A cautionary tale about the costs of privatization.
In February 2011, The Local (Germany’s news in English), reported that, “Berlin sold 49.9 percent of its water works Berliner Wasserbetriebe to investors Veolia and RWE to fill the city’s empty coffers in 1999. …Water prices have increased by 35 percent since then, and are among the highest of any German city.” Recently, 4-traders reported, “Germany’s Federal Cartel Office said (on June 5, 2012) it has ordered Berliner Wasserbetriebe, known as BWB, to cut drinking water prices saying that the utility has overcharged its customers for a number of years. In a written statement, the competition watchdog said BWB has to reduce drinking water prices for 2012 by 18%. For the years 2013 to 2015, the utility has to cut prices by 17% on average, the cartel office said.”
In the first 10 years of their operations, RWE and Veolia reportedly made €1.3 billion (US$1.64 billion) off of the Berlin Water Works.
This May and June there have been a number of key developments in this story. Reuters has reported that the “German utility RWE has agreed with Berlin city state on the sale of its 24.95 percent stake in (the municipal water utility) Berlinwasser Holding.” Following that agreement, “(France’s) Veolia, which also holds a 24.95 percent stake in Berlinwasser, took legal action (in late-May) against RWE’s planned divestment, saying it wanted all details of the negotiations before any final agreement was signed.” But, “A Berlin court (in early-June) rejected a bid by Veolia to block the sale of RWE’s stake Berlinwasser…” Now, “Veolia Environnement has signaled it wants to sell its stake (as well).”
“The parties in the city senate’s governing coalition must now decide whether they want to accept Veolia’s offer. …Unconfirmed reports said that (the RWE) stake could be worth around 650 million euros ($809.71 million) and said Veolia’s offer price could be also in that area.”
In February 2011, we noted in a campaign blog that, “(On February 13), over 665,000 Berlin citizens voted in favour of opening the books to disclose details of deals for the partial privatisation of the Berlin Water Works (Berliner Wasserbetriebe). The referendum was preceded by a successful petition, in which the Berlin Water Table (Berliner Wassertisch) citizens’ initiative collected within six months more than 320,000 signatures in support of its demands. In its own words, the Berlin Water Table is a local network of representatives of different groups, initiatives and interested citizens, united under the common theme: ‘Water belongs to everybody—Access to water is a human right’.” This blog can be read at http://canadians.org/blog/?p=5505.
As the privatization of water utilities is promoted under austerity measures, Berlin serves as an important warning about the true costs of privatization.