Co-operation of private water management sector with municipalities

Abstract

After 1990 a gradual privatisation of the water and sewerage sector began in the Czech Republic as well as in other Central and Eastern European countries. State assets of public water pipelines and sewerage were transferred to towns and municipalities and joint stock companies were established. Two types of companies appeared Ð operational and ownership companies. The first type is the operational company that operates the infrastructure assets of public water pipelines and sewerage. These assets stay in the ownership of municipalities. A long term operational contract is agreed that solves the relationship between the owners and operators. The second type is the ownership company that directly owns the infrastructure assets of public water pipelines. Towns and municipalities in this case became shareholders of those companies. At the end of nineties, big international companies bought shares of both operational and ownership companies. Municipalities have to, by law, ensure the operation of public water pipelines. However, by the sale of shares they have lost a possibility to participate in decision making. A question about future co-operation between towns and municipalities and ownership companies appears. An example of the North Moravian Water and Sewerage Works Company was used to describe a possible way of co-operation between a private company and the municipalities on whose territory the company operates. Contracts between the ownership company and particular municipalities were agreed. This solution turned out to be complicated, so the municipalities affiliated and established Water Management Association. The objective of the Association is to promote common interests of the municipalities in relation to the water company. A contract was agreed between the Water Management Association and the company about co-operation in the area of water tariff setting and public waterworks' development.