi).
The French giant was granted the concession for the water supply and sewerage systems in Bucharest and is now vying for the Constanta concession, a contract estimated at 25 million euros.
adrian.mirsanu@zf.ro ; laurentiu.ispir@zf.ro
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