A Press Conference was recently given by Vice President Suez Water Western Europe Ms. Diane D’Arras in Thessaloniki. With this public response we want to refer to what was said in an effort to enhance public debate on the issue.
An answer to Diane D’Arras
Senior Executive Vice President Water Western Europe
Let us please clarify that what follows is based on what you said and answered during your recent Press Conference in Thessaloniki, as it has been reported by the journalists and media that were present.
Despite the democratic traditions of your home country and in stark contrast to your saying that Suez will definitely take into account the citizens’ public feeling and vision, the fact that no invitation was provisioned for interested citizens and not all interested journalists were invited, can only be judged negatively. It also stood in contrast to your invitation, on behalf of Suez, to elected members of the city council to become Members in the company’s new BoD. One of those present could have asked a clarifying question as to what rights such a membership would mean apart from providing a false feeling of public participation and an implication of transparency. Unfortunately no such question was posed by the reporters in the room, some of which are in the payroll of your partner in the TAIPED (HRADF) tender for the acquisition of the 51% shares of Thessaloniki water Company (EYATH).
Reading your resume we were informed that in 1993 you took a managerial position and then a promotion in the Aguas Argentinas (Buenos Aires) which was privatized in 1993 in the midst of the economic crisis in Argentina and remunicipallized in 2006. Argentina, as you note in your CV, was for you “a great experience providing the opportunity to discover other ways of thinking, professionally and personally“.
You mentioned that the price of water shall be set by an independent regulatory authority. The Greek WRA is nothing more than the Special Secretariat for Water (an old service within the Ministry of Environment, Energy and Climate Change) that has hastily been upgraded to the status of an independent Authority just after the announcement of the imminent privatization of EYDAP (Athens water company) and EYATH. Such a service may remind you of its respective one in Argentina which as per the report of Alcázar, L.; Abdala, A.; Shirley, M Washington D.C.: The World Bank. Retrieved 2008-04-16 the local WRA “was lacking in experience as it was created during the privatization” and its “decisions were not taken into consideration”. The fact that AA was in 1997, while the crisis raged in the country, granted a concession contract with very generous terms that authorized it to demand dollars at the old 1:1 exchange rate after the peso devaluation, despite the abysmal international market value of the former (Solanes, Miguel (2006) only underlines the local WRA efficiency and abilities. “Efficiency, Equity, and Liberalisation of Water Services in Buenos Aires, Argentina”. Industry, Services & Trade (OECD).
On top, in 2010 ICSID awarded that the Argentina Government decision, disallowing raises in water prices when the value of the ARS was precipitating, wronged private water operators and ordered a compensation. The privates declared that they will go after a USD 1,2 billion compensation. Eventually, are the decisions of the regulatory authorities concerning the price of water but also the keeping of contractual obligations or other issues “respected“, as you stated in Thessaloniki, or can their existence, in several cases, become just a bureaucratic alibi facilitating corruption and being useful for the legalization of private monopolies under the consent of international organizations such as those that demand privatization in the first place?(1)
You set as one of Suez’ s main priorities in Thessaloniki the protection of the environment and – among others – the “reintroduction of quality in the Thermaikos Bay”. We sincerely hope so, as in Chile, Suez has been forced to pay a compensation of USD 5 billion for the “unpleasant odors” emitted from its waste water treatment plants. (research by the PSIRU team of the University of Greenwich).
Your pleasant promise for annual investments of € 25 and up to € 50 million on infrastructure that will remain property of ΕΥΑΤΗ Infrastructure S.A. definitely sets Suez among the foremost non-profit charity organizations worldwide, as the net profits of ΕΥΑΤΗ amount to ca € 18 million. Unless, of course, the price for water is somehow going to be “readjusted” so as to cover for the investments and the reasonable profit of the shareholders-investors, in which case the investments will have been paid by the good and, you shall hope, overgenerous citizens of Thessaloniki.
As a report (2009 PSIRU of the University of Greenwich) stated, water infrastructure investments in France are subsidized mainly by the public sector whereas only 12% on the average is paid by private water companies. How come important investments that have not been realized in France will be realized in Greece?
Could this be the reason why Paris, Brest, Grenoble, Cherbourg, Varages, Durance-Luberon, Castres retook water services under municipal control and why others (Toulouse, Ile-de-France, Montbeliard, Bordeaux, Lille) are eager to follow in the same path?
But even if such investments are to be made how is Suez going to pay for them?
The SUEZ profile shows liabilities amounting to € 19.777 million with assets of € 6.859 million. As assets include € 3.264 of goodwill while another € 4.060 million amount to other intangibles, then SUEZ turns negative (€ -465 million). For the last four years SUEZ shows only losses: € 2.281 million on 2009, € 1.158 million on 2010, € 1.205 million on 2011 and € 1.314 million on 2012. (2)
On the other hand, “small” ΕΥΑΤΗ (whose share price is overrated, as you stated), showed in 2012: profits of € 24 million euro (€ 18 million net), ready cash of € 33 million (today € 50 million according to latest information), and equity capital € 135 million on an annual income of € 74 million. Its stock market value is 220 million euro (according to the annual financial report of 2012).
Perhaps one should leave the theories about better management by the private sector aside until at least this picture is reversed.
You stated that SUEZ acquiring the EYATH shares will lead to 4.000 (!) new job opportunities, in a work environment which, for the last three years, has been pulverizing job positions in a terrifying pace and which shows no sign of changing in the near future. From the date EYATH stopped being a public service and turned to an S.A. (with SUEZ, later, obtaining in 2006 5,46% of its shares) its personnel has been reduced from ca 700 to 235 today as job positions were not replenished after retirement. By which viable investment plan and organization chart will recruitment of this order be needed to operate EYATH given the fixed number of “clients” and if you maintain the price per cubic meter at current levels? (In any case, the company at present, has only seven drivers for its 80 vehicles and employs only eleven plumbers on a network of some 2.330 km length and some 510.000 customers/hydrometers). As for prices, since 2001 there have been increases almost threefold. Still, you wondered whether the current water price of ΕΥAΤΗ can keep the company viable.
The referendum, you said, “may be important yet on the other hand, it is a political action”. Indeed. Such a referendum led to the citizens of Berlin being informed of the secret terms included in the concession contract by which their municipal water company had been given to Veolia and RWE and tariffs kept increasing; it was through this political action that these terms were made public and then the citizens started to struggle in order to reclaim the water service for the public sector. It was again such a referendum in Italy when 95,4% voted against the privatization of water services and the idea of profit out of water and as we say in Greece for our neighbors, since Greeks and Italians are “una faccia, una razza” it can definitely be such a referendum that will voice the will of the Greek people, the majority of whom are against the privatization of the monopoly of water. (3)
You talked about misunderstandings; you said that “water is not going to be privatized, we will just accomplish a public-private partnership”. We cannot feel at ease: it was such a partnership in Berlin that led to ever increasing water prices and loss of social control.
You said that “the worst thing for us is to be in a country that does not respect the law”. We agree. We would like therefore to inform you, in case you don’t know, that, according to Eleytherotypia mewspaper (4) , there is an ongoing investigation ordered by the Thessaloniki District Attorney for Corruption Argyris Demopoulos, concerning amounts of more than € 100 million, part of which is coming from the EU Cohesion Fund, for projects that run till 2016 that, if are not to be paid for by the investor, are to be illegally spent for the profit of a private company (Greece has been penalized in the past for similar reasons), on the condition that privatization occurs before that date. As per the report, an important parameter of the investigation is that HRADF is to produce the draft of the concession contract , to investigate exactly what is contained therein, in order to correlate the use of said infrastructure to the terms agreed.
Of course there is still pending the decision of the Council of State on the legality of the transfer of the ΕΥΑΤΗ shares to HRADF. What we as citizens (and presumably you as well) find absolutely unacceptable, is cases where the Constitution and the decisions of Supreme Courts are not respected by all parts.
We assume that your personal presence in Thessaloniki despite your high position of Vice President, is indicative of the great interest of the company you represent to acquire EYATH as “springboard” for the Balkan market. This we definitely believe is so. Still we would advise you to keep in mind that the remunicipalization trend is already on the way even in the Balkan area.(5)
SAVEGREEKWATER, The Initiative for the non privatization of water in Greece
SOSTE TO NERO, EYATH Employees Union, Movement 136, Water Warriors
P.S. Times have changed since then, but we’d like to remind you of a historical fact: During the fire that destroyed Thessaloniki in 1917, the water supply company, one of French interests at the time, refused to distribute water as it needed it to supply the Entente forces then stationed in the area. (Article in newspaper efsyn on 10/05/2013). By no means do we imply a similar behavior from the company you represent, to avoid misunderstandings.
(1) OFWAT has repeatedly failed to prevent the private water corporations in the UK from making undue greater profit due to shortage of funds? And though it has managed to discover fraud committed by those same corporations, it has granted them a 25-year notification before the cancellation of their licenses – practically giving them eternal monopoly. Also according to 1997 report of the Cour des Comptes, the privatization system on which SUEZ and Veolia based their national dominance was suffering from systematic flaws. “The lack of supervising and control of the granted public organizations, worsened by the lack of transparency in this kind of administration, have led to abuse.” (excerpt from the research of the team PSIRU of the University of Greenwich).
(2) Information found in published financials of Suez Environment on Bloomberg:
(3) As for the planned selling of ΕΥΑΘ, a 76% of the citizens is against. http://www.makthes.gr/news/reportage/115338/
(5) The water in Sofia is in the process of being made public again via a local referendum. According to the vice president of the Committee for the commercial policy and the municipal property there are three reasons for which the contract with the company must be terminated: a) the conditions for the water leakages are not met, b) price of water is much higher than what was originally agreed upon and c) high expenditure of the corporation, i.e. for advisors ( 27 August 2013 | 08:14 | FOCUS News Agency)
In Hungary, the city of Peks made its water supply company public again in 2010, terminating the contract with a subsidiary of SUEZ; the city of Caposvar also made its water supply company public again. In Hungary, even in towns where the water supply has been privatized, the investments are funded by the central administration. (excerpt from the research of the team PSIRU of the University of Greenwich).