Tallinn at loss over drainage fees

TALLINN - The Tallinn city government postponed on May 30 the endorsement of a surface water drainage contract under which it would have to pay the newly privatized city water company Tallinna Vesi a total of 235 million kroons ($12.8 million).

The city has never paid for this service and it doesn't have money for such purpose in the budget, the daily newspaper Postimees wrote.

Under the contract, the water company is asking the city to pay 41 million kroons this year and 48.4 million kroons in the next four years, or a total of 235 million kroons in five years.

Tallinn Deputy Mayor Ivar Virkus said the contract is ready, but authorization of its signing was postponed because there's no money for it in the supplementary budget.

The law office of Paul Varul, which acts as adviser to the city government, said the city should not pay the water company for surface water drainage.

Now, the privatized company demands additional payment, referring to a law that went into effect several years ago, according to which water tariffs shouldn't contain any sums not directly connected with the given service.

The law office recommends non-payment, arguing the service had already been paid for when the company was state-owned.

A controlling stake of 50.4 percent in Tallinna Vesi was sold to the British company International Water UU for $73 million last December. The main task for the new investor was to improve the present situation of the city's sewer and drain network, as about 30 percent of the network was leaking and some pipes date back to 1840.

At present Tallinna Vesi services about 70 percent of Tallinn.

International Water UU was formed through the merger of two multinational water utilities, the International Water and United Utilities enterprises.