Oligopoly on tap
While local water supplies have traditionally been a responsibility for a government or a locally owned utility, major multinational water supply companies are growing in influence. Two of these biggest water companies are French, Veolia and Suez; one is English, BWE Thames Water. These companies supply drinking and industrial water, as well as running municipal sewer systems and sewage treatment systems. The increasing complexity and capital requirements for treatment have made it harder for local companies to do the job, so these companies are called in, often in partnership with local government.
World leader Veolia Water, a division of Veolia Environnemental is an offshoot of Vivendi, a water company that wandered, to its loss, into the entertainment industry. It was spun off in 2002. The company's origins are in a company founded in the nineteenth century, Compagnie Generale des Eaux. That company (changed to Vivendi in 1998) has for a long time been a major French and international water supplier. The company now services over 110 million people in over 100 countries in all continents.
For example, Veolia is the number #1 water and waste services supplier in the US, though the US is a fragmented market. The company leads in US waste services through its Onyx subsidiary. It serves such communities as Tampa, Oklahoma City, and Indianapolis.
Suez, the second largest water company in the world, has its origins also in the nineteenth century, where it is was formerly Lyonnaise des Eaux. It was the company that once operated the Suez canal. Its waste management unit, SITA, the European leader. It claims to be #1 in population serves around the world, a total of 125 million people It's the #2 private water company in the US, and claims to be #1 in South America and Asia. The company also owns a number of electric utilities.
#3 BWE Thames Water is a relative newcomer, founded in 1989> It controls the London water and sewage system, and in 2001, it was acquired by RWE, a German energy company. In 2003 it acquired American Water, with operations in the US and South America. It services over 70 million customers worldwide.
Together these three companies serve around 300 million people worldwide, more than the total population of the US, and a good start on the 6.4 billion in the world. Of course, there are billions outside the reach f any water or waste system whatever.
But according to recent article in the Economist ("The flood fries up", 8/28/2002), "All three firms have met hard going in the third world and pulling back" The problem is that the whole area is politically very sensitive, especially in companies where the cost of providing clean water (with a decent profit) is far more than people can afford.
Thames, for example, has run into problems in Shanghai and Jakarta, where it is losing money and facing strong popular and government pressures to keep prices low. Suez, according to the Economist article, is also having similar problems in Jakarta, along with difficulties in Buenos Aires and Manila, where currency fluctuations have hurt profits badly. Veolia has suffered smaller problems in Puerto Rico and Argentina.
But the problem does not lie in the third world countries alone, the article states, "but from their own fast growth, and resulting debt." Veolia recently sold off its US Filter subsidiary, while Suez has sold its Nalco, water treatment resources in the US. RWE is laden with debt from the purchase of Thames Water and American Water, as well as several power companies.
All there companies look to be overextended. In the rush to dominate the industry, they managed to swallow too much too soon. But the trend of concentration of resources is not likely to be reversed, even if checked somewhat. China, for example, with its enormous needs and growing prosperity is a sore temptation. The individual companies may trip up, but the concentration of worldwide water supplies and distribution will continue.
7:23:00 PM 
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