The recomunalisation of water provision – Reflections on two different cases
Provides two case study of privatized water services returned to public hands, in Potsdam and Grenoble. Paper presented at the workshop "The Public: Alternatives to Privatisation" during the European Summer University of Attac, 1st to 6th August 2008, Saarbru?cken.
At the turn of the millennium, the expectations for a fast commercialisation of the water sector were high. In these years, conventional water privatisation had reached something like are a peak level even though at that time only around 5% of the worlds. drinking water services were in private hands. To give a non-representative but characteristic example of this time, I would like to refer to the Swiss investment bank Pictet. Pictet set up the first investment-fond for water, and was expecting a big privatisation wave. The manager of the investment fond, Hans Peter Portner, was anticipating a worldwide increase of the share of people being served by private companies from 7% in the year 2002 to 17% until the year 2015. For the USA and Europe his estimations were even higher: from 14% to 65% in the US and from 38% to 75% in Europe.
But reality turned out differently, and the trend was not as positive as Portner and others had expected. Although it would be misguiding to say that the privatisation trend in the water sector has been stopped, there still have been a series of serious set backs. In recent years the market leader Suez had to depreciate heavy losses in Argentina and other countries, and withdrew completely from the water service in Manila because expected profits could not be reached. In 2006 the third biggest private water supplier worldwide, RWE, sold its water subsidiary Thames Water with losses. Currently RWE is also trying to sell its subsidiary in the USA, American Water, but has difficulties finding buyers at the expected price level.
It is important to point out however that one should be cautious about interpreting these examples as a fundamental turnaround. Rather, there is a change of strategies regarding water privatisation. Scrutinizing the change of strategies more closely, three main trends can be identified. First, companies increasingly seek for public-private partnerships (PPPs). In PPPs the state often guarantees a minimal revenue, hence, minimising the risks of the companies. Secondly, financial investors such as hedge-fonds are beginning to play a vital role. The most known example in this context is the Australian Investment Bank Macquarie which bought Thames Water. And thirdly, traditional water companies realign themselves and invest more into the second line, that is, in technology and consulting, in sewage and desalination. In these fields, they are much less exposed to potential protest and resistance.
The Remunicipalisation of Water –
Some Reflections on the Cases of Potsdam and Grenoble
By David Hachfeld (2008)