City councils, the first culprit in the Spanish national debt crisis, will owe 3 billion euros in payments to service companies dedicated to cleaning up roadways, trash pickup and solid waste treatment. Sources from these industries have confirmed the numbers.
Months of deferred payments have contributed to the amassed debt, which are all the more significant considering recent major cutbacks in public spending. The situation is unsustainable.
So much so that the Partido Popular will be forced to intercede major energy supply companies (Iberdrola, Endesa and Gas Natural) and telecoms (Telefónica, Vodafone and Orange) to try and stymie energy and power cutoffs to some municipalities that are in arrears on their bill payments.
At the PP headquarters on Genova Street, experts calculate that at the end of this year around 500 town councils will be behind on some payments. In September of this year the number was just 125 councils. Jerez de la Frontera is a poster child of excess; a payroll of 115 employees sucks up 85% of the municipality?s budget.
This is a ridiculous amount according to sources consulted on the matter, who have also commented on the fantasy world that some municipal governments are living in.
The biggest companies in the energy sector are the biggest victims of the municipalities? inability to make payments on time. FCC, Ferrovial (Cespa), ACS (Urbaser) and Sacyr Vallehermoso (Valoriza) are feeling the sting of undisciplined budgeting that typifies management of most town councils.
FCC is the most exposed of all. Ten percent of the company?s EBITDA comes from town council business. At this time Baldomero Falcones? company is sitting on 1.4 billion euros in unpaid bills. ACS follows far behind at 600 million. Ferrovial and Sacyr Vallehermoso are owed 400 and 200 million, respectively. The list of municipalities with uncertain solvency that are still contracting services is very extensive.
