This week, the Riga City Council decided to put an end to the Aqua Riga project. Almost ten years ago, the responsible ministries had already warned the Riga City Council not to engage in commercial activities with the production of bottled water, but the local government under the leadership of Nila Ušakova (S) ignored it and even stubbornly pushed Aqua Rīga forward. What was the path of “Aqua Rīga” from the idea to the finish?
In 2014, Aqua Rīga came on the shelves with scandals. Prior to that, obstacles were raised for two years by the Ministry of Regional Development, the Ministry of Economy, the Competition Council and private business associations. They strongly objected that the municipal capital company “Rīgas ūdens” wanted to start a business with bottling and selling drinking water. There were concerns about the use of Riga City Council’s administrative resources, which would give Aqua Rīga a greater competitive advantage than private entrepreneurs.
In total, it was planned to invest at least 200,000 euros in the establishment of the production plant, but to earn five million lats within ten years. The plans were big – to conquer 30% of the drinking water market, to recoup taxpayers’ investments within four years.
But – neither earned nor went to zero. The accumulated losses of Aqua Rīga are almost 175,000 euros. In addition, the market share was negligible at only 0,2%.
Photo: ULDIS ĀBOLIŅŠ, TV3 NEWS
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“There have been some years with very, very small profits, but the initial investments have not been recouped, therefore the municipal funds have been spent more. It is clear there that the project has failed. We have lost money, not won, ”says Edmunds Cepurītis (APP), Chairman of the Housing and Environment Committee of the Riga City Council.
It is now very rare to find Aqua Rīga water on store shelves. It turns out that even before the Riga City Council announced the liquidation of the company, the shelves of Aqua Rīga had already ended.
Dagnija Kalniņa, the head of “Rīgas ūdens”, says “Aqua Rīga” could have been a profitable company, unless an even stricter ban on state and municipal capital companies from engaging in business activities outside the delegated functions came into force in 2015. The situation was further aggravated by amendments to the Competition Law.
“Action was taken, but it was minimized so as not to pose a risk of competitive neutrality, because if a violation of competitive neutrality were acknowledged, the economic consequences could have been quite significant,” says Kalniņa.
In addition, “Aqua Rīga” at that time came under crossfire between Nila Ushakov’s council and the parties forming the government. Aqua Rīga was even the reason why in 2013 work began on making the law even stricter in order to eliminate the interference of municipal capital companies in the free market.-
“If in the past the Riga City Council could just spit and say, you know, this is the case when you can do business, then the new law will provide for a special study in which they will prove that the municipality could still engage in business in the public interest,” Vilnis Ķirsis (JV), Parliamentary Secretary of the Ministry of Economics and current Councilor.
“Unfortunately, there was a very negative political attitude, the attitude of the political environment towards this project, which, of course, affected marketing activities and all other issues. If these conditions had been different in that period, then the project would have been much more successful, ”thinks the chairman of the board of SIA Rīgas ūdens.
Photo: ULDIS ĀBOLIŅŠ, TV3 NEWS
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The decision to liquidate Aqua Rīga was reached by the Riga Water Council itself. The new Riga City Council instructed to evaluate the justification of Auqa Rīga by the end of last year. The liquidation will end in the coming months. Only one person will lose their job, because the bottling of water did not take place in the municipal subsidiary, but the production line and logistics center of SIA “Orkla Latvija” were used. Water was transported there from the Riga underground water extraction site in Zaķumuiža.
“The reason why we came up with such a business idea was that in the last ten years, with the declining population of the city of Riga, water consumption has decreased very rapidly. Water resources were used only by 50%. In order to improve the situation, we had an idea to produce this prepacked drinking water, ”says Kalniņa.
If the municipality wants to continue to benefit financially from its groundwater resources, the auditors now recommend auctioning the right to use the water resource to a private company.
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