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Part of Acciona's infrastructure unit, the water division specializes in designing, building, and operating potable water and wastewater treatment plants. In recent years, it has also focused on the construction and operation of desalination plants that use reverse osmosis technology.
The water division's second area is providing comprehensive management services of the complete water cycle, including operating concessions for the supply of potable water and the treatment of household and industrial wastewater.
The water business
Acciona's 2017 income amounted to 7.25bn euros (US$8.86bn), 21.4% more than in 2016.
Of that sum, 4.94bn euros came from the infrastructure unit, which represented a 36.8% increase over the 3.61bn euros a year prior. The water division contributed 682mn to total infrastructure turnover, 3.7% less than in 2016.
In spite of this small drop, water's Ebitda grew 9.2% to 130mn euros.
Acciona's gross investment in 2017 amounted to 920mn euros, of which 359mn euros went to infrastructure. Regarding the water division, only 38mn euros were invested last year worldwide, a 64.2% reduction compared with the 107mn euros in 2016.
The portfolio of the firm's investment unit, which includes all pending projects as well as the contracts the group has won, stood at 18.8bn euros as of December 2017. Some 11.2bn euros of that sum were related to water, which represented a 6.6% increase over the 10.5mn euros for the water portfolio a year earlier. Some of last year's additions to the portfolio are located in Latin America, including the construction of two potable water treatment plants in Panama, and a concession to manage water and sewage services in Mexico's Boca del Río municipality.
Acciona Agua in Latin America
Acciona Agua has a presence in 12 Latin American countries, with permanent offices in Chile, Colombia, Brazil and Mexico. Under the company's strategy, these countries emerged as "platforms," offering significant business potential that can foster solid and profitable company growth.
These platform countries also serve as hubs from which the company offers numerous services to support other countries within the region. According to company information, this business structure allows maximizing available resources and guarantee that the expertise and capabilities of each team in platform countries can cover the markets in which its water unit operates.
To date, North and Latin America represent about 25-30% of Acciona Agua's turnover, Aurelio Ignacio López Mier, the firm's business development director for the Americas told BNamericas.
According to the company, invested capital – provided by banks and other financiers – reached 1.66bn euros last year, of which 15% went to concessions in Latin America.
Over the years, the company has won important contracts in Latin America. One of them, over US$16.6mn, was obtained in Ecuador as part of a consortium with BTD. It entails the construction of a wastewater treatment plant in Loja municipality and is expected to serve up to 350,000 people.
Regarding water management services, the latest contract was awarded in December by Boca del Río local government, in Mexico's Veracruz state.
Under the contract, Acciona Agua – as part of a JV with the municipal government and local company Malibran – will provide potable water and sewage services for 30 years to over 50,000 customers.
Another major project the company is developing in Latin America concerns the construction of the Atotonilco wastewater treatment plant – the largest facility of its kind in the hemisphere. The facility in Mexico's Hidalgo state will treat 60% of wastewater produced in Mexico City, so that it could later be used for the irrigation of 80,000ha of agricultural lands and also for industrial purposes. Under construction since 2011, final tests for the operation of the plant have successfully concluded in 2017.
As for South America, the firm won six contracts to manage water services in Peru's capital Lima, serving almost 9mn users. Moreover, Acciona Agua was also in charge of building the country's first desalination plant to use reverse osmosis technology.
In Panama, the company is building a US$212mn potable water treatment plant in the Howard sector of Arraiján district in Panama Oesté province, as well as a US$109mn treatment module at the Sabanitas potable water treatment plant in Colón province.
Other countries the company develops major projects in include Colombia, Venezuela, Brazil, Paraguay and the Dominican Republic.
LatAm business in numbers
• The company treats wastewater produced by over 12mn residents of the region, which amounts to 4Mm3/d.
• In terms of desalination, the company treats around 155,000m3/d, benefitting close to 500,000 residents.
• The firm treats over 250,000m3/d of potable water, serving over 1mn people.
• Through water management concessions, Acciona Agua currently serves over 9mn people in the region.
Acciona Agua holds 20 concessions, within the scope of CINIIF12 regulations. Three of these concessions are located in Latin America:
• A 25-year contract for the Atotonilco wastewater treatment plant, which is 24% owned by the company and expires in 2035.
• Another 25-year concession for the La Chira wastewater treatment plant in Peru, 50% owned by the company and expiring in 2037.
• The concession to manage potable water and sewage services in Boca del Río municipality in Mexico's Veracruz state. The company holds a 70% stake in the concession, which expires in 2047.
According to López Mier, the company is seeing strategic opportunities in the region for at least the next four years. These opportunities will be related to the investment cycles that each Latin American country is expected to go through, which in turn link to political situations, among other factors.
Analyzing these investment cycles to identify the opportunities a country offers is a key component of Acciona Agua's strategy. This approach also helps the company to face difficult situations related to complicated moments arising in each country.
Asked about whether or not the company expects a slowdown in the development of projects for this year as a result of the general elections that will take place in a handful of countries – including three of its platform countries – López Mier said that the business strategy includes also potential scenarios.
"The strategy of the platform countries is to support others, because of unstable cycles in most countries. In those years where some see less investment, we look at other countries to increase our presence there. Our investment plans are made based on a regional perspective, more than at the country level," he said.
López Mier said that investment cycles also help to partially determine which key markets exist within the region at any given time.
"Except for Bolivia, which is a country that we will begin to look at in 2018 as part of our corporate strategy, we are practically in all the countries in Latin America. Obviously, the countries with the largest populations are a priority – they are the ones we consider as platforms, and where we think there will be more opportunities for investment," López Mier added.
A recent and positive investment cycle for the company is Panama's, enduring for the last couple of years, according to López Mier. Other countries where the company foresees important water investments for this year are Argentina and Peru.
The firm is interested in building and operating water infrastructure, while it is also looking for opportunities in the concession market, all with the objective of consolidating a regional presence.
"We want to continue providing an excellent service to our clients and to continue with the success of our projects in terms of quality and excellence. We want to keep working alongside public entities to increase water and sanitation investments to reduce social gaps and improve environmental sustainability, and the life conditions of the local populations," López Mier said.