Setting up the ATOs – a progress report

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This has been a somewhat hit and miss affair although the situation is improving.

Under the framework of the Galli Law, so-called Ambiti Territoriali Ottimali (ATOs) must be set up. These are defined as “the optimum territorial extension for profitable integrated water system management” and are designed to rationalise the industry’s previously chaotic structure.

Originally, 89 ATOs were to be established although this number has risen to 91 with the addition of two in Sicily. Of the 91 ATOs planned, 74 have been fully set up. Prior to April 2001, the process had been somewhat haphazard with only 48 ATOs created. However, since then Italy’s regional and municipal administrators have worked at a brisk pace to conclude negotiations.

According to data compiled by Italian investment bank IntesaBci, only 15 of the 74 ATOs have awarded concessions. They are: all the ATOs in Tuscany with the exception of Toscana Nord, three in Lazio (Rome, Frosinone and Latina), two in Veneto (Valle del Chiampo and Polesine), the Terni ATO in Umbria, Sarnese Vesuviano in Campania, Asti in Piedmont and Milan in Lombardy. Between them, these ATOs account for around 20% of Italy’s population.

In 13 of the 15, a service concession has been awarded directly to an operator according to IntesaBci’s Laura Campanini. Only the Frosinone ATO opted for a concession to a third party in accordance with the Galli Law. In all the direct assignments, local authorities have chosen companies which they either wholly owned or in which they had a majority stake. In some cases, the water operator has been set up on an ad hoc basis by amalgamating various municipal utilities and local authorities (comuni).

Of the 13 direct concessions, only five have selected a privately owned minority partner with which they will run the service. They are: Asti, which sold 49% of the share capital of its public service company to a group led by AMGA of Genoa and SMAT of Turin; the Alto Valdarno ATO which selected a group led by Ondeo and AMGA; the Terni ATO which sold 25% of its share capital to the UK’s Severn Trent Water; Latina, which assigned the public utility’s minority shares to Enel Hydro and Acquedotto Pugliese; and the Sarnese Vesuviano ATO which sold 19% of its operating company to Acea and Enel Hydro.

ATO 2 Rome, the second largest ATO in terms of population served, awarded a contract to Acea ATO 2 for a 30-year term. Acea will thus widen its existing customer base in the capital by around 1 million people, from its current 2.6 million to 3.6 million.

Five areas (the ATOs of Florence, Ombrone, Pisa, Livorno and Polesine) must allow access to private partners by the end of this year, or lose their concessions.

Under article 35 of the Legge Finanziaria, direct assignments can only be made until June 2003. The company chosen must sell at least 40% of its share capital to private partners within two years of receiving its concession, or forfeit its contract.

The second concession on offer after that in Frosinone is ATO 5 Calabria. The contract is for 20 years and involves around €485 million of investment. The award of the concession will occur only after a competitive bidding process has been completed.

See also: Italian municipalities singled out