First Urban-Water Law in Spain Augurs Private Investment

Spain plans to tighten rules for local authorities to sell water to homes and businesses in a move that may benefit investor-owned companies such asAcciona SA (ANA)andFrance'sSuez Environnement. (SEV)

Towns or districts that want to sell directly to consumers will need to prove they are more "sustainable and efficient" than the best alternative, according to a draft law prepared by the government. The criteria are based on profitability and return on investment and the analysis must be made public, according to a draft seen byBloomberg News.

Spain's first nationwide rules for urban water concessions would open its water system further to new providers and contribute to growth prospects for the estimated $560 billion global water market. Revenue will expand 3.9 percent annually worldwide over the next four years, according to the Spanish engineering companyAbengoa SA (ABG/P), which cited Global Water Intelligence estimates.

Suez, Europe's second-largest water utility and controlling shareholder of Barcelona's water-management company, as well as Spain's Acciona and Fomento de Construcciones SA are potential bidders for concessions should Spain open the market further.

"It's a pro-business draft law," said Abel La Calle Marcos, a law professor at Almeria University and attorney specialized in water regulation. "It seems to be a draft that supports water providers mostly, and I'm not sure whether the public interest is equally protected."

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