/ 27 March 2014

Maximise existing assets

Maximise Existing Assets

There is a global tendency for countries to focus on “shiny new” facilities, instead of addressing maintenance and operational issues, which results in unwarranted expenditures in assuring water provision, says Bastien Simeon,  global head of water at KPMG Capital maintenance and renewals tend to be a problem in many places,” he says. 

“The authorities as a whole tend to focus on building new assets and increasing capacity, possibly because a new treatment plant is more visible. There is a tendency to focus less on actually leveraging existing assets, particularly underground, to ensure they operate efficiently. This is a shame, as it makes little sense to build a whole new plant when water is being wasted in leaking networks.

“And in terms of expenditure, the cost of capital maintenance is far lower, in general, than the cost of rolling out new infrastructure.”

Best practice, he says, means maximising existing infrastructure, achieving full operational efficiency and often also working in partnership with the private sector to improve service delivery. 

“Achieving efficiency and operational excellence also entails customer management, billing and recovery, bringing innovation and technology. For public sector water utilities, it is often a more viable prospect to call on the expertise of the private sector to improve existing infrastructure and operations than to invest in new infrastructure,” he says.

Simeon cites an example in Oman, Jordan, where KPMG worked with the water authorities to structure a performance-based management contract whereby a private operator was brought in to improve management and operations across all functions of the organisation. “About 15 to 20 senior experts have been working with the authorities for about three years now, and the local authorities have reported a significant improvement,” he says.

Globally, there is also a tendency to focus on drinking water and forget about the second half of the water cycle, Simeon says.  “People are more interested in getting clean water to taps and often they neglect the waste-water issue — they don’t like the idea that waste-water is still water. Indeed, waste-water is a negative term. It could be called ‘used water’ instead, because with today’s technology, it can be cleaned to the point where it can be reused for recharging underground aquifers, irrigation and industry.

“This water can even be reinjected directly into the potable water network.”

Simeon says while there is a mindset that rejects it, it makes good sense to use this waste-water in areas where there a shortage of water. “It can be highly cost-effective, depending on what you want to use it for and the level of processing needed.”

For example, he says, the mining industry consumes and pollutes a great deal of water, but if the waste- water coming out of the mine was treated on-site, it could be immediately reused without the mine having to pump it in from elsewhere. “We are seeing more use of waste- water being adopted globally,” he says.  

“An example is Saudi Arabia, which until recently was treating waste-water and simply dumping it into the desert, while at the same time it was using costly desalinated water to meet a large portion of its water needs. It is now embarking on large scale waste-water reuse for industry. We see similar examples around the world. Increasing the reuse of waste-water would alleviate pressure on water resources and reduce risk of environmental damage.”

By ensuring that all components in the water management sector are efficiently run, Simeon concludes, the need for investment in new infrastructure is reduced. “It is important to look at existing infrastructure first and make sure you are getting the most out of it, then, based on that, look to expansion. Don’t overlook what already exists, especially in the water sector, which is very capital intensive.”

Water sector forecasts

The World Economic Forum has identified water supply crises among its top two most impactful and top five most likely global risks. According to the World Bank, 2.5-billion people are without basic sanitation and at least 780-million lack access to safe drinking water, resulting in 4 000 child deaths and up to 7% in economic losses in some countries each year. More than two billion people live in countries with absolute water scarcity.

Feeding a planet of 9-billion by 2050 will require about 50% more water by 2050. Analysis suggests that with current practices, the world could face a 40% global shortfall by 2030. The number of people living in countries with absolute water scarcity is expected to rise to 4.6-billion by 2080.

For developing countries alone, $103-billion per year is required to finance water, sanitation and waste-water treatment through 2015, says the UN. The UN World Water Development Report 2014, released this month, states that global water demand (in terms of water withdrawals) is projected to increase by some 55% by 2050, mainly because of growing demands from manufacturing (400%), thermal electricity generation (140%) and domestic use (130%).

As a result, fresh water availability will be increasingly strained over this time period and more than 40% of the global population is projected to be living in areas of severe water stress through 2050. Agriculture is currently the largest user of water at the global level, accounting for some 70% of total withdrawals.

The food production and supply chain also accounts for about one-third of total global energy consumption. The report states there is clear evidence that groundwater supplies are diminishing, with an estimated 20% of the world’s aquifers being over-exploited, some critically so. Deterioration of wetlands worldwide is reducing the capacity of ecosystems to purify water.

“Global Water & Wastewater Treatment Chemicals Market Forecast & Opportunities, 2018” predicts that the global water and wastewater treatment chemicals market is projected to grow at a CAGR of about 4.5% during 2013 and 2018 as a result of growing usage of water in end user industries and stringent water treatment regulations across the globe.

In its “World Water Desalination” industry study with forecasts for 2015 and 2020, the Freedonia Group expected world demand for water desalination products and services to increase by 9.3% annually through $13.4-billion in 2015. It expected membrane systems to account for an increasing share of overall desalination capacity, with membrane elements, energy recovery devices and other products used in membrane systems to be among the fastest growing product groups.

It added that traditionally the Africa and Middle East market had relied on thermal desalination techniques, particularly multi-stage flash distillation. However, in coming years, Freedonia Group expected reverse osmosis and other membrane-based technologies to increase their share of the market in the region, especially in countries that also lack abundant energy supplies. In a separate study, Freedonia Group said global demand for water pipe is forecast to increase 7.5 % a year until 2017 to 10.9-billion running metres.

China alone will account for one-third of the increase, with other industrialising countries in Asia, such as India and Indonesia, and in Africa and the Middle East also driving demand.

This article has been made possible by the Mail & Guardian's advertisers. Content has been signed off by KPMG and their business partners.