Developers sign up for Ajman wastewater concession

04 January 2002

The Middle East's first wastewater concession for an urban area was signed on 19 December by the Ajman government and an international group made up of the US' Black & Veatch Internationaland the UK's Thames Water. Under the 27.5-year concession, a new utility company will invest $130 million-140 million in building and operating a wastewater network to serve 300,000 customers in Ajman. To provide for the concession, the Ajman government has drafted a new sewerage law, which is expected to be signed prior to financial close being achieved on the project in March.

The concession company is due to be incorporated within 60 days of the date of signing the concession agreement. Initially, Black & Veatch and Thames Water will be equal shareholders in the entity. However, the shareholding base will be expanded once financial close has been reached to take in several regional partners and the Ajman government, which is expected to hold a 20 per cent stake.

The co-developers are planning to finance the project through a 70:30 debt/equity package. Fuji Bank, now part of Mizuho Financial Group, is acting as financial adviser and is expected to become one of the co-arrangers for the loan. Given the size of the debt package, a club deal is envisaged with four-five banks participating. The loan tenor is likely to be about 15 years.

In addition to investing in the scheme and acting as co-developer, Thames Water will be responsible for operation and maintenance, while Black & Veatch will be the engineering, procurement and construction (EPC) contractor. Its principal civil subcontractor will be Belgium's Six Construct, while the UK's Paterson Candy, a Black & Veatch subsidiary, will be the mechanical and process plant contractor, working with Metitoof the US. Another UK firm, Binnie Black & Veatch, is the principal design engineer. Denton Wilde Saptehas advised Black & Veatch on legal issues.

The network will be expanded in phases. Phase 1 will involve the construction of a 48,000-cubic-metre-a-day sewage treatment plant, the installation of 300 kilometres of sewerage lines and the construction of 15 pump stations. Within 30 months of the beginning of construction, the co-developers are looking to have the treatment plant fully operational and 60 per cent of all those registered for connection by month 24 to be connected to the network. By 48 months, the target is to have all customers registered as of month 42 connected.

In addition to building, operating and financing the network, the concession company will be responsible for revenue collection. At present, Ajman residents use septic tanks, which are emptied by tanker.

The idea of tapping private finance for a wastewater network in Ajman is not new, with plans first announced in the mid 1990s (MEED 16:8:96).

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