1. ing. Renato Drusiani Panel of practitioners and experts - Italian situation - Watertime Final Conference Friday 25 November 2005, University of Greenwich, London

2. Four examinated cities and general situation of Water Services in Italy Milano Bologna Arezzo Roma

3. In Italy the water utilities system is highly fragmented for different reasons: HISTORICAL Strong political/administrative localism due also to the late formation (1861) of the national state, starting from situations with highly differentiated traditions, economic development and political divisions. GEOGRAPHICAL Italy has a highly differentiated geological physiognomy characterized by the presence of large mountain chains (Alps in the North and Apennines in the Centre/South) which tend to make its geography fragmentary. HYDROLOGICAL The availability of water is greater on average than in other parts of Europe although it varies widely across Italian territory

4. To increase the efficiency of Italian Water Services the Italian Parliament in the ‘94 approved the Water Services Reform Law. Law 36/1994 (Galli law)

5. Central point of law 36/94 is the creation of ATO ATO means Ambito Territoriale Ottimale (Optimal management area) In the ATO only one managing company is present for all the water services. This new water company is obtained by merging of existing operators. ATO areas are defined by each Region (in Italy there are 20 Region) 16 operators1 operator Example Population average value: 620,000 inhabitants

6. Targets of law 36/94: water management cycle Primary supply Potabilisation Wastewater collection Treatment Reuse (agriculture,industry) water resources Distribution THIS APPROACH IS CONSISTENT WITH THE FRAMEWORK DIRECTIVE

7. Main target of Italian water services reform: reduction of fragmentation 1995 Number of managing entities (not integrated)  8,000 1995 Number of managing entities (not integrated)  8,000 2006 (?) Number of managing entities (integrated) 80 - 100 2006 (?) Number of managing entities (integrated) 80 - 100 New assignements of water services has to be made before the 31 december 2006 Law 36/1994 socalled Galli Law Each managing area is called ATO

8. Stato attuazione Servizio Idrico Integrato Implementation of law n. 36/94 (June 2005) ≈ 55 % Italian population Milano Bologna Arezzo Roma

9. Management entrusted to a third party company selected by putting out to tender (socalled “concession”) Management by a mixed public-private company (private partner chosen by tender) Management by a company owned selected by the municipal administrations (socalled “in house providing”) Methods of assignment of water services in Italy (Law 290/03) Management entrusted to a company later quoted on the Stock Exchange (only if quoted within October 2003)

10. Assignment of the water services (sept.2005) Competitive methods Milano Arezzo Bologna, Roma

11. Few participants at the tenders 1999 2005

12. Assignments by tender (June 2005) 1 2 5 2 1 1

13. WHY ARE TENDERS SO UNAPPETIZING? FRESH FISH BIDS

14. HIGH ENTRY BARRIERS REGARDING BIDDING REQUIREMENTS IMPOSSIBILITY OF GUARANTEEING AN ADEQUATE RETURN ON INCOME EXCESSIVE CONSTRAINTS /CONDITIONING FOR THE FUTURE MANAGER ATO PLAN UNRELIABLE PLAN HIGH CONFLICTUALITY Arezzo: in five years, investements and tariffs were renegotiated three times

15. Time to prepare technical-economical proposal (by tender announcement) minimum value (52 gg) Dir. 93/38/CE

16. Turnover requirement for a Chief Company (group of 3 companies) to be admitted at the tender Real turnover of ATO Turnover requirement % 356

17. Different political/administrative situations Different technical/historical conditions can produce different solutions. Different cities for different policies Bologna and Roma municipality likes to enhance their companies by stock exchange quotation. Milano was interested to build an good “in house” company operating in Milano area, starting from municipal experience. Arezzo (not water tradition) searched a strong (and rich) partner to improve Arezzo water service using external know-out.

18. Different cities for different policies Bologna Roma Milano Arezzo Population involvement Managing continuity Political agreement Opposition by population littlegoodquite the same little/local goodlittlelittle/local not at alllittlegoodnot at all quite the same not at allstrongnot at all

19. Different cities for different policies Bologna Roma Milano Arezzo Privatisation experience in the past Privatisation policies now Kind of local governement strong (XIX cent.)not strongLEFT not at allRIGTH not at allLEFT not at all IS IT POSSIBLE THAT PAST HISTORY CAN INFLUENCE THE ACTUAL POLICIES ? strong (XIX cent.) not strong very strong

20. CONCLUSIONS The water services reform launched in the mid 1990s was important in enhancing the efficiency and functionality of the water services in Italy and in facilitating the implementation of Dir. 2000/60/EC Opening up the market is an important but delicate process that requires the fulfilment of various conditions: adequate tariffs, independent regulatory authorities, regulatory stability,… The opening up the water services market begun at the end of the 1990s was found to have numerous limitations; low bidding participation while no new market subjects have emerged. Even if the competitive mechanisms are currently a minority among the criteria for assigning the water service, the preferred system is in any case that of PPP with the private sort out by tender.

21. Reform of public utility system in Italy Are they finished now ? We hope so, but … we are not sure ….