The imbroglio that has come to threaten, over the last eleven years, the solvency of the Chamber of Barcelos is about to end. This Tuesday, the municipal assembly approved the revision of the water and sanitation concession agreement, established between the City Council and Águas de Barcelos (AdB), allowing the municipality to avoid paying a compensation of 172 million euros announced by the arbitral tribunal in 2012 and confirmed by the Northern Administrative Court two years later. The new agreement, which is expected to take effect from January of next year, stipulates the payment of compensation of 18 million euros, but establishes the extension of the concession period, which passes from the year 2034 to 2054.
“It is a historic moment. It will be possible, from now on, to start a new life in Barcelos”, rejoiced Mário Constantino, mayor of Barcelos (PSD), during the municipal assembly, where he explained the contours of the new agreement.
From the outset, the “extinction” of the arbitral tribunal’s sentence, which in 2012 condemned the municipality to pay compensation of 172 million euros, an amount that, with interest, could exceed 200 million by 2034 and threaten the current action of the municipality, which has an annual budget of just under €100 million. The conviction came after AdB had claimed non-compliance on the part of the City Council, at the time led by the PS, regarding the average consumption of water foreseen in the municipality: in 2004, when the concession contract was signed with the PSD in power, financial rebalancing clauses were established in case there was a 20% deviation in the average consumption, as happened until 2009. In the new agreement, the clauses are crossed out.
The contract also provides for the exemption of costs for connecting new branches, the transfer of the competent jurisdiction, in the event of a dispute, from the arbitral tribunal to the judicial court, and the introduction of social tariffs and tariffs for large families, which, according to with Mário Constantino, can cover up to “28 thousand families” in the county. The value of water to be paid by families, however, will increase by 7.7%: on average, a family that consumes 10 cubic meters will pay 25.79 euros, instead of the current 22.07. With the new tariff, Barcelos will be the 19th municipality with the most expensive water in the districts of Braga, Porto and Aveiro.
According to the municipality, the new agreement also allows for savings of 63.5 million euros “through efficiency gains”. Otherwise, admitted one of the technicians responsible for formulating the document, “it would not be possible for the municipality to pay only the 18 million euros” to the private sector, nor to avoid “a significant increase” in the water tariff. If the technical optimisations are not met, the consequences will have repercussions on the concessionaire.
Remunicipalization cost 242 million euros
In the new investment plan, AdB will have to invest 25 million euros in infrastructure, while the municipality is committed to investing close to 6 million, thus allowing “sanitation coverage to practically 80% of the territory”, covered by almost 117 thousand people.
According to the plan presented in the municipal assembly, which was voted against by the municipal deputies of the Left Block and the PCP, the redemption of the concession, which would be possible in 2034, would cost the municipality’s coffers 242 million euros. The remunicipalization option, rejected by the PSD coalition, CDS and the Barcelos, Terra do Futuro movement, would have to add the 25 million euros of investment by the concessionaire to the “rebalancing clauses, compensation for non-update of tariffs and interest rates” foreseen in the current contract.
After the approval of the new contract in the municipal assembly, the water issue, identified as the main reason for the change in the 2009 elections, which overthrew the PSD after twenty years in power, may be about to be resolved. Now follows the obtaining of a non-binding opinion from the Regulatory Entity of Water and Waste Services (ERSAR), the amendment of the financing contracts with the bank by the AdB, and the submission of the service regulation to public consultation. Subsequently, there will have to be a new approval by the municipal bodies, and, finally, the contract will have to be submitted for approval by the Administrative and Tax Court.