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- Category: Country & City Focus
- Created on Monday, 30 March 2020 13:05
In early January 2020, the municipality of Jyväskylä, located in the Central Finland Region, announced its intention to part-privatise between 30 and 40 per cent of its multi-utility company Alva, including water, energy and heating. Bringing in expertise from the private sector would better equip the company to tackle current market challenges, the municipality stated. Moreover, mirroring water privatisation arguments elsewhere, privatisation was said to promise increased efficiency and lower consumer prices. However, the announcement led to an immediate public outcry. Several critical opinion pieces appeared in various Finnish daily newspapers, and activists from the Left Alliance party launched a public petition to push the Finnish parliament into action. On 10 February, Jyväskylä announced that it had withdrawn its proposal. In this post, Dominika Baczynska Kimberley and Andreas Bieler trace the dynamics underlying this quick turnaround.
It all started with a misunderstanding. Misleading headlines in Finnish daily newspapers, which became further amplified via social media, suggested that the municipality planned to sell 100 per cent of its water services company. Many drew an immediate parallel to state-owned energy company Fortum’s sale in 2014 of its energy network to Caruna—a large private company with foreign shareholders—which had resulted in drastic increases in electricity transmission prices.
The common consensus was that when it comes to natural monopolies such as water, the public ought to retain ownership of infrastructure rather than lose control to large private—and potentially foreign—companies. Commentators, moreover, pointed to similar water privatisation experiences in the Estonian city of Tallinn in 2001, when a 50.4 per cent sale of water was made. Despite claims of increased efficiency and lower prices, the deal led not only to enormous corporate profits for foreign shareholders and higher prices for consumers (which only went down last year), but also to significant layoffs, as a third of the staff was made redundant and senior management replaced by British executives.