Moroccan cities block Veolia's sale of local services

RABAT, June 6 Fri Jun 6, 2014 7:52am EDT

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RABAT, June 6 (Reuters) - Moroccan local authorities have blocked a deal by Veolia Environnement to sell its Moroccan water, wastewater and electricity businesses due to a dispute over investments.

The French company agreed in 2013 to sell the Moroccan businesses to investment fund Actis for about 370 million euros ($504 million). The businesses are operated by concession companies Redal, in the capital Rabat, and Amendis, in the northern cities Tangiers and Tetouan.

However, officials from Rabat say they are owed around 1.7 billion dirhams ($207 million) for unfulfilled investments between 2002 and 2012, while the northern cities also say they are due money for investments that weren't completed.

"We have received Veolia's request to leave in September 2012. We decided to block the deal pending a decision on what to do with all the disagreements with the company," Abdessalam Balaji, an elected member of Rabat city council, told Reuters.

"We are trying to take some common decision with the other cities where Veolia is involved as we need to reach an agreement about the unfulfilled promises from the company," Balaji added.

Officials say they have the choice of approving the Actis deal, or buying back Veolia's businesses.

Morocco's interior ministry is expected to play a coordinating role in arranging talks with Veolia.

"We have not yet received an official notification from them (the councils) so we cannot really comment on the decision before we see it," the French company said.

Veolia said last year the Actis deal would reduce its debt by around 88 million euros. It added it had signed a three-year technical support contract with Actis for the businesses.

($1 = 8.2249 Moroccan Dirhams)

($1 = 0.7345 Euros) (Reporting by Aziz El Yaakoubi; Editing by Mark Potter)

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