Industrial Wastewater Treatment

Industrial Wastewater Treatment

Photo by Shutterstock / Milosz Maslanka

Industrial Wastewater Treatment

Country
Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Infrastructure
Sub Sector
Most major industry classification systems use sources of revenue as their basis for classifying companies into specific sectors, subsectors and industries. In order to group like companies based on their sustainability-related risks and opportunities, SASB created the Sustainable Industry Classification System® (SICS®) and the classification of sectors, subsectors and industries in the SDG Investor Platform is based on SICS.
Utilities
Indicative Return
Describes the rate of growth an investment is expected to generate within the IOA. The indicative return is identified for the IOA by establishing its Internal Rate of Return (IRR), Return of Investment (ROI) or Gross Profit Margin (GPM).
10% - 15% (in IRR)
Investment Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.
Medium Term (5–10 years)
Market Size
Describes the value of potential addressable market of the IOA. The market size is identified for the IOA by establishing the value in USD, identifying the Compound Annual Growth Rate (CAGR) or providing a numeric unit critical to the IOA.
< USD 50 million
Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.
> USD 10 million
Direct Impact
Describes the primary SDG(s) the IOA addresses.
Clean water and sanitation (SDG 6) Good health and well-being (SDG 3)
Indirect Impact
Describes the secondary SDG(s) the IOA addresses.
Industry, Innovation and Infrastructure (SDG 9) Life Below Water (SDG 14) Climate Action (SDG 13)

Business Model Description

Construct and operate water treatment facilities that treat industrial and oil-contaminated water using membrane bioreactor (MBR) systems for industrial waste-water and three-phase decanter technology for separation of oil from the water before discharge to the sewer system or for non-potable use, including irrigation and industrial needs.

Expected Impact

Enhance public health with increased access to quality water in urban and rural areas of Azerbaijan, while reducing water pollution caused by untreated water discharge into water bodies of the country.

How is this information gathered?

Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.

Disclaimer

UNDP, the Private Finance for the SDGs, and their affiliates (collectively “UNDP”) do not seek or solicit investment for programmes, projects, or opportunities described on this site (collectively “Programmes”) or any other Programmes, and nothing on this page should constitute a solicitation for investment. The actors listed on this site are not partners of UNDP, and their inclusion should not be construed as an endorsement or recommendation by UNDP for any relationship or investment.

The descriptions on this page are provided for informational purposes only. Only companies and enterprises that appear under the case study tab have been validated and vetted through UNDP programmes such as the Growth Stage Impact Ventures (GSIV), Business Call to Action (BCtA), or through other UN agencies. Even then, under no circumstances should their appearance on this website be construed as an endorsement for any relationship or investment. UNDP assumes no liability for investment losses directly or indirectly resulting from recommendations made, implied, or inferred by its research. Likewise, UNDP assumes no claim to investment gains directly or indirectly resulting from trading profits, investment management, or advisory fees obtained by following investment recommendations made, implied, or inferred by its research.

Investment involves risk, and all investments should be made with the supervision of a professional investment manager or advisor. The materials on the website are not an offer to sell or a solicitation of an offer to buy any investment, security, or commodity, nor shall any security be offered or sold to any person, in any jurisdiction in which such offer would be unlawful under the securities laws of such jurisdiction.

Read More

Country & Regions

Explore the country and target locations of the investment opportunity.
Country
Region
  • Azerbaijan: Baku
  • Azerbaijan: Central Aran
  • Azerbaijan: Absheron - Khizi
  • Azerbaijan: Shirvan - Salyan
Learn more

Sector Classification

Situate the investment opportunity within sustainability focused sector, subsector and industry classifications.
Sector

Infrastructure

Development need
Even though infrastructure development fares well compared to neighboring countries, expanding and raising the quality of existing assets such as road, water, waste and sanitation services is essential to support economic diversification. Increased efforts are needed to maintain and modernize the existing road and rail network, while water resources are threatened by the heavy oil industry and untreated sewage and industrial waste (1, 2, 10).

Policy priority
Strategic Roadmap for National Economy Perspective 2016 highlights investments in high-quality infrastructure to position Azerbaijan as a regional hub by 2025. Azerbaijan 2030: National Priorities for Socio-Economic Development lists development of international and regional transport corridors and building of modern infrastructure to harness country-wide economic potential among its key goals (3, 4).

Gender inequalities and marginalization issues
Regional differences in the delivery of infrastructure services are significant, with rural areas being neglected in favor of the capital city region, severely hampering their economic prospects (2). Women spend on average three times as much as men on unpaid domestic labor. Due to the deterioration of roads, water and sanitation systems women spend longer hours to finish both paid employment and domestic tasks (2, 5).

Investment opportunities introduction
Azerbaijan’s planned and current transport infrastructure projects reached USD 7.5 billion in 2019, while accounting for 15% of total greenfield FDI, among the highest in the region. In line with government objectives to diversify its economy significant opportunities exist for freight forwarders, logistics/supply chain developers and transport equipment investments (6, 7).

Key bottlenecks introduction
Budgetary constraints due to high capital requirements for infrastructure development and maintenance, despite ambition to diversify the economy, continuing emphasis on hydrocarbon exports and associated groundwork, dominant role of the public sector for providing infrastructure, and uncompetitive tariffs and utility prices are among the key challenges limiting private sector participation in the sector (2).

Sub Sector

Utilities

Development need
National water resources in Azerbaijan have decreased by 15% over the last decade, expected to further deplete by 5-10% by 2024 due to rising temperatures. Key groundwater sources flow from outside the country and are exposed to overuse and pollution from industries and municipalities. Untreated municipal wastewater is cited as the largest source of pollution of water basins followed by oil spills and leakages (7, 8, 9).

Policy priority
Action Plan on Ensuring Efficient Use of Water Resources for 2020-2022 was developed to enhance the use of national water resources and improve the drinking water supply. Strategy of Socio-Economic Development of the Republic of Azerbaijan between 2022 – 2026 states that the government targets to increase drinking water supply from 70% to 85% by 2026 (11, 12).

Gender inequalities and marginalization issues
In the absence of a reliable water supply network women are forced to collect water from outside sources requiring longer travel distances, schedule their household chores based on water availability, and are required to boil or filter collected water that might be damaging to households’ health. Difficulties in access to water is accentuated in rural regions, where populations often drink water from untreated river resources (13, 14).

Investment opportunities introduction
The government invested over USD 3 billion in critical utility infrastructure in the last two decades including water and sanitation services and USD 4 billion to implement the Azerbaijan Water Program. Opportunities exist for exporting foreign technology and know-how in water and wastewater management for industrial and agricultural facilities (7, 14, 9).

Key bottlenecks introduction
Limited scope of existing legislative frameworks and transboundary water management, lack of technical capacity and know-how on water management, high public involvement in utility service provision, short tendering phases and high need for capital investments are among the key challenges facing investors in the utility sector (9, 15).

Industry

Water Utilities and Services

Pipeline Opportunity

Discover the investment opportunity and its corresponding business model.
Investment Opportunity Area

Industrial Wastewater Treatment

Business Model

Construct and operate water treatment facilities that treat industrial and oil-contaminated water using membrane bioreactor (MBR) systems for industrial waste-water and three-phase decanter technology for separation of oil from the water before discharge to the sewer system or for non-potable use, including irrigation and industrial needs.

Business Case

Learn about the investment opportunity’s business metrics and market risks.

Market Size and Environment

Market Size (USD)
Describes the value in USD of a potential addressable market of the IOA.

< USD 50 million

Critical IOA Unit
Describes a complementary market sizing measure exemplifying the opportunities with the IOA.

Volume of discharge of sewage waters was 5,237 million m3 in 2021 of which 229 million m3 was untreated waste water (22).

Of the 5,237 million m3 of discharged sewage waters, 229 million m3 was untreated waste water in 2021 (22).

The country-wide volume of recycled and re-used water from economic activities including agriculture, mining and manufacturing reached 2,795 million m3 in 2021. The proportion of safely treated wastewater was 53% in 2021 (21).

18% of fresh water consumption was for industrial use in 2019 (9).

Capital investments directed to the protection of water resources and their rational use reached AZN 71.3 million (USD 42 million) in 2021 (22).

Indicative Return

IRR
Describes an expected annual rate of growth of the IOA investment.

10% - 15%

The Water Supply and Sanitation Investment Program supported by the Asian Development Bank (ADB), targeting water sanitation and services in the two towns of Nakhchivan and Goychay revealed a financial internal rate of return of 11.3% due to low water supply tariffs and high operational expenses related to membrane treatment. As a DFI supported project, the benchmark return can appear as above market standards (24).

World Bank Group's National Water Supply and Sanitation project in partnership with Azersu which comprised of a USD 207 million investment in the rehabilitation and reconstruction of water supply and sanitation infrastructure which included wastewater treatment in 4 rayons calculated an economic internal rate of return of 10.4% at appraisal date. As a DFI supported project, the benchmark return can appear as above market standards (25).

The application of a Moving Bed Biofilm Reactor - Membrane Bioreactor (MBBR-MBR) wastewater treatment system in a textile factory in Europe revealed an internal rate of return of 18% at the industrial scale (23).

Investment Timeframe

Timeframe
Describes the time period in which the IOA will pay-back the invested resources. The estimate is based on asset expected lifetime as the IOA will start generating accumulated positive cash-flows.

Medium Term (5–10 years)

The loan provided by ADB for the Water Supply and Sanitation Investment Program covered the period from 2009 to 2013 at appraisal which was later extended to 2017 resulting in a payback term of 8 years (24).

The example case study of the European textile factory implementing MBBR-MBR systems for wastewater treatment calculated return estimations based on a 15 year payback period (23).

A case study on a European manufacturer of high-quality metals investing in industrial water efficiency solutions including wastewater treatment conducted by IFC revealed a short-term payback period where the sampled company was able to achieve returns after two years following the initial investment of USD 3.1 million (26).

Ticket Size

Average Ticket Size (USD)
Describes the USD amount for a typical investment required in the IOA.

> USD 10 million

Market Risks & Scale Obstacles

Capital - CapEx Intensive

High need for massive investments associated with wastewater treatment facilities coupled with low tendering phases for public procurements might disincentivize investors (9).

Business - Supply Chain Constraints

Aggravation of water shortages due to climate change might constrain of water supply and need for wastewater treatment in industrial facilities (9).

Market - Highly Regulated

The water sector in Azerbaijan has a concentrated structure around state owned entities, posing entry barriers for private operators, while the regulatory framework remains fragmented and underfunded (25, 30).

Impact Case

Read about impact metrics and social and environmental risks of the investment opportunity.

Sustainable Development Need

Most water in domestic and industrial use in Azerbaijan is not treated nor reused, where only 53.3% of wastewater was safely treated in 2021 leading to significant pollution in main water bodies (9, 22).

Due to oil industry activities, water resources of Azerbaijan are heavily polluted, threatening public health and biodiversity. Annually, roughly 12 billion m3 of untreated wastewater including 1,500 tons of oil waste are discharged into the Caspian Sea (28, 29).

Since Azerbaijan is a downstream country, it is vulnerable to water quality risks. Lack of transboundary river management with its neighbors is one of the main challenges that increases pollution and environmental exploitation, undermining water safety (30, 31).

Gender & Marginalisation

Although 91% of the population has access to improved water sources, the rate is only 83% for rural residents. Due to the limited access to piped-water supply in rural areas, the population relies on local artesian wells which are more vulnerable to pollution from effluent water discharges (13, 32).

Access to drinking water is unevenly distributed across the country. The Kura river which is the main source of drinking water for many cities is significantly threatened by increased industrial production in the Absheron region and neighboring countries including Georgia, negatively impacting health outcomes for populations reliant on the resource (33).

Lack of safe water, sanitation, and hygiene (WASH) facilities disproportionally affects women's health, especially in educational facilities for school-aged girls (13, 34).

Expected Development Outcome

Decreased discharge of effluent water waste from industrial facilities will improve water and food security improving overall public health and quality of life.

Efficient management and use natural water resources will be achieved, which have already decreased by 15% due to the impact of climate change (28).

Azerbaijan will become more resilient to water quality risks from reduced discharge of industrial wastewater, enhancing public supply of safe water to the population.

Gender & Marginalisation

Women who are primarily responsible for acquiring water for household chores will benefit from increased availability of quality water due to decreased pollution in main surface and ground water resources.

Quality clean water will become available nation-wide enhancing sustainable and inclusive regional development.

Primary SDGs addressed

Clean water and sanitation (SDG 6)
6 - Clean water and sanitation

6.1.1 Proportion of population using safely managed drinking water services

6.3.1 Proportion of domestic and industrial wastewater flows safely treated

6.3.2 Proportion of bodies of water with good ambient water quality

6.4.2 Level of water stress: freshwater withdrawal as a proportion of available freshwater resources

6.5.1 Degree of integrated water resources management

Current Value

88% for the total population, 78% in rural areas and 96% in urban areas (2020) (35, 36).

53.3% (2021) (37).

66.7% (2021) (37)

57.3% (2021) (37)

40% (2021) (37).

Target Value

The Strategy of Socio-Economic Development of the Republic of Azerbaijan between 2022 – 2026 sets the target to increase drinking water supply coverage to 85% by 2026 from 70% in 2021 (12).

The Strategy of Socio-Economic Development of the Republic of Azerbaijan sets the target to complete sanitation systems in 32 cities to achieve treatment of wastewater by 2026 (12).

N/a

N/A

N/A

Good health and well-being (SDG 3)
3 - Good Health and Well-Being

3.9.2 Mortality rate attributed to unsafe water, unsafe sanitation and lack of hygiene (exposure to unsafe Water, Sanitation and Hygiene for All (WASH) services)

Current Value

3.64 deaths per 100,000 population in 2019 (36)

Target Value

N/A

Secondary SDGs addressed

9 - Industry, Innovation and Infrastructure
14 - Life Below Water
13 - Climate Action

Directly impacted stakeholders

People

Overall population benefits through improved public health and environmental outcomes enhancing quality of life.

Gender inequality and/or marginalization

Women who are primarily responsible for accessing water for household duties will benefit from increased access to clean and reliable water.

Planet

Discharge of the wastewater to the Caspian Sea and main water bodies of Azerbaijan including the Kura river will be avoided; decreasing water pollution.

Corporates

Wastewater treatment companies and treatment plant installers can enjoy increased business opportunities.

Public sector

The government will achieve its goal to increase drinking water supply coverage to 85% by 2026 from 70% in 2021 through decreased industrial wastewater discharges to main water bodies (12).

Indirectly impacted stakeholders

People

Population involved in farming can benefit from increased access to water for supplying irrigation systems.

Gender inequality and/or marginalization

Increased access to clean water from reduced pollution will enhance health benefits for rural households particularly women in meeting their sanitary needs.

Planet

Water resources of the country will be preserved and water efficiency will be increased in face of water scarcity.

Corporates

Industrial companies can achieve financial benefits from resource recovery and reuse of wastewater.

Outcome Risks

Construction and operation of wastewater treatment facilities are emission intensive and can produce a negative impact when external energy and chemical input and consumption are accounted for (38).

Trenching and installation of water infrastructure during the construction of water treatment facilities can generate waste and contaminate surrounding soil, disrupting surrounding households (39).

Impact Risks

High costs associated with the installation of wastewater treatment technology in industrial facilities may limit adoption by companies, which may lower the expected impact (9).

The existing water supply infrastructure remains in poor condition (1), which may limit the expected impact of delivery of treated wastewater to end-users.

Absence of timely and harmonized data on water supply and sanitation can limit the monitoring and measurement of impact (24).

Impact Classification

C—Contribute to Solutions

What

Investment in water treatment in industrial facilities will decrease water contamination and pollution in main water sources, increasing access to high-quality clean water for the population.

Risk

Limited data availability on wastewater management and discharge, and infrastructural deficiencies with existing water supply network can limit expected impact of wastewater treatment in industrial facilities.

Contribution

Industrial waste water facilities, in addition to the state-owned potable water treatment services already in-place, contribute to continuous access to water for the population by decreasing pollution in the main water bodies.

Impact Thesis

Enhance public health with increased access to quality water in urban and rural areas of Azerbaijan, while reducing water pollution caused by untreated water discharge into water bodies of the country.

Enabling Environment

Explore policy, regulatory and financial factors relevant for the investment opportunity.

Policy Environment

Azerbaijan 2030: National Priorities for Social Economic Development, 2021: highlights efficient usage and harnessing of water resources for supplying quality water under the national priority of "clean environment and a country of green growth" (4).

Social and Economic Development Strategy, 2022-2026: indicates effective water resource management including reducing water losses, expanding use of alternative water resources and wastewater treatment facilities to reach the target of increase drinking supply to 85% by 2026 (12).

Strategic Roadmap for the Development of Utilities Services, 2016: includes the expansion of clean and waste water infrastructure penetration and increasing efficiency of the water supply among the strategic targets of the vision-2025 (41).

Action Plan to ensuring the efficient use of water resources, 2020-2022: includes targets of effective water management in the energy sector, rational use of water for irrigation, upgrading the drinking water supply system and expanding water resource availability while establishing an electronic water management system (40).

Draft National Water Strategy, 2021: targets to improve the institutional and legislative structure and cooperation on efficient use of water resources while developing a system for water resource management including wastewater (40).

Financial Environment

Financial incentives: Financial incentives: The European Water Initiative Plus (EUWI+), a 2016 project funded by the EU with a budget of EUR 23.5 million (USD 25.6 million) included USD 6.5 million of direct investment in Eastern European countries including Azerbaijan, to improve river management planning and water quality monitoring (30).

Other incentives: FASEP (Private Sector Research and Assistance Fund) program, constituting a grant of EUR 700,000 (USD 765,000) provided by the government of France is designed to assist local authorities in conducting research in the preparation of infrastructure investment, a pilot project for water distribution infrastructure is underway in Baku (47).

Regulatory Environment

Water Code of the Republic of Azerbaijan 1997: governs the legal relations connected with the use and protection of water bodies in the country, encompassing international legal treaties, ownership, end-usage indicating that waste waters may be used for agricultural needs (42).

The Law of Azerbaijan Republic on Water Supply and Sewage, 1999: regulates the relationships between parties involved in supplying consumers with sufficient and quality water and treatment of sewage that complies with state regulations and sets qualitative standards for water metering (43).

The Law of the Republic of Azerbaijan on the Protection of Environment, 1999: sets the legal, economic and social parameters for environmental protection, to prevent the hazardous impacts of industrial activities to and ensure biological diversity and proper use of resources (44).

On Water Economy of Municipalities, 2001: Regulates the utilization and protection of water structures in municipal boundaries and sets the rights and duties of municipalities to regulate water relations including water economy systems and methods of water extraction and transportation (45).

Framework Convention for the Protection of the Marine Environment of the Caspian Sea, 2003: Signed between Azerbaijan, Iran, Kazakhstan, Russia, and Turkmenistan; outlining standards for monitoring human activities and protection for biodiversity in the Caspian sea (46).

Marketplace Participants

Discover examples of public and private stakeholders active in this investment opportunity that were identified through secondary research and consultations.

Private Sector

BP, Tekno - Atinak, Veolia Water, SUEZ Group, Ekol Engineering Services CJSC, Ecoservices Ltd.

Government

Ministry of Ecology and Natural Resources, Minister of Economy, Ministry of Health, Azerbaijan Amelioration and Water Management OJSC (SAWMA), Azersu OJSC, State Agency for Water Resources, Water Commission.

Multilaterals

World Bank Group, European Bank for Reconstruction and Development (EBRD), Asian Development Bank (ADB), European Union, United Nations Economic Commission for Europe (UNECE), Food and Agricultural Organization of the United Nation (FAO), United Nations Development Programme (UNDP), GEF, Korea International Cooperation Agency, German-Azerbaijani Chamber of Commerce (AHK).

Non-Profit

Regional Environmental Center for the Caucasus (REC), Global Water Partnership, Azerbaijan Water Users Associations, Azerbaijan Entrepreneurs Confederation (ASK).

Target Locations

See what country regions are most suitable for the investment opportunity. All references to Kosovo shall be understood to be in the context of the Security Council Resolution 1244 (1999)
country static map
urban

Azerbaijan: Baku

Approximately 50% of wastewater in Baku including sewerage is left untreated. Domestic and industrial wastewater are transmitted through the same network, which is frequently overloaded due to rising industrial activity and a population which has doubled in the city center causing increased number of accidents. At 52%, Baku is the region consuming the second largest share of water for industrial purposes (41, 25, 22).
semi-urban

Azerbaijan: Central Aran

Mingechevir (Central Aran) is the third largest consumer of water for industrial purposes, recorded at 52% of its total water supply (22).
semi-urban

Azerbaijan: Absheron - Khizi

Sumgait City located in Absheron-Khizi, directed 67% of its total water supply for industrial use in 2021, rendering it the largest consumer of water for industrial purposes in the country (22).
semi-urban

Azerbaijan: Shirvan - Salyan

Following Sumgait, Baku and Mingechevir, the city of Shirvan is also a significant consumer of water for industrial activities, allocating 50% of its total water supply in 2021 (22).

References

See what sources were used to establish the investment opportunity’s data and find resources that could be consulted to explore more.