Germany: Vivendi subsidiary chips away at former East Germany’s water quality worries

OEWA, a wholly-owned subsidiary of Vivendi Water, is expecting strong growth in public-private partnerships with German municipalities, particularly in the former East Germany where one of the challenges is to tackle customers' suspicions of drinking water quality.

“Right now, OEWA provides water for 700,000 inhabitants and sewage services for 500,000,” Christophe Hug, managing director of OEWA, told edie. In addition, the company has two industrial contracts and plans to expand its work in the sector by offering industrial clients access to US Filter technology.

“The work we do is similar to Générale des Eaux’s contracts in France, but our manner of working is quite different because the legal framework in Germany is not the same,” says Hug. “We can make use of the technical and financial expertise of Générale des Eaux but this is a real German company -not a French company in Germany.” Of OEWA’s 350 employees, only four are French.

Like the French water companies, OEWA offers a full service not just technical operations. “We provide administrative and customer service operations as well. We do the billing and have the call centres for new connection enquiries, complaints, all types of customer service,” says Hug.

Vague fears about microbiological quality

The majority of OEWA’ s municipal contracts are in the former East Germany where investment in infrastructure has been and continues to be very high. Hug believes that where OEWA holds contracts, customers are beginning to believe the drinking water they receive is of a high quality. “In the former East Germany, people are not used to drinking potable water,” he explains. “They drink only bottled water. Our studies show that with the information we have provided to customers as well as the huge improvements in water quality, people do have more confidence in potable water than before. But this is a gradual change.”

Hug admits that it is difficult to get customers to identify precisely their fears concerning potable water. “I think it is more about microbiological risks than pollution, but when we ask them they can’t give us answers,” says Hug. “It’s just a feeling that we get, that microbiological concerns are greater than worries about pollution. We explain that we have online analysis of water quality and analysis by the municipalities and that overall their water is really well analysed, well controlled and of high quality.”

Generally, Hug is not overly concerned by the prospect of more stringent EU water quality standards in years to come and believes that Germany’s water industry will meet the challenges. “Germany is rich in water resources,” he says. That doesn’t mean that we can do what we want but we can have fairly high quality water without too much of a problem.”

In the case of nitrate levels, Hug believes that this will remain a sporadic, localised problem that will not become the huge issue it is in certain parts of France, such as Brittany.

“Lead is a problem in some areas and there will be action. I think we will meet the EU deadline for lead,” says Hug. “We’re not facing an emergency, but we do have to implement action plans. In some areas of former East Germany, they have no lead pipes, only steel. But the problem is greater in some towns in the former West Germany.”

Prices rise, consumption drops

On the question of domestic consumption, the rising price of water has been the biggest factor in a sharp reduction in consumption in the former East Germany. “In 1990, there was a consumption in the former East Germany of 300l per person per day and now it’s at about 100-110. The price of water there used to be very, very low,” says Hug.

The quick and sharp rise in water prices has shocked citizens in the former East Germany, but Hug says OEWA’s customers in the region are reassured when they compare the prices they pay to those paid in nearby towns not served by OEWA. “They definitely think that the price is high,” says Hug. “But when they can see that where they live the price is reasonable in comparison to other regions then they understand. Prices are still rising – particularly in the former East Germany because of the area’s investment needs – but it is slowing down. The aim is obviously to stabilise the prices. In some cases this is possible, like in Berlin. In Berlin, the price will be stable until 2003 – that was one condition of the partial privatisation deal.”

“On our projects we have a good vision of the future and prices are fixed or with very small increases every three years,” says Hug.

With a boom in public-private partnerships and partial privatisations expected in Germany’s highly-fragmented water market – the country boasts more than 6,000 water and wastewater companies – OEWA is hoping that its position, as a German company owned by a giant in the international water business, will allow it to grow quickly.

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