SAN ANTONIO – It started out, by most accounts, as a good business deal.
"The return was estimated to be upwards of 12 percent over a 30-year period, so this was a pretty fantastic project,” said David Vequist, a professor of management at the University of the Incarnate Word of the Vista Ridge project.
Vequist has closely studied the business deal between the San Antonio Water System and the Spanish company Abengoa. The two entities began negotiations in 2011 and eventually came together as business partners in an effort to diversify the future of San Antonio’s water supply.
"And then a little [potential] bankruptcy happened along the way for one of the major partners,” Vequist said.
Abengoa S.A. is on the brink of what is predicted to be the largest bankruptcy in Spain’s history.
"The country of Spain has never seen a bankruptcy like this before,” Vequist said.
The company, however, follows a somewhat non-traditional model. The entity overseeing the Vista Ridge project is a subsidiary of Abengoa S.A. At the moment, this branch of the company appears to be making the project a priority.
Abengoa recently moved all of its employees from its Austin office to the company’s San Antonio office in a move that indicates the company may be doubling down on the Vista Ridge project.
Still, the effects of the financial issues seemed to have trickled down. On Tuesday, Abengoa announced it was now searching for additional investors for the Vista Ridge project. According to Vequist, it may still be a good business deal for whoever opts to join.
"The problem is, whenever you bring somebody else into the bedroom and there is now not two people but three people, it starts to get a little wild and wooly, because they may have other interests,” Vequist said.
SAWS said provisions in the contract protect against this. SAWS has also stated a complete takeover of the project could happen as a last resort, should everything go south.
Vequist believed it remained a fluctuating situation with plenty of intrigue.
"We should get ready for a wild ride in the future, because I don't think this is over,” Vequist said.
Abengoa, as of Friday, did not return phone call or email requests for comment.
SAWS opted not to comment on camera Friday, but did provide a statement on Thursday, for a previous story:
“The Vista Ridge Pipeline continues to be a viable project, and SAWS is fully committed to adding this resource to our diversified water portfolio.As any significant water project will face hurdles, this contract was negotiated to ensure San Antonio’s interests are protected. A component to the contract is the ability for SAWS to take over, as Abengoa was reminded at our Board meeting earlier this week. However, we would prefer to continue this current arrangement and we will ensure any proposed investor shares SAWS’s commitment to the project and its long term success.”