Lotte, Corus and AD help bail out Northumbrian Water
10 Jun 2010
London – Northumbrian Water Ltd (NWL) has managed to offset some of the impact of recent plant closures by its customers in the North East: securing a contract with the new owner of the Artenius site as well as a contract extension with a Corus business unit.
Artenius UK Ltd, NWL’s largest single customer, ceased production in 2009 and was expected to remain closed. However, in February, it was bought by Korean company, KP Chemicals, whose subsidiary Lotte Chemical UK Ltd brought the plant back into operation in April. NWL said its revenues would be only “slightly lower” than under the previous Artenius contract.
On the other hand, a number of plants have closed which had been expected to remain open. The most significant was Corus Cast Products where the blast
furnace was mothballed in January, although Corus has also announced that the South Bank Coke Ovens, which was also under threat of closure, would remain open for at least a further three years.
Elsewhere, NWM said all contracts are performing well and in line with expectations.
The group is a member of two consortiums delivering long term private finance initiative contracts with Scottish Water for wastewater treatment.
At Levenmouth, the group has a 75% shareholding in both project and operating companies and the benefit of a 40-year contract. In Ayrshire, it has a 75% shareholding in the project company and a 100% shareholding in the company that operates the three effluent treatment plants that comprise this 30-year contract.
NWM is also part of a consortium that designed and built a waste water treatment plant for Cork City Council in Ireland. Under the consortium agreement, the group has responsibility for a 20-year contract for the operation and maintenance of the plant.
Overall, NWL reported sales of £657.8 million for the year to 31 March 2010, 1.6% higher than the previous financial year. The increase, it said, was mainly due to a 3.0% inflationary increase in water and sewerage charges, partially offset by reductions in demand for both services amid the economic downturn and closures by major customers on Teesside.
Operating costs increased 2.3% to £t388.9 million, as increases in salary and abstraction costs and one-off charges for bad debt relating to the closure of a major customer were only partially offset by efficiencies. The gains here included the commissioning of an advanced anaerobic digestion plant at Bran Sands on Teesside during the year, which along with lower commodity prices, led to a £4 milllion drop in energy costs to £36.4 million
