Банкеръ Weekly

Briefs

MUNICIPALITY TO COURT FOR SOFIA WATER CO.

A claim has been placed against Sofia Municipality was announced at a press conference on April 4, 2001. The claim is against Sofia Municipality decision of March 1, 2001 for the increase of water price. It has been placed by the National Committee of Water Users in Bulgaria (NCWUB), the Federation of Bulgarian Users and the Sofia Union of Users.
According to the Municipality decision, price of water will increase as follows: 25% for the population, 30.3% for budget organisation and 1.8% for industrial needs. Price increase was motivated by the newly introduced fee of BGL0.02 per cubic metre for the use of water source, which was introduced by the British International Water, which has taken the Sofia Water under concession. According to the organisations, which have placed the claim, the price increase is not adequate to the fee. In an attempt to justify Sofia Municipality decision, Vassil Marinchev, the district governor, said that water price formation depends on the euro index, the currency index, the salary index, etc. as well. According to Ganch Christov, NCWUB Chairman, the above mentioned clauses are not included in the contract with the concessioners. According to the Federation of Users, the realistic price increase, taking into consideration inflation rate, is about 10%. The groundless Sofia Municipality decision will result in unlawful income for Sofia Water, which this year will amount to USD4.5MN, said Hitrov.
According to the contract signed with the British company water prices should have remained unchanged for a three-year period. At the tender for selecting concessioners, International Water offered the lowest water price, as well as a considerable amount of investments. That was the company's greatest privilege, placing it ahead of compensation. While a couple of months after signing the contract, water price considerably exceeds the price offered by the other candidates, said the National Committee of Users. They also claim that another clause of the contract for concession has also been violated: any eventual change of contractual clauses should be announced three months prios to its coming into force.
According to non-governmental organisations the contract for concession has been violated, thus violating the Consumer Protection Act. These are the basic reasons why the users have placed the claim against Sofia Municipality. They insist on abolition of municipality decision and review of price corrections. The Federation of Users reminded that International Water failed as concessioner of water pipelines in other capital cities as well - in the Philippines and in Argentina.

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