* Rabat mayor: financial loss forces Veolia affiliate out
* 15-year contract was won in 2009
* Anti-Veolia protests planned on Thursday
(Adds protest organizer, background)
By Souhail Karam
RABAT, April 13 (Reuters) - Financial losses are forcing Stareo, an affiliate of French Veolia Environnement, to quit a contract to operate the bus system in Morocco's capital Rabat, the city's mayor told Reuters on Wednesday.
Formed by Veolia Transport and Moroccan groups Bouzid and Hakam, the Stareo consortium won the contract in 2009. It is among Veolia affiliates that have been coming under greater public scrutiny amid a wave of protests in the former French protectorate.
"Stareo have considered that they are making financial losses from the operation and they are preparing to leave and we for our part are getting ready to find a replacement," Fathallah Oualalou said.
He was commenting on a report that was first published by Moroccan news portal Lakome.com citing unnamed sources.
Oualalou noted, however, that Stareo's decision to abandon the 15-year contract had nothing to do with a planned protest called by a youth-led movement demanding the cancellation of contracts awarded to Veolia's affiliates in Rabat and the northern cities of Tangier and Tetouan.
"As far as Stareo is concerned, the firm had to deal with a legacy of 20 to 30 years of problems that affected public transportation and those problems could not be brought under control ... They have not been able to respond to the needs of the sector," said Oualalou.
Veolia Environnement also has affiliates that have won three concession contracts to provide water, wastewater and electricity services managed by Redal for the cities of Rabat and its twin city Sale and by Amendis for the cities of Tangiers and Tetouan. In a rare occurence, protesters attacked premises linked to French firms in the Moroccan city of Tangier in February in a dispute over Amendis management.
Lydec, affiliated to GDF Suez, provides water and electricity services in Casablanca, Morocco's biggest city. Moroccan newspapers have recently been extensively reporting on a political storm involving the city's council's perceived silence over poor services provided by the company.
February 20 Movement, a youth protest movement spearheading calls for deep political and economic reform in the country, on Monday announced plans for protests to demand that Stareo, Redal and Amendis contracts be cancelled for allegedly short-changing the final users.
"Redal and Amendis' tarriffs are the highest in Morocco yet whenever it rains we end up with floods. They also don't clean the poor districts of Rabat and Sale. Children there play in the middle of garbage," said Najib Chawki, a member of the February 20 movement.
"We are protesting against all Veolia's affiliates in Morocco. When we look at those firms and Lydec, we can't help but wonder if there is some form of economic corruption going on," Chawki said.
The February 20 Movement is "not against the presence of French firms in the country.
"We want any relations to be based on transparency and not on the basis of privileges and the extorsion of our country in exchange for political support. The French tutorship over Morocco must end," he added. (Editing by David Jones)