Ann: Agreement for anticipated Aspiral China sales approx USD45M, page-198

@Dungiven,

Good timing by @willchang409 with his post here.

According to @ywtoh, one of the guys that WJY brought to Fluence with him from the power industry, thought outside the square and asked the question of iTEST about service areas, even though they were not part of the initial planned rural sewage partnerships.

It could turn out to be the single most important relationship that Fluence will develop in China.

As suspected, they are looking at further delving into different types of projects, and pushing deeper into the environmental protection market.
Their relationship with the China Highway Society is allowing them to market their MABR solution to all highway operators across China, and even internationally into the Belt and Road countries. Being a well respected SoE is allowing them to win awards in Hubei related to environmental protection. Beijing is using Hubei as a demonstration point for environmental reform in transportation channels, so as a leader, the examples set in Hubei will be adopted by other provinces. As luck will have it, iTEST are also related in the same province as original Emefcy target CGGC, who actually have a partnership with iTEST's parents to cooperate on highways. Any major moves that iTEST make in relation to provincial and national sewage treatment are likely to be watched closely by CGGC.

I see iTEST as a kind of master distributor, while at the moment they are just taking care of business in Hubei and getting their service areas and toll stations installed with MABR treatment and gaining the necessary experience, in future they will be selling their version of MABR solutions across China and possibly internationally. Any highway related enquiries in future, Fluence may just route through this partnership, as they will have the engineering expertise and ability to execute the installations. Fluence require strong partners who are financially viable and pay them on time, and iTEST have proven they are that type of partner, while sticking to contractual obligations.

The reason that iTEST would work with Fluence and push MABR so hard for us, is that by creating a new solution that will work across Chinese Highways and pushing the environmental standards that Beijing and Provincial leaders have set, it allows them to grow a sustainable standalone business in environmental protection, while the leaders gain political credits and potential elevation within the political party. They also increase their status and standing amongst their peers. In future, iTEST/Xiecheng Environmental may be viewed more as a China Everbright Water type of company than simply a subsidiary company of the highway transportation company in Hubei. It is how companies like CGGC get started and then grow into a behemoth to win national and international contracts. Finding the niche of the highway expressway area was just perfect timing, the perfect partner, and a win-win situation. It wouldn't have worked the same way had it been a partner in another province, as iTEST are in a unique situation of being a leader on highway environmental reform.

What @barry1990 has asked is very difficult to answer, as it depends on a number of factors. Are MABR plants elsewhere going to be 100, 200, 300, 400 or even 600 m3/d? Are other provincial groups also going to install 15 m3/d S1 plants at toll/monitoring stations. For plants outside of Hubei, is iTEST going to take a cut of revenue for bringing in business? Is there going to be scope for other types of projects in there? What % of the service areas or other locations in a province already have alternative treatment installed? Will this need to be replaced within 3 years? Each province then also has different effluent treatment requirements, which will affect decision making and budgets.

The first hurdle was getting full acceptance by iTEST. We are currently going through a period where iTEST is executing on their contracts and getting experience in installing their MABR solution in different situations and different sizes, and gathering data on where they can make any improvements. During this time, they have been marketing provincially and nationally, and have been winning awards and hosting visitors to the pilot plant to increase awareness. There has been increasing evidence of success in their marketing activities and influence. The next step will be for them to close some sales with additional provinces. For mine, the 3 year minimum $45 million USD, 66,000m3/d contract has more chance of being eclipsed rather than failing to be met.