EXHIBIT 10.3

Portions of this document have been omitted
pursuant to a request for confidential treatment.  The
omitted portions are marked ***** and have been
filed separately with the Commission.
 

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December 8, 2010

Mr. Glen Laville
General Manager
Water and Sewerage Corporation
87 Thompson Blvd.
P.O. Box N-3905
Nassau, Bahamas

SUBJECT TO CONTRACT

Dear Glen,

RE:
Proposal to Expand the Blue Hills Seawater Desalination Plant, New Providence,
Bahamas

Thank you for considering Consolidated Water Bahamas Ltd. (CWCO) to further
assist the Water and Sewerage Corporation (WSC). We understand the
sense-of-urgency with the water supply situation and have compiled a staged
solution that we are confident will satisfy your requirements.  Additionally,
the CWCO solution provides additional water supply in close proximity to the
island’s main demand area, thereby possibly reducing non-revenue water (NRW)
over an alternate supply significantly removed from the main demand area.

The Consolidated Water Bahamas solution will resolve the Arawak Cay barging
problem with an additional 6.0-MIGD production at the Blue Hills
facility.  2.7-MIGD of the 6.0-MIGD will replace the Arawak Cay barging
operation.  * * * * *.  The immediate benefit to WSC of a Blue Hills expansion
is to eliminate the need to relocate the Arawak Cay facility.  The associated
savings are estimated to be $7,000,000.00.  The WSC water rate will also be
reduced resulting in the savings estimated in the table below.

WSC Water Savings

* * * * *

Executive Offices, P.O. Box 1114, Grand Cayman, KY1-1102, Cayman Islands, T:
(345) 945-4277, F (345) 949-2957, Email: info@cwco.com
 
CONFIDENTIAL
 
 
 

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Portions of this document have been omitted
pursuant to a request for confidential treatment.  The
omitted portions are marked ***** and have been
filed separately with the Commission.

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* * * * *

This proposal is subject to finalization in the form of a suitable amendment to
the existing New Providence Seawater Reverse Osmosis Plant Contract dated May
2005 (“the Original Contract”). Please consider the information within this
proposal confidential.

Subject to execution of a suitable amendment to the Original Contract, that
incorporates an extension of the term to at least twenty
(20) years from the end of the existing contract term, Consolidated Water is
prepared to provide the Corporation with additional desalinated water on the
following terms and conditions;

Consolidated Water scope of supply includes;

 
1.
Within eight (8) months of contract amendment execution and the Corporation’s
written Authorization to Proceed, design, procure, fabricate, ship, assemble,
install and commission a modification of and expansion to the existing Blue
Hills seawater reverse osmosis desalination plant. The total capacity of the
plant will become 12.0 million Imperial gallons of water per day, with a daily
guaranteed delivery to WSC of 10.3 million Imperial gallons of water per day (or
10.0 million Imperial gallons of water per day, with a daily guaranteed delivery
to WSC of 8.5 million Imperial gallons of water per day depending on the
selected Expanded Plant size). The expansion shall be comprised of the existing
plant, plus additional desalination units, seawater extraction wells, brine
injection wells, and product transfer system (“the Expanded Plant”). The product
transfer system shall include all tanks, pumps and associated pipe work up to
the existing tariff meter, plus an upgraded product transfer pipeline between
the tariff meter and the Corporation’s reservoirs. The product transfer system
would not include any additional reservoirs. The Expanded Plant will be enclosed
in a suitably constructed building that meets all local building codes;

Deliver water with a chloride content of less than 250 mg/l. The water quality
parameters and the post-treatment system of the Expanded Plant would include pH
adjustment and chlorination only.

 
2.
Finance the design and construction of the Plant Expansion for twenty (20)
years;

 
3.
Operate and maintain the Expanded Plant, and shall meet all costs of and
associated with its operation and maintenance;

Executive Offices, P.O. Box 1114, Grand Cayman, KY1-1102, Cayman Islands, T:
(345) 945-4277, F (345) 949-2957, Email: info@cwco.com
 
CONFIDENTIAL

 
 

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4.
Provide all chemicals, filters, replacement membrane elements, replacement parts
and other consumables for the Plant, and maintain an adequate supply of spare
parts to ensure the reliable operation of the Expanded Plant;

 
5.
Make every effort to supply the demand of the Customer at all times up to the
design capacity of the expanded plant, and shall guarantee to provide not less
than 72.1 million Imp. gallons (or 59.5 million IG depending on the selected
size of the Expanded Plant) of water to the Customer each and every week during
the term of the extended agreement;

The Water and Sewerage Corporation scope of supply includes;

 
1.
Provide all Bahamas government licenses, permits and other approvals relating to
the Expanded Plant for the proposed land use, abstraction of seawater from the
ground, injection of concentrated brine into the ground, and operation of the
Expanded Plant;

 
2.
Provide a site, acceptable to Consolidated Water, for the seawater extraction
wells and brine injection wells. The feed water extraction boreholes and brine
injection boreholes shall be no farther than 350 ft. from the Expanded Plant;

 
3.
Provide a site, acceptable to Consolidated Water, for the Expanded Plant no
farther than 200 ft. from the existing Blue Hills plant;

 
4.
Pay all customs import duties (if any) on materials and equipment imported into
the Bahamas and used to construct and operate the Expanded Plant throughout the
term of the extended agreement;

 
5.
Pay all invoices issued by Consolidated Water after commissioning of the
Expanded Plant in accordance to the new unit rate.

Additional Conditions

 
1.
Consolidated Water has not provided in this price for a Construction Performance
Bond during the construction period of the Expanded Plant;

 
2.
Diesel engine emissions from the Expanded Plant would be the same as those
agreed for the Blue Hills Plant, and not as per the Original Contract;

Executive Offices, P.O. Box 1114, Grand Cayman, KY1-1102, Cayman Islands, T:
(345) 945-4277, F (345) 949-2957, Email: info@cwco.com
 
CONFIDENTIAL

 
 

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3.
The unit rate below does not include an additional environmental assessment of
the site for the expanded operation. If these additional works were required, we
reserve the right to adjust our proposed rates to reflect those additional
costs.

This proposal is valid for 90 days, after which period we reserve the right to
adjust the rates to reflect any changes in our costs.

I look forward to meeting with you in Nassau on Tuesday December 7th, 2010 to
discuss the details and execution of this proposal.  Please do not hesitate to
contact me before Tuesday if you have any questions. I believe that Consolidated
Water has demonstrated the very highest level of commitment to the Corporation
and to the Bahamas over the past thirteen years, and I hope that you will find
this proposal acceptable.

I look forward to talking with you soon.

Yours sincerely,

/s/ Brent Brodie

Brent Brodie
Director of Sales & Marketing

Executive Offices, P.O. Box 1114, Grand Cayman, KY1-1102, Cayman Islands, T:
(345) 945-4277, F (345) 949-2957, Email: info@cwco.com
 
CONFIDENTIAL

 
 

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