Francois Conradie | NKC African Economics
French utilities giant Veolia is leaving Gabon after it was unable to get its way in negotiations over the renewal of its contract with the State.
The break-up follows years of poor service delivery by the French company, which has been present in Gabon since 1997. More recently, in the context of negotiations about renewing the first 20-year contract, consumers have been more visible: groups of consumer rights advocates have held sit ins in front of Veolia’s local subsidiary, the Water and Electricity Company of Gabon (SEEG), complaining about poor delivery and inflated bills.
On Friday, February 16, negotiations to renew the contract finally failed. The State decided the contract would not be renewed and requisitioned the local subsidiary.
“In the interest of preserving continuity and quality in the public provision of drinking water and electric energy, the Gabonese state has proceeded exceptionally to the temporary requisition of the company,” Water and Energy Minister Patrick Eyogo Edzang wrote in a statement. Police accompanied the court official who delivered the State’s decision to the company.
On Monday, February 19, the staff of SEEG held a meeting at which executives under the leadership of Marcellin Massila Akendengue, the new interim chief executive, reassured staff about their future with the company.
According to Mr Eyogo Edzang, Veolia had threatened the government with water cuts; he told the trade union leaders at SEEG: “They told us: ‘If it’s like that, if you don’t do it our way, we’ll cut the power in Gabon. You can see what you’re going to do.’ It was intolerable.”
The Gabonese State’s move is a bold one.
It is certain that Veolia was derelict in running its business; it is much less certain that civil servants will be able to do better.
If the State continues to manage SEEG, then issues with service delivery may well persist or in fact grow worse, affecting perceptions of government legitimacy. It may also be that the requisition was a negotiating tactic to cut the French company down to size.
Veolia’s public relations executives seem to be hard at work to persuade public opinion that the requisition was some sort of arbitrary violation of its property rights; it was not.