Word: suez
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...Suez boss Jean-Louis Chaussade says his company is pursuing "organic growth" everywhere, including through its U.S. subsidiary, New Jersey--based United Water, which has contracts for 7 million people throughout 19 states. "For me, an organic growth of between 5% and 6%--a good three or four points above general growth rate--is the best possible kind of growth," says Chaussade. "Keeping that balance is what made us grow in France and what will make us grow in the U.S. and elsewhere...
Whatever their strategic differences, both Suez and Veolia turn water into cash in the same basic way: securing long-term concessions from public authorities to run, maintain and, if necessary, build water and sewage systems, but not buy them. Both reject the notion that they are privatizing water. "We're delegated providers of a public service," insists Frérot. The idea is to stay "asset light" and profitable while running publicly owned facilities. "In France we've developed over many years a kind of partnership between public and private that works well in the water sector," says Chaussade...
...Suez and Veolia work on the principle that as private companies with broad expertise, they can channel that investment more efficiently than municipal waterworks can. And since it's not they but the owners of the pipes that pony up the money for investment (usually by issuing municipal bonds), these companies can be more financially agile than conventional utilities...
...Veolia's U.S. subsidiary beat out Suez-owned United Water for a $1.5 billion 20-year contract to manage water distribution in Indianapolis, the largest such current contract in the U.S.; United Water already had the contract to run the city's wastewater system. The city had purchased the waterworks from a private owner that was struggling, says Tim Hewitt, president and CEO of Veolia Water Indianapolis. "When we started, there were taste and odor problems, and the previous owner had basically told people to get over it." Veolia couldn't do that since the agreement sets incentives for customer...
...measure, the Indianapolis deal has been considerably more harmonious than a 20-year management contract forged in 1998 between Atlanta, under now jailed mayor Bill Campbell, and Suez subsidiary United Water. That arrangement descended into a cacophony of charges and countercharges until it was mutually dissolved in 2003. Its failure may be one reason that the U.S. market, once praised for its explosive potential, has been "a little frustrating," as Hewitt says. But the frustration is relative: Veolia's U.S. business grew 12% last year...