Veolia's US growth hopes run into trouble

Luc OLINGA
 

Veolia's hopes of taking advantage of municipal privatizations and promised Trump administration public works projects to expand its US presence, are being strained by its role in water crises in Flint, Michigan and other cities.

The French water and waste management giant has targeted five percent revenue growth in North America in 2017, with the United States expected to lead the way. In 2016, North American revenues rose just 0.6 percent.

"The growth will be stronger," chief executive Antoine Frerot vowed this week in an interview. "We won't be far from five percent."

A push by more US local governments to privatize water systems and promises by President Donald Trump of a $1 trillion public infrastructure investment are seen as opportunities to Veolia to expand.

After four years of belt-tightening, Frerot last year unveiled a strategic plan to boost growth.

The company which currently has about three to four percent US market share in its three businesses, water, waste and energy.

The much-discussed Trump infrastructure plan, the details of which remain scant, "is especially promising," Frerot said.

"We see the potential for at least five percent growth per year in the US."

- Growth market -

Revenues in North America came in at around $2.2 billion last year, about 10 percent of the French company's total sales. Veolia employs about 8,000 in the United States and has about 30,000 industrial clients.

Part of the US market's appeal is the dry climate in key states such as California, where water scarcity offers an opening to provide water treatment and recycling services.

Other prospects include the chance to treat pollution from petroleum refineries or to recycle lithium batteries for electric cars.

But Veolia's operations have not been without controversy, especially in Flint, where a lead contaminated water system became a notorious symbol of American social injustice.

Veolia issued a study of the city's water quality before the scandal erupted but did not flag any issues with lead, an issue it says it was told to exclude from the report since city and federal authorities already were looking into it.

The contamination harmed thousands of children and was seen as the cause of 12 fatalities due to Legionnaires disease. Families is the battered city were forced to use bottled water for many weeks.

Veolia continues to face numerous investigations and class-action lawsuits connected to the crisis.

"Water privatization leads to the jeopardizing of public health and safety," said Lauren DeRusha Florez of the non-profit Corporate Accountability International, which plans to gather with other advocacy groups in Flint later this month.

Veolia continues to face numerous investigations and class-action lawsuits connected to the crisis, but has fought charges that it was responsible.

"Investigations are ongoing," Frerot said. "We don't want to preempt their conclusions."

- Problems in Pittsburgh -

Veolia also has run into controversy in Pittsburgh, Pennsylvania, which also suffered from elevated levels of lead in its water system.

The Pittsburgh Water and Sewer Authority has accused the French company of mismanaging the infrastructure system, including botching a shift in chemicals used in corrosion control.

The Pittsburgh authority is in mediation with Veolia, according to two people familiar with the matter, but if that process fails it could result in another protracted court battle.

"The matter is in litigation," said Tim McNulty, communications director for the city of Pittsburgh.

"Veolia was responsible for the management and operations of the Pittsburgh Water & Sewer Authority, and we intend to hold them accountable for the authority's difficulties."

By using Yahoo you agree that Yahoo and partners may use Cookies for personalisation and other purposes