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Public sector lost up to CZK 9 billion in waterworks privatisation  (Lest 2525 ganger) Skriv ut

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Martin  Onsdag 2. September 2009, kl. 15:13

[Fra Transparency International/waterstrategyamsterdam]

 
http://www.transparency.org/news_room/latest_news/press_releases_nc/2009/2009_08_18_czech_waterworks_privatisation

Czech Republic: Public sector lost up to CZK 9 billion in waterworks
privatisation, says new TIC study

Prague, 18 August 2009

Transparency International – Czech Republic (TIC) today published a
study describing the non-transparent practices often used to privatise
water supply companies in the Czech Republic and the consequences of
these practices. The public sector has lost a great deal of money –
money that could have been used to finance needed water supply
infrastructure renewal – as a result of the privatisation of the
profitgenerating arms of water management companies. Moreover, contracts
with private operators, as they are currently conceived, make it very
difficult for cities and municipalities to access European subsidies.

“Privatising water management in the Czech Republic would make sense if
it were to mean income generated for the public sector, better services
and less involvement in having to finance infrastructure investment”,
says project manager Eliška Císařová. “Unfortunately, it’s clear from
the examples cited in our study that what has happened instead is the
privatisation of revenues and nationalisation of expenses.” Indeed,
while water company privatisations meant a one-off financial pay-out for
the state, cities and some waterworks, over the long term it has meant a
loss of previously available sources to fund infrastructure development,
i.e. revenue and profit generated from the sale of water, as well as a
loss of eligibility for both domestic and European Union subsidies.

Operating agreements between infrastructure owners and operators are a
major problem. The contracts are often long-term (up to 25 years), place
the public infrastructure owner at a distinct disadvantage, lack
transparency in their quantification of prices and profit and fail to
motivate private operators to improve efficiency, since profit is
determined as a surcharge on “warranted” expenses (and the definition of
the term “warranted expenses” is non-existent in the Czech legislation).
The rents that cities receive from private waterworks operators often
fail even to cover infrastructure depreciation charges. Operating
profits are not put back into the industry, which raises the fundamental
question of who is going to pay for necessary investment to overhaul old
and build new water supply infrastructure in the Czech Republic and with
what.

TIC focuses on the promotion of decision-making transparency in public
finance, and the water supply industry is one area to which the
organisation has decided to pay closer attention. The published study
(available at www.transparency.cz), citing the examples of privatisation
in Prague, Ostrava, Zlín and Kroměříž, illustrates the circumstances
under which ownership relations and long-term operator agreements
lacking in transparency have come about and estimates how much has been
lost in public sector funds through the sale of the profit-generating
arms of water management companies.

TIC believes that market regulation represents a potential solution to
the problems that currently plague the water supply industry. For
example, a newly established independent regulator could protect the
public interest, see that contractual relations are balanced, set a fair
profit level for private companies and see to it that the public sector
receives a share in operating profit. Introducing regulation could also
ensure greater transparency in the conduct of private water management
companies, e.g. by applying a formula to calculate water and sewerage
fees that incentivizes savings rather than increased expenses or by
measuring the quality of provided services against selected standards.
TIC further recommends that city governments considering implementation
of operational model do everything in their power to ensure that
agreements between water supply infrastructure owners and operators are
fair and beneficial.

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