russian water & wastewater treatment market expected to double
TRANSCRIPT
Russian Water Market Outlook: $11 billion Pure Water Program to Fuel
Growth
Paulina Szyplinska, Research AnalystEnvironment & Building Technologies
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Russian Water
Market Outlook:
$11 billion Pure
Water Program to
Fuel Growth
Market Size and Forecasts
Key End-users
Key Market Forces
Conclusions
Russian Water Strategy
Focus Points
Technology Evolution
Overview of Russian Water Market
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Overview of Water and Wastewater Market in RussiaThe Market is Set to Witness Growth Addressing Critical Improvements in Deteriorated Infrastructure and High Water Pollution
Population Density (Russia), 2010
Source: Goskomstat Rossii
Water and Wastewater Treatment Market: Coverage of Services (Russia), 2010
Source: Russian Water Association, Frost & Sullivan
41.0 per cent of water supply
networks under urgent need of rehabilitation
29.0 per cent of wastewater discharge networks under urgent need of rehabilitation, 38.0 per cent of WWTP require reconstruction
.
Areas with Heavy Polluted Waters
The most serious water pollution occurs in the most densely populated regions as well as in industrial regions of Krasnodar and Stavropol’ territories in the north of the Caucasus, Rostov and Novosibirsk oblast, the Republic of Chechnya, Vladivostok, Moscow and St. Petersburg.
Russia’s water resources are unevenly distributed in relation to the population.
80.0 per cent of Russian population lives in the western part of the country which has only 8.0 per cent of total river runoff and 10.0 per cent of total renewable annual
groundwater resources.
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Russian Economic OverviewHit Hard By the Global Financial Crisis Russian Economy is on its Way Toward Recovery
GDP Growth Rates (Russia), 2007- 2011
2007
Source: Trading Economics, Federal Service of Federal Statistics, Frost & Sullivan
2008 2009 2010 2011Years
•Crisis management after the deep collapse in 2009 has been broadly appropriate. The recovery has been supported by
increased oil prices, stronger Russian domestic demand and more flexible exchange rate.
•It is projected that Russia will continue to see positive economic indicators. Growth will be driven predominantly by the
recovery of domestic consumption and increase in industrial production.
•Development of industrial sector will also contribute growth in the water and wastewater market, especially in
highly water related power, oil and gas and mining industries.
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Water and Wastewater Treatment Market: Key Objectives of Pure Water Federal Target Programme (Russia), 2011-2017
Share of population with access to water supply services
2011
95.0%
Share of population with access to wastewater collection services 84.0%
53.0%Share of wastewater treated according to the standards
Russian Water Strategy The Pure Water Federal Target Program Indicates Ambitious Goals and Mirrors the Scope of the Water And Wastewater Sector Needs
Share of population consuming drinking water that meets safety standards 83.2%
Source: Russian Water Association, Frost & Sullivan
Water and Wastewater Treatment Market: Funding for Pure Water Federal Target Programme (Russia), 2011-2017
$10.92 billion
Regional and Local Budget Funds $0.30 billion
Federal Budget Funds $0.30 billion
Private Investments $10.32 billion Source: Rosvodokanal, Frost & Sullivan
2011
2017
90.0%
54.0%
46.0%
71.0%
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Situation of Russian ‘Vodokanals’Revenues Generated by Vodokanals are Insufficient to Cover Critical Investments
Water and Wastewater Treatment Market: Management of Water Utilities (Russia), 2010
Source: Rosvodokanal, Frost & Sullivan
Note: CZ- The Czech Republic, SK - Slovakia, EE- Estonia, HU – Hungary, HR – Croatia, PL – Poland, RU – Russia, TR – Turkey, RO – Romania, CS – Serbia. Source: GWVOECD, Frost & Sullivan
The water and wastewater tariffs in Moscow, the most affluent city
in Russia, are approximately 30.0 percent lower than in Bucharest,
nearly three times lower than in Istanbul and more than three and a
half times lower than in Warsaw and Prague
Water and Wastewater Treatment Market: Average Water and Wastewater Tariffs (Europe), 2010
Currently, 84.0 per cent of water utilities are
operated by mostly ineffective municipal
enterprises. The level of private business
participation is low, however the Russian
Government is willing to attract private business
to the industry modernisation
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Key Market Drivers Strong Market Drivers Enable Investments and Catalyse Growth of the Market
Privatization of Public Water
Utilities
Progressive Environmental Legislation and Improvement of Implementation
Urgent Need to Rehabilitate Aging Infrastructure and
Introduce Advanced Treatment
Technologies
$10.92 billion Pure Water Programme
and Federal Support Attracting Financial
Aid
Source: Frost & Sullivan.Source: Frost & Sullivan.
The Russian water and wastewater market is significantly buoyed by progressive legislation, financing programs of
Russian Government and growing international investment and loans by the World Bank, EBRD and other International
Financing Institutions (IFIs).
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Corruption and High Levels of Bureaucracy
Limited Financial Resources of Water
Utilities
Lack of Resources and Organizational
Capacity to Address
Environmental Issues
Inefficient System of Water Tariffs
Key Market RestraintsDespite Strong Drivers, Substantial Restraints Continue Hampering Growth of the Market
Source: Frost & Sullivan.Source: Frost & Sullivan.
Limited financial resources of water utilities constitute the main factor which hampers development of the
market.
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Revenue Forecasts for the Russian Water and Wastewater Treatment Equipment Market
Water and Wastewater Treatment Market: Revenue Forecast for Treatment Equipment (Russia), 2007, 2010 and 2017
Note: All figures are rounded, the base year is 2010. Source: Frost & Sullivan
CAGR (2007-2010): 3.0%
Years
CAGR (2010-2017): 9.2% The total size of the Russian water and
wastewater treatment equipment
market in 2010 was $917.5 million. It
is expected that the market size will
almost double over the forecast period
and reach approximately $1,699.1
million in 2017, growing at a
compound annual growth rate (CAGR)
of 9.2 per cent from 2010 to 2017.
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Market Attractiveness and Growth by Key SegmentsConsiderable Potential Exists in Both Municipal and Industrial Segment with Significant Need of Large-scale Infrastructure Development
Water and Wastewater Treatment Market: Market Attractiveness by Segments (Russia), 2010-2017
Note: Size of the bubble corresponds to the segments’ market size in 2010. The base year is 2010. Source: Frost & Sullivan
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Treatment Technology Trends Tangible Shift Toward Advanced Treatment Technologies is Expected Over the Coming Years
Source: Mosvodokanal, Frost & Sullivan
Water and Wastewater Treatment Market: Development of Nutrients Removal (Russia), 2010 and 2020
Water and Wastewater Treatment Market: Development of UV Disinfection (Russia), 2010 and 2010
Source: Mosvodokanal, Frost & Sullivan
2010 2020 2010 2020
Key Objectives of Sludge
Management in Russia
Maximal reduction of volumes
Preparation for further safe recovery
Environmentally safe temporary storage or
incineration
Water and Wastewater Treatment Market: Key Objectives of Sludge Management (Russia), 2010
Source: International Water Association, Frost & Sullivan
At present the incineration of sludge is not widely applied method in Russia but it is expected that it will become more
important, mainly for large metropolises dealing with disposal problems
The main direction of development of the metropolitan sewage treatment facilities is their reconstruction with the transition to modern technology for nitrogen and
phosphorus removal and the introduction of UV disinfection
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Key Municipal End-user AnalysisThe Government’s Aim is to Finance Modernisation of Water Systems in Small Cities but Private Investors are Mainly Investing in Bigger Cities
Water and Wastewater Treatment Market: Key Municipal End-users Trend (Russia), 2011-2017
Short-term Perspective
Over 500,000
Long-term Perspective
100,000 – 500,000
Below 100,000
Cities with Population
TrendTrendSource: Frost & Sullivan GrowthGrowth StableStable DeclineDecline
Main interest of private investors. Development of water and wastewater sector connected with large-
scale modernisation of ageing infrastructure. Development in long-term perspective connected with expansion of the cities, construction of new
facilities and increasing treatment capacities
Not included in the Government’s funding programme and less attractive for private operators.
The development of treatment technologies is expected to increase as the number of private operators interested in PPPs will grow in the
Russian market
Stable opportunities while the investment is supported by federal and regional budgets. In the
long-term perspective the opportunities are projected to grow, as the this segment will attract
investments once the large and medium sized cities are covered
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Key Industrial End-user AnalysisIt is Expected That the Global Demand for Power and Oil & Gas will Entail Demand for Water and Wastewater Treatment Solutions
Short-term Perspective
Long-term Perspective
TrendTrend
Source: Frost & SullivanGrowthGrowth StableStable DeclineDecline
Mainly due to expansion of the Russian thermal and nuclear power capacity and introduction of Zero
Liquid Discharge and Best available Technologies
The global demand for oil and gas from Russia is expected to continue driving the demand for water
and wastewater treatment solutions. The increase in oil catalyses focus on more energy efficient,
compact treatment solutions
Increasing demand for quality products is expected to continue growing in line with rising demand for
advanced and high-end water and wastewater technologies to improve the treatment efficiency
By 2013, Russia is targeting an increase in coal production that will drive the demand of minimizing the impact of large runoff streams and metals-laden
wastewater on the local environment
Water and Wastewater Treatment Market: Key Industrial End-users Trend (Russia), 2011-2017
Power
Oil & Gas
Food & Beverage
Mining
Pulp & Paper
Expected demonstration of new trends of development, in water and wastewater treatment in the long term perspective, including application of
Zero Liquid Discharge Technologies
Industrial Sectors
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Summary of Key OpportunitiesGrowth Opportunities are Related Mainly to Nutrient Removal and Application of Membranes, UV and Ozone Treatment
Key Opportunities in the Russian
Water and Wastewater Market
Development of membrane, UV and ozone treatment in the municipal
and industrial sectors
Development of membrane, UV and ozone treatment in the municipal
and industrial sectors
Urgent need to upgrade depreciated water and
wastewater infrastructure
Urgent need to upgrade depreciated water and
wastewater infrastructure
Application of zero discharge technologies to reduce water consumption
Application of zero discharge technologies to reduce water consumption
Development of nutrient removal technologies in the
municipal wastewater treatment
Development of nutrient removal technologies in the
municipal wastewater treatment
Increasing private business involvement in
the public sector
Increasing private business involvement in
the public sector
Source: Frost & Sullivan
Water and Wastewater Treatment Market: Key Opportunities (Russia), 2010
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Chiara CarellaHead of Corporate CommunicationsEurope, Israel, Africa+44 (0) 207 343 [email protected]
For Additional Information
Paulina SzyplinskaResearch AnalystEnvironmental & Building Technologies+48 (0) 22 398 [email protected]
Fredrick Harry RoyanGlobal Research DirectorEnvironment (Water) Markets+44 (0) 207 343 [email protected]
Archana ChauhanResearch ManagerCEE Operations+48 (0) 22 390 [email protected]