Prague is pushing the French out of the water supply. They are now returning by detour through Křetínský’s heat

Already in 2016, Veolia bought from the Prague heating plant and heating plant on the left bank of the Vltava, the price according to the weekly Euro reached approximately 1.8 billion crowns. Now the French have acquired the company from the Energy and Industrial Holding (EPH) entrepreneur Daniel Křetínský in its entirety.

Following the approval of the deal by the Antimonopoly Office, Veolia will further strengthen its position on the municipal services market not only in the capital, but also in the Central Bohemian Region.

Pražská teplárenská in Prague covers almost a quarter of the thermal energy market and supplies heat to more than 230,000 households, a number of office buildings, industrial enterprises, hundreds of school and medical facilities and other entities.

Its management is profitable in the long run, in the order of hundreds of millions of crowns. Revenues have been around five billion crowns in recent years. Last year, the company’s net profit rose by 3.3 percent year on year to 580 million crowns. Revenues increased by 4.8 percent to 5.3 billion crowns.

The customer is safe

However, according to Cyrrus’s portfolio manager Tomas Pfeiler, the transaction will not lead to Veolia becoming a monopoly supplier that begins to dictate prices.

“Other players such as Pražská plynárenská or ČEZ are also active in the Prague heating market. In principle, nothing should change for the end customer,” believes Pfeiler.

Štěpán Křeček, an analyst at BH Securities, also agrees. “If the Office for the Protection of Competition does not object to the change in the ownership structure, we should not be concerned about the proposed transaction. In the private sector, it is common for the ownership structure to change according to the needs of owners,” explains .

According to him, Veolia operates in a heavily regulated sector, where regulators can take action against unfair practices. This protects end customers.

Křeček also reminds that Veolia has a lot of experience from different regions both in the Czech Republic and abroad. It will not have a problem to take over Pražská teplárenská without reducing the quality of the services provided. However, assessing Veolia’s dominance will be crucial, according to the analyst. “This could potentially lead to higher prices for customers of Pražská teplárenská,” he adds.

“In the case of EPH, this is a profitable departure from a successful business project. For Veolia, this means a significant strengthening of their activities, while it is a business and location that they know well and where they already have their own know-how. For customers, it should not mean any negative change, “Jiří Gavor, an analyst at ENA, told ČTK.

In addition to Prague and the Central Bohemian Region, the French Veolia in the Czech Republic controls heat and electricity producers in the Moravian-Silesian, Olomouc, South Bohemian, Plzeň, Karlovy Vary, Ústí nad Labem and Liberec regions.

The largest market for Veolia’s heating activities in the Czech Republic is northern Moravia and Silesia, where it operates the Třebovice Power Plant and heating plants in Přívoz, Krnov, Karviná or Frýdek-Místek. Last year, it achieved a turnover of 4.65 billion crowns. In Central Moravia, where the company has heating plants in Olomouc and Přerov, the turnover in 2019 reached 1.73 billion crowns.

In the Czech part of the republic, where, in addition to Prague, it owns, for example, energy sources in Kolín and Mariánské Lázně, it had a turnover of 2.25 billion crowns.

Veolia in the Czech Republic – energy:

Water in Czech hands

The capital city of Prague already has experience with Veolia in the field of water supply to Praguers. “I believe that the new owner of Pražská teplárenská will bring new investments in improving the heating infrastructure in Prague,” said Petr Hlubuček, Prague’s deputy mayor for the environment and security.

At the same time, it was, among other things, Prague, which two years ago decided to get its own water under control. It therefore bought a 49% stake in Pražské vodovody a kanalizace (PVK) from Veolia for CZK 1.75 billion.

PVK has a water management network – supplying drinking water to 1.32 million inhabitants of Prague and 208 thousand inhabitants of the Central Bohemian Region – leased until 2028, after which Prague wants to control the whole company.

A number of political parties, including Prime Minister Andrej Babiš, supported the takeover of the water supply system at the time. He then announced that he would offer a loan to the municipalities so that they could operate the water supply network themselves. Politicians and municipalities are particularly annoyed by the outflow of company profits abroad, which are not used for repairs and development of water resources and infrastructure. At the same time, residents of regions with private water mains often have to pay higher water prices than are the systems owned by cities and municipalities.

In 2018, for example, the towns in the Mělník and Kladno regions, as well as the municipalities of the Ústí nad Labem and Liberec regions, which belong to the North Bohemian Water Company, decided to take control of their own water. The seller was again Voelia.

Last year, Veolia supplied drinking water to three million inhabitants of the Czech Republic. It operates water management infrastructure in 1,050 towns and villages.

Veolia in the Czech Republic – water:

Source: Veolia.cz

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