Thames to invest pounds 44m in Indonesian project

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The Independent Online
Michael Harrison

Thames Water yesterday took its first step back into the international arena since it was forced to write off pounds 95m on a series of disastrous overseas forays a year ago.

The company is to take a 70 per cent stake in a consortium selected to manage water supplies for 5 million people in the Indonesian capital Jakarta.

Thames is putting up pounds 44m out of total planned investment of pounds 160m over the next five years. The concession, which covers the eastern half of Jakarta and will run for 25 years, is expected to generate sales of pounds 57m a year initially, rising to pounds 200m.

The joint venture with the Indonesian development company, PT Kekarpola Airindo, will be 30 per cent equity financed and 70 per cent debt funded.

It is Thames' first international deal since it pulled out of a series of loss-making overseas ventures early last year. It parted company with its chief executive, Michael Hoffman, at the same time. Since then Thames has overhauled its international strategy and ceased to be involved in the construction of overseas projects, instead exporting its expertise in running water systems.

As Thames was signing the deal to supply eastern Jakarta it was confirmed that a consortium led by the French water group, Lyonnais des Eaux, had won the concession to manage supplies for the western half of the city.

Jakarta is believed to be the largest single water concession anywhere in the world.

Thames has half a dozen other major overseas contracts in Turkey, Thailand, China, Puerto Rico, Malaysia and Australia. Thames is not the first company to run into trouble overseas. Earlier this year United Utilities wrote off pounds 83m on a sewage project in Bangkok and last week Anglian Water wrote off pounds 18.8m on its international business, including pounds 7.3m on a venture to build a waste treatment plant in Brazil.