City water supplier takes loan, lays off workers

  • 2002-11-21
  • Aleksei Gunter

The supervisory council of AS Tallinna Vesi, the city's water provider and sewage handler, approved a re-organization of the company which will include laying off as many as 100 workers.

"Approximately 100 employees will be leaving the organization. We have put in place and agreed with the trade union a comprehensive compensation package," said Bob Gallienne, CEO of Tallinna Vesi. The lay-off complies with the company's business plan Tallinn city authorities approved during Tallinna Vesi's privatization tender last year, said Gallienne.

Re-organization of the enterprise, which has some 200,000 clients in the city of Tallinn, is supposed to be completed by the end of the year.

"This step was mutually agreed, and we are not making anyone redundant. The compensation package includes not only financial support but also additional training and help in finding new jobs, probably from our contractors," said Gallienne. "We are doing it in the most humane way."

Workers to be laid off are from all levels within the company. About 65 percent are lower-level workers, and the rest are mid-level.

The company will have some 370 - 380 employees after the re-organization, and due to the natural turnover in staff, which is about 2 percent to 3 percent a year, Tallinna Vesi might hire new specialists, according to Gallienne.

The city government sold 50.4 percent of Tallinna Vesi shares in 2001 for nearly 1 billion kroons (62 million euros) to International Water UU, a joint venture of International Water and United Utilities.

Tallinna Vesi changed its plans to increase water tariffs after additional talks with the city authorities in August 2002 and will gradually increase tariffs by 54 percent by 2010, instead of 2005 as previously planned.

To improve its balance sheet after the privatization, Tallinna Vesi, one of the first utility companies to be privatized in the Baltic states, took a 80 million euro loan from the European Bank for Reconstruction and Development.

"The EBRD loan partly repays share capital to the city and overseas investors," Gallienne explained.

According to EBRD, the loan will also help the company meet European Union environmental standards for water and waste-water services.

From 2002 to 2007 Tallinna Vesi plans to invest about 1 billion kroons into water and sewage services, most of which will go to further modernizing the sewage treatment and disposal system.