On August 22nd, the State of Baja executed a public-private contract with a private special purpose project company (Aguas de Rosarito S.A.P.I. de C.V.) for the design, construction, financing and operation of a seawater desalination plant in Playas de Rosarito, Baja California, Mexico. The private company is owned by NuWater S.A.P.I., de C.V. and N.S.C. Agua, S.A. de C.V. (a subsidiary of Consolidated Water Co, NASDAQ: CWCO). Degremont S.A. de C.V., a subsidiary of Suez Environmental of France has been selected to design and construct the plant.
The contract calls for a plant with a capacity of up to 100 million gallons per day in two phases. The plant’s first phase has a capacity of 50 million gallons per day and an aqueduct to the potable water system of Public Utilities Commission of Tijuana (“CESPT”). The second phase has a capacity of 50 million gallons per day and an aqueduct to a second delivery point in Tijuana. The first phase must be operational within 36 months of start of construction. The second phase must be operational by 2024. The contract requires that the project company operate and maintain the plant for 37 years from the start of the first phase. Afterword, ownership of the plant and aqueducts will be transferred to the State Water Commission of Baja California (“CEA”).
The total project cost is expected to be $490 million. Annual revenues are estimated at $55.5 million. Water rates are indexed to Mexico’s national consumer price index. Energy costs are treated as a pass through charge to CEA, subject to efficiency guarantees. The project company anticipates raising Mexican peso denominated debt financing through a consortium led by the North American Development Bank, which served as financial advisor to the company.
The State of Baja plans include potentially making project water available to U.S. water users. A portion of the project water from the first phase may be available for a few decades. The second phase of the plant would be available under long-term leasing.
Written by Rodney T. Smith, Ph.D.