Cayman Water wins first-phase Mexico bid; may dwarf local operations

First phase of two-stage plant scheduled for 2019

The Cayman Water Company has cleared the first of two hurdles, winning the technical phase of its bid to build a half-billion-dollar desalinization plant in northern Mexico, close to the U.S. border.

If successful, in 2019 the company will open the first phase of a two-stage plant, drawing 50 million gallons of Pacific Ocean water each day from the Baja California coast, connecting to pipelines in Rosarita Beach, Tijuana and the Baja Peninsula.

The second phase of the 37-year contract will open in 2024, pumping an additional 50 million gallons per day. A proposed extension of the pipeline would pump up to 40 million gallons per day to the U.S. border and San Diego County’s Otay Water District, reaching more than 3.3 million people in the metropolitan area, easing the region’s critical water shortage.

Friday’s victory came after a Baja California state government board of assessors awarded the Cayman Water Company a score of 49 points – out of a possible 50 – outpacing its two opponents, Spain-based FCC Aqualia, with 48 points, majority owned by Mexican telecommunications tycoon and one of the world’s richest men, Carlos Slim, and Singapore’s Hyflux, with a score of 47.

“We made it through the technical evaluation, and next we open the pricing, said Cayman Water’s president and CEO, Rick McTaggart.

“On the fees, I think we are a little higher than one of the guys, and the results will be announced on June 15.”

Cayman Water has been working on the project since at least 2010, when it acquired a 50 percent stake in Mexico’s NSC Agua, described in Cayman Water’s annual report as a “Mexican development company … formed to pursue a project encompassing the construction, operation and minority ownership of a 100 million gallon per day seawater reverse osmosis desalination plant.”

That stake was ultimately raised to 99.9 percent and in 2012, NSC Agua signed a 20-year lease with the government for 5,000 square meters of land to build water intake and discharge works.

Subsequently, NSC purchased 20.1 acres for the plant itself, gained ocean access and contracted for 80 megawatts of power – more than half of Caribbean Utilities Company’s annual production – from the adjacent generating plant.

Cayman Water Company has also designed the piping network for incoming seawater and outgoing fresh water, bound for Mexican consumers and the U.S. border, although penetrating the American market will depend on U.S.-Mexico talks.

Already, Cayman Water has spent $20.7 million for land and equipment in Rosarita Beach, and another $16.7 million in development expenses, which include an equipment piloting plant, a water data-collection program, engineering studies and governmental permits. Mr. McTaggart pegs the overall cost of the project at between $500 million and $600 million.

In January 2015, Cayman Water submitted a preliminary – and unsolicited – plan for the project, followed in late March by a more detailed proposal.

In June, Baja California accepted the plan as “in the public interest with high social benefits,” opening public tenders on Nov. 6 and setting a March 23, 2016, closing date.

The Mexicali government postponed an April 20 decision on the technical merits of the three bids until May 20, and set a June 15 date for its financial assessment.

If Cayman Water is selected, Mr. McTaggart expects construction will start in August.

The amount of water generated by the Rosarita Beach operation will dwarf anything Cayman Water achieves in Cayman.

The 2015 annual report pegs production capacity at 9.1 million gallons from seven desalinization plants, supplying 5,800 customers in Seven Mile Beach and West Bay, and generating a net income of $7.5 million on $57.1 million in revenues.

Mr. McTaggart did not offer numbers for the Mexico project, but acknowledged the potential: “If the company wins the Mexico bid, then we will become more of an international company than we are now, with Cayman roots.”