Tapping into water investment

With some RON 200 million of varnished investments and plans to expand in other cities in Romania, Apa Nova is looking for more local investment opportunities. Bruno Roche, the company’s GM and president of the French Chamber of Commerce, Industry and Agriculture in Romania (CCIFER), told The Diplomat – Bucharest Apa Nova’s latest plans for local lease contracts as well as his realistic take on the Romanian business environment

July 2011 - From the Print Edition

Apa Nova, the Romanian subsidiary of French company Veolia Eau, is one of the best known private-public partnerships signed in Romania since 2000. The company’s name has been highly publicized since it inked two leasing contracts on the local market, a 25-year one to manage the Bucharest water supply and another 11-year deal to run Ploiesti’s water system.
Currently, the company is led by Bruno Roche, who lives in Ploiesti. What he says first about Romanians is that they are the top European tax payers, a positive aspect to be taken into account by a company, especially in these tumultuous times.
“Romanians are the best contributors and taxpayers in most European countries,“ said Roche, who is also the president of the French Chamber of Commerce in Romania.
Media reports over the past weeks paint a gloomy picture of foreign investment on the local market. However, Roche sees large investment opportunities in Romania, due to labor force availability and the real need for infrastructure in the major economic fields with a direct impact on the public.
His opinions on what needs to be changed locally don’t differ from those of most of the expats traveling, living and working in Romania: better infrastructure, the restrictive laws against public-owned companies and their access to different projects and financing, plus the lack of a coherent fiscal system and legislation.

Turning off the tap
According to the Apa Nova man’s estimations, water consumption in Romania costs EUR 500 per year per family, “a reasonable price to pay,” said Roche. The most payments in Romania come at the end of the year, which is, according to the manager, part of the local habit: to pay debts at the end of the year.
Like any other manager coming from another country to Romania, Roche also observes the local customs and routines of Romanian consumers. According to him, many old habits have died in the last decade. According to Roche’s calculations, Romanians consumed an average of 400 liters of water per day in 2000. Currently, average water consumption in Romania is 150 liters of water per day. According to Roche, the difference is because local consumers have started to understand market economy rules and the subsequent costs.

Investors splash the cash
With its two lease contracts for the public water supply in Bucharest and Ploiesti, Apa Nova has a long-term investment plan for these cities, according to Bruno Roche. The current legislative initiative, especially the long-disputed regionalization issue, has slightly delayed the development plans of Apa Nova outside Bucharest and Ploiesti but, as Roche said, the lobbying of the local authorities is ongoing. By 2016, the Veolia Eau subsidiary will have invested a total of RON 200 million in Bucharest for two projects comprising the expansion of the water supply network and waste treatment station.
According to the GM, the company will invest RON 33 million yearly as part of the “Bucur program”, a project required by Bucharest’s city hall. As part of the contract, the authorities will map the locations where expansion is needed and the French firm will perform the works. “The company is continuing its investment plans for the two cities but is also looking at possible openings in other Romanian towns,” said Roche.

Drip drip of water treatment in Bucharest
Another important joint project for Apa Nova and Bucharest city hall is the Glina wastewater treatment station, which should become functional in the second half of July. “We will treat Bucharest’s waste water and the bad situation of waste quality will improve, because, so far, this water has never been treated. The station will start functioning in stages and the quality of the waters which spill into the Dambovita River will improve,” said Roche.
The Glina project has been developed in two stages, with the first one to be completed this summer. The project has been financed partially through European money, both pre-aderation and cohesion funds. The total investments in the Glina station amount to approximately EUR 500 million.
So far, the first stage of the project has cost EUR 82 million and is estimated to top EUR 100 million, while the second stage of the works will absorb some EUR 400-450 million.
European funds contributed 54.6 percent of the first stage, a loan from the European Investment Bank brought almost 30 percent, while another loan from the European Bank for Reconstruction and Development (BERD) made up almost 12 percent with the state budget topping it up with 3.5 percent.
When finished, the wastewater treatment station at Glina will treat the sewage water of Bucharest and the neighboring areas, and the station is expected to generate 400 to 500 tons of sludge per day, which will be converted into biogas and, subsequently, energy production.
The works for Glina station started before 1989. To date Bucharest has not had a wastewater treatment plant, a fact long underlined by the European authorities. The construction of the Glina station cost EUR 6.7 million, money invested by Bucharest’s city hall. ■

Who is Bruno Roche?
With a background in engineering, Bruno Roche graduated from Clermont-Ferrand’s Superior National School of Chemistry in 1989. He has worked for Veolia Eau for two decades, managing different agencies of the company in France. Roche came in Romania in 2003 as manager of Apa Nova Ploiesti and, at the end of 2008, became general manager of Apa Nova Bucharest, both companies being subsidiaries of Veolia Eau, a division of the Veolia Environment group, which provides water supply and water treatment services.