Environment ministry encourages water company mergers to save costs
The Estonian Ministry of the Environment plans to encourage the country's water companies to join forces in order to increase their financial capacity and curb rising water prices.
According to Antti Tooming, deputy secretary general at the Estonian Ministry of the Environment, in the long term, there are only five cities in Estonia where water companies could continue to manage without subsidies.
"The problem actually affects all regions (in Estonia) with fewer than 15,000 inhabitants. The larger cities can manage, but the rest of Estonia will have a hard time in the longer term, in five year or ten years, because they simply won't be able to make the (necessary) investments," Tooming explained.
This could mean the price of water in Estonia's small towns rising from an average of €2 to €10 per cubic meter.
In the ministry's view, the best solution would be for existing water companies to merge. It believes, that if Estonia were to have only three or four water companies, prices would remain at reasonable levels.
Tallinna Vesi already has agreements to provide water to neighboring municipalities, such as Viimsi, Harku and Rae.
"The larger the area served by a water company, the more reasonably all the costs of producing or purifying water can be shared. /.../ There will certainly be limitations at some point and it is necessary to conduct an analysis into what constitutes a reasonable area, how many people need to be at work and how quickly these people can and will be able to react," said Aleksandr Timofejev, CEO of Tallinna Vesi.
Up to now, Estonia's water companies have benefited from receiving EU subsidies. However, with these now having come to an end, 85 percent of water companies have since applied for investment grants.
However, Andres Aruhein, board chair of Emajõgi Veevärk, which provides water services to over 100 settlements in Estonia, says, the proposed merging of water companies may also have its drawbacks.
"It might be possible to do some things together and perhaps get a cheaper service price or a cheaper investment price, but that's not always the case. But, if the distances involved are very long, it may not be possible to share one drinking water treatment plant between two (companies) for example," Aruhein said.
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Editor: Michael Cole