The City of Paris signs with GRDF a large contract of a new kind

14

The fifteen-year concession gives the Town Council an increased role and makes the gas network a key element of the ecological transition.

By Denis Cosnard Posted yesterday at 11h34, updated yesterday at 15h44

Time to Reading 3 min.

Subscribers article

Place de la Bastille, Paris, in the summer of 2018.
Place de la Bastille, Paris, summer 2018. Marc Mellet

The negotiation was very long, bumpy, complex, but this time, the City of Paris and GRDF, the subsidiary of Engie responsible for the distribution of gas in France, reached an agreement. The capital is preparing to grant a long-term concession to GRDF to distribute natural gas in the city, according to deeply reviewed terms. The contract, one of the largest ever concluded by GRDF, has already been initialed by the leaders of the French group on 25 October. Anne Hidalgo, the mayor of Paris, will sign it as soon as her city council has given her the green light, probably on November 15th.

"It's a new kind of agreement that other cities are waiting to learn from, says Célia Blauel, the ecologist assistant who led the discussions. The experience of this first major energy distribution contract to be renewed in Paris will also serve us for those who follow. " The city must find a new agreement before 2021 for the cold network, and before 2024 for electricity and the heat network.

The previous gas contract was signed in 1993 for a period of twenty-five years with Gaz de France. The company, privatized and become Engie, would have been satisfied with a renewal of the concession more or less identical. But Anne Hidalgo and her team did not hear it that way. In the midst of rising environmental concerns, the Socialist mayor wanted renegotiation to be an opportunity to integrate this concession in its ecological policy. And that it gives more power to the City Council. "Since these networks belong to us, we want to know what's going on, to be able to look under the hood, and not just give the dealer a free hand," explains Célia Blauel.

Monopoly

The bargaining power of the City was, however, limited. The distribution of gas remaining subject to a monopoly, Paris could only sign with GRDF. No way to rely on a competitor to raise the stakes. That's why when the City felt "An inertia of GRDF, very reluctant to change the usual contractual model", the discussion got a little bogged down. To the extent that the initial concession, which was due to be completed by the end of 2018, had to be extended twice. "If we sometimes seemed hesitant, it was because we were wondering about the consequences of the advances we were talking about, explains Eduard Sauvage, the managing director of GRDF. Could they serve as a model elsewhere in France? "