Press release
Iași, 26.01.2021
Iași, 26th of January 2021 – The Concession Agreement, based on which Veolia Energie Iași (VEI) supplies heating for Iași Municipality (hot water and heating) will cease on 30.04.2021. This decision is the result of the inability to identify a financial balance for this contract, despite the efforts made by the two partners.
The service provider shall initiate all necessary actions in order to hand over the management of the heating supply service, which was entrusted to it for 20 years, as of 2012.
“Since the beginning, we expressed a firm commitment towards the people of Iași, namely, to provide hot water and heating at the highest quality standards, but we are now faced with outstanding circumstances which prevent us from continuing our partnership. Since taking over the centralized heating supply system, Veolia Energie Iași has been registering significant loss, mainly caused by a drop in the number of consumers and a rate which did not reflect the market conditions. The company was thus forced to finance its day to day activity in order to ensure hot water and heating to the city from loans from the mother-company, to make sure the citizens were not affected. Despite all sustained efforts to continue this partnership under financially balanced conditions, the Concession Agreement has become non-performing and deficient” declared company officials.
The further provision of these services is also endangered by the pending legal actions between CET SA and local authorities, which question the de facto owner of the heating production equipment and distribution system and increasingly hinder its operation.
The service provider has made a commitment to Iași and has been rigorously observing all the obligations undertaken under the Concession Agreement. By integrating a large-scale revamping process, it achieved high efficiency levels.
Company officials stated: “We acted in a responsible and efficient manner and provided heating supply services based on the quality parameters undertaken within the contract and as per the applicable legal requirements, even when faced with difficult financial situations. The supply was maintained at 97% and included energy efficiency, operation, convenience and environmental protection. We have adhered to our promise to implement investment, maintenance and regular repair programs, measures which contributed to the provision of quality services, as well as to the reduction of water losses by 69.3% vs. 2013”.
The value of the taxes paid by the company between 2012 – 2020 amounts to 151.4 million Ron.
Since 2016, the two partners have been discussing various solutions to restore the economic balance of the contract. The parties reviewed all determining factors that may contribute to the partnership’s sustainability, including by changing the formula for rate adjustment, the investment level and by implementing a relevant action plan.
In order to ensure the execution of the contractual provisions, an independent expertise was also carried out to identify solutions that would allow the further provision of these services by the company.
Over the next period, all steps will be taken to inform the competent authorities on the termination of the contract and to carry out the actions necessary for the hand over – reception of the management of the public service and the assets comprising the system.
In order to protect the employees, the company shall award severance payments as set out in the applicable Collective Work Contract and shall apply due diligence to ensure that the employees will continue to work with the new service provider.
The company shall be constantly in contact with local authorities to ensure a smooth service management handover, to minimize the impact on the inhabitants of Iași, connected to the centralized heating system.
Until the actual termination of the Concession Agreement, the company will continue to operate based on the same values and principles of professionalism, which guided its activity so far.
About Veolia
Veolia Group aims to become the benchmark company for ecological transformation. Present on five continents with nearly 220,000 employees, the Group designs and deploys useful, practical solutions for the management of water, waste and energy that are contributing to a radical turnaround of the current situation. Through its three complementary activities, Veolia helps to develop access to resources, to preserve available resources and to renew them. In 2021, the Veolia group provided 79 million inhabitants with drinking water and 61 million with sanitation, produced nearly 48 million megawatt hours and recovered 48 million tonnes of waste. Veolia Environnement (Paris Euronext: VIE) achieved consolidated revenue of 28,508 billion euros in 2021 .www.veolia.com