Rayong waterworks

distressed

Universal Utilities Co. Ltd. (UU) had signed a concession agreement with the Provincial Waterworks Authority (PWA) in 2006 to manage Rayong Waterworks. Under a 25 years contract, UU agreed to provide quality tap water to the area of Muang District and Baankai District, covering over 44,000 households. UU promised to increase tap water production capacity from 33,000 cubic meters/day to 86,400 cubic meters/day and set prevention of water loss from 35% to 20% within the year 2007. UU had begun replacing obsolete and damaged tap water pipelines with new pipelines in the Muang District and was going to continue to maintenance and/or replace more pipelines in other service area such as Baankai Community, Baan Pae, Boung Summakngan Yai and Laem Mae Pim in order for the community to utilize clean tap water with better water pressure. Universal Utilities Co.,Ltd.(UU) was established on December 15, 1998 as a 100% subsidiary of Eastern Water Resources Development and Management Public Co.,Ltd.(East Water). Following its IPO in 1997, East Water had the next shareholder structure: state-owned Provincial Waterworks Authority (PWA) (44%), Industrial Estate Authority of Thailand (IEAT) (5%), and general investors (51%). By 2005, that shareholding structure was: the partially private Electricity Generating Company (EGCO) of Thailand (18.22%), PWA (40%), IEAT (4.5%), and public investors (37.25%). As of 12/01/2006 East Water had 1,738 shareholders. Major shareholders were governmental PWA (39.99%), partially private EGCO (18.62%), IEAT (4.45%), and the rest of general investors held 36.9%. As of 2004, the stake holders of EGCO were state-owned EGAT (25.41%), CLP Power (22.42%), Thai investors (30.09%), and foreign investors (22.08%). As of November 13, 2006, EGAT share in EGCO was 25.41%. On March 26, 2007 Eastern Water announced that Rayong Administrative Court has ordered to revoke the selection procedure of private water supplier to Provincial Waterworks Authority (PWA) of Rayong province. The court had also ordered to revoke the water supply agreement between the PWA, the first defendant, and UU Group Consortium Co., Ltd., the second defendant. The PWA was going to appeal the judgment to the Administrative Supreme Court. As the investment regarding this matter was exceeding 32 million $US (Baht 1,000,000,000), the Court held that PWA did not comply with the Private Participation Act B. E. 2535. UU Group had recognized the revenue from the Rayong Waterworks Project, for the period from July 2006 to February 2007, of about 1,875,783 $US (Baht 59,000,000) and had invested 4,673,560 $US (Baht 147,000,000) from total committed investment of 18,853,204 $US (Baht 593,000,000) on this project. The project became distressed in March 2007 Last accessed on 05/23/2007 http://www.uu.co.th/profile.asp?id=65&lang=en (UU website) http://www.eastwater.com/default2.asp http://www.pwa.co.th/english/index.html (Provincial Waterworks Authority (PWA))