Veolia Environnement SA, the world’s biggest water company, says growth in its North American water business unit will come in part from advisory services to large municipal water utilities.
Veolia bid to provide services to Los Angeles and San Diego, which have shown interest in contracting with an outside company to make operations more efficient and cost-effective, Laurent Auguste, president and chief executive officer of Veolia Water Americas, said in an interview at a Bloomberg New Energy Finance Water Leadership Forum in Del Mar, California.
In April, the Paris-based company said it will advise New York City on how to lower operating costs of water and wastewater services to 9 million people. The four-year contract may be worth $36 million in sales, Veolia said.
“It’s a new trend for municipalities in the U.S. to look to get help from the private sector for operations,” Auguste said yesterday. “And it is part of our focus to find a different approach to the market.”
Private investment in the $90 billion U.S. municipal water market has been “underdeveloped” in part due to the perception that “private companies running the U.S. water system is not a good thing,” Auguste said.
Veolia has developed a model where the company offers management expertise and leverages its global purchasing network to help public utilities reduce costs and improve operations based on performance-based goals, Auguste said. Unlike a traditional public-private partnership, Veolia only assists public utility workers and doesn’t take over the operations of the water system, he said.
Veolia’s U.S. sales rose 9.2 percent to $899.8 million for the first six months of this year compared with the same period a year ago, according to data compiled by Bloomberg.
Under its contract with New York City, the company has identified more than 10 percent in potential savings out of the city’s $1.2 billion budget, Auguste said.
Veolia also plans to expand its industrial business in the U.S. through water treatment for oil and gas production, he said. Veolia and Suez Environnement, also Paris-based, are the two largest water companies.
The inaugural BNEF water forum is a two-day event featuring executives from the energy, fracking and power sector including municipalities discussing management strategies and regional water scarcity issues that wraps up today.