Financialisation of the water sector in Poland

Over the last decade there has been dynamic development of technical infrastructure connected with the water economy in Poland. In the years 2000-2013, the water system network expended three times. Such development was possible thanks to the subsidies granted for the realisation of infrastructural investments under the European Union pre-accession (ISPA) as well as post-accession programmes (Structural Funds, Cohesion Funds) supported by state institutions responsible for environmental protection (the Ministry of Environment, the National Fund of Environmental Protection and Water Management). The financial means obtained from bank loans constituted an insignificant part of infrastructural investments. Responsibility for the water system, including the collective supply of water and collective discharge of sewage, is held by gminas1 and it is their own task under the municipal economy. Gminas, the number of which is 2479 in Poland, commission water and sewage service enterprises to perform these tasks. Such enterprises, characterised by a very fragmented structure, play a monopolistic role in a given gmina or a collection of gminas. That is why, the process of financialisation of this sector seems to be rather slow. Political conditions in local communities constitute additional limitations to abrupt ownership transformations in the water sector. Of key importance in water sector is the process of establishing tariffs for collective water supply and collective sewage discharge. The manner of validating the tariffs by gminas is, however, rather questionable. The total price of water supply in Poland varies to a large degree, compared to the prices of electricity or gas supply. It comes as a result of geographical and geological conditions in particular gminas as well as a large scale of proecological investments. Furthermore, the prices of water constitute a crucial political factor used in the fight for votes in the local government elections. The agreement from the gmina’s authorities to increase water prices may contribute to their political defeat and a loss of influence. The sector of water and sewage services is not supervised by a central regulatory authority. The functioning of water and sewage service enterprises is supervised by individual gminas. Thus, a conflict of interests occurs, i.e. gminas establish water and sewage service enterprises which they subsequently supervise. That is why, there has been a discussion in Poland over the creation of a central regulatory authority and the consolidation of the sector. These activities could lead to an intensive privatisation of this area of the economy and a significant growth in the level of financialisation of this sector.