Prague goes to Vivendi/AWG consortium
- From: Vol 2, Issue 2 (February 2001)
- Category: General
- Region: Europe
- Country: France
- Related Companies: AWG, International Water (IWL), Suez, United Utilities and Veolia Environnement (formerly Vivendi Environnement)
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VIVENDI ENVIRONNEMENT (VE) has won the concession to manage the city of Prague’s water supply and sewerage systems in a consortium with AWG. The Czech government will receive €174 million for a 66% stake in the Prague water utility, Prazské vodovody a kanalizace (PVK).
The two companies are understood to have agreed to pay twice as much for the stake in PVK as their main competitors International Water and United Utilities who reportedly offered €90 million while a further bidder, Suez Lyonnaise des Eaux, offered €75 million. The Czech government had set a minimum bid price of around €20 million for a controlling interest in the company. The
municipality of Prague will hold the remaining shares (34%).
The VE/AWG group will operate all water and wastewater services for 1.2 million people living in Prague and its suburbs until 2013. The contract is worth average revenues of €110 million a year for 13 years.
Komercni banka – the advisor for PVK’s privatisation – judged the VE/AWG bid to be the best on several criteria, including the price. The other criteria were the strategy proposed in the business plan for PVK, technical proposals and the productivity gains requested by the Czech government. VE and AWG have proposed a rapid reduction in leakage from the Prague network, improved treatment of the city’s wastewater, a staff training programme and the introduction of a customer services centre.
VE dismissed predictable claims that it had won the bid on price alone, saying it had gained considerable technical experience in the transformation of water services in the Czech Republic which ranked it above competitors. The company serves 3.3 million people in the Czech Republic, principally in Bohemia. Anglian Water has over 2500 employees in the Czech Republic providing water and sewerage services to 1.2 million customers.
The Anglo/French consortium added that the price of water will be stabilised in the long term. The rate at which the price of water has been rising – a tenfold increase in ten years – is to be brought down to the level of inflation within three years. As of 1 January 2001, PVK charged €1/m3 of drinking water.