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D. González: "In Spain, concession-type contracts are not broadly used"

  • D. González: "In Spain, concession-type contracts are not broadly used"
    David González, International Commercial Director and Concessions of GS Inima.

About the entity

GS Inima acts in all the phases of the projects in which it participates: Design, Technology, Construction, Operation and Maintenance and develops its activity in both the public and private markets.
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GS Inima is a company specialising in environmental services. It becomes involved in every phase of the projects it takes part in: design, technology, building, operation and maintenance, both in the public and in the private sector. Here we talk with David González, Commercial Director for International Business and Concessions.

Question - Firstly, Mr González, we would like to know about your career path up to your current position.

Answer - I am an industrial engineer. I started my career in 1999 at Permacare International Ltd (Manchester, UK), in the department of research, development and innovation (RDI). I was in charge of projects dealing with the autopsy and analysis of different membranes used in Reverse Osmosis. In the field of osmosis, I was in charge of evaluating different chemicals used in membrane cleaning and recovery, and preventing soiling and precipitation of different agents.

Afterwards, I moved on to OHL Medio ambiente (Inima), in Madrid, working in the department responsible for engineering and bids. I was in charge of preparing and submitting bids for desalination projects internationally.

In mid 2002, my career took a turn: I was hired as technical and process director in the international production department of Cadagua. My first challenge was being in charge of the construction of the seawater desalination plant at Yanbú (Saudi Arabia), with a production capacity of 50,400 m3/d.

After completing successfully the Saudi Arabia project, I moved to Dubai (UAE), where I worked for nearly 10 years as the person responsible for business development and contracting for the entire Middle East for Cadagua. During that time I was responsible for three offices located in Gulf Cooperation Council (GCC) countries (Dubai, Saudi Arabia and Oman), as well as several contracts under way in Oman and the Emirates. Worth noting during that period is the award of the Al Ghubrah SWRO Desalination Plant project, with a capacity of 191,000 m3/d and a concession contract for a 20 year term.

In October 2015 I returned to Spain as Global Director for International Business and Concessions at GS Inima, my current position.

GS Inima is focusing its strategy on integrated water management and the purchase of assets or companies that can contribute project references in the sector

Q - What are the main business lines of the company, and how does it stand out from competitors?

A - The strategy of our company is to focus on new markets and new lines of business, not forgetting the Spanish market, which has reached significant maturity. We continue to consolidate our presence in markets such as Brazil, Chile, United States, Mexico or north of Africa, but currently we target Latin America (mainly Colombia and Peru) and the Middle East for our international growth.

In terms of strategy, GS Inima is interested in concession projects and tenders, or contracts to build waste water treatment plants with long O&M terms, more so than isolated engineering, procurement and construction (EPC) projects, where the profit margins are ever smaller.

Besides what I mentioned before, GS Inima is focusing its strategy on integrated water management and the purchase of assets or companies that can contribute project references in the sector. We should note the consolidation of our company in integrated water cycle services in the Brazilian and Spanish markets, with the purchase of SAMAR and ASCAN, respectively.

In addition to those two acquisitions completed in the past two years, our company is currently involved in other buying processes still to be sorted out.

Another aspect worth highlighting, which makes us stand out from our competitors, is our commitment to research, development and innovation. We have a very competent RDI department that constantly strives to optimise processes and offer solutions which are increasingly efficient. Every year a significant budget is allocated to RDI and pilot projects. This positions our company in the water sector, and has brought us recognition at the national and international level, validated with important awards.

GS Inima boasts concession contracts amounting to a treatment capacity of more than 800.000 m3/d, comprising waste water treatment as well as desalination

Q - GS Inima maintains a solid presence internationally, with strong market prospects. Please, tell us about the activities of the company outside of Spain.

A - Currently there are two international markets which are the spearhead for the company, because of their maturity, turnover, consolidation, and long term presence. They are Brazil and Chile, where we have been present for more than 20 years, and where we continue to grow. In this regard, we should highlight the recent awarding of a desalination plant in Atacama, Chile. Also, as I mentioned earlier on, we have been successful in Mexico, the United States, Tunisia, Algeria, Morocco, Portugal and Senegal.

In terms of new markets, in the past three years we have submitted proposals in Colombia, Peru, Panama and the Middle East. We hope that this learning curve will translate into positive results in the near future, so that we can introduce ourselves in those markets with new contracts.

Q - Could you highlight some of your company's significant projects in the water sector outside of Spain?

A - In general I would highlight all projects that involve a concession contract (build-own-operate-transfer  or BOOT, build-own-operate or BOO, and public private partnerships or PPP) because they are long term projects, quite complex when it comes to risk mitigation and sharing between public and private entities. They are complex projects that entail obtaining funds and where many actors are involved in order to ensure a suitable outcome. In this regard, GS Inima boasts concession contracts amounting to a treatment capacity of more than 800.000 m3/d, comprising waste water treatment as well as desalination, with assorted clients across the world (Spain, north of Africa Brazil, Mexico, United States, Chile).

Spain is a very mature market, with many companies that have broad expertise in water treatment

Q - How do the challenges in the water sector in Spain compare to the challenges faced elsewhere?

A - Spain is a very mature market, with many companies that have broad expertise in water treatment. Therefore, it is a very competitive business, both from a technical and an economic perspective, because the profit margins are very low.

On the other hand, knowing the client and the rules of the game, both in terms of legal and financial aspects, entails greater certainty in these contracts.

In our country, concession-type contracts, our primary objective at GS Inima, are not broadly used. Although the business volume is low, we have been quite successful securing contracts that deal with integrated water management in the region of Cantabria, Soria (region of Castile-León) and the region of Castile-La Mancha.

Internationally, the number of competitors bidding for each tender is usually lower, and most of them are Spanish companies. However, the differences in legal and safety regulations, etc., entail an added difficulty to market our services and execute the contracts. In addition, it is difficult to know the local setting in each country to the same extent as you know your own; it requires a lot of effort and investment in an uncertain environment, and usually it takes a long time. For that reason, most of the time the key to success implies partnering with reliable local companies, although this is not simple either.

In general, working internationally requires a strong support structure: this is the case of GS Inima. We have legal, financing, procurement and O&M support departments, and first class engineering, along with experience in many countries worldwide, and especially with concession-type contracts that require the participation of all working teams.

Currently there are two international markets which are the spearhead for the company: Brazil and Chile

Q - Finally, let us look at the future. What are the main goals of your company?

A - The primary goal of our company is to further our growth in terms of project references, sales, portfolio, and specially our EBITDA (earnings before interest, taxes, depreciation and amortization). Our company's turnover has increased more than 50% in the past four years, maintaining a long term constant portfolio of € 4 billion and increasing our EBITDA by 65%. We have gone from an EBIDTA of € 22.6 million in 2014, to an EBIDTA of € 37.4 million in 2017.

And we have done this always with environmentally responsible management. We offer sustainable environmental solutions that meet challenges such as water stress or reducing direct carbon dioxide emissions, and to do so we implement advanced water management strategies that include our own innovation initiatives.