Prague buying back control over water

The city has completed a deal with Veolia to regain a large stake

Prague is regaining control over the city’s water supply. The city completed the acquisition of a 49 percent stake in water management company Pražské vodovody a kanalizace (PVK) by paying Kč 1.754 billion to Veolia Central & Eastern Europe.

The city is transferring the shares to a city-owned company called Pražská vodohospodářská společnost (PVS). At the same time, an option to transfer the remaining 51 percent of PVK shares to PVS in 2028 was agreed upon.

Analysts say the investment to buy the stake should in the long run pay for itself due to dividends.

The negotiated conditions guarantee the controlling position of PVS in deciding the main issues concerning the operation of water supply and sewerage in the territory of Prague. The deal also includes agreements over positions on the management boards and other guarantees.

The Capital City of Prague, which is the sole shareholder of PVS, enters as a partner into the management of water infrastructure in its territory. The stake in PVK will enable Prague to exercise effective supervision over the activities of the operator of water management infrastructure as well as closer cooperation with the operator.

“I am really pleased that we are able to correct the incomprehensible steps of the previous city leadership. When Prague lost control of water management in 2002, it was a terrible mistake and we were able to correct it now,” Prague Mayor Adriana Krnáčová (ANO) said.

This step follows after the other moves for the city to regain control over key real estate and infrastructure.

“Following the settlement of the contract for the lease of [municipal office building] Škoda Palace, the acquisition of [waste management firm] Pražské služby and public lighting in the city's property, PVK's repurchase is another great success,” she said.

The mayor stressed that the move would be beneficial for the residents of the city.

“Of course, this will have a direct impact on people because the city will be able to better control water and sewerage prices. I would also like to thank the participants for their constructive approach because even if it took a long time, I appreciate the fairness of those negotiations,” she added.

City Councilor Karel Grabein Procházka, responsible for city property, also thanked everyone for their work and effort. “Thanks to that we managed to complete one of the most important transactions for the city of Prague,” he said.

Veolia has been involved in PVK since the 1990s. Originally, the contract was due to expire in 2013, but in May 2004 then-Mayor Pavel Bém (ODS) extended his validity. The lease now is set to expire in 2028.

Critics at the time said the contract was not beneficial to the city because the city was still responsible to maintain the pipes and infrastructure, while Veolia paid a fixed rent and kept all of the profit.

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