Minister Jorge Moreira da Silva has agreed the headcount cuts in regional water company administrators which will take place before the year end as part of a cost reduction plan that puts meddling councils back in their place.
This measure presented to MPs during a parliamentary committee hearing is part of a cost cutting plan, one of the goals being a reduction of water bills for consumers, although few believe this last part.
The 19 companies that comprise the Águas de Portugal group will be reduced to four or six (North, Central, Lisbon & Vale do Tejo, and the Algarve) and the number of administrators supplied by local councils can therefore be reduced accordingly.
This part of the reform process is two years late but, as the minister sagely put it, “if it was easy, it already would have been done.”
The delay also has been blamed on the component companies of Águas de Portugal running up debt and overspending over the past three years to create fiscal confusion and poor conditions for the eventual privatisation of Águas de Portugal.
The company was put on the block as part of the agreement with the Troika, ‘The Government continues to implement the strategy to restructure ADP’s water and waste water services with a view to introducing private capital and management in concessions.’
However, in January 2014 the government said it is not discussing or even considering the privatisation of Portugal’s water supply industry, according to the Environment Ministry which oversees Águas de Portugal, "the Government's strategy is to restructure the water sector so as to provide greater social and territorial cohesion, environmental quality and economic and financial sustainability through the aggregation of multi-municipal systems."
By the end of the week, the Environment Minister will have completed the final part of the reorganisation of the public water sector, necessary before it is fit to be sold.
The country’s municipalities are of course against the tidying up of a system which for many is a licence to print money, charging the end user extortionate rates for water and not paying for the supply.
The idea of cutting well paid positions held by council nominees has made delaying tactics the norm but the minister does seem to have made progress and has managed to get these job cuts past council chiefs who have been against the proposed improvements in the structure.
Moreira da Silva explained back in July 2014, that the reorganisation is “a way of demonstrating to municipalities that we do not only want to harmonise tariffs and maximize economies of scale, we want to go further, reducing costs in Águas de Portugal which is essential in reducing tariffs.
The current structure for the supply of water and treatment of sewage is complicated. A search in Wikipedia provides facts but few answers:
"Provision of water and sanitation services in Portugal is a shared responsibility between the 308 municipalities and the national, public holding company Águas de Portugal (AdP) and its subsidiaries.
About 73% of the population in 243 municipalities receives water directly from municipalities (3.5 million people) or single-municipality companies established under public law (2.5 million people).
27% of the population receives water directly from companies established under private law, including 1.7 million from multi-municipal companies majority-owned by Águas de Portugal and 0.9 million from other municipal companies established under private law.
Many municipalities do not control their sources of bulk water supply. Companies established under private law, in particular multi-municipal companies co-owned by Águas de Portugal, thus sell water to municipalities, providing water indirectly in bulk to 53% of the population.
In addition companies established under private law provide water directly to 27% of the population. Thus, a total of about 80% of the population receives water directly or indirectly multi-municipal companies established under private law.
Independently of whether utilities are established under public or private law, all infrastructure is publicly owned. There is only limited private sector participation in the provision of water and sanitation services. Storm water drainage is directly provided by the municipalities.
According to the local government law (Lei das autarquias locais) the country’s 308 municipalities are responsible for providing water supply and sanitation services, either directly or indirectly through concessions. Decree-law 379/93 of 1993 establishes the legal basis for concessions to municipal and multi-municipal water and sanitation companies established under private law (typically publicly owned shareholder companies that are part of AdP). As mentioned above, these have come into widespread use in Portugal ever since.
Multi-municipal water and sewer companies AdP's first business unit (UNAPD) includes 18 multi-municipal water and/or sewer companies co-owned by AdP, which hold concessions contracts with municipalities.[10] AdP majority-owns all these companies (owning 51% or more), with the remainder being owned by participating municipalities (owning up to 49%). Out of the 18 companies 11 provide both water and sanitation services, 5 only sanitation services and 2 only water services. If a multi-municipal company does not provide both services, the other service is provided by the municipality.
For example, in the country's two largest cities, Lisbon and Porto, water is provided by a multi-municipal company, but sanitation services are provided directly by the municipality. In some municipalities water services are provided by one multi-municipal company, while sanitation services are provided by another."
The sooner this intestinal structure is sorted out, the better surely it will be.
See: http://en.wikipedia.org/wiki/Water_supply_and_sanitation_in_Portugal
