GERMAN COMMUNALISM

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More worrying from a strategic point of view was Veolia’s failure to secure an interest in Germany’s Gelsenwasser.

The company, which is owned by the municipalities of Dortmund and Bochum, was looking for a strategic partner to back its expansion. It has decided to go with two communally owned associations rather than Veolia (see story p14).

The news comes after it was revealed that Dresden didn’t even consider Veolia’s offer before selecting Gelsenwasser as minority stakeholder in its wastewater business last year.

All three European majors, Suez, Veolia and RWE/Thames, have made Germany and eastern Europe a key part of their European strategy. It looks as if German communally owned water companies will be putting up stiff competition. It is a compelling model in the German market because of the robust level of tariffs and the tax breaks. It has also been given a boost by the European Parliament this month, with a vote to ensure that water services are not included in the Internal Market (see p13).