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Performance on the Water Supply and Sewerage Companies As Working group II Water Sector Elif Oksuz - Turkey Novak Medenica - Montenegro Performance on the Water Supply and Anthony Amoah - Ghana Sewerage Companies as Regulatory Fatime Imeraj -Albania Instruments in Albania , Marjan Nikolov - Macedonia Valona – Case study Turin 2016 Structure of presentation • Introduction • Case study Introduction ALBANIAN WWS SECTOR • Albania’ s available average quantity of freshwater is estimated at 9,551 m3/capita/year. • Amount of total renewable water resources is 41.7 km3 and freshwater withdrawal regarding to the sectors as domestic /industrial /agricultural is 43%/ 18% /39% respectively. • The population of the country is estimated as 3.2 million. The urban population covers 57.4% of total population (2015) and the major urban area is Tirana which is also the capital city of Albania. • The average access ratio of total water services (water supply and sanitation) regarding to the total population is 74% (2015). • The access to improved drinking water resources in the urban areas is 97% and 94% in the rural. • In this study, Vlore which is respectively small city in Albania has been chosen as a case study. • Vlore is a coastal city and municipality and also the second largest port city in southern Albania. • The total population of Vlore is 139.221 and the access ratio of total water services is 98%. In Albania, the water sector is organized as a two-tier system, national government being responsible for sector strategies and policy development, and local governments for service provision in the water supply sector. There are 600 water supply systems for the 65 municipalities and 304 communes, 44% of them are gravity systems. The new territorial reform reduced the administrative units to 61. The WSS service functions mainly through the operators organized as joint venture companies owned by the local government. In total, there are 57 water utilities that operate in Water & Wastewater Supply Sector (WSS), 32 of them offer also wastewater disposal service and 5 of them have the wastewater treatment service. Institutional and organizational framework The water sector is organized as a two-tier system, with national government being responsible for sector strategies and policy development, and local governments for service provision. National Water Council National Water Council is a central decision-making authority in the field of water resource administration in the republic of Albania I Is the executive authority of NWC recently established in the Prime-Ministry responsible for the development and implementation of Technical Secretariat policies and strategies related to integrated water resources in Albania, ensuring effective functioning and monitoring of the total integrated water system in the country. 1.Gives the licenses for all the operators of the sector. 2.Sets tariffs, 3.Prepares/approves uniform service standards, Water Regulatory Authority (WRA) 4.Establishes a transparent, legal and regulatory environment, 5.Protects the interest of the public and the Consumers (e.g. development of a customer-utility model contract) Ministry of Transport and Infrastructure is the line Ministry responsible for the Water Sector in Albania. The following Ministry of Transport and Infrastructure two directorates are the fundamental pillars for the Ministry for the water issues: 1.Plan the budget and financing of the sector in Albania – from the state budget and donors.2.Prepare strategies for the sector and National Agency of Water Supply and follow up on their implementation, 3.Manage and distribute subsidies from the national budget Sewerage 4.Monitor Sector Performance Ministry of Agriculture, Rural Development Is set up under the General Secretary of Ministry of Agriculture, Rural Development and Water Resources and has two main sectors:1.River Basins Administration (6 Basin Agencies) and 2.Water State Inspectorate (12 Inspectorate Regional Directorates) and Water Resources Ministry of Environment Its main functions are: 1.Issuing the environmental permits and 2.Monitoring and enforcing the environment legislation. Ministry of Health is involved in the implementation of water sector legislation through the State Sanitary Inspectorate Ministry of Health The Institute of Public Health at the Ministry of Health is responsible for: 1.Water quality monitoring (surface water, drinking water, The Institute of Public Health waste, water from washing), 2.Monitoring the effects of industrial emissions on health and intervention in case of accidental water pollution and 3.Development and application of quality control plans sources of drinking water and waste water evacuation NATIONAL WATER REGULATORY AUTHORITY NATIONAL REGULATORY COMMISSIONS COMPETENCE • The Water Regulatory Authority in Albania (WRA) The Water Regulatory Authority in Albania is exercised by the National AREis a public AND independent institutionWHAT that regulates WE Regulatory Commission composed of 5 members supported by professional staff the water supply and sewerage sector established of 16 employees. by Law no. 8102, of March 28th,1996, as DOamended) The Commission is endowed with independence and the necessary tools to carry out its competences: • exercising the following functions and powers: In its decision making it is independent from all involved interests, i.e., Gives the licenses for all the operators of the government, operators and customers. sector works in conformity with the highest standards of public service, rigorously Sets tariffs avoiding all conflicts of interest, and acts in a way as to protect the best Prepares/approves uniform service standards public interest Establishes a transparent, legal and the necessary tools to carry out its independent role are: regulatory environment Protects the interest of the public and the • regulatory powers (issuing regulatory instruments) Consumers • executive powers (decision making competence) (e.g. development of a customer-utility model contract) • supervision powers (supervising possible infractions of the regulatory elements) WRA MISSION To ensure for all customers that water and sewerage service providers deliver the highest achievable quality, at a fair price and in a financially sustainable manner Consumer interests Financial sustainability of service providers TARIFF REGULATION The WRA’s approach to setting tariffs is set out in the Tariff Setting Guideline, most recently revised and approved by National Regulatory Commission in September 2011 as amended 2015 Tariff objectives Tariff structure & approved model Tariff monitoring for other services Application model Tariff approval process Analysis of tariff change proposal TARIFF POLICY OBJECTIVE THE WRA’S KEY PERFORMANCE INDICATORS KPI Description The part of the operation and maintenance costs (excluding depreciation and 1 – O&M Cost Coverage capital costs) covered by income. The part of total costs for services provided that are covered by the company 2 – Total Cost Coverage income. 3 – Collection Rate The ratio between the collected income and the amount billed to clients. 4 – Staff Efficiency Number of company staff serving for each 1000 WSS connections. 5 – Non Revenue Water The part of the produced water that is not billed to clients. The part of metered connections (number of clients) as a percentage to the 6 – Metering Ratio general number of connections (clients). 7 – Water Supply Hours Average hours of water supply in a day. 8 – Drinking Water Quality* The part of tests of the water quality, which meet the standards The part of the population within a company's service area, which provides the 9 – Sewerage Coverage sewerage service, but not necessarily the wastewater treatment. It is the assessment of the company activity in compliance with the regulatory 10 – Regulatory Perception framework. Case study Valona – environment for operation • Decentralization – amalgamation: 373 to 61 • Valona prefecture is estimated 186,252 population • Tourism: 164,661 visitors in 2014 • Booming construction • Pressure for basic public services: water, electricity, local roads seasonal congestion Valona – the PUC • Water Supply and Sewerage, in Vlora has been authorized under the License No. 7, dated 21.02.2013, to carry out activities in the following categories: • Category A – collection and distribution of water for public consumption; and • Category C – removal of wastewater. • However: In 2014, the company has submitted the documentation for the renewal of the license but after review several shortcomings were identified in the submitted documentation by the WRA. Financial analysis Items 2014 2013 Sales 246,111,153 241,317,225 Other operating revenues as subsidy, grant, interests 334,271,212 76,116,593 Cost of sales -14,716,767 -15,281,110 Wages and salaries -110,310,916 -119,788,280 Expenses for electricity -134,747,426 -141,138,714 EBITDA 320,607,256 41,225,714 EBITDA (with no subsidy) -13,663,956 -34,890,879 Depreciation & Amortization -146,143,601 -154,462,696 EBIT 174,463,655 -113,236,982 EBIT (with no subsidy) -159,807,557 -189,353,575 Other expenses -26,248,781 -25,122,904 Total Expenses -432,167,491 -455,793,704 Gain (loss) from operating activity 148,214,874 -138,359,886 Total Financial Incomes / Expenses -87,453,946 -17,169,517 Profit before Income tax 60,760,928 -155,529,403 Break even analysis – simulation 1 Example Valona Target operational profit because of the collection problems Operational profit Unit m3 LEKE/m3 Total Value in LEKE -444,677,259.00 Production 29,863,000 57 1,702,191,000
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