Ross Finnie: "More than just a merger"

Mr Finnie said Scottish Water is expected to invest more than �1.8bn in water and sewage services over the next four years.

The minister was speaking at the opening of a new �14.5m water treatment plant in Inverness.

He said: "The creation of Scottish Water is more than just a merger.

"It is the creation of something new - a multi-million pound, publicly-owned water business.

"It will be commercially astute but will very definitely remain directly accountable to parliament."

Mr Finnie said Scottish Water's key themes would be "efficiency and investment".

'Very good order'

Concerns were raised about Scottish Water's accountability after it became clear that new customer panels would not be set up until later in the year.

The Scottish Consumer Council (SCC) said customers have not been given a sufficient say in decisions at the crucial handover stage.

However, Mr Finnie said: "The company only comes into being on Monday - let's give it a chance.

"We passed the Bill through parliament in very good order - there are the consumer panels to allow the domestic and non-domestic consumers to be able to voice their opinions on the service, and we have the board operating as efficiently and commercially as possible.

Bruce Crawford: "U-turn by Mr Finnie"

"Fundamentally this is a company in public ownership accountable to Scottish ministers, and, more importantly, to the Scottish Parliament."

The minister promised that the higher water rates in the north of Scotland would now be brought into line with the rest of Scotland.

The Scottish Consumer Council also expressed concern that the water market has not been opened up to competition.

However, the Scottish National Party said it was pleased that the minister decided against following that route.

Environment spokesman Bruce Crawford said: "Ross Finnie has made a remarkable u-turn by abandoning his plan to introduce competition into the water market.

"Ross Finnie has championed the case for competition and has said on numerous occasions that opening up Scottish Water to competition would be good for the industry and customers.

"He has now been forced to climb down under enormous SNP pressure."