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Suez Unit Wins Puerto Rico Water Management Contract

Bitter Reactions To New Prasa Managing Contract

Union Leader Believes New Prasa Contract Uncertain

Suez Unit Wins Puerto Rico Water Management Contract

Dow Jones Business News

April 30, 2002
Copyright © 2002
Dow Jones & Company, Inc. All Rights Reserved.

SAN JUAN, Puerto Rico -- Puerto Rico has awarded two companies owned by Paris-based utilities group Suez (SZE), United Water de Ondeo and its parent company, Ondeo Services, a yearly $400 million contract to manage the troubled Aqueduct and Sewer Authority for the next 10 years.

A company owned by Vivendi Environnement (VE) previously held the contract.

The committee awarded the contract Ondeo and United Water - headquartered in Harrington Park, New Jersey - because they pledged to balance the utility's budget, now operating at a $200 million yearly deficit, Government Development Bank President Juan Agosto Alicea said Monday.

The island's government has filled the budget gap for the past seven years, and would save $1 billion in the first five years of the new contract, he said. But local representatives and legislators were angry the government did not take control of the state-owned utility, which has been under foreign contract for seven years.

The winning bid - to be signed this week - includes plans to install water meters for 90% of customers. Currently, the utility bills customers based on estimates, Agosto Alicea said.

The utility and outside water experts have estimated it loses up to 50% of its water from illegal siphoning, water leaks and incorrect billing estimates, he said.

"Ondeo is taking the risk that making investments in early years, when there will likely be losses, will make it possible to increase revenues in the long run," he said.

The decision, however, ignored a last-minute call by Senate President Antonio Fas Alzamora for the Caribbean island's government to take control of the state-owned company from foreign contractors.

The three legislators on the 11-member committee evaluating bids also favored local control, and abstained from the final vote.

No local companies were among the four final bidders.

The eight remaining committee members - from the private sector and government - all supported hiring Ondeo and United Water, which has projects in 17 U.S. states.

The current utility managers, Water Co., said it was disappointed with the ruling. Water Co. is a subsidiary of French-Spanish Vivendi Environnement and has run the utility under government control for the past seven years.

"We are surprised and disappointed ... we gave a better offer in terms of technical solutions and organization," Water Co. President Fernando Pina said.

The head of the utility's professional association, Miguel Marrero, said the decision was a "slap in the face of the people," while the National Coalition of Communities Without Water representing neighborhoods with problems with drinking water supported public opposition.

The coalition's spokesman, Luz A. Vega, called for "the people to organize" and get combative against the decision.

United Water should take over operations June 30.

The other bidding companies in the final selection were Compaigne Generale Des Eaux, of France, the incumbent Water Co. and Thames Water of London.

Bitter Reactions To New Prasa Managing Contract

April 30, 2002
Copyright © 2002
The Associated Press. All Rights Reserved.

SAN JUAN (AP) - "A government that cannot manage the Puerto Rico Aqueduct and Sewer Authority (Prasa) cannot manage a country," Prasa Independent Union President Hector Rene Lugo declared on Monday.

The reaction followed the announcement of the new Prasa contract, which was granted to the firm United Water of Ondeo.

"We are convinced that it will be more of what we have now. They are not coming with the interest of giving good service. What they want is to have profit," Lugo said. "Water is an essential service, and because of that, it should be managed by the government. We are convinced of that."

For his part, the Prasa Professional Employees Independent Union President Miguel Marrero said the decision was like a "slap in the face of the people."

Meanwhile, the Communities Without Water National Coalition denounced that it was not consulted until the beginning of the month over its opinion on the evaluation process.

Luz A. Vega, the community group spokeswoman called for the public to get organized" and to combat the government’s decision.

"We are amazed at Agosto Alicea’s expression that the public would be the final evaluators. We always said the public should be the first and should have taken part in this decision, which was made behind close doors. Nobody here has represented the people’s interest," said Vega.

Union Leader Believes New Prasa Contract Uncertain

By Melissa B. Gonzalez Valentin of WOW News

April 30, 2002
Copyright © 2002
WOW News. All Rights Reserved.

Miguel Marrero, president of the Independent Brotherhood of Professional Employees of the Puerto Rico Aqueduct and Sewer Authority (Prasa), requested that Gov. Sila Calderon desist from signing the new Prasa managing contract, as he believes it doesn’t guarantee the well-being of the corporation’s employees or of its clients after the 10-year period.

Although the government has assured that Prasa employees would continue working as public employees under United Water of Ondeo for the next 10 years, Marrero said he is not convinced.

"No one knows what will happen after these 10 years. The company may want to keep the business," said Marrero, adding that during a meeting to meet the bidding companies, Ondeo representatives had expressed their interest of staying on the island for more than 15 years.

If this happens, the union leader said the company could monopolize the water service in Puerto Rico, reduce Prasa’s personnel, and maybe increase utility rates for consumers.

However, Marrero said he couldn’t base his statements on any calculated projections, because he had not received a copy of the new managing contract.

On the other hand, Gov. Sila Calderon, as well as Government Development Bank President Juan Agosto Alicea, have said two of the new contract’s main objectives are ensuring Prasa public employees’ jobs and avoiding an increase in water service rates.

Marrero said he was also concerned with the amount of money that the local government would have to spend paying private firms to evaluate Ondeo’s performance.

The union leader also resented the fact that the government preferred a foreign company over local talent to manage Prasa’s operations.

"This is a slap in the face for Puerto Ricans. No one can believe that in the future Prasa’s operations will be returned to the people," Marrero added.

However, Marrero admitted that there’s nothing more anyone can do to avoid the signing of the new contract and ruled out a possible work stoppage to protest the new accord.

"If there were something else to be done in that sense, I think this is not the time to do it," Marrero said.

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