Tapping into the mainland market

THE idea that key areas of an urban infrastructure such as water supply and sewerage could be entrusted to private sector control would have seemed ludicrous to many British consumers only 10 years ago.

But the conversion of the major water authorities into listed companies was completed in late 1989 and today the biggest of the formerly state-controlled groups is out searching for new opportunities further afield.

North West Water Group, which grew out of the North West Water Authority created in 1974 to handle the water and sewerage responsibilities of 245 local authorities and organisations in the northwest of England, has already secured two contracts in Australia and is looking for more work in China.

Chairman-designate Sir Desmond Pitcher travels to Beijing today to meet state officials and representatives from the Norinco group to assess whether his company and its subsidiaries can play a role in any of the expanding urban centres in the mainland.

North West Water already has a handful of staff working with a British Water Industry team assessing waste water treatment proposals for Shanghai and is now anxious to discover whether it might be possible to land commercial contracts.

Sir Desmond hopes to spread the message that local authorities do not need to take on the work of designing and operating either fresh water processing or waste water treatment themselves, and that established groups like his own, which have acquired expertise in their own areas, are better equipped to handle the design and operation of new systems.

Sir Desmond said his own company's shareholders had been generally supportive of the group's ambitions to expand overseas.

Apart from acquiring two US companies, the group has landed contracts in Sydney and Melbourne and is looking for work in Southeast Asia.

''The shareholders like it,'' he said in Hongkong yesterday. ''They can see it as an income stream in the medium to long term which secures ongoing earnings.

''Our acquisitions have been very satisfactory investments. They are ongoing businesses which have not required massive management inputs or capital investments from us.

''But these international projects are often long-term and the cash flow out is quite high at first.'' Sir Desmond said North West Water would be able to take on a variety of projects but an ideal contract would be to handle work for smaller cities with populations of around 500,000.