Russia’s Secret Service Keeping French Water Firm from Operations

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Feb. 28 – Russia’s secret service, the KGB successor FSB, is keeping French Veolia Voda SA from satisfying its contract agreement, which it signed with the authorities of Russia’s Tomsk Region on December 6, 2010, the business weekly Vedomosti-Novosibirsk reports.

The authorities of the region awarded Paris-based French Veolia Voda SA, the water division of the world’s largest private water corporation Veolia Environment (VE), a 30 years contract to manage the city of Tomsk’s public water utilities.

But the company has no access to the city’s water supply plan because such information about cities with the populations over 300,000 is deemed a state secret.

Last Friday, the Governor of Tomsk Region Viktor Kress addressed this problem to the federal government. Later, the press-service of the governor told reporters that the application already got a special endorsement from the director of FSB Alexander Bortnikov, wherein Prime Minister Vladimir Putin is ordering him to solve the problem.

However the Prime Minister’s Press Secretary Dmitry Peskov said to the paper that “the subject wasn’t discussed yet.”

Viktor Kress and Veolia’s Director for Central and Eastern Europe Philippe Guitard signed the Memorandum on Cooperation during the Expo 2010 in Shanghai on June 15, 2010.

Last week, the governor stated that “the issue of the state secret has been purposely pointed out by competitors of the French Veolia.”

“The tender was ill-prepared and has been conducted in haste in particular for the certain company,” Tomsk Municipal Duma deputy Alexander Days considers.

Last December, three state-run regional water companies Orenburg VodoCanal, RBK-Tomsk, Vodniye Proekti and private Info Center sued the regional Commercial Court to call off the tender award decision. No decision has been made yet.

“The case is going to establish a precedent on domestic market,” Sergey Sivaev from the Institute of City Economy said to the Vedomosti-Novosibirsk.

The Russian subsidiary of German Remondis is managing the water canal of Arzamas town in the Nizhniy Novgorod region, but this case is not the subject of state secret decree because of number of inhabitants. According to the town municipal, only 108,000 people reside in Arzamas, he informed.

Veolia Water has been present in Russia for 10 years. The company operates in St. Petersburg through SPEP (Societe Eau Pure), which jointly owned by Compagnie Generale des Eaux (51 percent), Vodokanal (48 percent) and the city municipal authorities (1 percent). In 2008, Veolia Voda SA has opened a representative office in Moscow in charge of coordinating its activities in Russia, CIS and Turkey.

Veolia Water serves 108 million people in 66 countries. Its 2009 revenues amounted to US$17.36 billion.

The company is 90 percent owned by Véolia Eau-Compagnie Générale des Eaux. Since 2007, EBRD has owned the remaining 10 percent stake. Last November, the World Bank’s private-sector funding arm International Finance Corporation dropped US$139 million on Veolia Voda.

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