Interview with Géza Csörnyei, CEO, Budapest Waterworks

13 May Interview with Géza Csörnyei, CEO, Budapest Waterworks

Budapest Waterworks has been supplying clean water to Hungary’s capital for over 150 years. How do you maintain operational efficiency while modernizing for the future and what are the biggest challenges in maintaining a water supply infrastructure that dates back more than a century?

Budapest Waterworks, nearly 160 years old, was established in response to multiple epidemic outbreaks in Central Europe between 1830 and 1920, caused by contaminated water. The municipality created public utility services to ensure a safe water supply. Over time, the company built water production facilities and infrastructure, marking the beginning of the city’s water services.

The first decade of Budapest Waterworks focused on building infrastructure, with the electrification process in the 1920s introducing electric motors. During World War II, the company continued operations despite the conflict. Budapest was the first in Central Europe to build a steel-concrete water reservoir and several water towers built in the early 1900s still stand today. In the 1950s, Greater Budapest was established and the company expanded its services to new districts. Between 1950 and 1970, nearly half of the infrastructure was built.

After the fall of the socialist regime, Hungary shifted towards privatization and from 1996 to 2012, Budapest Waterworks was partially privatized by Berlin Wasser and Eau de Paris, which improved efficiency and modernized the company. In 2012, the municipality fully bought back the company, which now operates as a municipally owned entity serving over two and a half million people across Budapest and seven other towns. Budapest Waterworks not only provides utility services but also partners with municipalities and customers to offer more than basic connectivity, which is regulated by law. Approximately 25% of the company’s income comes from other business activities, including international projects. As one of the top 10 water operators in Europe, the company’s goal is to expand its service area, improve service levels and enhance efficiency.

Budapest faces a bigger challenge in providing cool water than hot water to the city. Is this a major challenge for the company, or is it an opportunity?

We face numerous challenges due to changes in the legal framework, particularly with the European Water Directive and its national and local implementation. Meeting new water quality parameters and requirements is a significant challenge and several research and development activities are necessary to understand how to comply. Additionally, the rising cost of electricity has made energy efficiency a top priority since 2023. We are now focusing on operating traditional infrastructure with new requirements, optimizing parameters and addressing the aging infrastructure, which is difficult to manage due to limited financial resources.

Our goal is to optimize the use of available resources to address the most critical issues and find solutions that maximize our impact. We have implemented risk-based assessment tools to prioritize problems and improve efficiency. Over the past 10 years, this approach has shown positive results, improving our main KPIs despite limited resources.

Another major challenge is climate change, particularly the flood and drought periods along the Danube, where many of our water production facilities are located. We need to establish efficient operations during both floods and long summer droughts. Digitalization and artificial intelligence also present significant challenges as we aim to elevate these technologies to higher levels while addressing cybersecurity and other concerns.

The global water sector is undergoing rapid transformation with the rise of digitalization. How is Budapest Waterworks leveraging smart technology to enhance water management and customer service?

We have many different solutions to choose from and the biggest challenge is picking the best one for our processes and customers. The COVID-19 pandemic pushed us to focus on digitalization, as everyone needed digital solutions during lockdown. During this time, we successfully digitized over 95% of our processes, allowing customers to solve their issues online. We also use software robots which support more than 29 of our processes. Our system is mostly automated and most technical tasks can run without human involvement. We’ve used several workflow systems to digitalize our technical operations and we also use software for modeling and optimization. However, implementing digital twins and online digital operations is still a challenge and we need to improve our current systems.

How do partnerships shape your strategy and what has been the most impactful international collaboration for your company?

Our international efforts are aimed at making a profit, primarily through projects for utility companies similar to ours. While we’re not unique, there are very few companies like us, as our experts come from utility operations and understand the technical, financial and municipality ownership challenges our clients face. This background makes our business model and approach effective. We’ve worked on construction projects in Indonesia and Sri Lanka and, closer to home, we focus on consultancy in the Western Balkans, our strongest area. We’ve collaborated with Tirana Water Supply and Sewerage Utility (UKT), with projects including a technical assessment, a master plan and most recently, the detailed design of their SCADA system. Our partnership with UKT exemplifies the ideal development of partnerships, where we learn and gradually expand our support across various topics, sharing our knowledge and expertise.

We are also involved in the European Union Water Operators’ Partnerships program, which is financed by the EU and monitored by the UN-Habitat Global Water Operators’ Partnerships Alliance (GWOPA), a global alliance of utility companies. This program, which focuses on mentor-mentee collaboration, gives us the opportunity to work with beneficiaries in less developed areas, including two Pakistani mentees from Madan Town (400,000 people) and Lahore (5 million people).

In addition to this, we are members of international groups such as GWOPA, where we serve as a steering committee member for Southeast and Eastern Europe, supporting utility companies in establishing similar collaborations. We are also part of the steering committee of Aqua Publica Europea, the European Association of Public Water Operators, where we support municipality-owned utility companies in tackling common challenges and sharing knowledge.

Would you be open to a three-party partnership with US investors?

Rita: From an international business development perspective, we would be interested. However, we’ve explored a few business opportunities but couldn’t find anything that aligns with our capabilities. In this case, we would be the suppliers. As for investors, we are a 100% municipality-owned company and as such, we must adhere to public procurement regulations for any procurement activities.

Géza: There are exciting investments and developments in the US and Western countries that are highly relevant to our sector. Many companies offer valuable solutions and experiences worth investing in. However, the utility sector still has room for growth in terms of digitalization and artificial intelligence, presenting numerous opportunities for improvement. As a municipality-owned company, our international business activities are limited, but we are open to collaborating with partners to share both the risks and rewards of investments. The nature of such cooperation depends on the specific investments and situations. We are particularly well-positioned due to our experience in the Balkan region, Eastern Europe and the East, having made successful investments in Russia and other Eastern countries over the past 10 years, allowing us to build strong contacts and business activity.

How will Budapest Waterworks continue to lead in technological advancements and sustainable practices and what is your message for the readers of USA Today?

We aim to expand our service area and improve efficiency by investing in new technologies and solutions. Our focus will be on digitalization and preparation to ensure continuous, high-quality service while addressing the challenges of climate change. Achieving these goals will be a significant task over the next five years.

International cooperation is a key aspect of achieving future results. We believe that international collaborations, where knowledge and experience are shared, can help everyone improve their businesses and services.

Could you give us a brief overview of your career and share anything personal you’d like to highlight?

I have been the CEO of Budapest Waterworks since January 1st, 2012, during a challenging period marked by tough economic conditions and rising energy prices. In 2023, while preparing our business plan, we realized that electricity costs could exceed the company’s income, which played a key role in my appointment as CEO. I moved to Budapest in 2006 and have held various positions, mainly on the technical side of the company, including network operations and overseeing water and wastewater production. Before 2006, I worked in southern Hungary, near Kaposvár and Pécs. With over 30 years of experience in utility operations and a background in engineering, I have also participated in international associations such as Aqua Publica Europea, Leading Utilities of the World, Global Water Intelligence and the United Nations GWOPA partnership program, which facilitates experience sharing among utility operators.

Rita, can you introduce yourself?

I have been with the company for 15 to 16 years. I started in International Business Development and now it’s a group, of which I am the leader. I have a keen interest in all the international activities of the company.