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French Water Companies Making ‘Abusive’ Profits

Thursday 15 November 2007

The price of water in the major cities of France is often ‘abusive’ and private water management companies make huge profits, according to the French consumer’s body, UFC-Que-Choisir.

Around three quarters of consumers in France have their water supply managed by a private company, of whom the two largest players are Veolia, who have 39% of the market, and Lyonnaise des Eaux (Suez), who supply 22% of the market.

In France, private water companies run local water services under contract from the local councils, although a small number of councils choose to run the service on a direct basis.

Chief culprits in the profits bonanza according to Que Choisir, are the Syndicat des Eaux in the Ile-de-France (Sedif) with a net profit margin of 58.7%, closely followed by the Syndicat des Eaux in Marseilles with a profit margin of 56.1%.

Others with a high margin are in Lyon, Toulouse, Montpellier, and Reims with margins between 40% and 50%.

Bordeaux, Nice, Paris, and Strasbourg have margins between 30% and 39%.

By contrast, Chambery, Clermont-Ferrand, Annecy and Grenoble, which happen to be managed by the local councils, have a profit margin between 10% and 15%.

Que-Choisir also criticise some of the wider aspects of the contracts between the local councils and the water companies, which place on the water bill expensive aspects of the service that, in law, should be funded by the general public rates.

The water companies have retaliated by stating that the profit figures given by Que-Choisir bear no relation to reality, and that even if they did, some publicly run services are amongst the highest profit earners (notably Reims and Strasbourg).

They also claim that private sector contracts are run more efficiently than public run services, losing around 20% less water from leaks.

Despite the large profits made by the water companies, the cost of water in France is not high by European standards.

More recently, prices have started to rise, in large measure because of the need to undertake investment in water treatment facilities, with France under threat of legal action from the EU.

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