The market today is a prime target for Veolia and the French water industry, both for commercial reasons and to try to restore the image of the private management. Recently the company announced with great fanfare the signing of new contracts in Nagpur, Delhi and elsewhere. On the ground, however, between financial scandals and conflicts with residents and local officials, French firms seem to fall into the trap of old.Investigation.
Article updated October 15, 2013 at 17:40 to include the answersreceived from Patrick Rousseau, Chief Executive Officer (CEO) of Veolia India.
The French water companies have made beaver lately to present India as a new Eldorado. This virtually unlimited market potential would enable them to boost their business expansion, to burnish their brand, but also to prove the validity of the private water management – a model somewhat dented both in France and the international.
In March 2012, Veolia announced the signing of the first contract delegated overall management of water services across an entire municipality, Nagpur in Maharashtra (2.4 million), for 25 years . Ad that was part of a multitude of smaller contracts – pilot projects in limited areas, construction and maintenance of sewage treatment plants, technical and managerial assistance, etc.. – Often presented as prior to the signing of major contracts. In the state of Karnataka and Delhi, including the local authorities have openly opted for the implementation of pilot projects to pave the way later in a more general privatization. A tantalizing prospect for Suez and Veolia given the magnitude of the potential market and its needs.
But the reality was quick to catch the French water companies and their Indian allies. Resistance have emerged both in civil society and in the administration. Exposed several suspicious financial transactions and more generally the collusion between political and economic interests did not remain unheard in Indian political context still marked by great social movement against corruption in 2011 and 2012. Finally, despite the rhetoric about the supposed superiority of private management, the undertakings concerned are quickly found entangled on the ground. They found it exactly the same problems that have always hindered the development and operation of a public water service quality in Indian cities, adding perhaps the disadvantages of inexperience and new financial requirements involving rate increases to equal service.
According to a report prepared in June 2013 by the Indian magazineOutlook , we find the same problems in all contracts for water privatization in India recently concluded, with both French and with other groups of 30 projects, no would have kept its promises, although the price of water would have increased by an average of 100%.Several are on the edge of the sinking. The cancellation of the contract of public private partnership (PPP) with Jusco (Tata Group) in the city of Mysore, for example, is on the agenda.
In the case of Nagpur, the private consortium led by Veolia seems to have ended up unanimously against him. Elected nationalist BJP party (which controls the municipality) and the Congress (municipal opposition) have for once agreed together to ask the Mayor Anil Sole cancellation of the contract. They point to a multiplication of errors, delays and incidents, especially with trucks loaded to supply off-grid areas, as well as the rising price of water for the inhabitants. The mayor promised to take legal action to force the consortium to meet its contractual obligations, but refuses for now to challenge the contract itself. Recently, Veolia and its partners have been officially admit that do not take the time to completion of the work provided for under the financing contract with the Indian state. This delay may jeopardize the associated credits and increase all the bills to be paid by the Municipality of Nagpur [ 1 ] .
In the end, one is left with a nagging sense of déjà vu: accusations of corruption, conflicts of interest, political and financial secrecy, threats of drastic price increase, fabulous promises unfulfilled, tumultuous relationships with local political authorities .. . It’s like back in the late 1990s and early 2000s, when the great wave of water privatization in the cities of the South, which had resulted in Suez and Veolia (then Vivendi) by series of scandals, conflicts and departures more or less forced. The French groups that are trying to repeat the mistakes of the past, and they go to the same disappointments? The dream of a recovery and rehabilitation of private water management already seems to have the lead in the wing.
Olivier Petitjean
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Photo: Vinod Chandar, DC
