Gabon on Tuesday accused Veolia of pollutingthe country as the government and the French company wage an increasingly bitter dispute in public over the cancellation of a contract for water and electricity distribution.

"There is considerable environmental damage at almost all of the sites exploited by SEEG," Communication Minister Alain-Claude Bilie By Nze told journalists, referring to the Gabonese firm which is 51-percent owned by Veolia.

"Oils and fuel have been spilled on the ground, without any protection or precautions, in flagrant violation of environmental regulations," he said during a news conference, adding that "investigations will be carried out".

The government cancelled Veolia's concession in Gabon on February 16 and took control of SEEG facilities. Veolia has denounced the move as a "brutal expropriation".

Since then the government and firm have engaged in a communications battle via the media.

"Is it possible in France that Veolia dumps fuels and used oils in the rivers?" asked the minister.

A Veolia spokesman responded by pointing out that the SEEG had been audited by Gabonese authorities more than 10 times over the last decade.

"It is surprising that all the checks by public authorities... never highlighted environmental damage when they conducted audits throughout the concession," the spokesman added.

He also said that despite the minister expressing concern about water quality, "the water produced and distributed by the SEEG is still drinkable" and it "meets the sanitary requirements of the World Health Organization, which is superior to the Gabonese authorities".

The firm and government have disputed whether Gabon met its commitment to invest the equivalent of 1.5 billion euros ($1.8 billion) into SEEG, as well as responsibility for power cuts and the calculation of electricity fees for the government.

Veolia provides water, waste and energy management services in numerous countries, employing more than 163,000 people worldwide.

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VEOLIA ENVIRONNEMENT

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