water pricing – SAVEGREEKWATER

Indirectly achieving the privatization of water services in Greece

savegreekwater — Sat, 10 Jun 2017 21:44:29 +0000

Monday, May 22nd, saw the publication, in the Government Gazette, of a long awaited ministerial decision titled: Approval of general rules on the costing and pricing of water services. Methods and procedures for cost recovery in water services.

Sais decision approves, with small adjustments and revisions, a draft issued and set for public consultation in August 2016, against which objections and reservations have publicly been expressed by Savegreekwater, as well as several other interested parties.

Through this Decision (nr. 135275, GG Β1751) water services users will be from now on burdened with paying the so called Recovery Costs of said services. Water has become a commodity, while water services companies will not differ anymore to any private profit-oriented and money-grabbing enterprise, despite them being constitutionally considered public services.

Specifically: the pricing of water services, contrary to the stipulations of Decision 1906/2014 of the Council of State, will aim to covering all costs of the company providing these (art. 9.1). Such pricing will include following items:

A’ Financial Cost (art. 4 and Annex Ι): this will include the cost of the invested capital, based on the annual depreciation of the provider’s assets; alternative use cost based on the profits the invested capital would yield if used for other purposes; operation cost, based on both standard and extraordinary operation expenses; maintenance cost; and management cost which includes the fees of any third parties. If water has to be transported to an arid area the users will be burdened with the extra cost, unless a state subsidy is available. All this leads to water services users in Greece being asked not only to pay once more for water services infrastructures and network, which have been paid through taxation both by this and several previous generations (this has happened several times in the near past) but also to cover any sums a water company will claim (with hindsight) as loss of profit for having its capital used to supply water instead of having been invested in some other “profitable” activity. That such activities may include absolutely anything has been proved by EYDAP’s contribution to last year’s capital increase of Attica Bank: this led to EYDAP losing € 17 million out of 20. As an addition the financial cost includes a “reasonable return” of private funds invested with EYDAP and/or EYATh: for the nth time the Greek Government interprets private enterprise as state guaranteed profits.

B’ Environmental cost (art. 5 and Annex ΙΙ), which, among others, will be imposed also on the occasion of a negative chemical condition of subterranean water deposits due to non-natural (sic) causes. Everyone knows of the Government of Greece being hesitant to impose fines on polluting businesses, but someone has to pay the cost, and the users of water services may prove an easy target.

C’ Resource cost (art. 6 and Annex ΙΙΙ) which includes costs incurred due to the bad management of water resources. No penalty for those responsible for such bad management is imposed. The environmental cost and the resource cost added up (art. 7) will constitute the Environmental Fees: such shall be written “clearly and explicitly” on the bill (as are the fees paid by energy users for similar reasons and ending up becoming subsidies to private businesses) and will be transferred, almost in its entirety, to the infamous Green Fund with the aim of being used, under quite general terms, in actions dealing with water. Vulnerable groups may be excluded from paying said environmental fees as are those entities that “through correct management of water resources contribute to the maintenance and/or improvement of the condition of such; these include enterprises dealing with waste re-use (there is a quite small number of such businesses in Greece, all belonging –directly or indirectly- to the richest 0,1%; q.e.d.)

Art. 9 (General pricing procedures) provides for an increase on bills if costs’ cut down does not by itself suffice for covering costs recovery. In order to convince the users that such increases will not be excessive it is stated that such cannot be higher than the GDP increase, or can be as high as double the GDP increase in certain cases (as if GDP fluctuations had anything to do with our personal income!)

Art. 14, titled “General Rules and Directions for the Improvement of Water Services”, actually lists conditions under which increases in water prices can be imposed.

As per the above this Decision proves that the negative results of water services privatization cannot only be reached through the transfer of water companies shares to private entities but can also be achieved by a State that long ago has stopped caring for the interests of its people preferring rather to protect and increase the profits of a small minority.

In addition there is recent Law 4472/2017 dealing (once more) with the transfer to the new Superfund of assets of the Greek State, among which the shares of EYDAP and EYATh: this law continues on the path of applying policies that have continuously been proved to be disastrous for the vast majority of the inhabitants of this country by targeting in general our economic and social well being and in particular our/everyone’s Right to Water.

This decision has been approved by ministers Panagiotis Skourletis (Interior), Dimos Papadimitriou (Economy and Progress), Eukleides Tsakalotos (Finances), Andreas Xanthos (Health), Christos Spirtzis (Infrastructures and Transport) and Evangelos Apostolou (Agriculture & Food) and (Deputy Minister of Environment and Power)

IIEA: Who Owns our Water in Europe? And Does it Matter?

savegreekwater — Tue, 14 May 2013 21:28:13 +0000

An insightful article published on the site of the Institute of International and European Affairs which explains the dynamics of the water management “war” in Europe and mentions also the greek case.

By Ryan Meade

The Irish government is currently in the process of centralising the State’s water services into a single entity to be known as Irish Water. The new authority will be structured as a utility company, and will be housed within Bord Gáis, the state-owned gas and energy provider. Its first task will be the nationwide roll-out of water meters, in advance of charges for domestic water supply being introduced in 2014. The reforms have led opposition spokespeople to raise the spectre of privatisation of water services in Ireland, although current Irish law guarantees that water supply will remain in public hands. The Minister responsible, Fergus O’Dowd, has strongly denied that privatisation is on this Government’s agenda. However the utility model and the introduction of charges have led some to suggest that privatisation will in the future become a logical next step. It could be said that most of the difficult work that would be involved in privatising water is now being done: moving water services from municipal and central government control into a commercial enterprise, albeit state-owned; installing meters in 1.3 million households to allow for domestic charging; creating a customer-supplier relationship between the water utility and every water user in the state. Once all of this heavy lifting is out of the way, a change in the ownership of the utility could be effected relatively easily.

The Minister is right to point out that across Europe public ownership of water services is the rule rather than the exception, although this is not to say that there isn’t significant private involvement in water and sanitation. The system in place in England and Wales stands out as an example of a completely privatised approach. In France about 70 per cent of the population are supplied with drinking water by a private operator, and French water companies also have a significant role in water services in Spain. Water systems in Europe have evolved over the centuries with the public and private sectors taking the lead to a greater or lesser extent at various times in different countries, so it’s no surprise to find heterogeneity in ownership models across the EU, and even within Member States. Although the EU is ostensibly neutral on the question of water ownership, there has recently been a debate on whether the European Commission is promoting privatisation through the back door, through its role in framing bailout programmes for financially distressed Member States, and through its proposals for a new Concessions Directive governing certain types of public-private partnerships.

In the case of bailout agreements, the Commission has been accused by campaigners (including labour unions and environmentalists) of insisting on privatisation programmes that include the sell-off of municipal water companies. In Greece the bailout agreement requires the selling off the State’s majority stakes in the already part-privatised Athens and Thessaloniki water and sewerage companies, while Portugal is under pressure to dispose of its state-owned water company. The Commission does not admit to actively promoting water privatisation for its own sake in these bailed-out countries, but campaigners point to its history of favouring privatisation in development aid agreements and international trade negotiations. The Commission can maintain its officially neutral stance on ownership of water services by pointing out that the privatisation measures are being carried out by the insolvent national governments themselves in order to raise money to keep other public services running.

More recently, the proposed Concessions Directive has become part of this debate. The Directive is seen as necessary to regularise the way public authorities in Member States enter into partnerships with the private sector to provide services of general economic interest. A contract to operate public water infrastructure is a good example of a concession, and other examples include toll roads, waste disposal and energy generation. The Commission sees as a loophole the fact that there are no specific rules governing the award of such contracts, giving rise to risks of fraud, favouritism and lack of transparency. While the proposed text restates that, in keeping with Article 345 of the Treaty, nothing in the Directive will prejudice Member States’ own system of property ownership, it also talks of “a real opening up of the market” in respect of water, energy, transport and postal services. It is not only this language but also fears about the practical operation of the Directive which have led campaigners to class it as another attempt to promote privatisation of water.

The general concern is that the conditions imposed by the Directive will result in a situation where public authorities find it easier and less legally risky to tender out concessions for water supply rather than providing the service themselves. As with Minister O’Dowd in Ireland, Internal Market Commissioner Barnier has been on the defensive against such claims, denying that the Directive will have any such effect. In a statement on 23 January 2013 he affirmed that the proposed Directive will “not lead to forced privatisation of water services. Public authorities will at all times remain free to choose whether the provide the services directly or via private operators.” This clearly did not settle the matter as a month later he took the somewhat unusual step of issuing a joint statement with Environment Commissioner Potocnik to the same effect. This followed a meeting of the European Parliament’s Internal Market and Consumer Protection Committee (IMCO) at which he pledged to make changes to the proposed text to clarify its intentions:

In response to certain false accusations, allow me to be perfectly clear, precise and formal: the Commission is not seeking in any way whatsoever to privatise water management – neither today nor tomorrow. This directive does not aim and will not have the effect of bringing about a forced privatisation of drinking water supply services. I am willing to make the necessary clarifications to the text in the three-way talks.

The Committee, having at an earlier meeting rejected a proposal to remove water from the remit of the Directive altogether, voted to get the trialogue underway. It remains to be seen what clarifications the Commissioner is willing to offer as part of this process, but IMCO’s rapporteur, Phillipe Juvin (EPP/France), is hoping for agreement that the text will include a solemn statement that water privatisation is not intended.

The political pressure that has caused the Commissioner to take such pains to clarify his intentions demonstrates the importance placed on public ownership of water in many parts of Europe. A civil society group led by the European Federation of Public Services Unions (EPSU) and comprising labour unions as well as public water operators and environmentalists is leading a Citizens’ Initiative which has attracted more than 1.2 million signatures since September 2012, calling for guaranteed water and sanitation for all citizens and an end to liberalisation of water services. The vast bulk of these signatures have come from Germany, but the campaign is not far off reaching the required numbers in seven Member States. Campaigns are also underway to “remunicipalise” private water services, particularly in France.

What does this debate about water ownership mean for water policy, particularly the resource efficiency agenda that is central to the Commissions’s Blueprint to Safeguard Europe’s Waters? Ensuring the full implementation of water pricing with incentives for efficiency is a key objective of the Blueprint. The current experience in Ireland is a demonstration that in many cases the policies required to promote efficient use of water are often the same as those required to prepare public water systems for privatisation. Public fears that metering and full cost recovery are Trojan horses for selling off of water services cannot be lightly dismissed, given the history of similar policies in the waste sector, for example, and the less than convincing claims by European authorities to be entirely neutral on the question. However by the same token there is nothing to suggest that, with the right policies, resource efficiency cannot be maximised while keeping water services in public hands. The efficiency agenda will in any case require a great deal of public goodwill – this often scarce resource might be maximised if populations can be convincingly reassured that they will retain choice in the ownership model of their water services.

Note: As an independent forum, the Institute does not express any opinions of its own. The views expressed in the article are the sole responsibility of the author.

Big changes on water pricing

savegreekwater — Mon, 28 Jan 2013 13:19:11 +0000

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[box] It is not news to those who follow developments at European level the change in pricing of all water usages imposed at present by the EU All these decisions were taken since the adoption of Directive 2000/60. Nor is it news the amazement and sometimes discomfort,of Greek politicians when it comes to the implementation of policies decided by Brussels. Regardless of the correctness of a decision or the imposition of private interests behind several policies, this discomfort, is an indication of how far Greek politicians are in reality (and by expansion Greek citizens) to the decision makers. At the time of policy implementation we witness again and again the deconstruction of EU’ democratic facade.[/box]

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Article written by Argyris Demertzis at Eleytherotypia (translated by SAVEGREEKATER)

A spectacular change on water invoicing is under way while at the same time the door opens for the complete reform of the pricing of domestic, agricultural and industrial water use, (taken into account that private interests are to enter the public water services sector).

The Ministry of Environment issued an amendment in the House of Parliament in a great hurry in order to avoid, on last minute, the imposing of new high fines by EU for non-compliance with EU Water Directive while it has already been convicted by the European court of Justice on April 2012 for the same issue.

The amendment signed by Deputy Environment Minister S. Kalafatis provides on one hand expediting procedures of final approval on management plans for water resources in twelve water districts of the country, as the last ultimatum Brussels had posed, expired by the end of 2012, and on the other hand implements by the Ministry of Environment the new rules of costing and control of water pricing, rules (for all E.U countries) . This means that in future the control and the decision in the exercise of pricing of all water & irrigation bodies will be centrally performed.

Irrigation water

The water management plans, which now come into effect, show deviation between the actual cost and pricing of water as it is done up to now. More specifically:

In agriculture, which uses 80% of the available water resources, it is clear that irrigation water is charged only 10% to 15% of the actual cost. The issue will be discussed on government decisions in conjunction with the dismal economic situation facing local organizations of landed improvements ( TOEB) covering irrigation throughout. Of course any increase in the price of irrigation water would be burdensome for farmers and the cost of products, amid the crisis. Furthermore, reactions occur in plans concerning that water for irrigation of crops will not be charged, as up till now , with prices per acre and per crop, but taking into account the volume of consumption while mandatory water meters which are to be installed in fields.

In Athens and Thessaloniki, for domestic use, the studies on which the water management resources are based indicate that the costing of water supply and sanitation companies of the two metropolitan complexes (ie EYDAP and EVATH) is around the same level as the actual cost , but with a large difference. The cost of tasks and maintenance of networks of companies is not included as required by the new way of costing. Competent sources estimate that considering the privatization of EYDAP and EYATH promoted by the government,it should get determined on the terms of the notice of the relevant competitions what will be the fate of fixed infrastructure. Note that so far the state supports multi billion projects in these companies and their eventual privatization may mean that this huge cost will be passed to the customers by the private corporations.

In the region, the studies show that domestic water use is charged at 30% to 40% of the actual cost. The issue is associated with the announced economic reconstruction of the 180 Municipal companies for Water Supply and Sanitation (DEYA) of the region, which are, almost all, facing major economic problems.

The real cost

* For industrial water, both in major cities and in the region, there are also deviations from the actual cost. And in this case, any decisions are difficult, as they are related to the business competitiveness and cost of their products and in many cases their future survival is in question.

Changing the way of water pricing does not automatically means increases in water tariff. The significant change is that the state centrally will know for every single use and in any case the real cost of water. The cost of coverage will be a political decision, as well up to what extent this cost will be undertaken by the State or the consumers.

However, the new way of pricing of water, as defined by EU Directive on water (2000/60/EC), which is incorporated into Greek law (Law 3199/2003 and Presidential Decree 51/2007) provides: “The costing and then the pricing of water is formed by the use and the water adequacy, the balance of supply and demand, the cost recovery services, the depreciation and the financing of infrastructure networks, as well as environmental criteria, based on the principle of “the polluter pays”, addressing water as an irreplaceable natural resource.

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