Experiences of Budapest Waterworks with state, municipal ownership structures and with the involvement of private funding: case study of Budapest Waterworks

In Central Europe privatization happened in the era of general political and economic transformation. The importance of privatisation is understandable given the specificity of the formerly planned economies where almost all productive assets were in the possession or under tight control of the state. Privatisation in Central and Eastern Europe (CCE) countries is unique; the number of assets that changed owners is huge and touched upon almost all sectors of economy. After several-decade-long socialist planned economy type of operations and after the collapse of the socialist regime, Budapest Waterworks was operated in Public Private Partnership (PPE) scheme by two professional investors (SUEZ Environment, and RWE Aqua GmbH). Public private partnership brought many benefits, namely the cross transfer of public and private sector skills leading to efficiency improvements and development. However, change of the legislative environment, the long term nature of the contract, lack of proper contract management and the evolution of different governmental strategies all lead to the early termination of contract. In our case study, we aim to present the various ownership structures with impact on the financing needs and tariff setting mechanism as well as the last decades’ results, effects on the present operations highlighting the efficiency improvement gained in the field of management of non revenue water, reorganisation of billing and receivables and process reengineering.