Walk through any major square in Italy over the next couple of weeks and chances are you will be stopped and asked to lend your support to a campaign titled “L’acqua non si vende”, or “Water is not for sale”. The campaign, which runs until 24 July, is an initiative of the Forum Italiano dei Movimenti per l’Acqua, a network of national associations and local committees that is collecting signatures for a referendum against the liberalisation of Italy’s water system. As of 21 June over one million signatures had been gathered – 500,000 more than are needed to call a referendum – according to the Forum’s website www.acquabenecomune.org. In Rome in mid-June protesters covered the characteristic public drinking fountains or nasoni (literally meaning “big nose”, a reference to the nose-shaped spout) with black plastic bags, padlocks, chains, posters and other material to draw attention to the campaign.

At the heart of the protest is the so-called Ronchi law of 2009 paving the way for the greater participation of private investors in the management of water services which, despite earlier moves towards privatisation, is still largely the prerogative of the local authorities (see Water services in Italy box). Under the new law from 2012 water supplies must be managed exclusively by private companies or by mixed public-private enterprises where the private investor holds at least 40 per cent, and contracts must be awarded by tender. In addition local authorities with a stake in utilities listed on the stock exchange are asked to reduce their shareholding gradually to a maximum of 30 per cent by the end of 2015. The ownership of the infrastructure (aqueducts, water treatment plants etc) remains in the hands of the state.

The government, through European affairs minister Andrea Ronchi who gave his name to the law, insists that the provisions are needed to bring Italy into line with European regulations. However opponents argue that water is a common good and that access is a fundamental right and as such that it cannot be subject to the laws of the free market. Local authorities across Italy immediately expressed their opposition to the changes and seven regions – Puglia, Liguria, Piemonte, Marche, Valle d’Aosta, Tuscany and the autonomous province of Trento – have appealed to the constitutional court against the law, claiming it violates regional autonomy. Meanwhile three referendum questions have been drawn up by eminent Italian jurists and deposited before the supreme court of cassation (see Referendum box).

Italy prides itself on having one of the lowest water rates in Europe. In Rome, where supplies are managed by the listed water and energy utility ACEA SpA, water costs on average just over ?1 per cubic metre, compared with ?2.7 per cubic metre in London, ?3.1 per cubic metre in Paris and ?6.3 per cubic metre in Berlin according to figures from the World Water Forum 2009. However at the same time the country loses about 30 per cent of its water (although in some areas the figure is much higher) from leaky aqueducts and theft, compared to a maximum of 20 per cent in other developed nations. This translates into losses for the water management companies of ?226 million per year and, together with waste in agriculture and industry, is also responsible for shortages and rationing particularly in southern Italy and during the summer months.

Supporters of liberalisation argue that greater private investment in Italy’s water system will make it more efficient and generate capital for much-needed investment in infrastructure and maintenance. However recent experiences of public-private management in various parts of the country suggest that this is not always the case.

In 2002 in the province of Latina in southern Lazio the management of local water supplies passed to AcquaLatina SpA, a mixed capital company controlled by the local municipalities and with a 49 per cent shareholding by the French water giant Veolia. Since then rates for consumers have risen by up to 500 per cent, while investments totalled ?74.5 million to 2008 against ?146 million stipulated under the original management contract according to Fabrizio Consalvi of the Comitato Cittadino Difesa Acqua Pubblica di Aprilia. This has prompted residents of one town, Aprilia, to refuse to pay their bills and demand that the local council resume management of the water supply.

In the province of Terni in Umbria residents currently pay an average of ?2,11 per cubic metre to their water provider, a mixed capital company called Servizio Idrico Integrato (SII) which was awarded the concession in 2003. This compares with an average rate of ?0.61 per cubic metre in 2002. Local Forum Italiano dei Movimenti per l'Acqua representative and Terni resident Maria Cristina Garofalo says that in her neighbourhood services have deteriorated over the same period, with supplies failing to keep pace with new building and increased demand.

Similar tariffs apply in the province of Arezzo and part of the province of Siena in Tuscany, where water services have been managed since 1999 by Nuove Acque SpA, a public-private company owned to 46.16 per cent by the consortium Intesa Aretina led by Gas de France (GDF) Suez and with participation by ACEA SpA. However here price hikes have corresponded to a real improvement in water quality, prompting many consumers to shift from bottled mineral water to tap water.

In light of the Ronchi law in May Italian utility group Iride and investment fund F2i announced a voluntary total takeover bid for Mediterranea delle Acque SpA, the company that currently manages water services in most municipalities in the province of Genova, as part of a project “for the concentration and development of water activities” according to a joint Iride and F2i press release. Iride already owns just over 68 per cent of Mediterranea delle Acque SpA through its subsidiary Iride Acqua e Gas SpA.

Likewise the main private shareholders in ACEA SpA, Roman real estate developer and media magnate Francesco Gaetano Caltagirone and GDF Suez (the same group that has stakes in Nuove Acque SpA in Tuscany), recently increased their shares in the company to just under 13 per cent and just over 10 per cent respectively, possibly in anticipation of the obligatory sale by Rome city council of at least 21 per cent of its present 51 per cent stake. ACEA SpA was once a local Rome company but according to its website it is now the largest supplier of water in the country, with interests in Tuscany, Umbria and Campania as well as Lazio.

Experts say clear rules on privatisation and an independent water business regulator are still needed before there can be a significant increase in private investment in Italy’s water industry. These, according to EU affairs minister Ronchi, should be in place by the end of the year. So it may only be a matter of time before these early manoeuvrings by providers give way to a flurry of merger and acquisition activity in the sector. The result could be a concentration of the management

Water services in Italy

In 1994 the Italian parliament approved a water and sewerage services reform (the so-called Galli law) to increase the efficiency of what had until then been a highly fragmented sector. This law provided for the restructuring of the industry by the regions through the aggregation of municipalities into single areas known as optimum territorial entities (ambiti territoriali ottimali, ATOs) – usually corresponding to the region or province – with a single water provider and a unified tariff system in each area. The law did not require local utilities to be privatised but it gave ATOs considerable flexibility in deciding how to manage their water services: through a public enterprise (so-called “in house provision”) or by concession to a private operator or a mixed public-private company, where private partners would be selected by tender. Tariffs in any given ATO are set by a special authority and must guarantee the provider at least a seven per cent return on their investment.

To date 92 ATOs have been created under the terms of the Galli law, of which 69 have appointed a provider (in some cases more than one), according to the 2009 report to parliament of the Commissione Nazionale di Vigilanza sulle Risorse Idriche. Currently there are 114 providers operating in Italy, of which 58, or over 50 per cent, are public enterprises.

The Ronchi law does not alter the basic organisation of the industry with respect to the Galli law but rather increases the requirement for private participation in the delivery of services.

Referendum

The Forum Italiano dei Movimenti per l’Acqua is promoting a referendum against the privatisation of public water management services. Three questions have been put forward. The first seeks to repeal the part of the 2009 Ronchi law about the greater participation of private capital in water management services; the second to repeal part of the earlier Galli reform concerning the assignment of water management concessions to third-parties; and the third to repeal part of the same reform requiring water rates to allow for “an adequate return on invested capital” on grounds that any profits should be reinvested back into the improvement of services.

For the referendum to go ahead the supreme court of cassation first needs to validate the 500,000 signatures needed and the constitutional court to confirm the constitutionality of the proposal. Only then can a date be set for the referendum. If all goes to plan the vote will be held in spring 2011.

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