Turin city council votes to fully remunicipalize its water utility

22 December 2017
In early October 2017, the city council of Turin (Italy) voted to change the legal status of its local water provider - the “Turin Metropolitan Water Company (SMAT)” - from a publicly-owned joint stock company governed by private law to an inter-municipal enterprise governed by public law.

by Emanuele Lobina*

The decision is a major victory for the local chapter of the Italian right to water movement because the change of its legal framework from private to public law has important implications for SMAT’s corporate governance. For example, under public law the new inter-municipal enterprise will no longer be subject to an obligation to pay dividends to its public shareholders (over 290 municipal governments in the Turin metropolitan area) and will be subject to tighter public oversight. The main operational and strategic decisions concerning the utility will now be subject to the approval of the municipalities, and there will now be scope for greater public participation.

SMAT’s workers will remain under private law and collective agreements ensuring that they can keep their jobs and employment conditions under the new legal regime and will not have to be dismissed and then re-hired pending a public competition, a requirement for permanent public sector employment in Italy.

 

A victory for the Italian “right-to-water” movement

The Turin city council’s decision does justice to years of campaigning for the implementation of Italy’s 2011 referendum, when over 27.6 million Italian citizens said “no” to the privatization and commercialization of water services. The Italian government has so far proved unwilling to enforce the people’s decision and this has led to renewed social mobilization at local and national level, in a struggle to make water as a common good a reality.

Reaffirming the results of the 2011 referendum was the main motivation for civic groups demand to change SMAT’s legal status. Right-to-water activists also denounce that – under private law - SMAT has behaved as a private water company even if it was publicly-owned. For instance, a SMAT subsidiary had won a water concession in the province of Palermo (Italy), which soon became problematic. As the concession did not meet profitability targets, in 2010 SMAT’s subsidiary sought compensation for damages from local authorities and demanded tariff increases before the concession was terminated. Activists also point out that – while under private law - SMAT prioritized the payment of dividends to its municipal shareholders over social and environmental considerations, such as the reduction of user tariffs, investment in infrastructure and maintenance, and fixing leaks.

 

An opportunity for enhanced public scrutiny and democratic participation

With this decision, Turin joins Paris and a growing list of cities that have chosen to bring back their water and sanitation utilities into full public ownership to ensure that the provision of water services to local communities is under public control, is of high quality, guarantees cost-efficiency and transparency, and  has democrative oversight through inclusive public participation mechanisms. In the case of Paris, remunicipalisation allowed progress towards more affordable and accessible water, and the appointment  of workers and civil society representatives to the board of directors of the new public utility. It remains to be seen how this principle will be implemented in SMAT.

However, this major achievement may yet not be final. If the October 2017 decision is to become effective, Turin and other 40 municipal administrations that expressed support for SMAT’s full remunicipalisation need to receive the backing of more local authorities in the Turin metropolitan area. Local right-to-water activists hope that this process will be completed by April 2018: this is a reminder that the struggle for water as a common good is hard, but Turin has already gone a long way.

 

* Emanuele Lobina is Principal Lecturer, PSIRU, Business School, University of Greenwich, UK. Emanuele joined PSIRU in 1998. He researches and teaches the reform and governance of water supply and sanitation services in developed, transition and developing countries, and EU Internal Market and Public Services.

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