The government’s plans to privatise Greek water utilities suffered a major setback when the Council of State, the country’s highest administrative court, blocked the transfer of state-owned shares in the Athens water company.
Among the government’s plans to privatise state-owned companies few have attracted as much opposition as the move to transfer the water utility companies serving the water and sewerage needs of Greece’s largest cities to private hands.
Campaigners in Greece stress that the experience in other countries of such privatisations has been largely negative, with prices rising and quality of services falling after water utility companies were transformed into for-profit companies. It is perhaps indicative that the Berlin Waterworks – originally sold to private investors in 1999 was eventually repurchased by the Berlin municipality following a referendum in 2011 to the relief of many German citizens.
It is also worth noting that, unlike other privatisations, the privatisation of water companies in Greece is not a strict memorandum prerequisite itself. The European Commission has made also clear that it excludes water from the relevant Directives regarding state companies.
Privatisation of water utilities is also extremely unpopular in Greece. In a recent unofficial referendum held in parallel with the first round of municipal elections ten days ago (and which the government did its utmost to block) 98 per cent of 200,000 participants voted against the move.
Despite this, the government has remained doggedly insistent on transferring EYDAP and EYATH (the water and sewerage companies of Athens and Thessaloniki respectively) to private hands.
However its efforts were dealt a critical blow in Athens when the Council of State ruled a few days ago that the privatisation of EYDAP would be unconstitutional. The court effectively reversed the transfer of a 34.03 per cent stake in the company from the state to the Hellenic Asset Development Fund (HRADF-TAYPED) completed in May 2012. That transfer came after the transfer of a 27.3 per cent stake in January of the same year and resulted in the HRADF having a controlling stake in EYDAP. All of the shares were due to be sold to private investors.
According to the court transferring a controlling stake in EYDAP to private hands would violate articles 5 and 21 of the Greek constitution which render the state responsible for the protection of citizens’ fundamental right to health.
Perhaps most significantly, the crux of the decision was that effectively transforming the water utility into a privately controlled for-profit company would render the state unable to fulfill its constitutional obligations. “The effective transformation of the state company to a private one which operates on a for-profit basis renders uncertain the continuation on its part of accessible services for the common good of a high quality as they will be no longer comprehensively secured by state oversight,’ the decision read in part. The decision also noted the de facto monopoly of EYDAP in the Attica region given that the water and sewage pipes necessary for the proper sanitation of the city are among the company’s assets.
The ruling by the Council of State came after Athens residents filed a petition with the court against the moves to privatise EYDAP. Residents of Thessaloniki also filed a similar petition against the privatisation of EYATH but it was thrown out on technical grounds. However anti-privatisation campaigners together with municipalities from the region of Macedonia will launch a new legal action with the court imminently.
The privatisation of Thessaloniki’s EYATH is at a more mature stage than that of EYDAP, with the HRADF looking to sell a controlling state in the utility to one of two interested strategic investors approved by the HRADF in May 2013 – namely the consortia Suez / Ellaktor and Merokot /G. Apostolopoulos / Miya / Terna Energy. The qualified bidders are now in the process of submitting binding offers.
However the recent ruling over the EYDAP privatization has cast a shadow over this process, with many believing that the Council of State will take a similar view with EYATH. While such a move would throw a spanner into the works of a government desperately looking to meet revenue targets from privatisations, it would be a relief to the citizens who want to make sure that their right to access to water does not pass through the hands of a private company (and a monopoly at that) looking to maximise profits.