Veolia Quits


Statements out of Paris tonight from Veolia saying it’s quitting the transport sector and will quit half the countries it is operating in to reduce massive debt.

Veolia Environnement SA, the world’s biggest water utility, will sell NZ$8.5 billion worth of assets to cut debt as it exits the mass-transit business to focus on water, waste and energy services.

Veolia will shrink its “geographic footprint” to about 40 countries from 77 in a bid to lower debt to less than NZ$20.6 billion by the end of 2013. Net financial debt was 27 billion at the end of September.

Veolia did not specify specific countries it’s exiting from but did say it plans to focus on central and Eastern Europe, China, France, waste operations in the U.K. and energy services in the U.S.

The company is trying to restore investor confidence in the group after Veolia surprised investors in July with a profit warning and its debt situation

Veolia Transport Auckland operates the Auckland passenger rail network on behalf of Auckland Transport. This contract extends through to March 2014.

VEOLIA: Runs Auckland trains until 2014

The merger in March 2011 of Veolia Transport and Transdev Group created a group with operations in 28 countries worldwide and 120,000 employees. The combined Veolia Transdev is the largest private transport operator in the world.

Transdev was formed last year by a merger of the transport arm of Veolia and that of Caisse des Depots et Consignations (CDC), a French state bank. There was speculation that CDC could be among potential buyers of Veolia’s Transdev stake.




  1. Matt L says:

    Regardless who who runs the show over here, they will still use the same staff so nothing would change.

  2. Chris says:

    Jack of all trades, master of none.

  3. Geoff says:

    Veolia Transdev run Auckland’s trains, not Veolia, so Auckland isn’t affected by this. It just means one of the shareholders of Veolia Transdev (Veolia) is selling its shares.

  4. Been Benuane says:

    Are you sure that’s not Paddington in that picture?

  5. AdrianC says:

    That’s Paddington in that picture, not Paris :)

  6. Giel says:

    Veolia Transdev is 50% owned by Veolia. Without Veolia in the mix Veolia Transdev pretty much would see NZ’s operation as a non core business. I mean why would a French State bank run a NZ passenger rail operation. So it is pretty clear that Veolia Transdev will exit NZ sometiime over the next two years as the market here is simply not attractive enough . Europe based companies like Veolia are in financial strife partly due to the European Economic crises and are looking to consolidate geographical footprints away from non core markets like NZ . Shell did the same and look forward to more of this. Maybe Infratil through N Z Bus may be a buyer of the Veolia Transdev NZ operation in a trade sale. Certainly would be good management synergies there as could eliminate duplicate management structures.

  7. Matt says:

    As Geoff says, it’s just the ownership of Veolia Transdev that’s likely to change, rather than the operation being closed down.

    CDC isn’t a regular bank, but basically an investment arm of the French state that puts money into low risk/steady return projects like building and operating infrastructure in order to fund future obligations such as pensions. Operating rail services is a pretty good example of this.

    Yes, they might decide not to re-tender to run Auckland services if they don’t think it’s going to be profitable. But on the other hand, it’s a growing business receiving large amounts of investment, fairly uncomplicated and with low levels of political risk, so I’d guess that it was pretty attractive compared with trying to run a UK franchise, regional services in a German state or a metro in the developing world.

    P.S. The photo is of London Paddington - Heathrow Express in the centre and First Great Western HST to the right

  8. AKT says:

    Sorry I selected the wrong photo earlier from my Europe travels folder.

  9. Owen Thompson says:

    Trains should be run by the Auckland Council.

  10. Matt says:

    Owen, that’s currently effectively illegal, and would require some contortions to avoid. With National in charge, it’s unlikely that the Council would get away with trying to avoid the legal constraints on operating transport services directly.

  11. Cheryl says:

    Auckland Transport owns and operates the trains as a CCO of Auckland Council.

  12. Sean says:

    Then surely Auckland transport could run them directly as they’re technically separate from the council itself?

  13. Matt says:

    The trains are operated by a private contractor, not by the Council or a Council-owned entity. It’s a key point. In theory the Council could create another CCO and have it contract to operate the trains, but it’s likely that Joyce would spit the dummy at the behest of his mates at Infratil.

  14. ingolfson says:

    Communism, sputter, wasteful, sputter, core functions only, sputter…

    Sorry, channeling ACT here.

  15. Geoff says:

    The cost savings to ratepayers if AT operated the trains themselves would be huge. Connex / Veolia / Veolia Transdev have only ever been involved in order for the council to meet its legal obligation to contract out the operation.

  16. Patrick R says:

    Central government passes laws to prevent local government efficiently providing services…. so whose interest do they really serve? Themselves, are they not the party of business?

  17. Matt says:

    Geoff - a state-entity running trains in-house isn’t necessarily cheaper than a private sector contractor. Sure, the contractor has to earn a profit, but on the other hand, state-entities tend to get bogged down in bureaucracy and politics, driving up costs.

    It’s pretty much doctrine in Europe now that an independent rail operator with a well-structured contract is likely to pay far closer attention to delivering a good service and the bottom line than if it’s state run.

    Having said all that, not all contractors are equal, and I think the lesson from the UK was that the best operators had senior managements with significant backgrounds in infrastructure and running railways elsewhere (e.g. Chiltern, LOROL), and the worst tended to be bus operators and accountants (with a few exceptions of course).

    Of course, there is a third way - make the operating company a workers co-operative. That way the people with the most experience in running it have a direct stake in making it as good as possible. Should reduce the likelihood of strikes too :-)

  18. Giel says:

    Matt - so true you are right. True about bus operators and accountants running rail services as well. Accountants and bus operators generally like a business to make a profit, the stewardship, commercial thing and all that, and rail operators mostly don’t so rail drives the average diligent accountant a bit potty after a while.


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