Opportunities & Realities in Mexico´s Water Sector

8/9/2019 Opportunities & Realities in Mexicos Water Sector

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May 2010Vincent Lencioni

LGA Consulting

Opportunities &

Realities in Mexico'sWater Sector


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Outline of 4 Part Presentation

A. Current Situation in Water Sector Problems & current Infrastructure Public & Private

B. Opportunities in Water Sector

Public & Private Sector Needs, Budgets, Activities

Preferred Products, Targeted Segments, Goals

C. Opportunities in the Context of Sector Realities

Regional challenges that limit access to and theviability of many public and private sector projects.

D. LGA Assistance: How and why we can help.


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A. Current Situation - Outline

Brief Water Sector Overview

Brief Analysis of state of Mexicaneconomy in the context of water sector

10 Sector Problems & Challenges

Wastewater treatment Industrial & public

Treatment Plants Industrial & public


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A. Water Sector Overview

Sector Dynamic

Geographical Challenges North vs South

Coastal vs Interior

Decentralization

13 Water Basins States & Municipalities

Funding Realities

NIP & Water Plans

Govt Bid Dynamic Nafta weakness, problems

identifying & following bids Private vs. Public

Economic Climate Affect 2009: Worst since 32

Construction down 7% Industry fell 20%

Govt revenue & spending Water: Public > Private

2010: ModerateReactivation Public still strong, private

up 2nd half, solid macro.

2011: Recovery Year Construction & Industry up Water: Private & Public up


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A. Related Economic Info

GDP 2009:Down 8% 2010 & 2001: up 4% each

Infrastructure Spending: $47.8 B in 2010 =5% of GDP Both Historic figures

5% was target for healthy growth

Mexican Imports 2010: Up 10%; 1st Qtr: Up 12%

Exports up 10% as well

By Segment (1st Qtr, 2010) Consumer: 37% up (31) Intermed: 20% up (23) Capital: 11% down (22)

Mexico Demographics 120 million population 40% (1-19); 24% (25-34)

Sector Dynamic 2009 Agriculture*: Up 1.8% Water/Electricity* Up 1.2% Food & Beverage*, Paper*, Chemicals*: -1 to

2% Clothing/Textile: -10% Machinery/Equip: -20% 2-5% Growth in 2010

Construction 2009: Down 7% 2010: Up 2-4.6%

Slow 1st Half, 8% last Qtr

2011: Recovery Year

Public Revenue

Oil Price: $60 (2009) to 75 (2010) Source for 1/3 of govt spending Balance of Payments solid Fiscal/Financial Stability

Banks: Revenue up 20%, 4th Qtr 2010


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A. Crime & Violence: Impact onBusiness

Fighting the Drug Cartels: Past vs. Present Right fight, hard to win, negative image

Historic military and US cooperation

Guns vs Drugs; Supply vs. Demand

Business Travel Concerns for Foreigners

North/Pacific Coast vs. South/Central Victim Profile Dynamic: 7000 deaths in 2009

93% = Police, Military, Narcos

Kidnapping (locals only) vs. General Crime (anyone)

Federal Oversight Up, Local Police Concerns Persist

Only 6% of Mexican companies consider crime & violence to have

major impact on business activities Traditional international & domestic economic concerns


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A. 10 Water Sector Problems& Challenges

1. Geographical Challenges

2/3 of water in the south: 25% population, 15% GDP

1/3 of water in the north/center: 75% population, 85% GDP

No water transfer system, No water collection strategies

2. Overexploited aquifers: 30%

653 aquifers: over 100 severely overexploited, 68 close

3. From 18,000 m3 (1950) to 4,400 m3 (2010) per capita But Mexico is still 7th in world rankings: 1. Canada (90,767), 2. Brasil (45,039), 3.

Argentina (20,707), 6. US (6,902)

Area of need but society that does not perceive the need yet

4. Conagua says 40% national wastewater treated, probably less

12% Federal District, 18% Jalisco, 21% State of Mexico

Only 5 states treat over 2/3 of their municipal waste

Other sources: Industrial below 10%, municipal below 20%


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A. 10 Water Sector Problems& Challenges

5. Traditional Water Statistics: Urban good, Rural needs work Potable Water Coverage: 97% Urban, only 76% Rural

Sewer/Sanitary Coverage, 96% Urban,only 63% Rural

6. Law requires 100% meter coverage, reality: 65% or less 80% coverage in large (>250,000) cities, minimal to none in smaller areas

Even where coverage exists, water often does not flow because of (a) lack of water, (b) poordelivery systems, or lack of pressure

Water authorities tend to buy cheap meters that do not last & breakdown

7. 50-60% of water lost in delivery system, little recent improvement

8. Water Infrastructure Competitiveness in Latam Rated far below Brazil, Chile, Columbia, and Argentina

20% below Latin America average, even behind Peru

9. 64th in Infrastructure Index of Competitiveness

Well below Brazil as well as Chile (35) and Panama (46)

10. Known for having some of the slowest and most bureaucratic water projectdevelopment processes in Latin America heard/said in lots of quarters.


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Municipal Wastewater Treatment Plants 1992-2008

Year Treatment Plants Installed Capacity(l/s)

Treated Volume(l/s}

A. Municipal Wastewater Treatment Plants,Installed Capacity, Treated Volume (1992-2008)

4x more plants since NAFTA, 2x installed capacitysince 1997 and 2x treated volume since 1999.Calderon: Plants up, capacity & treatment not.


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A. Wastewater Plants andTreatment by River Basin

No. Hydrologic Region =Organismo de Cuenca

Number of Plants inOperation

Installed Capacity(m3/s)

Water Treated(m3/s)

Lerma = 25% of plants; Rio Bravo = 25% ofInstalled Capacity and Water Treated; using

75% of Installed Capacity, Need a lot more.


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A. Treatment by Basin Analysis

Municipal wastewater treated by 13River Basins (Total = 100%):

1.- Rio Bravo/Northern Border 26.5%2.- Lerma-Santiago-Pacfic 21.5%3.- Pacific North 8.0%4.- Valley of Mexico 7.4%5.- Penisula of Baja California 7.3%6.- Balsas 6.5%7.- Central Northern Basins 4.8%8.- Northeast 4.0%

9.- Center Gulf 3.7%10.- Southern Border 3.1%11.- Gulf North 2.7%12.- Pacific South 2.3%13.- Pennsula of Yucatan 2.0%

Conclusions Majority of Treatment in

North (#1,3,5,7,8) Over 50% of all treatment

Significant Treatment inCenter (#2,4,6)

About 1/3 of rest

Insignificant treatment in

south/gulf areas Less need for water, lessindustry and population


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A. Municipal Wastewater Treatmentby State (Only Table Showing Coverage %)

State Municipal Wastewater Plants Coverage (%)

Number ofPlants

Installed Capacity(l/s)

Treated Water (l/s)


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A. Municipal Wastewater Treatmentby State Analysis

Majority of Plants in dry,northern states

1. Durango (167, 10%)

2. Sinaloa (136)

3. Chihuahua (119)

Most important states:fewer plants

State of Mexico (105)

Jalisco (96) Nuevo Leon (61)

Installed Capacity1. Nuevo Leon (12%)

2. Chihuahua (8%)

3. State of Mexico

4. Baja California

5. Federal District

Treated Water1. Nuevo Leon (14%)

2. Chihuahua (7%)3. Baja California

4. State of Mexico


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A. States Treatment Woes

- Less than 25% of waste watertreatment coverage

1. Yucatan 2.1%

2. Campeche 3.8%

3. Hidalgo 7.5% (DF wastewater)

4. Zacatecas 12.1%5. Federal District 12.9%

6. Tabasco 18.3%

7. Morelos 18.9%

8. Queretaro 22.7%

9. Jalisco/Guadalajara 24.7%

10.State of Mexico 21.1%*

* 7th most plants but 3rd mostinstalled capacity & 4th mostvolume treated.

Only 6 states treat morethan 2/3 wastewaters

5 Top States: All in North:1. Nuevo Leon = 100%

1. AGS = 100%

3. Baja Cal = 93%

4. Chihuahua = 71%

5. Sinaloa = 68%

Aquaculture focus

6. QuintanaRoo/Cancun=67%

Eco-tourism focus


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Present situation and Projection of Water Treatment of Urban Wastewater

Cost of total Annual

Discharge of Present Discharge of Needs of accumulated operational

wastewater capacity wastewater treatment investment in cost in

at present of treatment in 2020 2020 2020 ( Ref 2) 2020 (Ref 2,3)

m3/s 231 54 304 250 2780 2130

Biochemical

Oxygen

Demandtons/year 1.8 0.42 2.36 1.94

Ref 1.- Includes plants that are not currently operating

Ref 2.- Millions of current US dollars

Ref 3.- Includes existing plants (operating & non-operating) and those under construction

A. Urban (Industrial & Municipal)Wastewater Discharge Realities (Present)

Only 23% of urban wastewater & 23% of BOD isbeing treated. 2002 treatment need: 4-6x. Cost:

$2.78 Billion in Investment & $2.13 annually.


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Present Situation and Projection of Industrial Wastewater

Cost of Annual

Wastewater Wastewater Treatment accumulated Operational

Discharge Treatment Discharge Needs investment Cost

At Present At Present In 2020 In 2020 In 2020 In 2020(millions of

dollars)

(millions of

dollars)

m3/s 64.5 5.3 76 70.7 $1,571 $1,060

Millions

of DOB

per

ton/year 1.6 0.12 1.88 1.76

A. Non-Urban Industrial WastewaterTreatment Realities (Present)

Only 8% of top 1387 non-urban companieswastewater is being treated. 2020 treatment

need: 13x: $1.5 B in investment, $1 M annually.


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Present Situation and Projection of National Waste Water

Cost of Annual

Wastewater Wastewater Deficit accumulated Operational

Discharge Present Discharge in treatment investment CostAt Present Capacity In 2020 In 2020 till 2020 in 2020

(millions of

dollars)

(millions of

dollars)

m3/s 295.5 59.3 380 326 $4,350 $3,190

A. All Urban & Industrial WastewaterTreatment, Installed Capacity, Treated

Volume (Present)

Only 20% of all Wastewater is treated today; Needs:$4.35 Billion in investment until 2020, $3.19

Billion in annual operating costs as of 2020.


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A. Industrial Treatment Plants:Type and Number

Total Industrial Plants: 2082 (100%)

Primary: 648 (32%) Adjusting PH levels & removing materials > .1mm

Secondary: 1185 (56%) Removing colloidal & dissolved organice materials

Tertiary: 66 (3%)

Removing dissolved materials including gases Other: 183 (9%)

Without above or other concrete objectives


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A. Industrial Wastewater TreatmentPlants & Water Treated by State

Less than 60% used capacity; #1 State of Mexico (319,15%); #3 Veracruz (161): 20% total installed capacity& 25% total water treated, 2.5x State of Mexico.

State Number of Plants in

Operation

InstalledCapacity

(m3/s)

WaterTreated(m3/s)

State Number of Plants in

Operation

InstalledCapacity

(m3/s)

WaterTreated(m3/s)


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B. Opportunities - Outline

Private and Public Sector Definition

Federal & Local Water Budgets

Goals: 2012 Water Plan, 2030 Water Agenda

NOM/Standard Development Competition Analysis

Domestic vs International Product Preferences

Industrial Discharge Regulation

Water Rate Comparison and Analysis


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B. Private Water Sector Targets

- Private water infrastructure- Hotels & Resorts, Restaurants, Golf Courses, Malls, Industrial

Parks, Residential, Hospitals

- Industry water pollution

- Commercial & Industrial Discharge & Treatment- Industry water reuse & savings- Water costs, Water reclamation, water capturing systems

- Manufacturing processes using purified water

- Segments- 2030 Target Industries: Sugar, F&B, Paper, Metals- Problem Segments: Textile, Pharma, Chemicals, Leather

- High Use Segments: Agriculture, Aquaculture


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B. Public Water Sector Targets

A. Aquifers and Water Supply Solutions- Limited Resources

- Pollution Water Treatment

B. Clean Water Delivery Systems

C. Potable & Wastewater Measurement Products

D. Sewer & Drainage Collection & DistributionSystems and Flood Prevention

E. Wastewater Treatment & Reuse Strategies

F. Segments: Agriculture, CFE, Pemex


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B. Federal & Local Water Budgets

Conagua (National Water Commission) Budget- Since 2006: 125% increase ($1.2 to 2.7 B) and over $100 Billion Pesos

($8-9 billion US) invested- 2010: 5% up despite economy & cuts in other infrastructure sectors

- Potable water & sewage projects = $1.45 B US, double 2008 budget- Agriculture: $577 Million US, 60% greater than 2009 budget

State & Local Water Budgets Responsible for 95% of all water bids; try to remain independent of

Conagua technical specification and oversite, some friction Dependence on Conagua funding: majority of projects

Smaller/Poorer States & Municipalities: 70-90% of funding Larger/Wealthier Entities: Some without assistance, others 40-70%

Fonadin Water Trust & Banobras Financing Options Fully Funded, unused, still available to federal & local entities Banobras and other development bank options still viable & active


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Increased Irrigation technology

River Basin auto administrationAll rivers % lakes withouttrash

All treated water

reused

Contamination

sources undercontrol

Efficient regionalorderAll industrial

water treated

Flood zones withouthabitations

Urban suburbsconnected to the

network

Disaster alert systems and

preventionAll rural areas with potablewater

River Basin

Equilibrium

UniversalWaterCoverage

Habitableareas freefrom floods

100%CleanRivers

All municipal water treated

B. 2030 Water AgendaPriorities


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B. Goals: 5 Year Water Plan (2012)& 2030 Water Agenda

5 Year Plan (2007-2012) Potable water coverage: 92%

Sanitary/sewer coverage: 88%

Wastewater treatment: 60%

8% increase in efficiency from80 local water utilities

From 64th in world in waterinfrastructure to betweenPanama (46) & Chile (35).

Improve Water Productivity in

the Agricultural Sector Better flood prevention actions

Results So Far: Decent effortbut well below expectations

2030 Water Agenda By 2016: all major urban

areas free from risk of flood

By 2015, All Irrigation

technified, all treated waterreused

2024: Complete ruralpotable water access

2025: All Industrial

wastewater treated 2030: All aquifers and

contamination in balance


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B. New NOM Regulations in 2010

Opportunities to influence technology & infrastructure specifications:

Minimum flow levels for river basins to ensure caudal preservation/recuperation Water consumption specifications for plumbing/bathroom devices; Specifications and test methods for potable water system, sewer, and domestic water intake

related to hermetic questions; Maximum allowed pollutant limits for brine water discharge of sea water desalination plants

into national waters and related environmental impacts; Modification of NOM-011-CONAGUA-2000, which establishes the specifications and methods

to determine the mid-annual availability of national waters; Discharge for urban wastewater that is not connected to a sewer system; Requirements to obtain the seal of Ecological Grade for laundry washing machines; Specifications for rainwater discharge in urban zones; and Flow control devices, water flow regulators, and test methods.

Process includes committee meetings to discuss appropriate approaches andtechnology. Domestic companies and foreign companies that can demonstrate theirfocus in the area are allowed to participate in the process, LGA can assist.


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B. Local & ForeignCompetition

- 70% of Products Used in Water Sector: Imported- US Provides 2/3 of imported products to water sector

- Israeli: Strong and growing presence- Treatment plants (Companies: Aqwise, Amiad, Odis,Yamit)

- Waste water treatment products (dewatering systems),

filtration products (plastic, steel and automatic filters).- Some in-roads with metering products (MasterMeter/Iroda)

- Spanish: Engineering firms/Integrators (OHL)

- Chinese: Commodity products up with quotas off

- German: Products and Equipment mostly

- Mexican: (See Preferred Products Page)


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Imported ProductPreference

Both Domestic ProductPreference

GIS & SCADA Analyzers &Manometers

Contractors & Construction

Automation & ControlsEquipment

Filtration Equipmt &Products

Pipe/Water DistributionEquipment

Wastewater Reuse Equipment Treatment PlantSystems

Sludge Handling Systems

Treatment Plant Systems Tanks Gates & Flumes

Data Management Systems* Leak Detection Metal Fabrication

CIS & Meters Laboratory &Sampling Products

Chemical Feed Equipment

Well Drilling/Systems Process EquipmentAerators, Diffusers

Corrosion & CathodicProtection/Control Equipmt

Chemicals Compressors &Blowers

Chlorine

Desalination Equipment Disinfection Systems Coating & Lining

Leak Detection Consulting* Sewer/Collection Systems &Equipment

Laboratory & SamplingEquipment

Pumps & Valves Traditional Treatment Options

Rain Water Reclamation Storm/rain drainage

Solutions

B. Water Product Preferences


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Maximum Levels Allowed

Parameters Monthly Daily

(miligrams per liter, except when Average Average Instantaneous

something different is specified)

Greases & Oils 50 75 100

Sedimented Solids (mililiters per liter) 5 7.5 10

Arsenic 0.5 0.75 1

Cadmium 0.5 0.75 1

Cyanide 1 1.5 2

Copper 10 15 20Hexavalent Cromium 0.5 0.75 1

Mercury 0.01 0.015 0.02

Nickel 4 6 8

Lead 1 1.5 2

Zinc 6 9 12

B. Industrial DischargeRegulation: Nom 002 Semarnat

Less stringent than US & Europe standards;

Lower standard + unclear enforcement = ?


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B. Comparative Water Rates(Price per m3 in pesos, minimum 1000 up to 15,000 meters)

Poorer Area Rates Federal District: 2

Atizapan (Edomex): 5.5

Tlalnepantla(Edomex): 7.6 Leon (Gto): 8.8

Naucalpan (Edomex): 10.2

Tijuana (BC): 12.3

Huixquilucan (Edomex): 15.1

Aguascalientes (AGS):above 25

Richer Area Rates Federal District: 9

Naucalpan: 11.1

Tijuana: 12.3 Tlalnepantla: 13.1

Huixquilucan: 15.1

AGS: above 25


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C. Realities Outline

Government & Societal Realities/Factors

Revenue Realities

Factors affecting Industrial DischargeRegulation

Carrots & Sticks Analysis

Doing vs. Talking Analysis Good vs Bad Projects

BOT Analysis


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C. Limiting GovernmentFactors

- Decentralization- Municipalities and Basins: Domestic & Agriculture

- CONAGUA vs ANEAS

- Slowness

- Process in getting bids out and post-bid process- Budget Process and Payment issues

- Limited government resources, low efficiency

- Corruption

- Tendency towards Traditional Technology- Limited market information from Conagua

- Low cost & prices, limited water revenue


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C. Limiting Societal Factors

Water considered a commodity Population, Farmers, in General

Drinking Water Quality Challenges Problems with source & delivery contamination

Low use and expectations from population Smell, Taste, Consistency, Minerals

Low demand for tap water, strong bottled water sector

Most bodies of water contaminated

No polluted body of water has been recouperated Low societal expectations for water Culture: Avoid complaining, find a way around


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C. Revenue Realities

Federal/Conagua Conagua income

stream = no growthand below preNafta

1994: 9.7 Billion pesosvs. 8.1 Billion in 2006

Revenue emphasis upbut still problematic

Low subsidized ratesto local entities

Bill 20% of industrial &commercial directly

State/Municipal Decentralization:

Transfer of Authority &Responsability without

sufficient revenues Politically impossible

to increase domesticend-user rates

80% of industrial &commercial billed butcorruption/inefficiencyaffect income stream


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C. Factors Affecting IndustrialTreatment Viability & Action

4 Principal Factors

A. Cost of Water

B. Regulatory

Environment- Inspections & Fines

A. Importance of waterin mfging process

B. Level of pollutionfrom mfging process- Sugar, Textile, F&B

Degree of Concern

A. Cost: North vs Southand in general

B. Regulatory: Veryambiguous coverage 60% vs 40% vs < 20%

Federal, State, Muni?

C. Heavy water usersseem to be targeted

D.Unclear to what extenthigh polluters targeted


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C. Wastewater discharge:Carrots & Sticks

Government Regulations NOM 002 Inspection and Declaratorias Process

In effect since 1998, previous regulations voluntary

Required compliance, periodic inspections, payment of dischargerights (vs. fines) when non-compliant

Next step: requirements according to pollution levels of specificwater basins and municipal discharge levels

Sufficient regulations, insufficient enforcement

Unclear regulatory responsibilities (local vs. federal)

Still questionable water official regulation: whimsical

Enforcement differences: New vs. Existing companies

When economic crisis hits, authorities tend to back off

2010 Goal: 100% compliance; Reality: 20-40%

Carrots & Sticks are just not there or on the horizon


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C. Impact of Carrots & Sticks

Sticks Fines/Discharge Rights

No purchases driven by fear

Different in parts of Latam

Amounts not worrisome

Closures

Do not hear about them

Strategy of targeting new vs. Existingcompanies

Crisis or not,

Enforcement

Do not hear companies complaining

about it (like tax) Corruption vs inefficiency

Carrots

Few and ineffective

No true incentive programregarding potable use orwastewater treatment

No tax incentives for installationof systems

ProSanear Program

Discharge fees paid will bereimbursed if an effort is madeto comply

86 companies in 2009, 34 morein 1st Qtr 2010

Repayment: Not annual


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C. Doing vs Talking: Status ofTreatment Plants Projects

Cons (Talking) Atotonilco bid dispute Concerns about 2010 timing of

Caracol & Zumpango plants Rumors of delays with Nextlalpan

& Vaso El Cristo Plants Some Conagua official comments

about lack of funds for 2010 Apparent slow down in projects

and awards Classic & New Budget

Assignment Issues Only 17% of 1st Qtr Bids awarded

so far Are authorities being told to slow

spending despite havingbudgeted funds?

Mexico reputation for talking aboutprojects but not delivering

indefinite unexplainable delays

Pros (Doing) 5% GDP spent on infrastructure Since 2006: Over 200 new plants and

43 rehabilitations 50 under construction: end 2009 Recent, Historic Awards

Largest Latam treatment plant inFederal District

Create 60% coverage Two large plants in Jalisco

Create 100% coverage

Conagua officials: 100 new plants in2010

31 bids: 1st Qtr 2010 Funding up, financing ok 2012 goal: 60% coverage: Have to work

on problem, BOT medium-term at best


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C. BOT: Opportunities & Concerns

Mexican govt push before & after crisis Even with continued increased funding for plants &

systems, perception that need more

Well behind world & Latin America in BOT projects Problems & Concerns

Juridic Insecurity concerning contracts Concerns: Local political issues and election impact

Payment Guarantee Issues Poor govt payment image, concerns and trends

Poor govt revenue stream: Water viewed as commodity


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D. LGA Services Outline

Water Sector Activities

Why LGA Can Help

LGA Website & Materials LGA Services for Water Sector


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D. LGA Water Sector Activities

15 Years working with Wisconsin companieswith products for water sector

2 years of formal & extensive water focus Quarterly Mexico Water Report

Monthly compilation & review of water bids &awards

Development of Intermediary lists Distributors, Reps, Integrators, EPCs, Consultants

Winners of Awards, Participants in Bids Interaction with local water officials and

intermediaries for early project information


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D. Why LGA Can Help

We understand the water sector pretty well Study it every day (clients, Quarterly, Bids) Knowledge increasing continually

We know many key govt officials Continuous/Regular Outreach at federal and local levels

Reaching out to water officials in 12 states

We know many of the intermediaries/integrators Reaching out for searches, networking Following them via bids (winners, participants) We may not know them, but we know how to locate them

We know that what we do not know we can find and understand

Strength: focus on a particular company & identify success strategy Private: 15 years of industrial & commercial sector research, market

analysis, business development, intermediary searches Public: Active & focused on segment like no other firm in Mexico


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D. LGA Website & Sector Info

New Website: www.lgaconsulting.com

Water Section: Bids, Services, Clients, QuarterlyWater Report

Staff of 7, experienced and bicultural List of Water Sector Clients

Pumps/Meters/Valves, Filtration, Municipal,Residential/Retail, Industrial, Commercial

Blog & Presentations Variety of Water Issues

Specific Services: Water Sector Products
http://www.lgaconsulting.com/http://www.lgaconsulting.com/


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D. LGA Services: Water Sector

Water Product Market Analysis Water Product & Channel Viability Analysis Project & Client Business Development

Early Sales Pipeline Assistance: Customer research& qualification, database development, prospectingcalls, assessing competition

Intermediary/Partner Location Distributors, Reps, Integrators, EPCs, Partners

Intermediary & Client Evaluation for business &payment issues Related legal, regulatory, fiscal services


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Annexes

Demand for Water 2020

Domestic Water Price Comparison

Commercial & Industrial Water PriceComparison

Tips on winning projects


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Km3/year (m3/s)

National Agriculture Industry Public Other Difference

Supply 2020-1997

3180 2640 95 381 64 856

100 83% 3% 12% 2% 27%

Water Demand by Sector (2020)

Other Sources establish current water demand as:77% Agriculture, 12% Public, 9% Industrial.

B D ti W t P i


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Naucalpan AGS Naucalpan AGS Naucalpan AGS

DOLLARS 30-45m3 31-50m3 75-100m3 75-100m3

Domestic A Popular A $8.72 $25.20 $48.64 $235.36

(Price per additional m3) $0.76 $2.42 $1.25 $10.08

Domestic B Popular B $21.12 $32.16 $72.72 $300.96


Domestic C Medium $22.32 $38.00 $74.64 $347.20


Domestic C High $22.64 $38.00 $76.08 $347.20


B. Domestic Water Prices:AGS vs. Naucalpan

Aguascalientes (AGS) considered most expensivewater in Mexico; Naucalpan average/low.

B. Commercial & Industrial Water Prices:


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B. Commercial & Industrial Water Prices:AGS vs. Naucalpan

How do they compare to the US?

Are they sales drivers or inhibitors?

Naucalpan AGS Naucalpan AGS Naucalpan AGS

DOLLARS 75-100m3 75-100m3 500-700m3 500-1000m3 1200m3 plus 1500m3 plus

Commercial $133.12 $339.52 $1,929.04 $2,502.00 $5,313.28 $6,139.60

(Price per additional m3) $3.09 $8.88 $4.35 $4.04 $3.42 $2.42

Industrial $136.32 $414.24 $1,929.04 $2,607.04 $5,313.28 $6,244.64

(Price per additional m3) $3.16 $10.08 $4.35 $4.04 $5.30 $2.42


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C. Tips on winning projects

Foreign companyproblems Importance of Mexican

intermediary Public: all bids must go

through local entity Private: Less so but still

key to success

Keep tabs on projects Intermediaries not always

proactive or dont/wontshare info

Competition & Bribes Non-US companies: get

business at any cost.

Tips for Success Develop relationships with

Mexican intermeds

But dont give exclusivitynor rely on them

exclusively for Market Information

Business Development

Early access to entity Spec Development key

Right Intermediary key Bring Financing Plan

Avoid non-ProfessionalWater Officials & Entities

Documents

Opportunities & Realities in Mexico´s Water Sector