ECONOMY

Plans by private firms to bring water to Dodecanese run dry

The much-advertised program for water management in the Dodecanese islands, with members of the Hellenic Technodomiki construction group, seems destined to founder after the refusal of the European Union’s Cohesion Fund to finance the projects (desalination plants combined with wind parks), due to the dominance of private business interests in the consortium. Following the refusal, the company jointly set up with the prefectural authority in 2001 remains inactive, at least as regards the water segment of the project. It is quite likely that the company will not be dissolved and will focus its activities on energy production, having acquired, within a very short time of its founding, eight licenses for power plants in Rhodes, Halki, Symi, Patmos, Kasos, Leipsoi, Kalymnos and Kos, having a total capacity of 17.2 MW. Undeclared war But the latest development gives new content to the undeclared war over rights for the management of the islands’ water resources being waged between the government, the local and prefectural authorities and the powerful business groups now eyeing activities which the public sector is trying to shed in one way or another. Citizens are mostly unaware of the content of such concession agreements to private companies, signed by their elected representatives; they usually amount to low-risk investments for the entrepreneur, who will also manage the utility and, above all, be a privileged contractor for the project. In a press release for the Dodecanese Prefecture, issued in early April 2003, the prefect, Yiannis Mahairidis, appears to have called at a broad meeting of all parties involved (local officials and representatives of members of the Hellenic Technodomiki group) for «new, improved proposals in relation to those in the contract, regarding the cost of water to the consumers.» Local government officials say this cost would have been about 1 euro per cubic meter according to the original contract provisions, signed by the prefect at the time, Savvas Karayiannis. For this reason, they received a shock when they heard the representatives of the Hellenic Technodomiki group say the cubic meter would cost 2.50 euros, and after protests, 1.70 euros. The affair started when the Dodecanese prefecture reached an agreement with the construction group in 2002 to jointly form the company Aeiforiki Dodecanisou. The majority of shares belonged to a subsidiary of Hellenic Technodomiki, Development and Management of Energy and Water Resources, while Karayiannis became chairman of the joint company’s board of directors. Deal hailed The construction group issued glowing accounts of the deal, extolling its significance for new sectors of activity, particularly concessions regarding the management of natural resources. Said the group on its website (www.etae.gr): «The problem of lack of water on the Aegean islands will be dealt with through the project for management of the water resources of the Dodecanese, which will be implemented with the participation of private capital and provides for water management through a joint company with the prefectural authority for 20 years. There will be agreements with the municipalities for the sale of specific quantities of drinkable water (about 3.5 million cubic meters per year), processing of sewage and delivery for irrigation of the water resulting from the process, and the development and operation of wind parks totaling a capacity of 17.2 MW and other energy production applications.» This text has not changed since then, but developments seem to have overtaken it. In the local government elections of a year ago, Karayiannis (who had been supported by the opposition New Democracy party) handed the post of prefect over to Yiannis Mahairidis (supported by PASOK), who kept his distance from the deal, along with the mayors of the island who began to have doubts about how good it really was. But the decisive blow to the entire deal was the projects’ failure to win approval for subsidies from the Cohesion Fund, on the grounds that the majority shareholder was a private concern which would win, in this way, a dominant position in the management of a public good. The present prefectural administration has now decided to go it alone and has submitted its own proposals for desalination plants, seeking political support for a definitive solution to the permanent problem of water supplies in the region. But Hellenic Technodomiki never briefed its shareholders on the risks of concessions in public utility goods.