Delfluent

About Delfluent

Delfluent is a consortium of four national and international specialised companies, which is working on the design, construction, finance and management of the new waste water treatment facilities in the region of The Hague for a period of 30 years. The Delfland Water Board, the public authority and employer of Delfluent, has opted for a Public Private Partnership (PPP), the first one in the Dutch water sector.

Foundation Delfluent

The Delfluent consortium was established in 1999 to bid for the International tender launched by Delfland for the Design, Build, Finance and Operate (DBFO) contract including:

1. The development of a new waste water treatment plant in Harnaschpolder;
2. The refurbishment of the existing waste water treatment plant in Houtrust (The Hague);
3. The management of both plants and the accompanying transport system with 18 pumping stations,  for a total period of 30 years.

After being selected as preferred bidder in 2002, the Delfluent company was incorporated in August 2003 and signed, on 5 December 2003, the DBFO contract with the Delfland Water Board, which remains, as local public authority, ultimately responsible for the quality of the waste water in The Hague region.

Project afvalwater Haagse regio

The reason to start the project Afvalwater Haagse Regio (AHR) was the shortage in treatment capacity and the compliance with the more stringent European regulations on waste water. By signing a DBFO contract the Delfland Water Board intended to realise the project within time and in a sustainable and cost-efficient way.

The project is the first Public Private Partnership (PPP) in the water sector of The Netherlands. Given the limited available implementation time, a choice was made to apply proven technologies for the design. The aim is to enlarge the treatment capacity of waste water and to comply with the stringent European regulations on waste water, within the allotted time and taking into account a cost saving of at least 10,5% compared to a conventional way of contracting.

Company values Delfluent

Our objective is “the sustainable treatment of waste water in order to improve the quality of our environment in the longer term”. This objective is also expressed in the long, 30-year, contract period. Sustainability occupies centre stage in our activities, not only in the construction, the maintenance and the operational activities, but also in the strengthening of our relationship with the interested parties and the increase in our knowledge and expertise. Furthermore, with our end product, purified water, we are already working towards a cleaner and more sustainable society.

An additional advantage of long-term responsibility for the management and maintenance is that investments are made in sustainable solutions during the construction and renovation of both plants. The greatest contribution towards the energy sustainability derives from the recycling of biogas from sludge waste. This gas is good for a substantial part, over 50%, of the total energy requirement of Harnaschpolder. In addition, durable materials, high rate of return from the electrical and mechanical equipment, minimal drinking water consumption and taking the natural environment into account are important aspects that were considered in the design.

In their search how to arrive at a cheaper way to implement this project, The Delfland Water Board comes into contact with the Ministry of Finance and the Netherlands Investment Bureau (NIB). The NIB proposes a PPP-construction, which could result in a cost saving for the Delfland Water Board of 150 million guilders. The Delfland Water Board starts to draw up plans for such a construction. Part of the activities consisted of the adaptation of the Water law (Waterschapswet), to make it possible to outsource the operation and maintenance activities, while the final responsibility remains with the Delfland Water Board.

Tendering and contracting

The choice of the PPP-partner was made through a European tender procedure. In September 2002 the European tender procedure is finalized. From the eight bidders, three were found to be acceptable. Finally Delfluent was selected as “preferred tenderer” with a cost saving 13,4%. After carrying through several adaptations, Delfluent submitted its “Best and Final Offer”, followed by the contract negotiations.

In December 2003 the DBFO-contract (Design-Build-Finance-Operate) was signed. A cost saving of 17,2% was realized, more than the required 10,5%. The construction works of the new Waste Water Treatment Plant (WWTP) Harnaschpolder started in January 2004.

Contract & back-to-back contracts

Based on the risk matrix, which was drawn up during the tender procedure, it was decide which activities could best be put under the PPP-contract. The principle that the party that can best cope with a certain risk should bear that risk, was applied.

A DBFO-contract was signed between The Delfland Water Board and Delfluent. Delfluent has sub-contracted the design and construction, including the related risks to BAHR through the EPC-contract. The operation and maintenance and all related risks were sub-contracted to DSBV through the O&M-contract.

Besides these contracts, Delfluent has entered into a Common Terms Agreement (CTA) and two financing contracts (Commercial Facilities Agreement and EIB Finance Contract) to arrange the project financing. Guarantees to the banks are contractually arranged by signed of Direct Agreements between the banks, The Delfland Water Board and Delfluent. This gives the banks and the Delfland Water Board the right to step in, in case Delfluent would not fulfil its contractual obligations.

As per 15 June 2016 all finance contracts have been terminated as a result of the restructuring of the finance. At all times, the Delfland Water Board will remain the rightful owner of the treatment plants and the transport system, while Delfluent has obtained the ‘Right of Use’ for the duration of the 30-year concession period. The Delfland Water Board retains its public responsibility with regard to the treatment of waste water.

The Delfland Water Board

The Delfland Water Board has adapted its organization ir order tp cope with the PPP contract by installing a Contract Management Team. Within the Delfland Water Board, this team is responsible for the control of the contract with Delfluent. The various disciplines within the management team, make it possible for the Delfland Water Board to guarantee sufficient control over the contractual obligations of Delfluent.
 

Delfluent

Delfluent has a limited number of activities (mainly financing) taken care of by herself. This is realized with a small organisation (during the construction phase 7 persons and now 4), which is primarily focussed on the relationship with the Delfland Water Board, the compliance with the contractual obligations, maintaining the insurance portfolio and the financial reporting to the financing agencies.
 

BAHR

BAHR consortium consists of a combination of Veolia Water Solutions & Technologies (50%), Heijmans en Strukton (50%). BAHR entered into the Engineering Procurement Construct (EPC) contract with Delfluent and is the responsible main contractor for the design and the construction of WWTP Harnaschpolder, the refurbishment of WWTP Houtrust and the commissioning of both treatment plants.
 

Delfluent Services

The shareholder of Delfluent Services (DSBV) is Evides Industriewater (100%). DSBV has entered into the Operation & Maintenance (O&M) contract with Delfluent and is responsible for the operation and maintenance of the treatment plants and the accompanying transport system with 19 pumping stations.

Shareholders Delfluent

Delfluent is a consortium of Evides Industriewater, DIF and Strukton. At the start of the project and during the construction phase, Heijmans, Veolia and Rabobank were partners in the consortium as well. These companies have earned their name in their own field of work.

Waterbedrijf Evides is the supplier of drinking and industrial water in the South-West of The Netherlands and has at its disposal a broad know-how of water treatment and distribution. The construction firm Strukton has ample experience in the field of large and complex construction Works and PPP-concession projects, both nationally as well as internationally. DIF is a leading independent fund management company. The combined forces of these expertises in Delfluent, guarantees quality and cost savings.

Shareholders

• 54,5%    Evides Industriewater
• 35,5%    DIF
• 10%       Strukton

Financing model

The financing of the project is realized through a so called Project Finance Initiative (PFI). This relates to the way risks are structured in the Special Purpose Company (SPC) Delfluent and the financing agencies in the project are secured.

At the same time that the contract negotiations between the Delfland Water Board and Delfluent were held, negotiations with the financing agencies of the project were held as well. These financing agencies were Rabobank and Dexia (commercial banks) and the European Investment Bank (EIB). Upon the formation of the syndicate in the first half of 2004 eight more banks joined the project.

Total amount

In total an amount of € 362,5 million was required which was financed as follows:

•           Main Loan of  € 166,4M
•           EIB Guarantee Facility of € 132,5M
•           Junior Funds Bridge Facility of € 43,6M
•           Standby Facilities of € 20M

By making use of financial instruments all financing risks for the project have been eliminated.

The service fee comprises a fixed and a variable component. The fixed component mainly consists of financing costs and the variable component is a compensation for flows and treated pollutants, based on agreed tariffs.

Restructuring of the finance

In order to reduce contract costs, a restructuring of the finance on of HHDelfland has taken effect per 15 June 2016. By attracting external financing, HHDelfland was able to pay an advance on future service fees to Delfluent. This was used by Delfluent to pay off all its external loans in full. The current financing that remains for Delfluent is the 43.6M Junior Funds Bridge Facility.

Archaeology

Sustainable building also means paying attention to the history of the area in which you build. In the Harnaschpolder, where the large waste water treatment plant is springing up, people have left their tracks through the ages. On and around the building site there have been a large number of finds and at the edge of the plant site, an archaeological reminder has been established in a cross-section of a dune, with a replica wooden New Stone Age house.

Landscape and nature: green zone

A lot of attention has been paid to the permanent integration of the waste water treatment in the existing and changing landscape and nature. In consultation with people living in the neighbourhood and themunicipalityofMidden-Delflandit was decided to develop a green zone around the site, a so-called leave-strip landscape. However, it was consciously decided not to hide the plant. Walkers can choose a route with a view of the settling tanks or a green route. The design of the green zone also refers to the former landscape, with vegetation from the New Stone Age and the Roman era.

Milestones

General

• 15-01-2003 – Order to proceed
• 04-12-2003 – Contract close
• 31-05-2008 – Service Delivery
  

Harnaschpolder

• 01-10-2003 – Construction work commenced
• 01-09-2006 – Starting up treatment
• 18-12-2006 – Availability of Capacity Intermediate
• 31-05-2008 – Availability of Capacity 100%
• 30-06-2008 – Completion Certificate
  

Houtrust

• 08-01-2007 – Start of Phase 1 upgrade works
• 03-10-2007 – Availability of 50% Capacity
• 04-10-2007 – Start of Phase 2 upgrade works
• 31-05-2008 – Availability of Capacity 100%
• 31-12-2009 – Completion Certificate
  

Transport System

• 01-06-2006 – Influent transport system available
• 01-06-2006 – Effluent transport system available
  

Financial

• 05-12-2003 – Financial close
• 30-01-2009 – Repayment of Junior Funds Bridge
• 15-06-2009 – First Repayment date of Senior Debt
• 21-11-2011 – EIB Guarantee Release
• 15-06-2016 – Restructuring of the finance