Brief Analysis of Water Industry in China

Shuang LiBeijing Capital Co,. Ltd

2016.11.16 Barcelona

BEIJING CAPITAL CO., LTD

水务之首 创碧水蓝天

北京首创股份有限公司

2

With the support of Beijing municipal government, Beijing Capital wasestablished on 31th August, 1999 and the registered funds was 0.8 billion.Beijing Capital was listed on 27th April, 2000 at Shanghai Stock Exchange. Beijing Capital started to reform the shareholder structure from 2006;Realized full circulation reform at 2009 and total share capital reached 2.2billion. Realized refinancing in the capital market and now the total share capital is2.41 billion. As of March. 31, 2015, the gross asset was RMB 26 bn.

One of the leading water companies in China; Top 5 global water companies of water projects operation capacity (from GWI)Since the establishment in 1999, Beijing Capital has been trying to promote the market process of public infrastructure industry with the mission of “Creating green environment, supply clean drinking water”.

Overview of BEIJING CAPITAL CO., LTD

Company business:Focus on environmental protection

• Our company has business of drinking water, wastewater and organic waste

treatment in 18 provinces and 72 cities of China. The total water and

wastewater treatment capacity reaches 20,000,000m3/d.

• The company , s business scope is gradually expanding from traditional

drinking water and wastewater treatment to reclaimed water, seawater

desalinization, sludge treatment, organic waste recycling and treatment etc.

We hope to become a comprehensive environmental company for both

urban and rural environmental protection.

• Towards globalization. In 2014, our company finished the acquisition of TPI

New Zealand company , which has the largest market share of solid waste

disposal in New Zealand. In 2015, the largest hazardous waste disposal

company of Singapore--ECO company was also acquired by our company.

Drinking water

Wastewater treatment

Organic waste treatment

EquipmentEngineer, Procure, Construct,EPC

Environmental comprehensive treatment

Technical advisory

BEIJING CAPITAL CO., LTD

Development of water industry chain

Stage I

Stage II

Stage III

Stage IV

1970s, Environmental equipment service

1980s~1990s, Environmental engineering service

2000s~2014, environmental investment and operation service

2014~now, Environmental protection effectservice

Note: “Comprehensive environmental service ” becomes the tendency.

PPPGuide for the implementation of PPP project in the field of traditional infrastructure----October, 2016• Give the operational details of PPP project• Clear division of duties• Give priority to BOT, BOOT, DBFOT, BOO etc.

Capital timesThe large capital will incorporate into waterindustry. And competitive model will change.

One belt and roadBuild the Maritime Silk Road oriented toward ASEAN, and to create strategic propellers for hinterland development.• Expand market demand and provide good

opportunities.

Internet plus• Big data• Focus on details• More feedbacks from market

Background

Municipal water12th five-year plan

By 2017, the leakage rate should be controlled below 12% while below 10% by 2020.• water supply facilities renovation • Smart water platform

0,312 0,315 0,326 0,318 0,323 0,318 0,326 0,336 0,341 0,355544 578,7 622,6 659 699,7 747,2 778,4

840,9 880,2929,6

0

200

400

600

800

1000

0

0,2

0,4

0,6

0,8

1

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Pipe

line

leng

th

product capacity(billion m3/d) water supply(billion m3/d)

pipeline length(thousand Km)

Fig. 1 Cities and towns water production capacity and supply Fig. 1 Cities and towns water production capacity and supply

5,8876,2036,5866,738

7,097,7288,059

8,2458,4098,651

01

23

4

56

78

910

2005 2007 2009 2011 2013 2015 2017

tota

l lea

kage

(bill

ion m

3/ye

ar)

year

Fig. 2 Leakage volume during public water supply of cities and townsFig. 2 Leakage volume during public water supply of cities and towns

Pipeline length has a high

growth rate

Leakage rate is high

Present

Policies The action plan for prevention and treatment of water Pollution has been announced.

• Insure the safety of drinking water• Increase the drinking water producing

capacity• Decrease the leakage rate

Municipal water

Fig.3. The prediction of water supply volume for cities and towns

Future

280,73

288,03

295,53

303,22

311,11

265

270

275

280

285

290

295

300

305

310

315

2016 2017 2018 2019 2020

wat

er su

pply

vol

ume(

mill

ion

m3/

d)

year

Year Market scale(￥billion)

2016 117

2017 122.9

2018 129.7

2019 133.1

2020 138.5

Table 1.The predicted market scale of municipal water tariff

Municipal Wastewater

1. By December 2015, 3469 municipal wastewater treatment plants have been established and the treating rate of municipal wastewater is more than 90.8%. By 2015, the treatment capacity of municipal WWTPs reached to 170,270,000 m3/d.

2. The COD removal rate meet the requirement of the first grade A, however, almost 90% of WWTPs in China have problems with nutrient removal, especially total nitrogen. And the influent COD is always lower than 300 mg/L.

3. Although most WWTPs in China are equipped with sludge treatment facilities, >80% of sludge is improperly treated. The sludge treatment in most WWTPs is basically a “thickening-coagulation-mechanical dewatering” process and landfill is still the main treatment methods.

0

20

40

60

80

100

120

140

160

180

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015treatment capacity (million m3/d) real treatment volume(million m3/d)

Present

Municipal Wastewater treatment: WWTPs upgrading

Policies

The action plan for prevention and treatment of water Pollution has been announced• By 2030, strive to improve the overall quality of the water environment and realize the initial recovery water

ecosystem.• By 2030, the proportion of the water quality in seven major river basin with excellent reached more than 75%; • By 2030, the city built-up area of black and odorous water in general are eliminated; • …….

11

22

33

Policies

The WWTP programs will be incorporated into theProgram of Sponge city or black and odorous watertreatment.

The upgrading of WWTPs has been executed.

The environmental comprehensive service will be the tendency.

The policies result in a lot of variations for wastewater treatment.

1. Discharge standard and upgrading COD NH3-N TN TP SS

Second grade 100 25(30) -- 3 30

Grade-I B 60 8(15) 20 1 20

Grade-I A 50 5(8) 15 0.5 10

Surface water V 40 2.0 2.0 0.4(0.2) --

Surface water IV 30 1.5 1.5 0.3(0.1) --

Surface water III 20 1.0 1.0 0.05(0.2)

Require all WWTPs in areas to meet the Grade I-A standard of effluent discharge by 2017. Some sewage treatment plants in Beijing are proposed to reach the IV standard of surface water.

Municipal Wastewater treatment: WWTPs upgrading

Predict: more than ￥40 billion invested for the WWTPs upgrading.

2. The predicted treatment capacity

Until 2020, the treatment capacity of WWTPS will reach up to 10.04 million m3/d.

45

36

19

Grade I‐A Grade I‐B Second or third grade

Municipal Wastewater treatment

Fig.1 The sponge cities

Chinese government invests 86.5 billion to build project of sponge cities in 16 cities(October 2015). (Fig. 2) Wuhan city; Jinan city; Xiamen city; xi`an city; Dalian city……

Thus, some projects of WWTPs will be incorporate into the construction of Sponge cities or project of “improvement of urban black and odorous water”.

Analysis of commercial modeA lot of policies have been issued to promote commercialized management of infrastructural project. The water industry opens the door to social capital widely.

BOO BOT BT+O DBO EPC+O TOT

Proportion of different mode in wastewater treatment (March, 2016)Social companies takes on more and more responsibilities. Until March 2016, BOT took proportion of 54%.

1. The refined operation and management become

more and more important after the rapidly

expansion of WWTPs.

2. The comprehensive environmental services

become popular.

3. The competition of environmental market are

increased and technique innovation is very

important.

From BOT to new PPP

Analysis of commercial modeThe past ten-year data of 13 top water companies in China has been analyzed.

1,71 2,57 4,69 4,65 5,3 5,76 5,91 7,45 8,47 6,5812,28 13,23

17,35 17,56 16,66 17,9 18,47 17,3820,16 21,529,04 9,54

11,32 13,35 12,2918,55

23,09 24,72

31,42 34,55

0

10

20

30

40

50

60

70

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

million m3/d

privately‐owned foreign‐owned state‐owned

2,09 2,54 3,99 4,97 6,16 5,76 7,54 11,56 8,68 7,923,4 3,56 3,79 3,8 4,49 2,91 3,412,86

3,61 3,118,63 9,6811,47

20,77 20,0719,19

23,4526,63 32,34 38,79

0

10

20

30

40

50

60

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

million m3/d

privately‐owned foreign‐owned state‐owned

Municipal water supply Municipal wastewater treatment

State-owned companies increase while private companies decrease

Conclusions• A lot of policies have been issued to promote commercialized management

of infrastructural project.

• The environmental protection effects times comes which is leading to the upgrading of water industry chain.

• The comprehensive environmental services become popular.

• The technique innovation, refined operation and management become more and more important.

BEIJING CAPITAL CO., LTD北京首创股份有限公司