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Consolidated Water and PERC Water win $204m contract to build a desalination plant in Hawaii

  • Consolidated Water and PERC Water win $204m contract to build desalination plant in Hawaii

About the entity

Consolidated Water
Consolidated Water Co. Ltd. develops and operates advanced water supply and treatment plants and water distribution systems. The company operates water production facilities in the Cayman Islands, The Bahamas and the British Virgin Islands.

Consolidated Water, a leading developer and operator of advanced water supply and treatment plants, announced its indirect subsidiary, Kalaeloa Desalco LLC (which is jointly owned by the company’s wholly-owned subsidiaries PERC Water Corporation and Consolidated Water U.S. Holdings, Inc.), has signed a definitive agreement (DBOM Agreement) with the Honolulu Board of Water Supply (BWS) to design, build, operate and maintain a seawater reverse osmosis desalination plant. Consolidated Water has separately guaranteed the performance of Kalaeloa Desalco to BWS for the term of the DBOM Agreement.

The plant will be located in the Kalaeloa Regional Park District on the Island of O’ahu in Hawaii and situated on the site of the former Barbers Point U.S. Naval Air Station.

Kalaeloa Desalco will develop, permit, pilot, design and construct the facility during the first 44 months of the DBOM Agreement. The plant will be capable of producing potable water from saline source water derived from seawater wells. Kalaeloa Desalco has guaranteed to deliver 1.7 million gallons of potable water per day to BWS’s water system on a 24/7 basis. After commissioning, Kalaeloa Desalco will operate and maintain the plant for the following 20 years and potentially during two five-year optional extensions.

The company expects revenue generated over the approximate 24-year base term of the contract to total about $204 million in current dollars. Approximately $149.6 million of the revenue is expected to be generated during the development, permitting, piloting, design and construction phase over the first 44 months of the DBOM Agreement. The construction fee is subject to a cost adjustment based on changes in certain material and labor cost indices at the time that pilot testing, permitting and design are complete and construction commences.

Kalaeloa Desalco has guaranteed to deliver 1.7 million gallons of potable water per day to BWS’s water system on a 24/7 basis

Operating fees to be earned by the company are estimated to be approximately $2.7 million annually in current dollars and will be adjusted annually for changes in certain other materials and labor indices over the 20-year term of the operating phase of the DBOM Agreement. These estimated revenues may change based on the outcome of the development, piloting, permitting and design phases of the project, as well as the values of the above-mentioned materials and labor cost indices at the time that construction and operations commence.

This plant will be the 24th seawater reverse osmosis desalination plant that Consolidated Water has constructed and the first in the U.S.

“As our first desalination plant in the U.S. that is also under our longest-term contract, this milestone win represents a significant affirmation of the world-class design, construction and operational services that Consolidated Water provides,” stated company CEO, Rick McTaggart. “We believe winning this contract was due to our 50 years of experience designing, building and operating some of the world’s most energy-efficient seawater desalination plants, as well as the exceptional project track record that our team was able to demonstrate to BWS. Key members of the project team include Nordic PCL Construction, Pacific Advanced Civil Engineering, and Bowers + Kubota Consulting.

“We also believe this entrance into the U.S. desalination plant market positions us well for the additional opportunities we are pursuing in the Western U.S., a region that continues to experience unprecedented drought conditions.”

In the surrounding area where the plant will be located, potable water demand is expected to increase from about 24 million gallons per day in 2019 to nearly 27 million gallons per day by 2030, according to O’ahu’s Water Master Plan published by the Board of Water Supply. The new Kalaeloa desalination plant is expected to help meet this anticipated growing demand for potable water.

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