METROPOLIS TALLINN 7-8 JUNE 2002 ROME CITY GOVERNMENT Dept. for Economic & Development Policy

1. METROPOLIS TALLINN 7-8 JUNE 2002 ROME CITY GOVERNMENT Dept. for Economic & Development Policy

2. The Municipality of Rome Holding Company The City of Rome participates in a direct way in 19 companies, most of which in turn participate in other companies. Therefore, also taking into consideration part-holdings at second and third level, the Municipality of Rome Holding Company comprises 83 companies. On the basis of the consolidated budget of this group, it is, virtually, the largest industrial holding of central and southern Italy. "Virtually" because it is not actually an industrial holding. In effect, even the name Municipality of Rome Holding Company, by which it is normally called, is pushing a point, because single companies are not linked among them with the true logic of a holding company. One of the policy goals of Mayor Veltroni is to promote those elements that can best lead to synergies or to common strategies. The companies comprising the Municipality of Rome Holding have very different origins and they operate in very different sectors. They can be grouped into two subsets. On one side there are those that traditionally operate in the local public service sector, like transport, energy and water supply and waste collection. These are companies with an old and rooted history, in the municipal tradition. But all of them have begun a remarkable phase of transition, becoming limited companies. Moreover Acea was first quoted on the stock exchange in 1999, so now all its management systems, together with all the aspects of control and vigilance, typical of companies rated on the stock market. The others are still joint stock public companies, but without the stock market quotation; they have not adopted the same measures of control and transparency of the management of a private business. One of the themes under discussion is the possibility that these public companies will adopt rules similar to those now applied in Acea, without being forced to, in order to improve the organisation.

3. Without any doubt, these companies represent an industrial heritage of national importance and they have a strategic importance for the city of Rome. So much so that it is not exaggerated to define Rome as a capital of the utilities. We must not be surprised by the fact that, after carrying out benchmarking, there are some small companies, operating in small towns, with higher indexes of efficiency. Public companies in Rome are unique in Italy, and in some cases in Europe, in developing their activity over such a wide territory. They are the only ones that operate in a town with 3 million inhabitants and it is therefore obvious that they have greater difficulties compared to others.Anyhow, because they operate on such a wide territory, they have developed a technological and logistic know-how unique in Italy. Just this characteristic makes Rome a precious partner for industrial alliances: Acea is surely leader in Italy in the water supply. As pointed out in a recent study, Acea is recognised, among those quoted on the stock exchange, as the Italian firm which has the greatest number of strategic alliances, participating in fact in sixteen. For instance, Acea manages the water distribution cycle in 111 municipal districts for over 3.6 million inhabitants and also for some international companies. The case of Acea shows that public companies in Rome can play an important role in building alliances with other similar companies, which is becoming more and more frequent as the process of liberalization proceeds. Furthermore, the setting up of forms of co-ordination will also help to develop strategies of collaboration at national and international level. Rome is strategically interested in assisting these companies to develop their growth, and considers them not as a financial asset to cash through privatisation but as an industrial value for the city in the broader scenario of the liberalisation process. In the second group, instead, there are new or recently set up enterprises, primarily within the process of extension of public functions or identify new ones. Here we have a very wide field of action: the property market, tax collection, the management of cultural events, the fish together with the fruit and vegetable wholesale markets of Rome.

4. These companies are small, however the following consideration also applies to them: operating in such varied areas of activity allows each to accumulate some competitive advantages. For example, Gemma, the company which collects local taxes, could become a concessionary and this will enable it to compete in tenders in the whole national territory, with interesting prospects for its own development. The industrial value of the companies in the Municipality of Rome Holding is therefore an unquestionable point of strength of the city, on which to build, together with other elements, the project of growth in Rome. The central point is the maintenance and the strengthening of the liberalisation of the market. The performance improvement of these companies, and particularly the ability of management to give citizens access to improved service, is due to allowing large quantities of competition into the market. With good chances, the process of liberalisation is the passage from a monopolistic market, dominated by the public incumbent, to an oligopolistic one, in which three or four great industrial companies compete. A scenario of great transformation is now in front of us, in Rome. The choice the administration in Rome intends to make is to concentrate on the industrial character of companies in its Holding, in order to enable them to play a leading role in the construction of one of three or four great groups that will compete in the restructured market. In this way, for the companies in the Municipality of Rome Holding, and therefore for the whole of Rome, there will be a transformation of the scenario towards great opportunities, where accumulated industrial know-how becomes an engine for growth, but continuing to be strongly linked to its traditional vocation of service to the community.