What are the main drivers of your growth in Mexico, and have they changed in recent years?
In Mexico, we work in the municipal market, more specifically on building and construction operations with wastewater plants, desalination plants, and water production plants. At the same time, we work together with GE Water & Process Technologies, which the company acquired a year ago. This company is focused on the industrial sector, and for us it is important to expand the introduction of Suez and this technology to the industrial sector. We are currently focused on three main questions; one is advanced solutions that strive to provide technologies and service to water companies in order to improve the commercial and physical efficiency and all services relating to the improvement of water services. The other two are smart agriculture and waste. One of our targets in Latin America is to start a waste business, not only in Mexico but all of Latam.
How do you assess the sustainability of Mexican cities' utilities networks compared to other Latin American cities?
The operation is more or less the same. Here, there are certain trends regarding the reuse of water. We are working and operating the management of the San Luis Potosi wastewater plant, and the regulator is currently using the wastewater to provide water to the agricultural sector and cool energy plants. This is one of the trends Mexico is trying to spread. The second is perhaps one of the most important challenges around the world, trying to improve water efficiency. In Mexico City, for example, between 50 and 60% of water is lost in the network, which is the average across Latin America. In Europe, it is 18-20%, while in Las Vegas or Singapore it is 5%. It is important to improve physical efficiency because we are in the position to reduce the investment in CAPEX. The third aspect is more focused in the north of Mexico, which is the drawing of the use of water, which is one of the major challenges. This is great technology to implement in these specific sites where the aquifers right now are warm, and increasing the water surface via rivers is difficult due to the international agreement between the US and Mexico. It is important in the case of Mexico to increase its autonomy in the north in order to get water as a raw material and not depend on the US.
Can you tell us more about the plan to build a water desalination plant in Baja California, and what innovation it represents for the country?
We are working to get financial closure on when we will be able to start building the plant. It is important for geopolitical decisions and is the responsibility of the Baja California government and the federal government. This plant is important to bring greater water autonomy to this part of the country; furthermore, desalination is a great technology. An issue is the production, because it is not possible to be the only option. We need more water sources and part of our water comes from rivers, aquifers, and desalination; it is necessary to have a split between different options.
What are the advantages and disadvantages of the different types of public private arrangements you have signed with different layers of the government?
It depends on the goal the country wants to achieve and the security that the public sector provides. There are several models. One PPP model is the service contract, where, for example, in Mexico City Suez provides 50% customer service to a public water company though we provide all the customer service: invoicing, metering, network, call centers, offices, and collection. The other is build, operate, transfer (BOT), which are extremely reliable here because Mexico has excellent and reliable regulations. In Mexico in the last 10-15 years the government invested a great deal of money in public-private partnerships (PPPs) and BOT projects and the private sector is involved in deploying and developing water infrastructure. The third is concessions, where the client is the end user and in that case there are more political concerns. Right now, we are working on a concession in Saltillo, where 55% is a public company owned by the municipality of Saltillo and 45% is Suez. We have been working on this concession for the last 15 years, and the results are excellent in terms of public necessity as the tariff is cheaper and the commercial and physical efficiency is one of the highest in the country. PPP programs are possible to put in place if it solves public necessity. If there is no public need, then PPPs will not work no matter how excellent the client relationship or profit is.
What are the reasons behind massive water leakages, and how can companies such as Suez contribute to solve this issue?
The most important question to solve is physical efficiency. To invest in assets is not enough if you do not improve the maintenance of the network in order to reduce leaks. The first step is to create macro and micro sectors in the network. After that, one is in the position to control the micro sectorization and introduce a specific pressure. We can manage the pressure with new technology (open and close valves) and also to find where the leakage is without breaking the water pipes. One can use, for example, helium gas or sound; however, in Mexico City using sound is difficult as it is a noisy city.
Can you tell us more about your plans in smart agriculture?
We are looking at this as a group decision, as 85% of the water is used in agriculture and 10-12% is used for residential uses. We are experts in water, and we need to move from the public sector to the private sector. One of the targets has been the industrial sector via the GE Water acquisition, though the second one is to become an important player in smart agriculture. Mexico is a huge market in this sector to make agriculture less water intensive. Chihuahua is the first pecan nut producer in the world, and Mexico as a country is the first in avocados and in the top 20 of apple producers thanks to Chihuahua (80% of the national production). Agriculture is an important market for us to help develop by introducing new technology and reducing the water intensity in the market.
What are your short-term priorities for the coming year?
For me, the first priority is to become an important player in desalination in Mexico. The second is to be an important player in the re-use of water, water efficiency, and smart agriculture. The last is developing in this business to become a top player in the industrial sector.