Unlike the town hall of Bastiathe majority municipal ajaccian refuses to take on part of the structural deficit of the Engine supplier and turns to the state. This disagreement threatens the ratification of the a DSP extension and providing 15,000 homes.
The only operator in the running for gas distribution in the city, Engie will finally withdraw from the Ajaccio market and leave the 15,000 families (about 45,000 people) heated by gas… without gas? As improbable as it sounds, this scenario still is “very plausible” according to the terms used by Stephen Sbraggia at the last city council.
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This is an adjustment of 530,000 euros (out of an amount of 3.1 million euros) which neither the State nor the Municipality undertakes to pay to finance the manager’s structural deficit for the year 2022. Gold this transitional loan is a prerequisite for the signing of a new Public Service Delegation (DPS), expected in July 2023 for a period of 20 years. As a result, the municipal executive fears that the operator will change his mind and decide to lower the curtain in Ajaccio. Since the tender was in progress, Engie did not want to respond to our requests.
The state swept the problem under the carpet during the privatization of GDF
In fact, no agreement between the State (which agrees to finance 80% of the 2022 deficit but no more) and the Municipality, which ensures that it cannot give more than 100,000 euros in 2022, has been found. With less than a week left in the year, both sides are still dumping their buck.
The Ajaccio executive made its position known during the last city council, as we reported in our December 17 edition : the Municipality, which in 2021 paid 30% of Engie’s structural deficit (or 700,000 euros), had warned that it could not put more than 100,000 euros into 2022. The state’s point of view reached us last week through a press release sent to the editorial staff by the head of the cabinet of the prefect of Corsica (read below) : the prefecture recalls the Municipality’s competence in the field of gas distribution (which the Municipality does not deny) and underlines the numerous efforts made by the State in this file which ultimately concerns it only indirectly.
The former director general of city services, Pierre-Paul Rossini, continues to manage this dossier as old as it is complex. Remember the story once againand: “In 1963, Gaz de France distributed gas to Ajaccio under a contract with an initial term of 30 years. When the contract ended in 1994, it continued tacitly. Later, during the privatization of Gaz de France (later Engie), the state simply failed to solve the problem of unconnected areas of which Corsica is a part.Stato and Engie (which have included the deficit in their accounts) covered up this problem until four years ago, the operator went to see the mayor to ask him to regularize the situation and finance his structural deficit”. Two options therefore arise: triple the gas bill for the families of Ajaccio or seek state aid in this case where national equalization has disappeared.
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To better explain the problems, Pierre-Paul Rossini uses an analogy: “It’s a bit as if we privatized EDF tomorrow and consumers or communities would find themselves having to pay the cost of supplying EDF electricity in Corsica, can you imagine the bill?”
Refusal to engage a gear
In 2019, the Municipality therefore entered into negotiations with the State to find a way to finance the deficit. “Engie had just responded to a first call for tenders, its overall deficit in 25 years had therefore been estimated at 340 million euros, explains Pierre-Paul Rossini. Do you think that the Municipality cannot support this deficit! The State can claim to be responsible for 80% of the deficit in 2022 (compared to 70% in 2021), however we must remember that it was never a question of assuming the remaining 20%. We don’t have the means and if we accept to take charge of 20% every year, in 10 years, it will perhaps be 3, 4 or 6 million that will have to be paid each year by the Municipality!
Because beyond the issue of the 2022 deficit settlement, the City refuses to get into the gears of financing the SDR’s deficit beyond 20 years.
To increase the complexity of the dossier, the 2019 call for tenders was relaunched to be reduced to 20 years. This decision follows an order that non-interconnected areas such as Corsica must speed up their energy transition. “Basically in 15 years we will have to start dismantling the Loretto tanks. In the long term, town gas will disappear”, sighs Pierre-Paul Rossini. This prospect makes the amortization of the Loregaz project even more difficult, as the number of subscribers is destined to disappear faster than expected. This project consisted, from 2015 to March 2022, of the complex and costly restructuring of the Loretto tanks. Its operation, initially planned for 50 years, is then reduced to 20 years. The city’s acquisition of Engie’s assets in this project is “the entry ticket into the DSP”, explains Pierre-Paul Rossini. Ajaccio, which does not have the means to assume these depreciation costs, has asked the state to bear them.
Without the purchase of assets, the valuation of which is the subject of debate with the State (70 million to the State, 110 million to the manager, i.e. 40 million of differences that the Municipality does not intend to assume), Engie will not be willing to commit. The State, for its part, separates the signing of the DSP from the acquisition of the assets and ensures that a study is underway to establish a new valuation.
READ ALSO: Ajaccio: new Loretto tanks commissioned
Finally, the prefect’s chief of staff cites as an example the attitude of the municipal council of Bastia (and of three municipalities in its agglomeration) which unanimously agreed on 15 December to pay 2 million euros to make up the deficit of Engie awaiting the signing of a new DSP agreement. “Two million euros of public money given by the mayor of Bastia to the multinational Engie to compensate for the deficits. The people of Bastia will appreciate the grub between the majority and the municipal opposition”teased Paul-Félix Benedetti on his Twitter account.
While the nationalist majority has agreed to pay the bill without question, the city of Ajaccio is sticking to its determination. The mayor and his city council do not accept that Ajaccio’s taxpayers pay the gas deficit. “In the end there were no negotiations with the state, underlines Pierre-Paul Rossini again. The general directorate of local authorities in Paris imposes decisions on us when it comes to a problem that should have been addressed by the state during the privatization of GDF”.
The State gives its position on the file
Following our report from the city council (published on 17 December), Danyl Afsoud, director of the cabinet of the prefect of Corsica, wishes “restore the facts in this case for which the municipality of Ajaccio is fully competent and has requested the support of the state”.
“Given the importance of the issues and although it had not been integrated into the negotiation process between the municipality of Ajaccio and Engie, the state responded doubly, on the one hand, by mobilizing teams of high-level specialists specialized in the engineering of complex projects, on the other hand , providing exceptional financial support to the municipality of Ajaccio to finance its share of the deficit linked to the gas distribution activity, the balance being Thus, pending the future public service contract, scheduled for 2023, the state financed the 70% of the share of the 2021 deficit that weighs on the municipality of Ajaccio and has proposed to increase this funding by 80% for the year 2022 (2.50 million euros financed for a total owed by the municipality of 3.20 million euros ) but also to cover 100% of the depreciation costs of the first year of the Loregaz project, owned by the municipality of Ajaccio (3.4 million euros)*.
In summary, the state has therefore paid 1.3 million euros to the municipality of Ajaccio for 2021 and intends to finance 5.90 million euros for 2022. However, despite this exceptional effort by the state which aims to ensure continuity of the gas supply to Ajacciens and to support the municipality financially, the latter refuses to finance the rest of its quota, which it intends to limit to 100,000 euros per year.
Conversely, the municipality of Bastia – and the three affected municipalities in its agglomeration – faced with a similar problem, accepted that its share of the deficit was 80% borne by the state and 20% borne by its budget . December 16 edition
Therefore, if the municipality of Ajaccio maintains this position, no co-financing agreement can be signed with the state and when the company Engie sends it in January 2023 the request to cover its deficit for the year 2022, it will no longer be possible for receive financial assistance from the state. The problem with this dossier therefore lies in the refusal of the municipality of Ajaccio to take over the part of the operating deficit that is due to it (631,000 euros, or 20% of the theoretical deficit, the State proposing to finance 80%). Finally, as regards the difference in the economic evaluation of Loregaz, the State is in fact carrying out a financial evaluation of the project – which, moreover, is in the interest of the Municipality, which will assume primary financial responsibility – but these works are not such as to jeopardize the future contract award and have absolutely no impact on the signing of the interim financing agreement for 2022, which is becoming urgent.
In this context, the State fully plays its role in this file for which it has no direct competence, in order to avoid a supply disruption which would be detrimental to many Ajacciens but also to allow the conditions of the formalization of a new contract of public service, satisfactory for all, from 2023″.
