Ireland is currently the only country in the Organisation for Economic Co-operation and Development that doesn’t levy direct charges for domestic water consumption. It provides water services at an annual deficit of around ¤1 billion, a sum the nation can scarcely afford given its current economic predicament. Indeed, the status quo is no longer an option. As part of Ireland’s bailout agreement with its troika of international lenders – the International Monetary Fund, the European Union and the European Central Bank – introduced in May 2011, the country is committed to restructuring its water services. Supporters see this as a necessary reform, but sceptics view it as a step towards full privatisation.
The current system, operated by 34 county and city councils, will be merged under a newly created operator, Irish Water, which will sit as a division within the state-owned energy provider Bord Gais Group. The new regime will start taking over local authority water assets from 2015, with the full handover expected to be completed in 2017.
The Irish government has been at pains to point out that the restructuring does not amount to privatisation, although it will be some time before the governance and financing model to be put in place for Irish Water is finalised. What is certain is that Irish domestic consumers will have to get used to a new concept: paying for the water they use. What is also certain is that this restructuring will open the door to a number of commercial opportunities for UK firms, because imported expertise will be vital in delivering a successful rollout of the programme.
In many ways, the Irish restructuing plans are radical. Universal metering – only implemented within the Southern Water region in England and Wales – will be introduced throughout Ireland. This will create a significant opportunity for the technology and contracting sides of the supply chain to supply and fit the huge numbers of meters needed. It is anticipated that up to 100 different companies will be involved in ha ndling this specific requirement alone.
The asset management programme that will inevitably accompany the restructuring will also offer commercial opportunities. The management of Irish Water’s new regulated asset base will require the implementation of integrated geographic information system and supervisory control and data acquisition (Scada) solutions – like the ones in which English and Welsh water and sewerage companies are currently investing – which will require the supply chain’s technical know-how.
Irish Water will also need to address its level of leakage which, at 41 per cent, is around double the UK average. This is an obvious service enhancement that the new operator will target to establish its legitimacy and help manage the contentious issue of introducing domestic water charges. Again, the UK supply chain can add significant value both through technological solutions such as automated meter reading, network telemetry and Scada, and in helping to implement large-scale engineering programmes.
Managing these issues, as well as additional supply chain requirements to address effluent quality issues and deliver environmental improvements, should be seen as a huge opportunity for water technology providers, pump and industrial drive manufacturers, engineering firms and water consultancies.
Overall, the radical changes that are planned for Ireland’s water system will require external expertise and, given the parallels in what they are planning and the structure currently in place on this side of the Irish Sea, companies in the UK should be well placed to help deliver this.
Guy Winter, partner and energy and natural resources specialist, Shepherd and Wedderburn
This article first appeared in Utility Week’s print edition of 1 June 2012.
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