New Georgia Water Law Could Lead to Flood of P3 Activity
Almost a decade after Shirley Franklin, the 58th Mayor of Atlanta, helped put the brakes on water privatization in the US, the state of Georgia is at the forefront of a new effort to involve the private sector in the development of large water projects.
In 2003, Franklin ended a deal between Atlanta and United Water, a subsidiary of France's Suez Environment, for the operation of the city's water system. The 20-year contract was cancelled just four years into its life.
That episode left a sour taste in the mouths of both public officials and water industry executives who blamed each other for the failure of a contract that was worth USD420m.
It also helped bring to a close a period in the late 1990s that saw European water companies try to penetrate the North American private water market. Many still remain in some form, but the US private water market never took off in the way they anticipated.
Since then, activity has centered on deals like the Connecticut-based Aquarion Water Company, which was acquired by funds managed by Macquarie, and the take-private of California's South West Water Company by JP Morgan Asset Management last year.
Cities and municipalities around the country continue to issue contracts with private firms for the operation and maintenance of water and wastewater systems, but a new law in Georgia could herald a wave of new P3 deals to expand or construct wastewater treatment facilities, and put the state at the heart of a revitalized private water market.
The law could also spur the state to seek a consultant as early as the end of the year.
At the beginning of this month, Georgia Governor Nathan Deal (R) signed into law the much anticipated Senate Bill 122 (SB 122), allowing local governments in the state to enter into P3 arrangements to help finance various water projects.
In 2008, the state's General Assembly created the Georgia Comprehensive Statewide Water Management Plan, a council that represents 11 water planning regions, to assess the state's needs for water filtration, wastewater treatment and water supply. The council was created in light of the fact that Georgia is the seventh fastest growing state in terms of population since 2000, with an 18% increase in residents.
State Money Scarce For Projects
The council, in conjunction with the Georgia Environmental Protection Division (GEPD), is finalizing a report recommending, among other things, that wastewater treatment facilities either be constructed or upgraded. An official with the state's water plan said the council most likely would hire a consultant to determine the type of financing required for various projects that need to be implemented.
"The bill just passed, so right now we're trying to figure out where and what the needs will be and how best to finance them," said the official, citing that Georgia faces an USD823n budget deficit in FY2011.
"What we know right now is that the state doesn't have the money to finance all of the projects we want to do."
On Jun. 23, the council is expected to present final recommendations for water supply needs and improvements in ten regions in the state: Altamaha; Coastal Georgia; Coosa-North Georgia; Lower Flint Ochlockee; Middle Chattahoochee; Middle Ocmulgee; Savannah Upper Ogeechee; Suwannee Satilla; Upper Flint; and Upper Oconee.
Potential P3 deals, however, could happen in other regions, according to the official.
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