Strategic risks

Incompleteness of the acquisition process of the municipalities included in ATO 2

The 2002 Concession Agreement set out the award of the Integrated Water services for 111 municipalities (which later became 112) to ACEA Ato2 S.p.A., with the aim of completing the acquisition process in the three years following the signing of the Agreement. However, the problems that emerged during the years led to a partial acquisition of the municipalities. Today, ACEA Ato2 S.p.A. delivers services to 76 municipalities.

In particular, since 2007 the acquisition of contracts with the municipalities involved has slowed. This has been mainly caused by local authorities, natural political alternation and internal difficulties within the authorities themselves. Moreover, based on the assessments carried out, certain municipalities still have problems relating to the state of treatment plants and lack of authorisation for waste disposal.

This led to the need for subordinating the assignment of municipalities to the actual compliance of plants with the existing environmental regulations.

In this way, on the one hand the impact of other litigation risks for ACEA Ato2 S.p.A. is limited, and on the other, there could be an increased incompleteness risk concerning the acquisition process, with a significant impact on the corporate strategic requirements.

 

Incompleteness of the acquisition process of the municipalities included in ATO5

The 2003 Concession Agreement set out the award of the Integrated Water services for 85 municipalities (in addition to two other municipalities located outside the Area) to ACEA Ato5 S.p.A., by immediately completing the acquisition process and establishing a safeguarding period for some of them. To date, three municipalities are awaiting completion of the said process: Atina, Cassino Centro and Paliano, as a result of problems that have occurred over the years.

More specifically, failure to acquire the plants of Atina and Cassino Centro was due to the policies adopted by Municipal Authorities, in clear contrast to the original forecasts of the area plans submitted in the tender and, more generally, the provisions of the reference legislative framework. With regard to the Paliano plants – for which the failed acquisition was initially due to alleged extensions of safeguarding periods – the activities related to transfer of the Integrated Water Services were commenced on conclusion of assessments of the locations and works to be transferred (November 2009). The activities connected with the commercial, administrative, logistics and HR sector are still to be completed.

 

Economic consequences of non-compliant landfills: shutdowns, efficiency, management costs, maintenance costs

The Galli Law aims at constantly improving Integrated Water Services, through both a quality service for users and compliance with current legislation. For this reason, if, during

acquisition, the operator acquires plants that are subsequently classified as non-compliant, said operator has to make them compliant with technical, management and regulatory provisions for their intended operation. However, the operator has dealt several times with this problem, with operating (shutdowns, malfunctions) and economic consequences (increase in management and maintenance costs), as in the case of the seizure of the treatment plants in Castelnuovo di Porto. In order to limit the consequences of said risk factor, controls have been adopted concerning the mapping of non-compliant plants, in order to plan any restoration work, as well as studies for network controlling and monitoring of parameters at the plant entry point. In any case, based on the weight that should be given to this issue and the costly operational hitches in the case of shutdowns, the impact of this risk factor is considered high.