This is a best prospect industry sector for this country. Includes a market overview and trade data.
Against a backdrop of increasingly scarce natural resources, climate change, and major environmental disasters, the sustainable management of resources plays a more important role than ever in the economic and environmental performance of businesses.
As the government and the civil society pay ever closer attention to the environmental impact of companies, water management represents a major challenge for every sector of industry, from power, oil, and gas (upstream and midstream, downstream and petrochemicals), to mining and metals, chemicals and pharmaceuticals, pulp and paper, food and beverage, utilities. Both businesses and households are driven to optimize water consumption, improve water treatment, especially industrial, and implement water reuse technologies. Overall, industry already accounts for almost 22% of water consumption, behind agriculture, but well ahead of human consumption. According to the Russian National Research Institute’s Highest School of Economics, the industrial water market in Russia is worth an estimated $93 million.
One-fifth of the world’s fresh surface and groundwater is located in Russia. Only 4 percent of the surface water sources in Russia meet hygienic requirements ensuring the safety of the public drinking water.
The water utility sector is one of the largest in Russia with a total of 8,801 water supply systems and centralized water supply utilities. These systems are used by more than 120 million people residing in almost 1100 towns and more than 200 small villages. However, the centralized water supply caters to the needs of only 85.5 percent of the total population of Russia according to Rosstat data for 2019.
According to different estimates, the total 2019 Russian market size for environmental technologies and products, including the water, wastewater, and waste management segments, was estimated at $187 million with potential future annual growth of 20-25%. (Sources: Russian Federal Service of State Statistics, Russian Association of Water and Wastewater, Russian Customs, Ministry of Natural Resources)
The majority of the public utilities’ infrastructure is municipally owned and managed by the local Vodocanals (Waterworks), municipal unitary enterprises. The Russian municipal water supply system includes water lines, pumping stations, water treatment and water purifications systems, water supply networks, and water sanitation stations. The number of Vodocanals in the Russian Federation exceeds 800.
The majority of water supply and wastewater treatment facilities are worn down, depreciated, and require immediate modernization. According to the Russian Association of Water (Supply) and Wastewater (Disposal), approximately 60% of the infrastructure must be replaced within the next five to10 years.
The past decade brought a considerable change to the government and business attitude to the industry, clearly manifesting itself in the growing percentage of the municipal assets’ privatization, improvement of the state legislation, large-scale state modernization programs such as the State Program “Pure Water” (2011-2017) and the National Project “Ecology” (2019-2024). The biggest portion of the “Ecology” project deliverables relates to the preservation of Russian surface water resources, industrial wastewater elimination, sustainable operation of municipal water systems, and improvement of the drinking water quality. According to the “Ecology” project, the Russian government has committed to secure some $56.5 billion to tackle the acute environmental issues related to water treatment and waste management and stimulate the development of the industry. The funds will be provided by federal sources and by private businesses.
Most capital expenditures are invested in imported equipment, raw materials, and products. Russia has a deficit of domestic water treatment equipment and treating agents production such as coagulant aids, flocculants, oxidizing agents, anti-degradants, sorbents and drying agents,
The most advanced technologies for the water treatment industry are in high demand in the largest Vodocanals of Moscow and St. Petersburg, and managed under concession agreements for regional Vodocanals in Voronezh, Nizhny Novgorod, Kazan, Perm, Rostov-on-Don, Samara, Volgograd, Ufa, and Omsk. Significant innovations in the area of industrial water treatment are being implemented in the border regions of Russia, such as Vladivostok (having border surface waters with Japan), St. Petersburg (having border surface waters with Finland), Kaliningrad, the Arctic region, etc.
Large global companies such as P&G, International Paper, BAT, Siemens, JTI, Fortum, Unilever, and many others, having production facilities and operations in Russia, along with the biggest Russian industrial and production companies such as Severstal, Uralkali, Norilsk Nickel, Novatek, Rusagro, Rusal, etc., located throughout the country are more concerned about their ecological footprint, closely monitor their ecological impact, and have access to funds to invest in sustainable operations. They require the most efficient technologies and products from the entire water, wastewater, and process value chain, including design and build projects, specialty chemical services, equipment and system offerings, outsourced services, and digital water management solutions.
The demand for pure drinking water in Russia will be growing, according to the forecast of Russian environmental consultants, and to meet this demand, the water and wastewater sector will have an increased need for equipment and technologies to help them complete a major refurbishment of the water infrastructure. These environmental issues are getting more attention from the government and are addressed in the Strategy of Ecological Safety which was approved by the Russian President in 2017. The strategy was aimed at tackling environmental issues throughout 2024. In 2019, the action plan to implement the strategy was finalized, and supported by the major Federal Project “Ecology”.
Industry experts see a lack of domestically produced equipment and state-of-the-art technologies, reflected in the import numbers for 2019, comprising almost 30% of the market, according to the Russian Customs’ data. The biggest share of imports belongs to Germany (18%), China (17%), Italy and France (12% combined?), and the U.S. (6%). Rising demand, increased focus on ecology, and a lack of domestically produced equipment and technologies mean the water and wastewater sector offers plenty of opportunities for U.S. companies pursuing a long-term commitment to the Russian market.
All Russia Water Congress
- Russian Association of Water and Wastewater
- Mott Macdonald