Finance Structure Wanted by Private Operators of Water Business in Southeast Asia

24th April 2011 Kozo Bando Global Water Recycling and Reuse System Association (GWRA) Kajima Corporation 1. 2. 3. Introduction of GWRA Current Financing Issues in the Region Preferred Financing Arrangement

Introduction of GWRA a. Founded in November 2008 & has 50 member companies among industries of construction, plant engineering, electricity, machinery, material and finance b. Aims at supporting Japanese companies to participate in water business overseas c. Promotes activities:
 Collection and analysis of water business information; market, policies and risks  Assistance of technology development through establishment of demonstration plants with Government assistance  Assistance in project finding & project development

c. NEDO demonstration study project WATER PLAZA (Kitakyushu City)
Test Bed area
MBR Area

Demo Plants

Kitakyushu City

UF/RO Area

Water recycling facilities (6000 Total water production: ㎡) Sewage water 1,400m3/d RO production: 1,000m3/d 3
Sea water RO production: 400m /d

Aeration tanks Primary sedimentation tanks

Digester tanks

Test Bed
(9m×20m /section) Theme: Experimental research on integrated system to recycle seawater and sewage water.

Final sedimentation tanks

Project site: 5 sections

Sea 100m

Offered by GWSTA(Global Water Recycling and Reuse Solution Technology Research

Current Financing Issues
1. Low Tariff  Viability Gap (not Bankable)  Subsidized Operation 2. Difficult Financing Arrangement  No Long-Term Financing in Local Currency 3. Premature Regulatory Conditions  PPP Regulation  Dispute Resolution 4. Risks Private Operators Cannot Control  Country Risk  FOREX Risk

Preferred Financing Arrangement
1. Public Contribution  For Viability Gap  Make Bankable 2. Use of ODA  Loan, Grant, Investment, 2-step Loan  Implementation by PPP Scheme  Minimize Risks 3. Procurement from Commercial Institutions  Relaxed Criteria for Loan and Investment for Public Service Sectors  Loan in Local Currency

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