Water. Desalination + reuse
Issue link: https://fhpublishing.uberflip.com/i/749211
Water. desalination + reuse December 2016 In Site 31 2017 2050s H1 2017 Consolidated Water expects to achieve financial close August 2016 Signing of the APP 2024 Approximate date for completing phase two, another 50 million gallons a day plant 2020 Approximate date for completing phase one, a 50 million gallons a day RO plant Mid-2050s Agreement to operate plant runs for 37 years Consolidated is now working towards financial close The facTs • APP contract forms the basis for discussions with potential lenders and investors • Equity partners and banks are currently combing through the fine details of contract • Financial close is expected to be in early to mid-2017 The figures • Consolidated Water expects annual revenues from the project to be around MXN1.02 billion ($55.5 million) • Water rates will be indexed to the Mexican national consumer price index be built on budget and on time, and operate for those costs. The bankability of a project like this is encapsulated in the agreements between the various partners involved in the APP," he says. The APP was issued in substantially complete form by the Mexican authorities in November 2015, and the final agreement executed in August 2016. "Under Mexican law, they pretty much have to prove that it is the exact same as they started with last November, but incorporating clarifications. Once that deal is done, we can start banking upon it, and the state can start putting the guarantee trusts in place," adds Tonner. Consolidated has been in discussions with potential equity partners and banks throughout the project development process, and these parties are now scrutinising the paperwork; as well as a guarantee mechanism – a trust agreement – that is put in place by the State of Baja California. Once financial close is achieved, the design work begins. "The next really big announcement is financial close, and then we can begin breaking ground," says Tonner. Next steps: financing Degremont, a subsidiary of the French water treatment solutions and services provider Suez Environment, has been awarded an engineering, procurement and construction (EPC) contract to build the plant at Rosarito. "Suez has a track record of building projects like this, and lenders like to see that the EPC contractor is doing the engineering and taking responsibility for that," says Tonner. Back in 2009, Degremont, in consortium with Thiess, signed up to finance, design, build, operate and maintain the Victorian Desalination Plant mega-project in Melbourne, Australia, up until 2039 — one of the world's other major public- private partnership desalination mega-projects. The ongoing operations and maintenance of the Rosarito Desalination Project will extend for 37 years from the date of commissioning of the first phase of the project. "We will be operating the plant through an operating subsidiary, in partnership with Suez and NuWater," says Tonner. The bankability of a project like this is encapsulated in the agreements." John Tonner, vice president and chief operating officer, Consolidated Water The next big milestone is for Consolidated Water to secure funding, which it expects to do in the first half of 2017. An interesting aspect of the project is that it will be financed in Mexican pesos rather than US dollars. The details of the contract released by Consolidated include that water rates will be indexed to the Mexican national consumer price index, and that electrical energy costs incurred by AdR to desalinate and deliver water will be passed through to CEA (subject to efficiency guarantees). The company also said it expects annual revenues from the project to be around MXN1.02 billion ($55.5 million). Tonner, whose background includes 10 years working as a technical adviser to lenders on project finance structures for big projects, explains that details such as these, among other information, will be pored over by banks and investors before they commit funds. "Before the banks put their money in the kitty, they will be reviewing the preliminary details that we've got, satisfying themselves that the project can