For Veolia Wasser CEO Christophe Hug and Vienna-based Veolia representative Klaus Brenner it is a double win: the long-standing French water group’s buy-in into AQUAssist, a subsidiary of Stadtwerke Klagenfurt AG (STW), also establishes its first, long-aspired foothold in hitherto “Veolia-resistant” Austria! Understandably, enthusiasm is curbed by the pending decision of the Austrian antitrust authority on the matter.

Becoming a player in the water market

Purchased as Mac Water by the publicly owned STW in 2005, AQUAssist Wasser Service GmbH shall serve the latter to become a player in the water market. STW chief executive Romed Karré identifies opportunities mainly in the smaller Carinthian and Slovenian communities, which often lack the increasingly important know-how in wastewater treatment and business operations.

Associations as well as industrial and commercial undertakings are also regarded as potential customers. Being asked why a private and, at that, foreign partner has been selected, Karré openly admits that STW AG is a solid waterworks with many advantages but lacks an aggressive market development policy. He also underscores the urge for a quick market presence. “We were looking for an international partner with ample experience in the field and technical as well as operational know-how,” says the manager.

A corresponding agreement was finally signed with Veolia Wasser in August this year, a group holding equity interests in several Eastern German enterprises. The percentage of company interests in AQUAssist is as follows: 49 % Stadtwerke Klagenfurt AG, 45 % Veolia Wasser GmbH, 6 % aqua consult Ingenieur GmbH. The partners agreed upon not to disclose any financial figures of the transaction.

As Romed Karré confirms, selling the majority of shares to private investors had been part of the plan; but as a precondition the city utilities were to remain the major individual shareholder. This became possible by allocating a 6 % interest to the long-standing German company aqua consult, which today is to 75 % owned by Veolia Wasser.

At the same time, it puts AQUAssist in the position to draw vital know-how from yet another leading source. Since its foundation in 1978, aqua consult has been gathering international expertise as consulting and planning engineers and mainly specialises in communal wastewater and sludge treatment for plants servicing between 10,000 and 1.5 million PE (see box for details).

No plans for a purchase of water rights

Christophe Hug stresses that Veolia has no intention to use the AQUAssist buy-in for a purchase of water rights. “As a purely service-oriented undertaking we have no interest in owning water resources. The win-win situation results from merging local know-how with the experience and power of an internationally successful group.”

The strongest argument supporting this long-term decision, says Romed Karré, is that the business object of newly structured AQUAssist is explicitly stated in the partnership agreement. This is perhaps one reason why Carinthia’s governor Jörg Haider – the strongest defender of domestic water interests – has not yet publicly criticised the deal.

Even criticism coming from the domestic water sector was at best of a rather symbolic nature. Opinion leaders of the domestic water associations ÖVGW and ÖWAV, for instance, refused to make an official statement. This is not surprising: Veolia Wasser is an important member of both interest groups.

Experts of the Chamber of Labour, who are basically quite critical of private companies taking over services of general interest, mainly commented on aspects concerning the award procedure (see box). In this context, AQUAssist CEO Herbert Kramer confirms that the company will of course offer its services through participation in public tender processes.

This applies to contracts in Slovenia and the Greater Klagenfurt area as well as to contracts awarded by STW itself (or its waterworks). Says Kramer: “If our subsidiary wants to be successful in an award procedure, it simply must be good enough to win the contract!”

Romed Karré and Herbert Kramer don’t believe Austrian cartel law will be a problem, arguing that AQUAssist cannot presently be regarded as a market-dominating enterprise. Both managers claim that their current focus is on investment.

They await the federal antitrust authority’s final decision by mid-October. Does this imply a “clean sweep” for AQUAssist? Perhaps not quite. Herbert Kramer, apart from his job at newly structured AQUAssist, shall also remain head of the Klagenfurt waterworks. Reports of similar cases reveal that there have been problems. Current plans to temporarily employ municipal staff at AQUAssist, too, will cause some turmoil. It remains to be seen how “inventive” the ECJ is going to be in this respect…
(Source: aqua press Int. 3/2006, Mag. Christof Hahn)

Contact & Information:

Stadtwerke Klagenfurt AG
DI Romed Karré (Vorstand)
MMag. Dr. Michael Junghans (Vorstand)
Tel.: +43/463/521 700/701