Changzhou Tap Water group

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In in September 2005, Veolia Water (ChangZhou) Investment Ltd. was awarded a 30-year concession contract by the local government of ChangZhou city for its water utility company, ChangZhou Tap Water Group, following an international tender. Changzhou, located in Jiangsu Province, was a fast-growing city with a population of 1.2 million in 2005. To implement the contract, the Changzhou Tap Water Group was created as the project company in which Veolia Water (Changzhou) Investment Ltd. acquired 49% stake, while the state-owned Changzhou City Construction Group owned the remaining 51%. Veolia Water (Changzhou) Investment Ltd., in turn, was owned 50% by Veolia Environnement and 50% by the state-owned Citic Pacific of Hong Kong with a net asset value about US$93 million (RMB 770 million). Veolia Water (Changzhou) Investment Ltd. paid US$55.6 million (RMB 450.47 million) for the stake in Changzhou Tap Water Group. Under the agreement, the JV was responsible for managing the water utility ChangZhou Tap Water Group, including its 850 employees, 5 water treatment plant of a total capacity of 715,000 cubic meters a day, and 1,750 km network. The JV was also responsible for managing customer services. Total revenues under this contract were expected to be more than US$993.8 million (Euro800 million). Veolia did not appear to make any investment commitments under the lease contract.