Publicly owned, but not state-owned: the case of CEDAE

The discussion about the nationalization/denationalization of public companies needs to be broadened. The arguments used today mix government, State and public. Why not introduce into the topic the unlinking of the management of these companies from the administration of the State (carried out by the government)? It should be noted that this issue can be conducted without moving in the direction of privatization, as it is understood among us today.

We suggest that Cedae be a public company, owned by the users, through shares or quotas linked to some factor of service use, such as, for example, the water meter, with its assets not tradable on the stock exchange. The model for the division of quotas (all with voting rights) among the users is an important matter to be discussed in each place where the public company is to be implemented. We have some ideas, which, however, do not fit in this article.

And why this solution? In principle, because it does not seem reasonable to grant concessions for monopolistic services to individuals or private business groups. The essence of the private ownership of a company, as it is understood today, is based on the capitalist economic system and, therefore, on free competition. Now, in a monopolistic system, as a water distribution system is characterized, there is no room for free competition, unless two or more networks are admitted in the same public streets, with competition for customers between the companies, which can only occur in very peculiar situations, normally inconceivable.

On the other hand, it is still necessary to deepen the defense of the public company in relation to the current state-owned companies (governmental). Firstly, a government, however efficient it may be, cannot manage effectively all the fronts that today concern it. Our proposal is decentralizing. In addition, if the State is responsible for providing the service, who will supervise it?

Let us imagine, without making a value judgment about the current government of Rio, electing a governor of a certain ideological profile committed to the basic functions of government with strong social content, for example, but at the same time wishing to have an administration of the “water company” that is eminently technical or even conservative, without this being contradictory. Today we cannot.

Society wants us to seek systems that do not encourage the current physiological logic of granting favors, positions, and clientelist practices. In the model we propose, the boards of directors and technical staff of the administration of public companies would be judged, promoted or kept in their positions by the population according to the result achieved, by their effort and competence (merit) — and not as occurs today in most cases, according to political connections or protectionism. With stability in public companies, everyone would gain: employees, suppliers, contractors, designers and users.

There is no room for free competition, unless two or more water networks are admitted in the same public streets, with competition for customers.

In summary, it is proposed to create among us the public company or user-owned company, as it is called in some countries. The Denver Water Company, in Colorado, in the USA, is an example. It has operated under this model for one hundred years with satisfactory results, in which the population exercises shareholding control of the companies directly, without going through the group that may eventually be in power, as occurs today. One method for implementing this system may be the compulsory sale of all voting shares of these companies to the users, following the example of what the Telebras system did some time ago, although with a share portion smaller than 50%. This method would have an attraction capable of winning allies: a source of immediate resources for the State of Rio. It seems to us that the moment is favorable for discussion. It may be a more adequate idea than privatizing an existing water system, as in the current debate over the “crown jewel”, our Cedae.

(*) Reynaldo Barros is president of the Regional Council of Engineering and Agronomy of Rio de Janeiro (Crea-RJ), and Miguel Fernandez is an engineer and member of the Brazilian Association of Sanitary and Environmental Engineering.

Published in O Globo, on February 9, 2017

(*) Miguel Fernández Y Fernández, engineer, chronicler and columnist, member of the National Academy of Engineering and of the Institute of Engineering # R2026junRa, 4,438 keystrokes