Sector Report | Water Industry
Contents Global Water Industry
03‐04
How big is the Global Water Market?
04‐06
Which geographies would see high spending?
06‐09
India ‐ Huge Opportunity ahead…
09‐15
How the listed companies fare…?
15‐16
Companies
ION Exchange (India) Ltd.
17‐29
Moving to the next Orbit next Orbit
VA Tech Wabag Ltd.
30‐43
Leader with the technology edge technology edge
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Sector Report | Water Industry
Contents Global Water Industry
03‐04
How big is the Global Water Market?
04‐06
Which geographies would see high spending?
06‐09
India ‐ Huge Opportunity ahead…
09‐15
How the listed companies fare…?
15‐16
Companies
ION Exchange (India) Ltd.
17‐29
Moving to the next Orbit next Orbit
VA Tech Wabag Ltd.
30‐43
Leader with the technology edge technology edge
IndiaNivesh Securities Ltd
04 Dec 2017
2 of 43
Sector Report | Water Industry
Global Water Industry
INSTITUTIONAL EQUITIES
Water ‐ Stay Invested, Invested, Stay Afloat Afloat ‐ Stay Water already a scarce Commodity Water is an essential commodity, with wide usage across all spheres of our life. Right from growing food, producing any type of of goods goods required for our existence, water has a key role to play. Even though water covers 70% of of Earth’s Earth’s surface, only 1.5% of of it it is fresh water. We are more dependent on annual precipitation for water supplies, which is not evenly distributed across geographies. ~65% of the annual precipitation evaporates into atmosphere, 20‐25% of it flows into waterways, not fit for human consumption. Only 10% of the rainfall is available for Personal, Agricultural and Industrial usage.
Population boom to drive demand We expect the global population to continue growing for next 2‐3 decades, mainly driven by African and some areas of the Asian sub‐continent. This population growth is likely to drive urbanization from 54% in 2015 to 60% in 2030. ~12% of available water globally flows into domestic use, 69% into Agriculture and 19% into Industrial production. Half the water consumed in developed world is towards Industries, whereas 70‐80% of it in developing world is towards the Agriculture. Rising population and rapid urbanization would drive the Food and Energy demand in developing world. This in‐turn should drive demand for water. Also surge in the Industrial activity would drive demand for water. As per United Nations Food and Agriculture Organization (UNFAO) report ~1.2 bn people are living in regions with extreme water scarcity. This is expected to increase to ~1.8 bn people by 2020 (owing to rise in water pollution, decline in waterbed levels, which makes the water undrinkable and unsafe for usage).
ANALYST Yellapu Santosh Tel: +91 22 6240 6456
[email protected] Sabyasachi Mukerji Tel: +91 22 6240 6458
[email protected]
Fig. 1:
Asia, the most stressed Water market If one were to look at continent‐wise details then, Asia is expected to face severe water shortage. ~60% of the global population is based in Asia with only 36% of global water supply. Within Asia, China and India are the two most populous economies, who could face water shortage going forward, as they are majorly exploiting available water resources. On other hand, North America has access to 15% of of global global fresh water with with just just 8% of of global global population.
~1.5% of the of the Global Water sources are Fresh Water
Fig. 2:
Water Vol. (cu. kms)
% of fresh of fresh water
% of total of total water
100%
1,338,000,000
‐
96.5
80%
Ice Caps, Glaciers, Permanent Snow
24,064,000
68.7
1.7
Groundwater
23,400,000
‐
1.7
Soil Moisture
16,500
0.1
0.0
Ground Ice & Permafrost
300,000
0.9
0.0
Lakes
176,400
‐
0.0
Water Source
Oceans, Seas & Bays
Atmosphere
12,900
0.0
0.0
Swamp Water
11,470
0.0
0.0
3,240
0.0
0.0
1,386,000,000
‐
100.0
Rivers & Biological Water Total
Source: Igor Shiklomanov's Igor Shiklomanov's Chapter "World Chapter "World fresh fresh water resources" water resources" in in Peter H. Peter H. Gleick,
69% of water of water globally flows towards Agriculture 25%
60%
48% 69%
71%
81%
64% 81% 54%
40% 37% 20% 0%
19% 12% d l r o W
4% 15% a c i r f A
M un un ic icip al al
16%
12% 14% a c i r e m A
17%
10% 9%
A S
a i s A
I nd nd us ust ri rial
21%
20%
e p o r u E
a i n a e c O
Agricul tu tu ra ra l
Source: Industry Report, Industry Report, IndiaNivesh Institutional Research Institutional Research
1993, IndiaNivesh Institutional Research Institutional Research
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Fig. 3: Asia, Europe & Africa are most stressed continents 70%
60%
Fig. 4:
Africa to see strong population growth….
100%
1% 5% 9%
80%
10%
60% 50% 36%
40%
10%
13% 11%
N or orth & Central America
South America
% of global of global p op op ul ulat io ion
20%
Asia
Aust. & Oceana
40%
Europe
17%
20%
2017
2030
26%
0%
Afri Africca
% of Global of Global Avg. Freshwater Res.
Source: Industry Report, Industry Report, IndiaNivesh Institutional Research Institutional Research
Asi Asia
Euro urope
2050
LatA LatAm m & Carib Caribbe bean an
2100
North North Ameri America ca
Ocea Oceania nia
Source: Industry Report, Industry Report, IndiaNivesh Institutional Research Institutional Research
Globally % of Urban of Urban population to increase…
Fig. 6: Asia has maximum no. of cities of cities with > 1 mn inhabitants 400
100%
80%
46%
48%
53% 60%
58%
8%
5%
0%
Fig. 5:
43% 54%
40%
13% 6% 1%
Af ri rica
1% 4% 6% 6%
60% 60%
15% 8%
1% 4% 8% 7%
9%
26%
30% 20%
1% 5% 5% 8%
40%
320 240
71%
160 40%
20%
54%
52%
47%
60%
29%
0
0% FY 1950
80
FY 2000
FY 2010
Urban
FY 2015 Rural
Source: Industry Report, Industry Report, IndiaNivesh Institutional Research Institutional Research
FY 2030
North America
Latam & Carribean 1950
Europe
2000
Africa
2010
Oceania
2015
Asia
2030
Source: Industry Report, Industry Report, IndiaNivesh Institutional Research Institutional Research
How big is the Global Water Market? Industry experts expect the 2017 Global Water market size to be ~$652 bn (76% of it from Municipal and the remaining from Industrial segment).
Within Municipality, APAC is the biggest market Given the high water stress, inadequate infrastructure and continued increase in demand, APAC emerges as the largest spender within Municipality segment. India, China, Malaysia, Thailand, Sri Lanka, Japan, Philippines, Vietnam, Bangladesh are few markets currently pursuing capacity augmentation within the Municipal segment. In the domestic markets, we expect awarding traction to be seen from Namami Gange, AMRUT and Smart City projects. Opening up of Japanese Water market to private sector, higher spending in Chinese, Vietnam, Philippines market and strong bid pipeline in Sri Lanka market (under Water Supply & Sanitation Improvement scheme), comfort us about the awarding momentum outlook, going forward.
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Project upgrades to drive European Municipal markets Higher spend is expected towards the up gradation of existing plants with new technologies, in order to make the Asset management smarter. Fig. 7:
Within Municipality segment, APAC is the biggest market… Latin America 6%
Fig. 8:
O&M accounts for over half of the Municipality Spending…
Design, Engineering & Construction 18%
North America 26%
Chemicals 3% Process Control & Management 16%
APAC 35%
Water & Wastewater Technology 11% Operation & Maintenance 52%
Europe 23%
Middle East & Africa 10%
Source: Industry Reports, IndiaNivesh Institutional Research
Source: Industry Reports, IndiaNivesh Institutional Research
Fig. 9:
Fig. 10: O&M accounts for 46% of Industrial Spending…
APAC & Europe are 2 largest markets within Industrial segment Latin America 10%
APAC 30%
North America 19%
Design, Engineer. & Construction 10%
Chemicals 9%
Process Control & Management 17%
Operation & Maintenance 46%
Middle East & Africa 14% Europe 27%
Source: Industry Reports, IndiaNivesh Institutional Research
Water & Wastewater Technology 18%
Source: Industry Reports, IndiaNivesh Institutional Research
Key trends in Industrial Water Space Government initiatives, favorable policy (like Zero Liquid Discharge) announcements, fuelled by water scarcity and stress has propelled growth of Industrial Water and Waste Water treatment in the APAC region (especially in India and China). Oil and Gas and Mining sectors are likely to contribute majorly towards Middle East Industrial Water treatment industry. Strong awarding outlook is expected from Saudi Arabia, Oman and UAE markets. Food and Beverage industry in Europe is likely to contribute towards the growth of Industrial Water and Waste Water treatment, as demand for efficient treatment technology continues to increase. With Mining boom, stricter enforcement of regulations, adoption of BOOT model in Industrial Water treatment industry could lead to increase in awarding from the Latin American markets, going forward. Again if one were to look at the ~$652 bn of Global Water market size, then 50.5% is the share of Utilities and the remaining is held by Solutions & Services companies.
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Fig. 11: Utilities account for 50.5% of the Global Water market
Fig. 12: Solutions account for majority of Solutions & Services market
Build/ Construct 16%
Solutions & Services 50%
Utilities 50%
Operation Services 19%
Design/ Consulting 9%
Solutions 50%
Maintenance & Monitoring Services 6% Source: Industry Reports, IndiaNivesh Institutional Research
Source: Industry Reports, IndiaNivesh Institutional Research
Within Solutions, Process Control & Management (PCM) accounts for a major 47.4% of total spends. Treatment technologies & Chemicals account for 36.3% and 16.3% of the total $161 bn being spent towards Global Water Solutions. Fig. 13: PCM accounts for 47.4% of Global Water Solutions market
Fig. 14: Coagulants & Flocculants account for majority of Chemicals market spending Antifoam Chemicals 5%
Chemicals 16% Process Control & Management 48% Treatement Technologies 36%
Source: Industry Reports, IndiaNivesh Institutional Research
pH Conditioners Other 8% Chemicals 10%
Scale & Corrosion Inhibitors 19%
Coagulants & Flocculants 42%
Disinfectants and General Biocidal Products 16%
Source: Industry Reports, IndiaNivesh Institutional Research
Within the $26.3 bn Global Water Chemicals market size, Coagulants & Flocculants account for a major $11 bn of the opportunity.
Which geographies would see high spending? We see strong awarding pipeline of Water/ Wastewater Treatment projects from Asia, Middle East and other African sub‐continents. We expect spending on the Desalination projects in Middle East markets to grow on the back of strong oil prices, which has been the backbone for many of these economies. With oil prices in recent months being on an uptrend, we see the long pending pipeline of large value projects to get awarded in Saudi Arabia and UAE. We also expect few Desalination orders to be awarded from the Yemen and Iran markets over a period the next 2‐3 years.
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In addition to investments made towards Desalination, Water Treatment Projects and Sewage Treatment Projects, Saudi Arabia, UAE, Qatar, Oman, and Bahrain are also simultaneously investing on expanding their water connectivity networks and enhance Storage capacities. Fig. 15:
Middle East Countries
Country
Emerging Trends/ Comments Reforms in Water sector (Split Water and Electricity Ministry in to 2 separate Ministries, reduction of Water subsidies,
sign MoU’s with private players, privatization of existing government plants). Saudi Arabia
Focus shifts towards Waste Water Treatment projects (through PPP route). 3 Large Wastewater Treatment plants to be awarded under BOT/ BOO scheme.
Announced UAE Water Security Strategy 2036 (reduce demand for water resources by 21%, increase water productivity 3
0
index to $110/ m , reduce water scarcity index by 3 , increase the reuse of treated water to 95% levels)
UAE spends ~Dh12 bn/ year on Desalination to meet its drinking water requirement. In 2016, UAE had ~70 Seawater Desalination plants accounting for 14% of world’s total output of Desalinated water.
UAE
Pipeline of Desalination projects looks strong. Some of them include Salalah IV IWP, Ajman, and Hassyan projects.
(1) Water Security Strategy, (2) STEP and (3) MoU between DEWA and ADWEA for connectivity of water network, indicates awarding and execution of Water storage, connectivity and lay‐down of Pipelines during FY18‐19.
Pipeline of Sewerage Treatment Plants, Industrial Waste Management, Desalination projects looks strong. 6 Industrial Sewerage Treatment Plants (STPs) are planned. 2 Industrial Water Treatment Plants (IWP’s; Salalah, Sharqiya) on BOO basis to be awarded first. Duqm and Khasab IWP’s would be awarded thereafter.
Oman
Qatar
Darsait, Al Athaiba STPs projects to be awarded soon.
In addition to the on‐going $1bn worth of projects, Haya Water plans to spend another $4.3 bn on networks and Treatment Plants. Majority of it would be spent in 2017‐18.
Plans being drawn to integrate Renewable Energy sources with upcoming Seawater Desalination projects.
One of the few Middle East countries self ‐sufficient in its Water requirements.
Focus is more on Strategic Water Reservoirs (first phase to be operational in 2017).
Next set of opportunities to be driven by the proposed law on Industrial Zones, which in the long‐run could create opportunities for Industrial Waste Water treatment also.
Source: IndiaNivesh Institutional Research
India and China are the 2 largest Water/ Wastewater Treatment markets in Asia. Within Asia, countries like Sri Lanka and Bangladesh are spending to build basic Infrastructure to supply drinking water. World Bank in Aug‐2017 approved $47.5 mn loan to Bangladesh for Water supply projects (total loan sanctioned is $218.5 mn). Simultaneously, Philippines, Malaysia, Thailand, Vietnam, Cambodia, and Taiwan are increasing their allocations and spending towards the Water/ Wastewater Treatment plants. Fig. 16: Country
Thailand
Asian Countries Emerging Trends/ Comments A $3 bn Water Treatment (includes all sub‐segments) market. Agriculture accounts for >75% of Water Treatment market. 2015 and 2016 droughts in northern Thailand, forced government to increase allocation towards Water sector. Laws insist that (1) new Commercial properties should install Wastewater Treatment Systems (2) wastewater from
livestock before discharging to public must be treated.
GWI expects Waste Water treatment market to grow ~10% yearly. 90% of Equipment’s used for Water treatments are imported from USA, China, Japan and Korea. See good demand for Chemicals & Resins from this market.
In addition to the existing 46 Sewerage Treatment plants, Malaysian government has announced 77 new Sewerage Treatment plants by 2040 at estimated cost of RM52 bn (Singapore$16.8 bn).
Malaysia
As part of Water Services Industry Act (WSIA) Act, 2006, Indah Water Konsortium (IWK), government owned entity will be split separately in to state‐level entities and there‐after merged with state water supply companies in long ‐run.
In Mar‐2017, Johor became the first state in Malaysia to have a Waste Water recycling plant.
As part of Water Supply & Sanitation Improvement project, Sri Lankan government is spending on building the basic
Infrastructure. This project is being funded by JICA, ADB and other multi‐lateral funding agencies. Awarding pipeline looks stronger (includes awarding of Desalination projects).
Sri Lanka
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One of the few Asian economies to successfully implement PPP model in Water sector (recently awarded projects‐ Metro Agoo Waterworks Inc. bagged Ilocos Village Water Supply project; Manila Water Company got Bulacan project; Apo Agua Infrastructura Inc. got the first Water Treatment project for Davao City; JFE Engineering got the upgrade works for Water purification project).
Philippines
One of the few Asian economies with a very strong and robust awarding pipeline which should last for next few years.
Maynilad Water Services plans to spend P30.6 bn towards Wastewater management program, during 2018‐22 (invested P42 bn in last 5 years).
Japan
Opened the Water Treatment industry for wider private sector participation. 1 of the ~10 projects is recently awarded to Veolia Japan along with consortium partners.
Source: IndiaNivesh Institutional Research
We see lot of opportunity in Latin American Water Treatment market. Despite the evolving regulatory framework, funding continues to be a major concern in some of these countries. Peru is one of the few countries where we see a lot of awarding related to the Potable Water treatment projects. This is in addition to strong bid pipeline seen at Brazil, Argentina and Columbia. Fig. 17: Country
Latin American Countries Emerging Trends/ Comments
……………………………………………….…………………………………………….………….………
Investment towards sanitization was below $3 bn in 2016 (half the requirement to fulfill sanitization goals, established by Brazilian National Plan for Basic Sanitation). In mid‐to‐long term, sector should benefit from Investment Partnerships Program as 18 of state‐owned companies would be privatized.
Brazil
Brazilian National Water Agency (AWA) estimates $47.3 bn of investments till 2035 to attain universal Sewerage services.
Strong pipeline of Desalination & Wastewater treatment projects.
As part of Argentina National Water plan, in next 15 years investments are planned to the tune of $ 44 bn. Already tenders worth $ 2.4 bn have been announced and few of them have been awarded.
Argentina
Santa Fe province to spend 1.1 bn peso ($ 66 mn) to increase potable water production by 75%.
Northern provinces in Argentina would award $ 494 mn of Water and Sanitation projects in 2017.
Idesa estimates that PPP’s could quadruple Argentine Infra (including Water investments) to $ 97 bn during 2018‐20.
Columbian Housing Ministry in 2016 announced that it plans to award 100 Wastewater Treatment projects. Some of the key projects to be awarded include, Bogotá's El Salitre plant (waiting for WB financing approval),Canoas wastewater treatment plant (as part of Water and Sewerage Utility EAAB's plans to clean up contaminated Bogotá river, already
Columbia
raised 4.5 bn pesos), build Wastewater treatment plant to serve Pereira and Dosquebradas on PPP basis.
Regulator Superservicios estimates the total installed capacity for Water Treatment to be at 33.1m3/s via 562 primary and secondary facilities. This is just 30% of the Country’s Waste Water getting treated.
SEDAPAL (Regulatory body for managing Lima’s Water Systems) is sitting on a cash of $ 5 mn (expected to reach $ 30 mn by 2020). With the new Optimized Master plan likely to be launched, we expect awarding of Water Treatment projects to gain momentum (in addition to rebuilding of Canal Systems, Build dams, Filtration Systems, amongst others).
Peru
National Water Regulator SUNASS, plans to award at least 3 potable Water Treatment plants (La Atarjea 3, Huachipa 2 and Lurín) in 2017.
SEDAPAL has plans to invest $ 6 bn towards ~200 Potable Water and Sewerage projects over the next 5 years (2017‐22).
Plans to award the up gradation of La Pastora Drinking Water Treatment Plant in 2017.
Source: IndiaNivesh Institutional Research
Fig. 18: African Countries Country
Emerging Trends/ Comments
ONAS (Office Nationale de L’Assainissement) plans to double the integration of treated waste water until 2020.
Strong pipeline of 38 (9 to be industry oriented) new Sewerage Treatment plants to be awarded in next 2‐3 years’ worth
Tunisia
rd
~Euro 1 bn. Of a total 113 Sewage Treatment Plants, only few are equipped with 3 cleaning stage. This indicates scope for upgrades in long‐run.
As per Holding Company for Water and Wastewater (HCWW) Master plan, capex of $2 bn and $3.5 bn would be spent towards Water Supply & Wastewater Treatment during 2015‐20.
Egypt
New Water & Sanitation Bill approved to encourage private sector participation in the sector. Funding agencies, like, AFESD, OFID, USAID, Swiss and German Development Bank, Islamic Development Bank have come forward to fund various Water Supply, Treatment projects.
Source: IndiaNivesh Institutional Research
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We see increased investment activity in Water sector from North African countries like Tunisia, Ethiopia, Egypt. Most of these projects are funded by Multi‐lateral Agencies. Increasing water scarcity, more of natural calamities is driving the Water spend across the African countries. Given that Europe has one of the best Water Infrastructure, focus for most of these countries is now shifted towards Smart Asset management. Accordingly, we expect Operation and Maintenance projects to see deployment of the next generation technologies like Smart Management, IOT, amongst other areas.
Fig. 19:
European Countries
Country
Emerging Trends/ Comments
Austria
Announced to spend Euro 46 mn towards drinking Water projects, expansion of Wastewater Treatment plants and flood protection in Jul‐17. Of this Euro 26.6 mn would be used towards drinking Water and Wastewater Treatment.
Source: IndiaNivesh Institutional Research
India‐ Huge Opportunity ahead… Water Resources at a glance India accounts for 2.45% of the world’s land area, 4% of water resources, but 17% of the world’s population. Of the total 4,000 BCM of annual precipitation of water (including snowfall) seen in India, 48% ends up in rivers (average annual potential flow estimated at 1,869 BCM). Of this only 60% (1,123 BCM) is utilizable. Of the total potential of these river basins 59.4% (accounting for 1,110 BCM) comes from Ganga‐Brahmaputra ‐ Meghna basin alone. Fig. 20: Water Resources at Glance Water Source
Fig. 21: Qty. (in BCM)
Water Resource potential and Utilisable levels Water Reserves Potential (in BCM)
Utilizable Surface Water (in BCM)
1,110.2
273.9
Indus (up to border)
72.9
46.2
River Basin
Average annual Precipitation
4,000
Avg. precipitation during Monsoon (Jun‐Sept)
3,000
Water loss due to Evaporation & Soil Water
2,131
Average annual potential to flow in to Rivers
1,869
Godavari
110.3
76.6
Natural Run‐off
1,987
Krishna
78.5
58.0
Mahanadi
67.3
49.7
Narmada
44.9
34.5
Others
385.0
151.1
Estimated utilizable surface Water Resources
690
Total Utilizable ground Water Resources
433
Total Annual Utilizable Water Resources
1,123
Per capita Water availability (2003‐07 average)
1,720
Source: Industry Reports, IndiaNivesh Institutional Research
Ganga‐ Brahmaputra ‐ Meghna
Source: Industry Reports, IndiaNivesh Institutional Research
The ‘Water’ Challenge India faces water issue owing to (1) excessive and inefficient use of water used for Agriculture, (2) Depleting ground water levels, (3) increase in river pollution, (4) extremity in the monsoon season. Water Resource Group (WRG) 2030 Report, expects burgeoning population, urbanization and rapid economic growth to lead to 50% gap (754 BCM) in water supplies and projected demand. Barring East India and J&K, entire country would be facing moderate to severe water stress. The same report highlights 37 measures to bridge the water availability gap. The cheapest measure would entail investments of $5.9 bn by 2030 whereas the total government annual expenditure towards water sector has been
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to the tune of $2.3 bn in 2009. If one were to explore cheaper alternatives to lower this deficit then 80% of it is to be addressed by improving the efficiency and productivity in Agriculture sector (accounts for 80% of water demand till 2030). We expect the “triple play effect”, (1) River clean‐up programs, (2) High government spending, and (3) Change in the regulators perspective, to create favourable long‐term outlook towards the Water Treatment sector.
River clean‐up gets government attention Environment and Forest Ministry is focusing on cleaning ‐up of rivers across the country. As per a 2015 Central Pollution Control Board (CPCB) report, Sewerage generated from 650 urban cities along 302 river stretches has increased from ~38,000 MLD in 2009 to 62,000 MLD in 2015, reflecting 63% increase. Against this, 816 STPs have installed capacity of 23,277 MLD, indicating that only 37.5% of the need is addressed. Fig. 22:
Details of pollution across river stretches
Range
Count of rivers
BoD > 30mg/ I
34
Fig. 23:
Polluted river stretches ‐ State‐wise Mix (%)
Length (in kms)
West Bengal, 6%
A.P., 6% Assam, 5%
2,726 U.P., 18%
BoD 20‐ 30mg/ I
17
1,145
BoD 10‐ 20mg/ I
36
1,834
BoD 6‐ 10mg/ I
57
2,492
Others, 20% Telangana, 6% Orissa, 5%
BoD 3‐ 6mg/ I Totals
158 302
Gujarat, 5%
4,166 Maharashtra, 17%
12,363
Note: BoD‐ Biological Oxygen Demand; Source: CPCB, IndiaNivesh Institutional Research
M.P., 7%
Karnataka, 5%
Source: CPCB, IndiaNivesh Institutional Research
Under the National River Conservation Plan (NRCP) a total of Rs 45.1 bn is sanctioned towards 30+ rivers flowing across 14 states. This sanctioned amount is likely to create 3,155 MLD of STP capacities. As of Aug‐17, only 78% (i.e. 2,455 MLD) of the targeted capacity is created. Notably, 2 rivers which have seen wide interest from various stakeholders and large scale funding allocations are Ganga and Yamuna. Since 1993, ~Rs 15.1 bn has been spent under the Phase I and II of Yamuna Action Plan. Phase III (under new policy named as ‘Maily Se Nirmal Yamuna Revitalization Plan’) is expected to see Rs 16.5 bn of awarding activity towards STPs and Trunk Sewers, over next 7 years. Already Rs 3.4 bn has been sanctioned by Water Ministry, where 30% of the cost burden is to be shared by the respective state government. Another focus area for government is to clean river Ganga. Namami Gange Action Plan (NGAP) has been rolled‐out separately under the Ministry of Water Resources. As per a CPCB 2017 report, ~10,705 MLD of water is discharged every year in to river Ganga. Installed water treatment capacities in 2012 were at 1,231 MLD. In last 3 years only 7 STPs (80%, that needs to be addressed. Of all the operational plants monitored, current utilization stands at ~55% levels. We expect ~75% of Rs 200 bn planned expenditure during FY18‐20 would be towards STP & Effluent Treatment Plant (ETP).
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Fig. 24: Ganga River‐ Water discharged versus Water Treated 12,000
100%
10,705
10,000
75%
84%
80%
Fig. 25: Ganga river: Utilization at 55% of the Operational STPs 1,200 1,000
100% 79%
82%
996 80%
800
8,000
55%
56%
6,000
600
4,974 40%
4,000
2,723
2,638
1,686
1,231
0
20%
2012
Sewage Gen. (MLD)
40%
336
400
2015
Source: CPCB, IndiaNivesh Institutional Research
89
109
22%
Bihar
WB
20%
0% UP
2017
STP Capacity (MLD)
200 0
0% 2009
462 20%
1,209
1,174
2,000
60%
55%
60%
Uttarakhand
Capacity (MLD)
Gap (%)
Total
Utilization (%)
Source: CPCB, IndiaNivesh Institutional Research
Of the Rs 150 bn worth of EPC and HAM projects anticipated to be awarded towards ETP/ STP construction/ up gradation during FY18‐20, already ~Rs 65 bn of projects have been approved in recent months (Rs 4.3 bn of it is awarded and Rs 45 bn of it should get awarded in next 12‐18 months), thereby indicating us that awarding momentum should gain further momentum. Fig. 26: Amount Sanctioned towards river Ganga to grow... 250,000
75
Fig. 27: Namami Gange‐ Mix of sources of funding… 80 JICA 5%
200,679
200,000
56
60 WB 30%
150,000 34 96,300
100,000
50,000
Budget Allocation 30%
40
20
35,810
0
0 2008‐14
2014‐17 Sanctioned (Rs mn)
Source: Industry Reports, IndiaNivesh Institutional Research
2018‐ 20
Other Sources 35%
Projects Source: Industry Reports, IndiaNivesh Institutional Research
Even though the amount sanctioned under Namami Gange during FY14‐17 stood at ~Rs 96 bn, only 7 STPs got commissioned. Another 27 STPs are under construction stage (as of Jul‐17). We expect World Bank and budget allocations to account for ~60% of the planned spending, thereby allaying funding concerns up to certain extent.
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Inadequate Infrastructure to drive higher government spending Table highlights that across Urban India, there is a huge mismatch for the Sewage generated and treated. Fig. 28: State‐wise details (Urban) ‐ Sewage Generation versus the Operational Capacities State/UT
A. P.
Sewage generation in Urban areas (MLD) 2,871
Capacity of Municipal STPs (MLD)
No. of Municipa l STPs
Operational Capacity (MLD)
247
12
156
Under Construction Capacity (MLD)
Proposed Capacity (MLD)
91
Assam
703
0
1
0
Bihar*
1,879
125
6
100
421
Delhi*
4,155
2,694
35
2,671
94
Goa
145
75
7
35
40
Gujarat
4,119
3,063
51
2,112
360
94
Haryana
45
70
1,413
853
41
805
H. P.
110
115
66
80
J&K
547
265
19
146
117
Jharkhand*
1,270
117
15
117
Karnataka
3,777
1,304
57
1,112
192
Kerala
2,552
153
10
113
37
Maharashtra
8,143
5,160
76
4,684
132
M. P.
3,214
482
17
475
0
Odisha
1,121
386
13
158
228
Punjab
1,664
1,245
86
921
277
32
Rajasthan
2,736
866
63
385
149
332
Tamil Nadu
5,599
1,800
73
1,141
521
133
Telangana
1,671
686
18
635
51
7,124
2,647
73
2,372
170
494
39
155
Uttar Pradesh* Uttarakhand* West Bengal* Total
495
153
24
91
4,667
417
28
235
59,975
22,851
791
18,543
16
184 2,448
2,024
Source: CPCB, *Namami Gange project documents, IndiaNivesh Institutional Research
Of the 59,975 MLD of Sewage generated by Urban India, 791 Urban STPs treat ~18,543 MLD of Sewage, indicating the urgent need to add more STP capacities. Even the pipeline of ~4,400 MLD of STP capacities would not address this problem. Assuming benchmark cost of setting‐up Sewage plant (as per current technologies in use), it is estimated to cost ~Rs 50‐65 mn/ MLD (interception and diversion costs‐ Rs 40‐50 mn/ MLD and the plant cost is Rs 10‐15 mn/ MLD). In order to address this deficit, we expect the required installed capacities to be ~47,000 MLD. At Rs 50‐65 mn/ MLD range, this translates to an opportunity of Rs 2.3‐3.0 tn. Acknowledging the deficit, Government has rolled‐out Atal Mission for Rejuvenation and Urban Transformation (AMRUT) Scheme to ensure Water Supply and sewage networks for urban India. This program has been rolled out in convergence with the 100 Smart Cities Program. Table below highlights that during FY17‐20, Rs 191.5 bn would be spent towards setting ‐up the STPs.
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Fig. 29: AMRUT Scheme details: Total Sewage Project Cost
State (Rs mn)
Time Period
Jharkhand
FY2017 ‐20
5,556
5,556
1
1,969
Tamil Nadu
FY2017 ‐20
41,111
41,111
13
32,873
AP
FY2016 ‐20
22,273
13,503
28
5,291
Bihar
FY2015 ‐20
24,698
10,304
1
377
Chhattisgarh
FY2015 ‐20
21,928
8,790
12
4,474
Karnataka
FY2015 ‐20
49,529
20,696
21
10,615
Gujarat
FY2016 ‐20
36,800
22,790
36
10,895
J&K
FY2015 ‐20
5,931
MP
FY2016 ‐18
45,449
20,509
24,940
24
15,788
Maharashtra
FY2016 ‐18
58,079
24,899
33,180
19
25,290
Mizoram
FY2015 ‐18
1,226
872
353
Odisha
FY2016 ‐18
11,377
5,304
6,073
Rajasthan
FY2017 ‐20
32,239
UP
FY2015 ‐20
114,217
38,952
42,392
Goa
FY2015 ‐20
3,964
696
2,673
2,220
HP
FY2017 ‐18
1,150
1,150
271
Uttarakhand
FY2015 ‐19
6,891
2,472
2,118
WB
FY2017 ‐18
15,537
15,537
0
0
Chandigarh
FY2017 ‐20
620
620
1
600
Meghalaya
FY2017 ‐20
1,418
1,418
3
775
Manipur
FY2016 ‐20
1,289
689
0
0
Tripura
FY2017 ‐20
639
639
25
Nagaland
FY2017 ‐20
452
452
55
Punjab
FY2015 ‐20
27,727
12,758
16,809
Sikkim
FY2015 ‐18
401
Telangana
FY2017 ‐20
7,313
Arunachal Pradesh
FY2015 ‐20
1,403
Assam
FY2017 ‐20
Delhi Haryana Total
Total Cost
Approved for 2016 ‐17
8,771
7,404
14,010
Approved for 2017 ‐20
No. of Sewage Projects
2,247
384
40 4
32,239
600
21,078 47
21,495
133
0
0
7,313
2
1,260
526
1
180
2,922
2,922
0
0
FY2017 ‐18
3,386
3,386
3
1,771
FY2017 ‐20
28,223
28,223
573,744
133
844
467
122,616
345,084
14,057 216
191,555
Source: GoI Websites
Change in Regulators perspective The years leading up to 2020, when Paris Climate Agreement enters in to force, 127 member countries have ratified their commitments, which include water as one of the key priorities. India being member nation could see changes in the way water is managed and utilized. We could see (1) increased adoption of free water getting rationed in future, (2) water for all uses could get priced, (3) no more unrestricted rights over groundwater below the land one owes, and (4) mandatory for industries to use only treated water. We already see policy level changes happening, (1) MoEF has tweaked standards for water discharged from STPs, (2) Central Pollution Control Board (CPCB) made it mandatory to install STPs/ ETPs for all Textiles companies.
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In Oct‐2017, Ministry of Environment and Forest (MOEF) tweaked standards that govern the quality of water to be discharged from the STPs. Fig. 30:
Standards governing water quality discharged by STPs Old Standards (in mg/ l)
Parameter
Details
Ph
Captures level of acidity for aquatic life to thrive
Bio‐Chemical Oxygen demand (BoD)
Total Suspended Solids (TSS) Fecal Coliform (FC)
Amount of Oxygen needed per litre, permitted in the treated water
Indicate Turbidity; Dry weight of particles trapped by a filter at any water body
New Standards (in mg/ l)
Scope
5.5 ‐9
6.5 ‐9
