European Union Water Initiative Plus for Eastern Partnership cOUNTRIES (ENI/2016/372-403)

THE , AND RIVER BASIN MANAGEMENT PLAN IN REPUBLIC OF for the future planning cycle (2022-2027)

TECHNICAL REPORT N°6 ON ECONOMIC ANALYSIS OF WATER USE

December – 2019

Technical Report N°6 Economical analysis of water use

Beneficiaries IWRM department of the MARDE (legislation and supervision), Agency “Apele Moldovei” (Planning coordination and follow up of implementation) Produced by OIKUMENA Public Association Authors Petru Bacal, Iurie Bejan, Vitalie Dilan, Lucia Căpățînă, Nicolae Boboc, Boris Iurciuc, Natalia Zgîrcu Produced for: International Office for Water (France), as contracting authority responsible for RBM planning in EUWI+East member state consortium Supervision Radu Cazacu and Dumitru Proca from Apele Moldovei supported by Pierre Henry de Villeneuve (IOWater) and Victor Bujac (National EUWI+ Project Representative in Moldova) Date December 2019 Version Final Acknowledgements: Apele Romane for offering its support including the direct contribution of Irina Tutunaru from Water Administration Prut – Barlad River Basin, Financed by: Co-financed by: Austrian Development Agency and the Artois-Picardie Water Agency (France) for the implementing Member States

Disclaimer: The EU-funded program European Union Water Initiative Plus for Eastern Partnership Countries (EUWI+ 4 EaP) is implemented by the UNECE, OECD, responsible for the implementation of Result 1 and an EU member state consortium of Austria, managed by the lead coordinator Umweltbundesamt, and of France, managed by the International Office for Water, responsible for the implementation of Result 2 and 3. This document, the “TECHNICAL REPORT N°6 ON ECONOMIC ANALYSIS OF WATER USE”, was produced by the EU member state consortium with the financial assistance of the European Union. The views expressed herein can in no way be taken to reflect the official opinion of the European Union or the Governments of the Eastern Partnership Countries. This document and any map included herein are without prejudice to the status of, or sovereignty over, any territory, to the delimitation of international frontiers and boundaries, and to the name of any territory, city or area.

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Responsible IOW officers: Yunona Videnina, [email protected] Chloé Dechelette, [email protected]

Page | 2 Technical Report N°6 Economical analysis of water use

4. Economic analysis of water use ...... 4

4.1 The legal framework for the use and protection of water resources...... 4

4.2 Peculiarities and trends of water use ...... 9

4.2.1 Abstracted water by sources of origin...... 9

4.2.2 Water use by main usage categories ...... 11

4.2.3 The activity of public water supply and sewerage services ...... 16

4.2.4 The non-centralized water supply sources ...... 22

4.3 The costs recovery mechanism of water use...... 26

4.3.1 Tariffs for public water supply and sewerage services ...... 27

4.3.2 Tax for water use ...... 40

4.3.3 Charges for water pollution...... 42

4.3.4 Administrative penalties for law infringement of use and protection of water resources .. 45

4.3.5 Evaluation and compensation of damage caused to water resources...... 46

4.4 Financing the sector. Subsidies for rational use and protection of water resources ...... 47

4.5 Methodological reference and bibliography ...... 54

4.5.1 Methodological reference ...... 54

4.5.2 Bibliography ...... 57

Annexes ...... 60

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4. Economic analysis of water use The „Economic Analysis of Water Use” Chapter is elaborated in accordance with the WATECO Guideline on the Methodology of Economic Assessment of Water Use1 for the Implementation the Water Framework Directive 2000/60/EC, the River Basin Management Plans implemented in the neighbouring countries2,3 and in the Republic of Moldova with the provisions of sectoral national strategies, which aims the sustainable use of water resources and adaptation to the change. This chapter includes: 1) the national legal regulation regarding the water use and protection; 2) the peculiarities and trends of water use; 3) the economic mechanism for costs recovering of water use and protection; 4) financing of measures for sustainable use and protection of water resources. 4.1 The legal framework for the use and protection of water resources. Regulatory and legislative framework for the use and management of water resources, regulating the provision of services of water supply and sewerage is stipulated in Water Law no. 272 of 23.12.2011, Law no. 1515 of 16.06.1993 on the protection of the environment, Law no. 1102 of 06.02.1997 on Natural Resources, Law no. 272 of 10.02.1999 on Drinking Water, Law no. 1440 of 27.04.1995 on the River and Water-Basin Water Protection Areas and Strips, Law no. 1402 of 24.10.02 on Public Utility Services, Law no. 303 of 12.13.2013 on Public Services of Water Supply and Sewerage, Decision of the National Agency for Energy Regulation (NAER) no. 164 of 29.11.20044 on Methodology for Determination, Approval and Application of Tariffs for Public Water Supply Services, Sewerage Systems and Waste Water Treatment, Title VIII of the Tax Code on the tax for use of natural resources, Offenses Code (Articles 109-113, 143-146, 156, 170-176); Law no. 86 of 29.05.2014 on Environmental Impact Assessment; methodologies for assessing damage to surface water5 and groundwater6 souses capitalization and management of water resources. Water Low is elaborated in accordance with EU Directives on the use and management of water resources, particularly the Water Framework Directive (2000/60/EC), Urban Waste Water Treatment Directive (91/271/EEC), the Directive on the Assessment and Management of Flood Risks (2007/60/EC), Directive on the protection of waters against pollution caused by nitrates from agricultural sources (91/676 CEE), Directive on the management of bathing water quality (2006/7 / EC). According to Articles 6 and 54 of this law, water resources management is based on the principles

1 Guidance document no. 1. Economics and the Environment. – The Implementation Challenge of the Water Framework Directive. Luxembourg: Office for Official Publications of the European Communities, 2003. 2 The Management Plan of the Prut-Barlad River Basin. Cycle II. 3 Danube River Basin Management Plan. In: icpdr.org/main/publications/danube-river-basin-management-plan. 4 Decision of NAER of 18.12.2014. In: Official Monitor n0. 33-38 from 13.02.2015 5 Decision no. 163 of 07.07.2003 of the Ministry of Ecology, Construction and Territorial Development on approval of "Methodology for Assessing the Environmental Damage Caused as a Result of Water Law Infringement 6 Decision no. 1808 of 18.08.1999 of the Ministry of Environment on approval of "Provisional Methodology for Estimating the Environmental Damage Caused by

Page | 4 Technical Report N°6 Economical analysis of water use of "polluter pays" and the economic value of water that involves the cost recovery of water use and water management, as well as the principle of sustainable water use. In this context, the economic analysis should establish trends in water demand and supply in river basins, estimating the volume and cost of using water as a component of the environment and natural resource. According to Article 17 of the Water Law, national water policy documents must contain provisions on: a) the quantity and quality of existing water resources and water bodies for their use in the branches of the ; b) protection of drinking water sources; c) the volume of unused water flow, taking into account the environmental needs; d) short, medium and long-term water demand for the main branches of the economy; e) investment priorities for efficient water supply for the population; f) priority measures to promote adaptation to the effects of climate change; g) programs of measures to achieve the environmental objectives of the ecological status of the water and the rehabilitation of protection areas of the aquatic objects. The main competencies of the Government in the management of water use are: a) approving the legal framework in the field; b) coordination of the activity of the public authorities responsible for the management of water resources, aquatic ecosystems and their protection areas, , including the improvement of the normative and legislative framework in the field, elaboration and approval of programs for improvement of water body status and water quality used for domestic, technological, irrigation and recreational purposes, upon completion of cadastre of water resources and their protection zones; c) adopting the decisions regarding the modification of the land fund and the water fund, redefining and extending the protection areas of the aquatic objects and the sanitary areas of the drinking water sources; d) request from departmental authorities in the field of economy, use of natural resources and environmental protection programs and recommendations on reducing water consumption and losses, prevention of pollution and eutrophication of waters objects. Ministry of , Regional Development and Environment (MARDE) represents the central public administration of environment and is primarily responsible for implementation of state policy in the field of water management. MARDE is responsible for: a) elaborating and improving the legal framework in the field of water and their protection zones; b) coordination of actions meant to ensure the rational use and protection of water; c) establish, with departmental and local authorities, consumer rules and priorities for general and special use of water and water objects; d) monitoring the status of water resources and the characteristics of their use; e) completion of the State Water Cadastre; f) coordination of attraction of water subsidies and implementation of planned measures; g) presentation of proposals for optimization of water use and its protection. Also, MARDE is responsible for the elaboration and approval of Management Plans of hydrographical districts, and of hydrographical basins and sub-basins, which should include the assessment of the risk of water

Page | 5 Technical Report N°6 Economical analysis of water use scarcity and , the environmental risks of the accumulation dams and the costs of their prevention and mitigation. In addition, must be delimited the areas intended for: a) the abstraction of drinking water from surface and underground waters with a flow rate greater than 10 m³ per day or serving more than 50 persons; b) the protection of aquatic species of increased economic and ecological importance; c) water bodies designed for recreation, including those identified as bathing waters. The River Basin Committee consults the central body of public administration in the environmental field on the elaboration, modification and completion of the Management Plan of River Basin, including to: determining priorities for water use within the river basin; elaborating the measures and determining the deadlines for their implementation; identifying funding priorities. In the departmental subordination of MARDE is the Environmental Agency and the Inspectorate of Environmental Protection. The Environmental Agency was created7 as a result of the transfer of surface water monitoring functions from the HydroMeteorological Service (SHS) as well as the functions of issuing environmental permits, impact assessment and ecological expertise from the State Environmental Inspectorate. Therefore, the main competencies of the Environmental Agency in the field of water management are: a) issue of authorizations for special water use; b) issue of integrated environmental permits, including for the authorized discharge of pollutants into waste water; c) monitoring the status of water resources, aquatic ecosystems and fishery resources; d) setting annual fishing quotas and issuing respective permits; e) creating and managing, together with the Agency Apele Moldovei, the information system of the water resources; f) managing the fishery resources and coordinating the breeding measures. The Inspectorate for Environmental Protection (IEP) was also set up in 2018 in the process of the current reorganization of the central environmental authority and its departmental subdivisions8. The main function of IEP is the state control of the use of water resources and their protection areas, including: a) compliance with the water consumption rules; b) possession of permissive documents necessary for the special use of water, waste water discharge and the exploitation of fish and irrigation basins; c) compliance of the protection areas of the aquatic objectives and of the sources of drinking water supply; d) objects of commercial, recreational and scientific fishing, reproduction of fishery resources; e) execution of work in natural fisheries, including water abstraction, deepening and straightening of the riverbeds. Also, IEP is in right to: a) issue compulsory prescriptions for the removal of detected deviations and provisions restricting or suspending economic activities9, where

7 GD no. 549 of 13.06.2018 on the establishment, organization and functioning of the Environmental Agency. In: Official Monitor no. 210-223 of 22.06.2018. 8 GD no. 548 of 13.06.2018 on the organization and functioning of the Inspectorate for Environmental Protection. In: Official Monitor no. 210-223 of 22.06.2018. 9 Offences Code of RM

Page | 6 Technical Report N°6 Economical analysis of water use unauthorized use and when have been detected major deviations from water consumption and wastewater discharge standards; b) to investigate offenses in the field and to apply fines according to legal provisions and competences; c) to calculate the damages caused to the waters and to make decisions on their compensation; d) initiate civil actions against persons who have caused water damage; e) request the withdrawal of the special permit for water and the environmental permit. Another important governmental actor in the management of water resources is the Agency "Apele Moldovei". The main functions of this agency are: a) elaborating the policies and strategies for the use and protection of water resources, particularly water used in irrigation, agriculture, fisheries, hydropower, tourism and recreational activities; b) to apply the principle of basin management of water resources; c) maintenance of surface water bodies, water protection zones and strips; d) to design, build and repair10 the water supply and sewerage systems, irrigation and drainage systems, reservoirs and protection dams; d) to keep data recording of water fund; e) compliance with the limits of water use by and the technical condition of their hydraulic structures; f) records of the water and the amelioration fund; g) elaboration of the Water Information Registry11; h) to coordinate the management of transboundary water resources; i) to provide management assistance and logistics to the objective and goal achievement stipulated in the Strategy Regarding Water Supply and Sanitation12. The National Agency for Energy Regulation (NAER), in collaboration with local public authorities (LPAs) and public central environmental and health authorities, regulating the activity of the public service of water supply and sewerage. NAER’s main tasks in this field are: a) issue extension and withdrawal of activity licenses from water supply and sewerage system operators; b) elaborating the methodology for determination and application of tariffs for the service provision; c) to verify and approve tariffs for water supply and sewerage established by operators and approved by the local councils, including current expenditure and investment justification13; e) the approval of the Framework Specifications and Contract for the provision of water supply and sanitation services14. Core competencies of LPA are: a) approval, in agreement with the Environment Agency and the Agency "Apele Moldovei", the limits on the use of water resources; b) maintenance and management of the surface water bodies, protection zones and strips of water objects under the management of LPA; c) maintains under strict control of the abstracted and used waters in the priority field of use; d) reduction of water consumption and losses; e) applying the necessary measures to prevent the

10The building and re-building works, operating work frecvently delegated to economic agents 11 GD no. 1009 from 10.12.2014 regarding the approval of the Republic of Moldova's Strategy for Adaptation to Climate Change by 2020. In: Official Monitor no. 372-384 of 19.12.2014. 12GD no. 199 of 20.03.2014 regarding the approval of the Strategyof Water Supply and Sanitation (2014 – 2028). In: Monitorul Oficial no. 72-77 of 28.03.2014. 13Article 13 in Legea RM no. 1402 of 24.10.02 regarding public utility service 14Article 7 in Legea RM no. 303 of 13.12.2013 regarding water supply and sewerage public service

Page | 7 Technical Report N°6 Economical analysis of water use eutrophication of surface water and groundwater pollution; f) ensuring compliance with the special regime for management of protection zones and sanitary areas; g) supervision of springs, rivers and lakes and their biocenoses; h) carrying out the restoration works of the affected aquatic ecosystems; i) identifying land with representative biocenoses or endemic or endangered species to be declared as protected areas. LPAs are also entitled to: approve, in accordance with the ANRE’s methodology, the tariffs for public water supply and sewerage services; b) coordinate and monitor the functioning of the respective services; c) perform the functions of providing water supply and sanitation services, directly or through the municipal enterprises created for this purpose; d) decide the transmission of the respective services to private operators, based on competitiveness and management efficiency; e) development of rehabilitation programs, expansion and modernization of existing facilities, f) contracts or guarantees loans to finance investment programs for infrastructure development of the settlement public utilities and, as well as, co-finances these works; g) approve the Task Book of the local operators; h) allocates the compensation for socially vulnerable categories of water users. Water users are obliged to: a) use water economically; b) respect the rights of other water users; c) keep strict records of the water used. The general use of water does not require environmental authorization and includes: a) human consumption and other domestic needs; b) watering of animals without the use of permanent structures; c) irrigation of the lands near the ; d) bathing and recreation; e) the capture and use of water to fight fire or other emergencies. The general use of water is free of charge. Access payments to bathing areas and resorts can only be established by the environmental permit holder for the special use of water that has built buildings and / or facilities for recreational activities. The holder of the authorization for the special use of water is obliged to ensure access to the water used for these purposes. The water use for bathing and recreation needs may be restricted or prohibited by the environmental and health authorities, by the holder of an environmental permit for the special use of water, in accordance with the permit conditions and at the request of the competent public authorities. The environmental permit for the special use of water obliges the holder to comply with the requirements for the rational use of water for the specified purpose and the installation of the metrological equipment and to provide information on the volume of water used. Economic agents, who are using water resources are required to: a) apply technical solutions to ensure the sustainability of aqueducts and improve irrigation techniques to avoid water losses; b) not affect the ability to restore aquatic ecosystems and water quality. Conclusions of subchapter 4.1: The Republic of Moldova has an adequate legal framework for sustainable use and efficient management of water resources, and the competencies established for public authorities with responsibilities in the field and requirements for water users are clearly defined

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(except for recreational objects) and oriented towards sustainable water use and preventing major impacts on water resources. Despite this fact, as a whole, there is evidence of inefficient use and management of water resources and their protection areas, limited access to quality drinking water, and most bodies of surface water are in a poor condition and are at the risk. The main causes of this alarming situation are: a) superficial communication between the responsible authorities; b) the norms, taxes and fines applied do not sufficiently motivate water users to promote sustainable use of water resources, prevent and reduce impacts on water sources and their protection zones; c) the difficult socio-economic situation and the low level of population incomes, especially in the rural areas; d) the insufficiency of qualified human resources, of financial and logistic support necessary for the exercise of the established functions and the achievement of the planned objectives; e) inefficient sectoral policies; f) fragmented stakeholder responsibility and frequent lack of synergy in achieving the planned objectives; g) issues related to the right to possess and exploit hydro-technical constructions; h) low access of the population to water supply and sanitation systems, and their advanced degree of wear and tear; i) massive ignorance by the population, water users, LPAs on the sustainable use of water resources, prevention of pollution and maintenance of water protection areas. 4.2 Peculiarities and trends of water use

4.2.1 Abstracted water by sources of origin. The Hydrographical District Da.nube-Prut-Black Sea (HD DPBS) contributes much less in the water supply of the Republic in comparison with the Dniester River and its tributaries. This hydrographical district lies just 4.0% of the total volume of abstracted water, and 21% from the right bank of the Dniester river (annex 4.1.1). The reduced share of HD PDBS is due both to its small size and to its pronounced agrarian and rural character. Despite much lower share compared with the Dniester river, the HD DPBS has a primary role in the water supply of many settlements from the west and south of country, including the urban and industrial centers Edinet, Fălești, , Hâncești, and (annex 4.1.2). In the period of 2007-2017 years, in the HD DPBS were abstracted, on average, 33.7 million m3 of water, including 23.3 million m3 (70%) from Prut river basin and 10.5 million m3 (30%) from Hydrographical Space Danube-Black Sea (HS DBS). The maximum volume of water is captured in the districts of (5.1 million m3), Cahul (3.9 million m3), Edineț (3.5 million m3), Ungheni (3.5 million m3), Hâncești (2.0 million m3) and in the TAU Găgăuzia (3.6 million m3), and the minimum volume – in the Ocnița, and districts (annex 4.1.2). Thus, the volume of abstracted and used water is determined by the surface of these districts and by size of its urban centres, by the degree of access to the Prut river bed and the existing technical capacities and capacities of water

Page | 9 Technical Report N°6 Economical analysis of water use transport, as well as by the volume of water used for agriculture and household purposes. The border regime in the Prut river perimeter significantly limits the access of the population and economic agents to this water supply. Moreover, restricting access significantly reflects on fisheries and recreational uses of the Prut riverside and significantly reduces benefits of this important water object. In the HS DBS, more than 3/4 (7 million m3) of water are abstracted from the basins (49%) and Cogalnic (30%) rivers, which is conditioned both by the bigger surface and the presence of urban and industrial centers in these river basins: Hâncesti and Cimislia – in the Cogalnic river basin; Comrat, Ceadir-Lunga and ‒ in the Ialpug river basin. Other rivers from HS DBS have a local importance and a small contribution in the water supply, being used almost exclusively for agriculture and fisheries purposes. On average, over 60% (21.1 million m3) of abstracted water comes from underground sources (annexes 4.1.1-4.1.2), including 54% in the Prut river basin and 83% in HS DBS. The maximum share (> 80%) of water abstracted from underground water sources is attested in the settlements from the district of Hâncești and Cimișlia located in the Cogâlnic river basin, and from TAU Găgăuzia located in the Ialpug river basin. The volume of water abstracted from surface water sources was on average 12.6 mln. m3, including 10.8 mln m3 from the Prut river basin and 7.6 mil. m3 from the Prut river bed. The maximum share of surface water sources is attested in the districts of Ungheni (75%), Edineț (63%) and Cahul (60%). Due to low flow and intensifying processes of climate aridity, the ability to explore surface water sources is very low. In addition, phreatic water has increased mineralization which significantly limits the development of irrigated agriculture. Compared with 1990 year, there is a reduction of about 13 times in the volume of abstracted water (from about 450 million m3 to only 33.7 million m3) and used one. This is due, primarily to similar reducing of water used in irrigation and other agricultural activities that are in profound crisis for about three decades. During the analysed period (2007-2017), the tendency to reduce the volume of abstracted water is maintained in all sub-basins of DH DPBS (annex 4.1.3-4), except Sarata river basin and mainly all districts in the perimeter of the respective hydrographical district. Thus, the total volume of water was reduced to 30% or 13 million m3, including in the Prut river basin with 10.2 million m3. In HS DBS, the captured water volume decreased to 21% (from 12.8 million m3 to 10.1 million m3). The biggest decrease was registered in the small river basins of Cahul (> 3 times), Kitai and Hadjider (≈ 2 times), but the less decrease – in medium river basins as Ialpug (9%) and Cogalnic (11%). The total volume of abstracted water from surface sources has decreased by about 2 times (from 20.7 million m3 to 9.5 million m3), inclusive in the Prut river basin from 16.2 million m3 in 2007 to 8 million m3 in 2014. In the HS DBS the volume of abstracted water from surface sources was decreased, on average, by ≈ 4 times (from 4.46 million m3 to just 1.03 million m3). For this reason, in the Hadjider

Page | 10 Technical Report N°6 Economical analysis of water use and the Cahul river basins with a greater share of surface water, it is attested greater decrease in the volume of abstracted water than in other basins of the respective hydrographical space. The volume of abstracted water from underground sources decreased only with 8% (600 ths. m3), inclusive in the Prut river basin with 18%. Meanwhile, in the HS DBS the volume of water abstracted from underground water sources, used mostly for domestic purposes, registers a slow growth of about 9%. This situation is due to the recent extension of the centralized water supply network15, especially for the household needs of the rural population and the majority of water is abstracted through artesian wells built and modernized with the financial support of the National Ecological Fund, German Technical Assistance Fund (GIZ), Austrian Development Agency (ADA), Swiss Agency for Development and Cooperation (SDC) and other financing sources16. At the same time, a large part of the newly constructed water supply networks are not supplied with centralized sewage networks and sewage treatment , which significantly increases the harmful impact on the natural environment and the human body. 4.2.2 Water use by main usage categories In the period under review, the total volume of used water in the HD DPBS was on average 26.4 million m3 or only 3.4% of the Republic and 23% on the right bank of the Dniester River (annex 4.1.1). About 2/3 or 17.6 mil m3 of water is used in the Prut river basin, especially in the urban centres of Cahul and Ungheni. Thus, the maximum volume of water used in the Prut river basin is registered in districts of Cahul (3.0 million m3), Ungheni (2.7 million m3), Briceni and Edineț (2.4 million m3 each). The total volume of water used in average ≈ 8.9 million m3. The maximum volume of water is used in TAU - 3.2 million m3. The minimum volume of water used in HS DBS is registered in the smaller districts, inclusive in the districts of Basarabeasca (749 thousand m3), Nisporeni (775 thousand m3) and Ocnița (410 thousand m3). For agricultural purposes needs is used about 18.4 million m3 or ≈70% of the total volume of used water. Also, in the HD DPBS are used 22% of total volume of water, which are used in the agriculture throughout the Republic and over 40% on the right side of the Dniester. Therefore, in this basin, the amount of water used in agriculture conditions directly the total volume of used water and its spatial distribution. At the same time, in the standard forms received and processed by the Basin Department of Agency “Apele Moldovei”, the drinking water supply for population and budget organizations through the centralized communal aqueducts is often attributed to agricultural use, which artificially increases (with 20-30%) the share of this sector in the total volume of water use. In addition, in the reports of the Environmental Inspectorates from districts level, the waters supplied through the

15 The activity of water supply and sewerage systems in 2007-2017. In: statistica.md. 16 Bacal P. Gestiunea protecţiei mediului înconjurător în Republica Moldova. Chişinău: ASEM, 2010, p 101-106.

Page | 11 Technical Report N°6 Economical analysis of water use communal aqueducts are attributed to domestic necessities, which is much closer to the reality, although in the rural localities, the water received by the households is also used extensively for various domestic agricultural needs, including livestock and irrigation. At the river basin level, the maximum share of agriculture is found in Hadjider basin – 92%, Kitai – 78%, Sărata – 71% and Cogâlnic – 69% (annex 4.1.1). At the HD DPBS districts level, the agriculture share exceeds 50 %, excepting the district of Ungheni, but in the Briceni, Râșcani, Nisporeni, Hâncești, Cantemir and Stefan-Voda districts - 80%. (annex 4.1.2) The minimum share for the districts of Ungheni (45%) and Cahul (53%) is due to higher dimensions of these district centres. The volume of water used in agriculture, especially for irrigation, is conditioned by the surface of river basins and administrative territorial units in the perimeter of this hydrographical space, by the water sources used for these purposes and by the presence of big agricultural farms in this . Thus, the maximum volume of water used in agriculture is registered in the districts of Briceni (2.3 mil. m3), Edineț, Cahul and Hâncești (1.6 mil. m3 each) and in TAU Găgăuzia (1.4 mil. m3). The maximum water consumption is recorded in the big agricultural companies with complex profile, especially from disticts of Ocniţa (700 thousand m3), Hânceşti (400 thousand m3), Cantemir (370 thousand m3), Basarabeasca (300 thousand m3), Râşcani (250 thousand m3) and Stefan Voda (120 thousand m3). In the most of these enterprises, the largest amount of water is used in production, especially for growing technical and forage crops, crops, and the volume of water used does not only depend on the water needs for agricultural purposes, but also on the current technical and financial capacities of agricultural enterprises from districts of HD DPBS. Thus, the largest water consumers are: SRL Dîngenarul (252 thousand m3), SRL Palmoc-Agro (210 thousand m3) and SRL Plai Birladean (90 thousand m3) from Ocniţa district; SRL "Vardan Agro" (201 thousand m3) and SRL "Darurile Basarabiei" (47 thousand m3) from Râşcani district; SRL "Danulischii" (104 thousand m3) from district; SRL "Agrosfera BM" (391 thousand m3) from the ; SRL "Sadac-Agro" from (300 thousand m3); SA "Glia" (153 thousand m3), SA "Ciobalacia" (149 thousand m3) and CAP "Gotişteanca" (112 thousand m3) from the ; SRL Baimaclia Agro from Causeni district (106 thousand m3). Also, water demand for crops growing is provided by district irrigation stations, including Stefan Vodă districts (1.2 million m3), Hânceşti (330 thousand m3) Ungheni (221 thousand m3). In comparison with Dniester’s HD, in the HD DPBS animal husbandry is much less developed, which is due, mainly to the location of the largest cities (markets) outside of this district. At the same time, average water consumption is registered at poultry factories from districts of Falesti (17.3 thousand m3), Nisporeni (28 thousand m3), Cimișlia (6 thousand m3) and Basarabeasca; pig complexes from districts of Falesti (20 thousand m3), Hancesti (17 thousand m3), Briceni, Ocnița, Cahul and Comrat.

Page | 12 Technical Report N°6 Economical analysis of water use

Also, should not be neglected the water use for plant and livestock breeding in households, which, usually, are not endowed with authorized sewage and treatment systems and, as a whole, produce a major impact on the environment and the human body. For irrigation, there are used, on average, 5.1 million m3 (19%), inclusive 3.8 million m3 (22%) in the Prut river basin and 15% in HS DBS. Averagely, 417 thousand m3 of water were used for irrigation in the Cogâlnic river basin and 369 thousand m3 in the Hadjider river basin. The maximum share of water used for irrigation is stated in the basins of Hadjider river (62%) and the Cahul river (21%), and at the level of the administrative districts - in Briceni (52%), Basarabeasca and Ștefan-Vodă (28%). The relatively low volume of water used in irrigation is conditioned both by the natural conditions (low flow and insufficient rainfall, increased risk of soil salinization) and the technical and economic possibilities of water used for irrigation in respective region. The spread of irrigated agriculture has a pronounced non-zonal character. This is explained by the higher level of financial assurance and more pronounced marketability of agriculture in the northern districts. The main sources of water abstracted for irrigation are: the Prut riverbed, lake Costești-Stânca and other lakes from the river basins of Prut tributaries, lakes from basins of Ialpug and Cogâlnic rivers. For domestic needs there are used, on average, 23% of abstracted water or 6.0 million m3, including 3.8 million m3 (22%) in the Prut river basin and 2.2 million m3 (25%) in the HS DBS. The volume of water used for these purposes is determined by the number and size of serviced urban centres and the rural areas which have extensive centralized water supply networks and perform water use registering. In addition, due to the mentioned deficiencies of the water management indicators system at „Apele Moldovei” Agency, the share of water used for domestic purposes in rural areas is significantly reduced and the real volume is much higher. The maximum volume of water was used by communal enterprises from the towns of Ungheni (2.3 million m3), Cahul (1.3 million m3), Comrat (1.1 million m3), Edinet (866 thousand m3), Ceadâr Lunga (528 thousand m3), Hancesti (466 thousand m3). Cimişlia (463 thousand m3) and Falesti (450 thousand m3). Also, a maximum volume of water used for domestic needs is recorded in the rural localities from TAU Gagauzia (925 thousand m3), Cahul (630 thousand m3), Cimislia (600 thousand m3), Falesti (540 thousand m3), Glodeni (410 thousand m3), Hancesti (340 thousand m3), Briceni (330 thousand m3) and Taraclia (324 thousand m3). For technological purposes there are used, on average, 1.9 million m3 or 7.4% of the total volume of water used in DH DPBS and 17% of water used for the same purposes on the right bank of the Dniester river (annex 4.1.4). The share of water used for technological purposes in the Prut river basin is higher (9.2%) and is due to the presence of industrial centres such as Ungheni and Cahul. Also, a maximum volume of water used for such purposes is stated in the towns of Edineţ, Făleşti and Glodeni (annex

Page | 13 Technical Report N°6 Economical analysis of water use

4.1.2). In the branch structure absolutely prevail the food enterprises, followed by the mining and building materials enterprises, commercial and service centres, especially health and institutions, markets and car wash stations. The largest water consumers in the food industry are: sugar factories from Glodeni (303 thousand m3), Falesti (234 thousand m3) Edineţ (169 thousand m3), Briceni (94 thousand m3): factories for the production of wines and of other alcoholic beverages from TAU Găgăuzia (86 thousand m3), Taraclia (81 thousand m3), Cahul (60 thousand m3), Hincesti (32 thousand m3), Nisporeni (25 thousand m3), Ungheni (11 thousand m3), Stefan Voda (20 thousand m3), Cimislia (23 thousand m3), Cantemir (20 thousand m3); dairies from Hancesti (22 thousand m3), from Cahul (20 thousand m3); juice and canning factories SA Natur Bravo from Edineţ (156 thousand m3) and „ Vitˮ SA from Căuşeni; grain processing plants from Vulcanesti (30 thousand m3), Căușeni and Iagrara, district; bakery factories from the district centers of Comrat, Ceadâr-Lunga and Cahul; bottling plants of mineral waters from Ungheni, Ştefan Voda and Hânceşti; the sausage production companies from Hânceşti, Cahul, Edinet and Comrat; bakeries, mills and cottages in the rural areas; catering enterprises. The largest water consumers from mining and industry for production of building materials construction materials (MIBM) are: limestone extraction quarries from Râşcani, Edinet and Briceni districts; companies for producing of concrete products from the towns of Ungheni, Cahul, Comrat; gravel enterprises from the Briceni, Edinet and Riscani districts; enterprises for production of pressed bricks and sidewalks from district centers; building companies fom Ungheni, Cahul and Comrat towns. Most mining enterprises keep incomplete water evidence of water management indices. A significant volume of water for technological purposes is used by public enterprises providing water supply and sanitation services from the towns of Comrat (784 thousand m3), Ungheni (388 thousand m3), Cahul (260 thousand m3), Edinet (166 thousand m3), as well as by the markets and car wash from the district centers. Also, an average water consumption is attested at the woodworking enterprises from Ungheni, Cahul, Nisporeni, at the railway transport companies and the bus parks in Ocnita, Ungheni, Cahul, at the storage stations of the fuels. The volume of water used for hydro-energetic purposes at the dam of Costesti-Stânca lake is about 77 million m3 or by 3 times higher than the total volume of water used indicated in the Reports of the Agency „Apele Moldoveiˮ, which do not include the data to hydroelectric power plants. The total volume of used water registers a highly negative dynamic (annex 4.1.5), both in the Prut river basin and in the HS DBS. The maximum decrease is stated in the Danube river basins, where are predominant the surface water sources, particularly in the Cahul (by 4 times) and the Kitai (by over 2 times) river basins. The highest decrease is found in the south districts of HS DBS, including Taraclia, Stefan Voda and Cantemir, where is a difficult economic situation, and the territory is more affected

Page | 14 Technical Report N°6 Economical analysis of water use by the climate aridization process. At the same time, in the Falesti and Cimislia districts is observed a positive trend, because of the faster and more massive expansion of centralized water supply systems used, mainly for domestic purposes. The volume of water used in agriculture decreased, on average, with 42% (from 25.8 million m3 to 15 million m3), including in the Prut river basin by 39% (from 16.6 million m3 to 10.6 million m3), and in the HS DBS – by ≈2 times (from 9.3 million m3 to 5.0 million m3). Similar to the total volume of water used, the maximum volume of water used for agriculture is found in the Danube basins, where there are mainly surface sources, especially in the Kitai (≈6 times) and Cahul (≈ 5 times) river basins. The total volume of water used in irrigation has decreased by about 5 times (from 13.5 million m3 to 2.5 million m3), and has determined the decrease of the total volume of used water, especially from surface water sources. To our opinion, this is conditioned both by worsening economic situation in agriculture and intensifying aridity processes as well as the spread of the phenomenon of incomplete recording of water usage for these purposes. The highest decreasing rates in the volume of water used for irrigation is attested in the district of Edineț and in the medium size river basins of the Ialpug and the Cogâlnic, which has also reflected on the overall situation in the region of study. The recent rapid expansion of water supply network, especially in rural area, has conditioned the increased volume of water used for domestic purposes, on average, with 8% (annex 4.1.5), inclusive with 12% in HS DBS and with 8% in the Prut river basin. The positive dynamics is observed in all basins of HD DPBS, especially in the basins of the Kitai river (about 13 times), Sărata river (about 2 times), the Cahul river (+ 50%) and the Ialpug river (+22%). The total volume of water used for technological purposes registers a fluctuating evolution on the background of a general decreasing tendency (-35%) marked by decline in the agri-industrial complex. Despite major prospects of economic integration with the EU states, due to tensioned relationship with Russia and very low capacity of the internal market, the rapid re-launch of the agri-food complex and the considerable increase in technological water consumption are unlikely to occur. Water losses. As a result of the predominant use for agricultural purposes, the massive use of wastewater technologies and aqueducts, the volume of water losses is, on average, 24.9 million m3 or ¾ of the total captured water volume, which is far higher than average in the right bank of the Dniester river (52%). At the same time, the significant reduction of surface water used in agriculture has led to reduction of water losses volume. Nearly 80% are technological losses. It is due to the more advanced depreciation of the water supply infrastructure in the HD PDBS as well as technological specifics of the water supply in agriculture that prevails in the branch structure of this hydrographical district. Irrevocable losses of abstracted and distributed water by enterprises of Association “Molfova Apa- Canal” (AMAC) from the HD DPBS are ≈35% (annex 4.2.4) if to compare with the average of 74% for

Page | 15 Technical Report N°6 Economical analysis of water use all enterprises for water supply in this hydrographical district This difference is explained by the fact that the enterprises of AMAC supplies water almost exclusively the households industrial and service centres from urban areas, where technical losses are significantly lower than those of water supply in agriculture, especially irrigation. The amount of losses and the degree of infrastructure usage (fixed assets) of water supply and sanitation systems is conditioned, to a large extent, by its wear degree, as well as the low efficiency of strategic and operational management of respective enterprises. Therefore, the maximum loss is observed in the towns of Taraclia (75%), Ștefan-Vodă (73%), Edineț (66%), Ungheni (63%), Cimislia (50%) and Vulcăneşti (48%). Wear degree of fixed assets is on average 41% or with 7% lower than the country average. This is explained by the massive expansion of water supply networks in the rural area whose population is greatly predominant (70%) in this hydrographical district. Another difficult issue is the low usage (27%) of fixed assets, which is conditioned both by multiple decrease of industrial consumption and by the price - quality disproportionate ratio in the most AMAC enterprises. 4.2.3 The activity of public water supply and sewerage services According to Article 3 of Law nr.1402 of 24.10.2002 on public utility services17, the main management principles of providing of water supply and sewerage service are: a) sustainable development; b) local autonomy and decentralization of management of public utility services; c) promoting economic and management efficiency and profitability; d) intercommunity association and partnership; e) correlation of resources with requirements; f)) ensuring the competitive environment; g) rational use and protection of water resources. Also, implementation of public investment in the infrastructure for public management of water resources are provided from the operators’ income and expenditure budgets that are formed by revenues from the water users, representing the value of the provided services, from local budgets and or transfers from the state budget. The main requirements to water supply and sewarage service providers: a) adaptability to the quantity and quality requirements of water users; b) equal access to public services provided/rendered on a contractual basis; c) optimal management of water supply and sewerage system, economically safe and efficient, in accordance with the specifications and operating instructions in this field; d) water users informing and consulting; e) natural and social environment protection; f) providing the information required by the local public authorities. Also, according to the Law 303 of 13.12.2013 on the public service of water supply and sewerage, the operating companies are responsible for the maintenance of the public water supply and sewerage system in safety and technical-economic efficiency and strict monitoring of the quality of distributed potable water and of received waste water. In addition, operators are required to: a) to submit to NAER and LPA the

17 Official Monitor no. 14-17 of 07.02.2003

Page | 16 Technical Report N°6 Economical analysis of water use reasoned calculations of the incurred expenses; b) shall not interrupt the provision of the public service of water supply and sewerage, except for the cases of non-payment, the technical and security reasons provided by the law, the license and the contracts; c) present annually, for approval, the tariffs for providing of the public service of drinking water supply and sewerage; d) install, repair, replace and metrological verify the water meters; e) does not allow consumer discrimination, Information about providing of public services of water supply and sewerage is completely accumulated only from the enterprises of the Association "Moldova Apă-Canal" (AMAC)18. They contribute with about 50% of the volume of supplied drinking water and with over 80% of the volume of discharged and purified wastewater (annexes 4.2.1;4.2.7). Number of public water supply networks in the HD DPBS is 482 units (annex 4.2.2), of which over 90% are in operation. The most centralized aqueducts are registered in the districts of Cimișlia (58), Cahul (56), Hâncești (52), Ștefan-Vodă (34) and TAU Găgăuzia (39), and the fewest are in the northern districts and the smallest one, as Leova (9), Taraclia (13) and Nisporeni (15). In the years 2007-2017, the number of centralized water supply systems in HD DPBS has increased ≈2.1 times from 227 to 482 units. The highest growth rates are registered in 2013-2016, as a result of the allocation of financial support from the NEF in order to achieve the objectives and targets set from the Water and Sanitation Strategy (2014-2028). Positive dynamics is recorded in all districts of the study region. The maximum increase is registered in the districts of Fălești (by 10 times), Râşcani (7.8 times), Hânceşti (7.4 times), Cantemir (6.3 times), Leova (4.5 times), Edineț (4.0 times) and Cahul (3.7 times). The total length of public water supply networks in the HD DPBS is 5554 km, out of which ¼ (1276 km) belong to enterprises of AMAC, located in the urban centers. The most extensive aqueducts are in TAU Gagauzia (879 km), in the districts with a bigger area as Hincesti (538 km), Cahul (506 km), Ungheni (462 km), as well as in some smaller districts, such as Cimislia (392 km) and Nisporeni, which have recently registered a high rate of expansion of public aqueducts. The minimum length of aqueducts is in smaller districts such as Ocnita (35.4 km), Leova (115 km). Glodeni (205 km) and Basarabeasca (204 km).The length of public water supply systems increased by 2.2 times, from 2555 km to 5554 km (annex 4.2.3). The maximum increase of centralized water supply systems length is clearly observed in Cantemir (11.6 times), Râşcani (8.6 times), Falesti (7.2 times), Hânceşti (6.0 times), Ungheni (3.9 times) and Cahul (3.5 times), where, in recent years, big projects related to extension of the water supply and sewerage networks have been implemented. In addition, if we take into account the recent finalized or on-going projects (2012-2016) supported by the NEF, RDA and other important financing sources, then the rehabilitation and extension rates of the centralized water supply infrastructure are big enough. Also, in Râşcani and Edinet districts, there is an interconnection of the

18 amac.md

Page | 17 Technical Report N°6 Economical analysis of water use supply networks from Prut and Nistru basin. It is important that these input indicators turn into result indicators, such as increasing access to water and quality services, improving the state of water bodies. As a result of the rapid expansion of public water supply networks, ≈½ of the population from the study region (in 2013 - 36%) has access to centralized water supply systems (annex 4.2.1). At the same time, access to public water supply systems in HS DBS (65%) is higher than in the Prut river basin (35%). In TAU Gagauzia, as well as in Basarabeasca and Cimislia districts, the population's access to water supply systems exceeds 70%, but in majority of districts from Prut river basin does not exceed 40%. Minimal access is observed in the districts of Ocnita (14%), Briceni (24%) and Leova (31%). Despite to the rapid expansion of water supply networks, water consumption per capita is much lower (52 liters/day) than the average of the republic that is explained by lower degree of urbanization and great share of the rural population, who has a reduced access to public water supply systems. In the HD DPBS water is supplied by 493 pumping stations and about 600 artesian wells with a total capacity of 240 thousand m3/day (annex 4.2.1), including 120 thousand m3/day in the Prut river basin and HS DBS for each. At the same time, there are used only ¼ of the project capacity of existing stations, which is explained by the high degree of wear and tear and multiple decreasing in water consumption in agriculture and industry in the last two decades. The total water volume supplied into HD DPBS is, on average, 11.6 million m3 (annex 4.2.4), inclusively 7,0 million m3 in the settlements from the Prut river basin and 4,6 million m3 in those from HS DBS. The AMAC enterprises delivered around ½ of the total volume of used water through public supply systems and over 80% of the water delivered to economic agents. The volume of supplied water is determined by the number and size of urban centres, drinking water resources from their proximity, by the number of users in rural settlements from the perimeter of this region who are connected to the public water supply systems, as well as by water consumption for various household needs including agriculture. Thus, the maximum volume of water is supplied into TAU Găgăuzia (1,9 million m3), also in the districts of Cahul and Ungheni (1.6 million m3 each), Hânceşti (736 ths. m3), Cimişlia (674 ths m3) and Edineţ (640 thousand m3), but minimum volume into Ocnița (83 ths m3), Leova (326 ths m3), Basarabeasca (359 ths m3) and Nisporeni (372 ths m3) districts. Among urban centers it is remarkable Ungheni (1.2 million m3), Cahul (1.0 million m3), Comrat (477 thousand m3) and Edineţ (320 thousand m3), but the minimum volume from the smaller towns such as Ocniţa (70 ths m3), Nisporeni (78 ths m3), Basarabeasca (86 ths m3), Glodeni (131 ths m3) and Vulcăneşti (149 ths. m3). For householders are delivered 10,0 million m3 or 86% of total volume, inclusively from AMAC enterprises – 4,8 million m3. This ratio is similar in the most of the districts and towns of HD DPBS, except the districts of Edineţ and Glodeni (annex 3). The second position is occupied by the budgetary organizations, which are provided annually about 850 thousand m3 or 7,3 % of the total volume.

Page | 18 Technical Report N°6 Economical analysis of water use

Among the budgetary organizations are to be noticed the medical and training centres, local and district government buildings. The volume of water delivered to the economic agents is 708 ths m3 or 6,1 % of the total volume. It depends on the number and production capacity of the enterprises which lack their own sources of water, particularly agricultural and complex markets, technical service stations, car wash stations, gas stations, etc. In addition, the AMAC enterprises delivered more than 80% of the total water used by the industrial companies. The production indices of public sewerage and wastewater treatment services In the HD PDBS are discharged, on average, 9,3 million m3 of waste water, which represents only 1,4 % of the total waste water discharged in the country and ≈12% on the right bank of the Dniester river (anexa 4.2.5). Smaller share of the volume of discharged wastewater compared to that of captured and used water is explained by the predominantly agrarian of the HD DPBS. A lot of farms do not use sewerage systems, and, most households in rural areas are not connected to centralized sewerage systems and the discharged waters are not evaluated. Similar to the volume of captured and used water, the volume of discharged wastewater varies by watershed area, by the number and size of urban centres in the perimeter of the HD DPBS, by the number of rural settlements and population connected to centralized network of wastewater disposal and treatment. Therefore, the maximum volume of wastewater is registered in the Prut river basin (7,3 million m3) and in the medium river basins from HS DBS, including Ialpug (1.0 million m3) and Cogâlnic (735 ths. m3), where are located the most urban settlements. Also, the maximum volume of wastewater is discharged from Briceni (2,9 million m3), Cahul (942 thousand m3), Unhgeni (934 thousand m3), Hâncești (884 thousand m3) districts and in theTAU Găgăuzia (767 thousand m3). According data from Basin Department of the “Apele Moldovei” Agency, without treatment are discharged 2,5 % (183 thousand m3) of total volume from wastewater evacuated into natural water basins. Till 2015, the mainly part of the untreated wastewaters were discharged in the Cogalnic river basin, after that – in Prut river basin as a result of stop functioning the water treated station from Glodeni sugar factory, which previously provided the wastewater reception and treatment services in this town. Volume of insufficiently treated discharged wastewaters is, in average, about 3 mil. m3 (≈30%), including 1,3 mil. m3 in Prut basin (anexa 4.2.5). In the HD DPBS, less than ½ of the total volume of the discharged water is insufficiently treated. Also, the reports of the “Apele Moldovei” Agency contain inaccurate information (in millions of m3), which cannot be used for an adequate analysis in a spatial or branch profile, and, in the many districts the use and discharge of domestic waters includes data only from the urban localities served by the AMAC enterprises. In additions, at 13 from 18 AMAC enterprises, who provide services to urban areas, the entire volume of discharged wastewater is insufficiently treated, which represents over 2/3 (2.7 million m3 of 4.0 million m3) of the total

Page | 19 Technical Report N°6 Economical analysis of water use wastewater volume (annex 4.2.7). Thus, based on the data from AMAC and NSB, the total volume of insufficiently treated waste water is over 3 million m3 or more than 40% of the total volume of discharged wastewater into natural basins. Therefore, in reality, in the study region, about half of the wastewaters is discharged without treatment or insufficiently treated. In addition, the volume and share of these wastewater categories is growing, especially in the small and medium-sized rivers. This is also confirmed by the reports of the environmental19 and medical authorities20 for study period. In addition, most wastewater treatment plants have a higher degree of wear. So, waste water discharged has a low level of treatment being strongly and moderately polluted21. The volume of conventional pure wastewaters is 3.5 million m3, which represents ≈½ of the total volume of discharged watewater into natural basins. The volume of not treated and insufficiently treated wastewater is higher that the volume of conventionally pure wastewater, by ≈3 times in the study period (from 4.7 million m3 to 1.8 million m3). The highest level of wastewater treatment in the HD DPBS is found in the Cahul (74%) and Prut (54%) river basins, but this information is not confirmed both by the ecological and medical authorities, and the AMAC enterprises. In the HD DPBS there are only 60 public wastewater discharge systems (annex 4.2.6), The maximum number of public sewerage systems is registered in the district of Cimislia (7), Cahul (6) and Edinet (5), and in the TAU Gagauzia (7). The "Moldova Apa-Canal" Association has only 19 centralized systems for discharged of wastewater, located in all urban centers of the region, except small towns Glodeni, , Costeşti and Tvardita. Despite the ambitious starting of Strategy on water supply and sanitation (2014-2027), so far only 11% of the population from DH DPBS has access to centralized systems for discharged and treatment of wastewater. Maximum access is registered in districts of Cahul and Ungheni, which have more extensive sewerage network. In addition, in Cahul and Ungheni started implementing pilot projects of regionalization of water supply and sanitation services, which will significantly increase the profitability of these companies and services. The total length of sewerage network is 750 km, from which 701 km (93%) are functional, inclusively 312 km (45%) of the AMAC enterprises (annex 4.2.6). The maximum length of sewerage networks is conditioned by the number and size of urban centres, as well as the population access level to public sewage systems. Thus, the maximum length is registered in the TAU Gagauzia (167 km) and in the district of Ungheni (80 km), Cahul (66 km), Cimislia (62 km) and Edineț (57 km). Among urban areas of

19. Annual Reports on the quality of environmental factors and the work of Ecological Agencies and Inspections 20 Sanitary-hygienic and epidemiological condition in the Republic of Moldova. National Scientific and Practical Center for Preventive Medicine. Chisinau, Reports for the years 2007-2016 . 21 Data from SEI and SHS

Page | 20 Technical Report N°6 Economical analysis of water use the HD PDBS we distinguish Ceadar-Lunga (84 km), Ungheni (66 km), Edineț (53 km), Cahul (52 km) and Comrat (39 km). Unlike the water supply systems, the number of sewerage systems does not register a positive trend (annex 4.2.2), but a negative one (from 70 to 60 units). The coverage degree of water supply with sewerage networks has been reduced during this period about 2,5 times (from 31% to 12%). The abandonment of sewerage networks is observed, mostly, in rural areas and mono-specialized and intense ruralised small towns in the last two decades However, the total length of sewerage networks increased with 41%. Also, we consider that official statistical information on this subject is incomplete. Thus, if we consider the recent completion of construction and expansion projects of sewerage and treatment networks in the settlements of the HD DPBS, then we see a more significant positive trend. In the HD DPBS there are only 48 wastewater treatment plants, from which 39 are working, including 17 plants of AMAC enterprises (annex 4.2.7). In the Prut river basin works 22 wastewater treatment plants and in the HS DBS – only 17. Total capacity of wastewater treatment plants is 126 thousand m3/day, including ≈94 thousand m3/day (75%) of urban wastewater treatment plants of AMAC enterprises. Maximum capacity of wastewater treatment plants is found in TAU Gagauzia (15,8 thousand m3/day) and in the medium cities like Ungheni (15 ths m3/dayi), Cahul (13.7 ths m3/day), Falesti and Briceni (10 ths m3/day). The usability of treatment plants in the HD DPBS is only 14%, which is conditioned both by economic and demographic decline of serviced cities and the very high level (over 40%) of wear and tear of the wastewater sewerage and treatment installations. Disastrous technical condition and superficial control of pollution sources, very low pollution payments and episodic punishment for contraventions generate an increased impact on water and the human body. The total volume of wastewater discharged through centralized sewage networks is 4.2 million m3, inclusively 2/3 or 2.7 million m3 from Prut river basin and 1/3 or 1.4 million m3 from HS DBS. Through the public sewage systems of AMAC enterprises are collected over 90% (4,0 mil. m3) of discharged wastewater (annex 4,2.7). As was mentioned before, the volume of discharged wastewater varies by catchment area, by the number and size of urban centres in the perimeter of the HD DPBS, and by the number of rural population, who are connected to public systems of wastewater discharged. Thus, the maximum volume of wastewater is discharged in the larger towns from the Prut river basin, as Ungheni (831 thousand m3), Cahul (770 thousand m3), Comrat (365 thousand m3) and Edineț (302 thousand m3). The minimum volume of discharged wastewaters is found in the smaller districts, like Ocniţa (48,7 thousand m3), Cantemir (66,7 thousand m3), Glodeni (88,5 thousand m3– without treatement), Cimișlia (96 thousand m3), Nisporeni (106 thousand m3) and Leova (106 thousand m3).

Page | 21 Technical Report N°6 Economical analysis of water use

On average, ≈60% of discharged wastewater comes from households, 18% from economic agents and 15% - budgetary organizations. In the last time, significantly decreased the share of industrial enterprises, but increased the share of budgetary organizations and commercial centers. 4.2.4 The non-centralized water supply sources Wells and springs. Water supply in the HD DPBS is largely ensured by non-centralized water sources, which are not covered by current records and metering. According to SEI data, in the perimeter of HD DPBS were identified 74.3 thousand wells (Annex 4.3.1). The number of wells varies depending on the size of districts and localities, by the quantity and quality of groundwater and their storage characteristics, and the LPA ability to record, monitor and report to territorial environmental and medical authorities. Therefore, most wells are attested in the northern part of the river basin, including districts of Edinet (15.4 thousand) and Briceni (14.9 thousand). In the Central Region are remarke the districts of Ungheni (5.0 thousand) and Hincesti (4.2 thousand), and in the South Region - districts of Leova (4.0 thousand) and Cimislia (2.9 thousand), and TAU Gagauzia (3.2 thousand). The minimum number of fountains is recorded in smaller districts, including Taraclia (194), Basarabeasca (680), Nisporeni (1600), as well as Stefan Voda (1117) and Căuşeni (1280) districts, which fall only partly located in the HD DPBS. At the level of localities, the maximum number of wells is attested in the Larga (1354), Beleavinti (1104), Grimăncăuţi (1201) and Teţcani (893) from ; Gordineşti (814), Brătuşeni (805), Hancăuţi (751), Blesteni (736) from edinet district; Ocnita (712), Dângeni (636), Clocuşna (578) and Bârladeni (524) from Ocniţa district; Zăicani (450), Malinovscoe (327), Hiliuţi (322) and Gălăşeni (321) from Râşcani district; (908), Danu (433), Hajdieni (409) and (385) from the ; Obreja (398); Pânzăreni (359), Logofteni (351) from Falesti district; (777), Petreşti (376) and (333) from Ungheni district; Sărata Galbenă (230) and Carpineni (225) from Hincesti district; Filipeni (818), (432) and Tomai from ; Congaz (492), Cazaclia (415) and Copceac (410) from the TAU Gagauzia; Gura Galbenei (268) from the Cimislia district; Tocuz (360) and Taraclia (265) from Căuşeni district; the towns of Cupcini from Edinet district (1012), Edineţ (852), Costeşti from Râşcani district (392), Briceni (384), (321) from Leova district and Glodeni (300). Overall, 84% of the wells are arranged and can be used in households. Also, for water supply are used 983 springs, out of which 72% are arranged (Annex 4.3.1). In the territorial aspect, the number of springs depends on the surface of the districts and localities and of their hydrological peculiarities, also by flow of the existing springs. In addition, the official data on this subject are also influenced by the of recording and monitoring activities of water resources, including springs and wells, carried out by ecological and sanitary authorities. Most springs are located in the districts of Glodeni (155), Nisporeni (138) and Ungheni (101). At the level of localities, the maximum number of sources is

Page | 22 Technical Report N°6 Economical analysis of water use attested in the vilages (19), Danu (13), and Hîjdieni (12) from Glodeni district; Hiliuţi and Şaptebani (10) from Râşcani district; Măcăreşti and (12) from Ungheni district; Cristeşti and Vărzăreşti from (9); the towns Glodeni (14), Nisporeni (12) and Costeşti (10). In the Prut River Basin are numerous mineral springs, most of which are used only for water supply to households. The most important mineral springs are located in the central and southern part of the basin, including in the towns Cahul, Ungheni and Corneşti from the same district, which possess valuable therapeutical properties and captured for bottling and commercialization. Mineral springs can be found in the Larga of Briceni district, Viişoara from Glodeni district, Nemteni, Pogăneşti, Negrea, Cioara, Dancu from Hincesti district, Goteşti from Cantemir district, from . Also, at the spring of the Cogâlnic River, near Hincu , are abstracted mineral waters for bottling and commercialization. The use of the water reservoirs (accumulation lakes). According to the State Ecological Inspectorate data, within the HD DPBS are registered 2016 lakes with a total area of 23.3 thousand ha. The number of accumulation basins recorded a significant decrease in the north-south direction. Thus, the maximum number of lakes is attested in the northern districts of the district, including Glodeni (231), Briceni (225) and Falesti (221). The maximum area is observed in the Cahul (4135 ha) and Râşcani (3208 ha) districts, which contain the largest water reservoirs of HD DPBS − the lakes Costeşti-Stânca, Manta and Beleu. Along the rivers are arranged 805 lakes (40%), and on the side of the water courses − 1207 lakes (60%). The maximum number of lakes are arranged on the watercourses of the , Nârnova, Lăpuşna and Sarata river basins. Almost half (920 or 45%) of the total number of lakes are used primarily in fish farming, 773 lakes (38%) are assigned for general use, 82 lakes (4%) are destined for irrigation, 36 lakes (2% ) are attributed for anti-erosion purposes, and for priority leisure purposes - 21 lakes or only 1% of the total, but their number is rapidly increasing. The absolute majority of general purpose lakes are managed by the LPA, and of private or leased lakes are used for fisheries, irrigation and recreational purposes. Most fish ponds are also arranged in the middle course of the Prut river basin, as well as in the Sărata and Hadjider rivers within the Stefan Voda district (44). At the level of localities it is noted: Ocnita (15), Grinăuţi-Moldova (14) and Bîrlădeni (12) from Ocnita district: Grimăncăuţi (18) and Marcăuţi (10) from Briceni district; Danu (37), (14), Hjideni (11) from Glodeni district; Obreja (15) and Sarata (13) from Făleşti district: Malinovscoe from Râşcani district (10); Hânceşti (11); Săiți (11) from Causeni district, Slobozia (11) and Ermoclia (10) from Ştefan-Voda district. The maximum area of the fish ponds is attested in the districts with maximum number of lakes used for these purposes, as well as in the lower course of the Prut River within of Cahul district, where the largest fish farms from HD DPBS. In

Page | 23 Technical Report N°6 Economical analysis of water use the region of study were identified 16 specialized fish farms, which manages 50 pools, with an total area of 3800 ha, which are located in the territory of 33 localities. In the Falesti and Leova districts there are 4 specialized fish farms, and in the remaining districts - up to 2 fishing enterprises. The maximum number of fish ponds held by specialized fish farms is recorded in Falesti (14), Briceni (10), Glodeni (7) and Leova (6) districts. The largest fish pond, with an area of 1.2 thousand hectares, is located on the territory of Crihana Veche and is managed by the Cahul Fish Farm. SA Piscicola operates 9 basins, including 4 basins (106 ha) in the of Clocusna and Corestauti (on the Racovat river) in Ocniţa district, 4 basins of 221 ha between the villages Ukrainca and Tocuz from Căuşeni district (along the river Ceaga, tributary of Cogâlnc river) and 1 lake with 112 ha near the village from Leova district, along the Sărata river. The Fisheries Service has 3 basins of 43.2 hectares in the Malinovscoe village in from Râşcani district (on the Camenca river course). SA Acvacultura operates one fish pool of 375 ha located along the river Ialpug, around town Taraclia. SA Rechin from Briceni district exploits 10 fishponds arranged on the courses of Racovăţ (5), Draghişte (4) and (1), with a total area of 246 ha. In the Falesti district, SA Avinem operates 6 basins (284 ha) and SA Ghidrim 4 basins (107 ha), located on the rivers Şovăţul Mic (8) and Camenca (2). In the Glodeni district, the fishing company SA Frăsineţ operate 7 fishing ponds with a total area of 246 ha, including 5 basins along the river Şovăţul Mic and 2 pools on the Căldărușa river. Also, most of the mentioned fish farms have emerged as a result of the dismantling/reorganization of the State Fisheries Holding and have inherited the aquatic terrain and the remaining infrastructure. For priority irrigation purposes, are used 82 accumulation lakes or 4% of the total number. Most basins with main irrigation functions are registered in the Briceni (22), Cahul (15) and Râşcani (9) districts. There are also 86 mixed use pools, including irrigation. In addition, for irrigation purposes are also used much of the lakes attributed to general use. For exclusive recreational purposes are registered only 21 lakes. Also recreational functions also provide about 130 pools with mixed use. In addition, for recreational purposes, mostly unorganized, are used majority of the public' lakes attributed for general use, especially especially within or near urban areas, and the access of local populations and visitors from outside is much easier compared to fish ponds. In the HD DPBS perimeter there is a single spa resort - SA "Nufărul Albˮ from Cahul town, which annually resides over 5.5 thousand people. A valuable recreational area, but insufficiently capitalized is the accumulation lake Costeşti-Stânca. Also, recreational areas of major interest are created around the lakes from towns of Edinet, Ungheni, Cahul, Hancesti and Comrat. Preliminary forecasts on water consumption trends in the DPBS HD. As a result of the analysis of the dynamics of used water volume in 2007-2017 years, including the main categories of use, the

Page | 24 Technical Report N°6 Economical analysis of water use identification of the main causes that determined the respective trends, as well as the evaluation of the production indicators of the public water supply systems, we can conclude following: in the next decade we expect an increase in the volume of water used, which will be conditioned by the expansion of public aqueducts and, correspondingly, by increased water consumption. Gradually, however, we can expect a slowdown of the increase rhythms of water consumption and even a negative growth in the disadvantaged localities, especially small and medium size. The main causes will be: massive depopulation and aging of most rural localities, the difficult situation in the agriculture of these region, the increasingly acute shortage of groundwater reserves, intensification of climate aridisation. In this context, elaborating of qualified forecast and possible scenarios for medium and long term (by 2030) of water demand and limiting natural and anthropogenic factors must necessarily be included in the Program of Measures for second cycle of management. Unregistered water consumption from wells and springs will record a pronounced negative dynamic, which will be conditioned by both increased access to public aqueducts and by various constraints, such as the depopulation and aging of rural areas, the diminution of livestock in households, alarming lowering of the groundwater level and draining of wells and springs, increasing the intensity of heat and , especially in the area of Falesti district and the Southern Region, with a low degree of afforestation. Despite recent regulatory changes to facilitate access to irrigation water sources, the water consumption from the water reservoirs will not increase significantly, in particular because of the massive spreading of their clogging, eutrophication and drying processes, stopping of which requires massive investment, but also the active involvement of all stakeholders. Conclusion of chapter 4.2 The volume of abstracted and used water is determined by size of districts and of its urban centres, by the degree of access to the Prut riverbed and the existing technical capacities of water transport, as well as by the volume of water used for agriculture and household purposes. On average, 60% (21.1 million m3) of the abstracted waters come from groundwater sources, including 54% in the Prut river basin and 83% in the DBS HS. About 70% of the abstracted waters are used for agricultural purposes (including 19% for irrigation), 23% for domestic purposes and only 7.3% for technological purposes. During the analyzed period, the volume of abstracted and used water recorded a significant reduction, which is mainly conditioned by the similar reduction of the volume of water abstracted from surface sources and used for various agricultural activities, especially for irrigation. In the years 2007-2017, there is a growth of more than 2 times the total number and length of the public water supply networks In the same time, the rapid expansion of the water supply network are

Page | 25 Technical Report N°6 Economical analysis of water use not accompanied by the similar extension of the sewerage network, the require included recently in the legislative acts, both in the regulations of water supply enterprises, and of environmental fund As a result of the rapid expansion of public water supply networks, ≈½ of the population from the study region (in 2013 - 36%) has access to centralized water supply systems. Despite to the rapid expansion of water supply networks, water consumption per capita is much lower (52 liters/day) than the average of the republic that is explained by lower degree of urbanization and great share of the rural population, who has a reduced access to public water supply systems. Due to the massive lack of sewerage systems, most discharges from rural areas are not monitored and treated, but generate significant impacts on water sources, aquatic ecosystems and population health. Water supply in the HD DPBS is largely ensured by non-centralized water sources, which are not covered by current records and metering, incuding 74/3 thousand wells and 980 springs. In the HD DPBS are registered 2016 lakes with a total area of 23.3 thousand ha. Almost half (920 or 45%) of the total number of lakes are used primarily in fish farming, 773 lakes (38%) are assigned for general use, 82 lakes (4%) are destined for irrigation, 36 lakes (2% ) are attributed for anti-erosion purposes, and for priority leisure purposes - 21 lakes or only 1% of the total. • In the next decade we expect an increase in the volume of water used, which will be followed by a oscillating evolution based on a general trend of reduction, depending on the pluviometric characteristics, the demographic and socio-economic evolution of the this hidrographical district 4.3 The costs recovery mechanism of water use. The concept of the cost recovering of water use is focused on the principle of complementarity of 3 T (Tariffs, Taxes, Transfers). The cost of water use includes operational costs, investment costs and environmental costs. Operational costs include current expenses related to the operation of the water supply and sanitation infrastructure and the provision of those services to different categories of water consumers. Also, operational costs are usually direct costs, easily quantifiable by the current accounting system and are subject to recovery over a short and time-bound period (1 year, 1 semester). Operational (exploitation) works are primarily aimed at direct economic and social benefits. The investment costs are usually intended for the extension and modernization of the water supply and sanitation infrastructure, pumping and water treatment plants, and are planned and subject to recovery in the short to medium term or longer (over 5 years). Investment costs are aimed at both direct and indirect benefits. Environmental costs can be identified and evaluated both on the basis of environmental damages and the costs necessary to restore the affected natural components and ecosystems, as well as through the assessment methodology of aquatic ecosystem services. Environmental costs primarily address social and environmental indirect effects.

Page | 26 Technical Report N°6 Economical analysis of water use

The recovery of the operational costs of using water resources is obtained mainly from the tariffs for the provision of the respective services, permits for sport fishing, access to the recreational areas. For costs recovering of public measures for the management, protection and restoration of aquatic objects and their protection zones, for the maintenance of public utility of aquatic objectives (recreational swimming, amateur fishing) are applied taxes for water use, taxes for discharges of pollutants with wastewaters, access permits, as well as transfers from the public budget and donors. According to the AAS Strategy, is needed an adequate combination of tariffs, taxes and transfers (3T) to finance recurring and capital costs and to stimulate other forms of funding. Tariff policies must ensure the uninterrupted supply of water to all population categories and operators' economic profitability. Sustainable cost recovery provides future cash flows from the 3T combination and revenue use as the basis for attracting recoverable funding sources, depending on the local situation. In the longer term, recoverable sources cannot substitute for underlying incomes, with only a shift of burden to future years. When establishing the tariffs for water supply and sanitation, it is necessary to take into account the consumer payment capacity, so that the price of those services does not exceed 5% of the average income of a household. According to NBS data, about 60% of households overcome that level, and about 20% of households - the 10% level, which is a major constraint for adjusting tariffs to the costs of those services. For these reasons, the planning of investments and the selection of priority projects must have localities that can ensure the recovery of operating costs (operational and investment) from the applied tariffs. In the event of the impossibility of recovering operating costs from tariffs, decentralized solutions must be found and accepted by water users in the locality, including by subsidizing the socially vulnerable population. 4.3.1 Tariffs for public water supply and sewerage services 4.3.1.1 Conditions and principles of application The amount and application procedure of tariff for public water supply, sewerage and treatment services are stipulated into Decision no. 741 of National Agency for Energy Regulation (NAER) from 18.12.2014 on “The methodology of determination, approval and application of tariffs for public water supply, sewerage and waste water treatment services”. The current methodology is in accordance with the provisions of the Law nr. 303 of 13.12.2013 on public water supply and sewerage services and of Water Law nr. 272 of 23.12.2011. Also, this methodology is adjusted to Article 9 of the Water Framework Directive 2060/EC and is based on the principles "beneficiary and polluter pays" and „the costs recovery of water use” from the tariff of water supply and sanitation services. Meanwhile, tariff shares for water supply and sewerage services are set only on categories of users and their ability to

Page | 27 Technical Report N°6 Economical analysis of water use pay, but not on the total value of the water sources, the cost-efficiency22 analysis in conformity with WATECO Guide regarding the methodology of economic evaluation of water usage. Tariffs for public water supply, sewerage and wastewater treatment services are applied to users which represent 3 main categories of consumers, for whom are assigned separate tariff quotas: 1) population; 2) budgetary organizations; 3) economic agents. According to NAER methodology, the applied mechanism to determine the tariff is based on the following principles:1) providing to consumers reliable water services, sewerage and waste water treatment to actual costs that are needed for the efficient use of the company production capacity; 2) priority covering of consumption and expenditure for water capturing, pumping, treatment, filtration, transportation, distribution and supply, and wastewater transportation and treatment from the tariffs collected for this purpose; 3) efficient and profitable company conduct that would offer the opportunity to recover the funds invested in the development and reconstruction of production capacity; 4) provide transparency during the process of tariff regulation. The most important categories of expenditures, which determine the approved tariffs, are the costs of labour remuneration and the expenses for the electricity required for pumping the drinking water to the supply network and received the wastewater in the sewerage network. These expenditures are conditioned by the daily water supply capacities (flow) of the capture source, its geographic location, and the peculiarities of the settlement or perimeter between the source and final consumers. At the same time, the tariff quote for households and budget organizations do not depend on the amount of used water and on the reserves available for uninterrupted supply of drinking water, which de facto represents a major lack of this Methodology and, particularly, an alarming problem for the population and LPA. Excessive consumption in some households, including for irrigation, industrial animal breeding, auto services, etc. significantly affect the available water resources and the capacities of local operators to provide drinking water to the population throughout the year. Therefore, it is necessary to modify in force Methodology for the application of differentiated rates of water supply tariffs depending on the volume of water consumed per households, as well as on the degree of assurance with quality water at local and regional level. Also, the tariff for the households must be applied up to certain consumption normative, and for overtaking it, must applied the increased quotas depending on the level of overtaking of the respective limit. The Methodology for calculating of tariffs for wastewater evacuation and purification does not include the regulatory costs necessary to protect and restore the natural basins where wastewater is discharged as well as possible damage to aquatic ecosystems and the human body. Also, the influence

22 Guidance document no. 1. Economics and the Environment. The Implementation Challenge of the Water Framework Directive. Luxembourg: Office for Official Publications of European Communities, 2003. p. 116-167.

Page | 28 Technical Report N°6 Economical analysis of water use of the political factor persists on the approval of the tariff quota, especially during the electoral periods, as well as the phenomenon of their "cross-subsidization" - the establishment of small quotas for water supplied to the population for a higher quota for the other categories of consumers. These 2 constraints substantially limit the ability of water and sanitation service providers to optimize expenditures, increase the cost-effectiveness and quality of services provided, and needs to be gradually removed once the budgetary sources have been found to support the social vulnerable population categories. According to the Law 303 provisions23,, if the local council approves tariffs at a lower level than those provided in The Opinion delivered by the The Agency, it is obliged to establish in its decision of tariff approvement the source and specific amount to be allocated to the operators to cover their lost incomes due to low tariffs. 4.3.1.2 Tariff for providing of public water supply services The average tariff quota for water supply services in the HD DPBS is, on average, 14.6 MDL/m3, but in 2018 is 17,2 MDL/(0.87€)m3, which exceed the general average of AMAC enterprises from the country with 1.5 MDL/m3 (annex 4.4.1). Increase of general tariff for water supply services is, on average, 71%, (from 10.1 MDL/m3 in 2007 to 17,2 MDL/m3 in 2018), and in the equivalent Euro with 43%24. The maximum increase of tariffs is registered in the towns of Ungheni (3.7 times), Leova (3.3 times) Hânceşti and Edinet (2.7 times), Comrat (2.6 times) and Ocnița (2.0 times) and slower increase in the towns of Briceni (+3%), Ștefan Vodă (+ 14%) and Ceadâr-Lunga (+ 34%). In 2015-2017, the tariffs have increased only on the AMAC enterprises from Ungheni, Edinet, Cahul and Taraclia. At the same time, as a result of the depreciation of the national currency, have significantly increased the purchase prices for electricity, plant and equipment and operational costs. As a result, the application of the water cost recovery principle of the respective tariffs, stipulated in Article 9 of the Water Framework Directive 2060/EC and Article 35.9 of RM Law no. 303 of 13.12.2013 on the public service of water supply and sewerage becomes very difficult. In addition, if these tariffs are not adjusted to increase of costs, will significantly reduce investment expenditures, which will negatively affect the quality of the delivered and purified water and the effectiveness of these services. The minimum quotas are applied at the AMAC enterprises from less-favoured small cities, including Basarabeasca (9,7 MDL(0.49 €)//m3), Briceni (12,8 MDL(0.71 €)//m3) and Cantemir (14,1 MDL(0.7 €)/m3), and in the larger one, such as Cahul (13,9 MDL(0,7 €)//m3) and Ungheni (15,0 MDL(0.76 €)//m3) which capture water at lower prices directly from the Prut River. The higher volume of delivered water allows them to obtain more of scale. Maximum quotas (over 20 MDL(1.0 €)//m3) of average

23Article 35.9 from Law no. 303 of 13.12.2013 regarding public service of water supply and sewerage (in effect from 14.09.2014). Monitorul Oficial no. 60-65 of 14.03.2014. 24 Official average exchange rate during 2007-2018 years was 17.89 MDL/1 €, and in 2018 - 19.85 MDL/1 €

Page | 29 Technical Report N°6 Economical analysis of water use tariff are set in Glodeni, Hâncești, Edineț and Leova towns, and is due to the use of the waters abstracted from the underground sources and the more fragmented relief in these localities. If the municipal water source (artesian wells) is located in the lower part of the locality, the electricity expenditures for pumping the water is more higher, which requires higher tariffs. Also, the municipal enterprises besides the water supply and sewerage services also provide sanitation and evacuation of household waste, for which they pay only an insignificant share of the population. To compensate the expenses and lost revenues from these services, the enterprises establish higher tariffs for water supply and sanitation services which are subscribed by a much larger share of the local population. For this reason, some AMAC enterprises have a negative profitability, in spite of the fact that the applied tariffs cover the costs of supplying water and sewerage services. Overall, during the analysed period, tariffs for water supply for households are almost doubled (annex 4.4.1), and in the Euro equivalent by only 62% (by 12% and 8% in Euro). At the same time, the tariffs for the budget organizations and for the economic agents increased more slowly or about 30%. This is explained by the beginning of the process of eliminating the "cross-subsidization" of tariffs. The tripling of the water supply tariffs for the households is recorded at AMAC enterprises from Edinet, Ungheni, Hanceşti and Leova (annex 4.3.4), and their doubling - in the cities of TAU Gagauzia, as well as in Cahul and Cimişlia. The lowest increase of these rates is observed in Briceni (+ 5%), Falesti (+ 19%), Glodeni (+ 47%) and Cantemir (+ 50%) towns. Tariffs for public water supply of households were, on average, 11.5 MDL(0.64 €)/m3, including 10.9 MDL(0.61 €)/m3 in the Prut river basin and 12.2 MDL(0.68 €)/m3 in DBS HS. In 2017-2018 years, the average quotas was at 14.3 MDL (0.72 €)//m3, being increased in Ungheni, Cahul and Cimislia, and decreased in Comrat. At present, the maximum tariffs are applied in the towns of Edinet (19.7 MDL(1.0 €)/m3), Hânceşti (18.4 MDL(0.93 €)/m3), Leova, Cimislia, Vulcanesti (16.0 MDL(0.81€)/m3 for each one), where are supply mainly from underground sources. The minimum quotas are set in the small towns of the region, including Basarabeasca (9 MDL /m3), Cantemir (10 MDL(0.5 €)/m3) with a lower incomes of population. The tariffs for water supplying of economic agents were, on average, 32.9 MDL(1.85 €)/m3, and 35.8 MDL(1.8 €)/m3 in 2018, inclusively 34.2 MDL(1.7 €)/m3 in the Prut river basin and 37.8 MDL(1,9 €)/m3 in DBS HS. Maximum quotas, > 40 MDL(2,0 €)/m3 were approved at the AMAC enterprises from Glodeni (54.8 MDL(2.76 €)/m3), Hâncești, Edineț, Ștefan Vodă and in the towns from TAU Gagauzia (annex 4.3.5), while the minimum ones were in Cimişlia (20 MDL(1,0 €)/m3), Ungheni and Cahul (22 MDL/m3). Thus, the difference between minimum and maximum quotas of these tariffs is much higher (≈35 MDL/m3 or 3 times) than that for public water supply tariffs.

Page | 30 Technical Report N°6 Economical analysis of water use

In the period under review, the average tariff for water supply of the economic agents in DPBS HD has increased with 29% (in Euro - by 8%), inclusively 55% in the Prut river basin and only 6% in HS DBS. The maximum increase of these tariffs is noticed at the AMAC enterprises from Ocniţa (5.1 times), Edineţ (3,9 times), Cimişlia (2.5 times), Glodeni (2 times), Vulcanesti and Ungheni (+ 70%). A slow increase is observed in the small towns, inclusively Taraclia and Basarabeasca (7% each), in Briceni and Nisporeni (17% each). In Fălești, Ceadâr-Lunga and Ștefan Vodă, tariff quotas for water supply to economic agents have not been changed, even in Cahul and Taraclia were decreased. The quotas and rates increasing (+34) of the tariffs for water supply to budgetary organizations are almost identical to tariff quotas for economic agents. In addition, in Nisporeni the tariffs for budgetary organizations were even reduced. In 2015-2018 years, the tariffs for water supply of budgetary organizations were increased in towns of Ungheni, Edineț, Cahul, Cimișlia and Taraclia. The maximum tariffs are set in Glodeni (54.8 MDL/m3), Hâncești (50.4 MDL/m3), Ștefan Vodă (48.7 MDL/m3), Vulcănești (44.5 MDL/m3), Edinet (40.1 MDL/m3) and Ceadâr-Lunga (40 MDL/m3). The minimum tariffs were approved by la SA „Acva Nordˮ from (4,1 MDL/m3), in towns of Cahul (22.0 MDL/m3) and Ungheni (22.2 lei/m3). As well, minimum tariffs are in small cities with a low income, including Cimișlia (19 MDL/m3), Taraclia (20 MDL/m3) and Cantemir (24 MDL/m3). Despite the existing differences, there is a tendency to equalize these tariffs. 4.3.1.3 Tariffs for sewerage and wastewater treatment services Unlike tariffs for water supply, the tariffs for waste water evacuation and purification do not only reflect the costs related to the operation of these systems but also a significant part of the ecological costs. Therefore, the tariff for sewerage and treatment services must necessarily include environmental damage or loss of ecosystem services by wastewater discharges into rivers. In addition, both tariffs form the "price of water". The average tariff for sewerage services at the enterprises of AMAC from the DPBS HD is, on average, 14,0 MDL(0.85 €)/m3 or with ≈2.0 MDL/m3 higher than the country average tariff (annex 4.4.2). In the DBS HS is stated a slower increase (+ 57%) of the tariffs than those in the Prut river basin (≈2 times)25, the highest increase (˃2,5 times) of the general tariff is recorded at the smaller enterprises from Leova, Nisporeni, Ocniţa, Edineț and Cahul and the lowest one (˂30%)- in Glodeni and Briceni. In the DBS HS, the highest increase of the general tariff for sewerage services is registered at Comrat (3.6 times), Cimișlia (2 times) and Hânceşti (+ 79%), while the lowest increase – in Ștefan-Vodă (+25%). In Taraclia that tariff quota has been even decreased in 2017 with 13%. Increasing the costs in the conditions of not adjusting the respective tariffs will negatively affect the degree of waste water purification and the efficiency of the respective services.

25 The Prut River Management Plan. Cycle 1. 2017-2022. Chișinău, 2016. p. 79-82.

Page | 31 Technical Report N°6 Economical analysis of water use

In addition, the tariff methodology for sewerage services does not include the coefficient of environmental damage. The minimum tariff quota is approved at the enterprises from big towns from the study region, including Cahul (9.2 MDL(0.46 €)/m3) and Ungheni (9.4 MDL/m3) due to "economies of scale" obtained after receiving the maximum volume of wastewaters in that towns. As well, the minimum tariffs are in that towns where the treatment stations are not operating or the procedures are done episodic and insufficient as in Cantemir (6.5 MDL(0.33 €)/m3), Basarabeasca and Ștefan Vodă (annex 4.4.6). In addition, minimum tariffs for sewerage and wastewater treatment services in the small towns are due to the social and economic situations, politic and technical and economic constraints. Maximum quota (>20 MDL(1.0 €)/m3) of general tariff for sewerage and wastewater treatment is applied in Edineț, Comrat, Glodeni, Leova and Ceadâr-Lunga, which exceed 4-5 times the minimum quota. In most sewerage networks and wastewater treatment plants predominates an infrastructure with a high degree of wear (about 60%) which considerably reduces the profitability of these services and imposes the tariff increasing. Despite the unique methodology for calculating the tariff, there are significant differences (over 5 times) between the maximum and minimum quotas approved by local councils, which is explained not only by differences in operational costs, but also by political factor. Also, in the HS DBS, those differences are 2 times lower than in the Prut and Dniester26 river basins. During the analyzed period it is recorded a doubling of the tariff for the sewerage and wastewater treatment services provided to households (annex 4.4.7), on the background of a much slower increase in the applied tariffs for budgetary organizations (+56%) and economic agents (+41%). Thus, similar to the services for water supply, it is observed the start of the cancellation process of tariff "cross- subsidization". Despite these signals, the public tariffs remain ≈3 times lower than for other consumer categories. The highest tariff increasing rate is found at the AMAC enterprises from Cahul (4.1 times), Edineţ (4.3 times) and Taraclia (3.5 times), but the lowest – in Falești, Briceni and Basarabeasca. In the 2017-2018 years, the tariff for the discharge and treatment of waste water received from households was on average 11.7 (0.59 €)MDL/m3, including 11.0 MDL(0.55 €)/m3 in the Prut river and 12.7 MDL(0.64 €)/m3 at AMAC enterprises from the HS DBS. So, the average share of the tariff for waste water discharge and treatment is on average by about 5 MDL (0.25 €)/m3 lower than the average tariffs for water supply. The minimum quotas are set at the enterprises from bigger as Cahul (6.0 MDL(0.3 €)/m3), Ungheni (7.1 MDL/m3) and Hincesti (7.4 MDL/m3), which receives maximum volumes of discharge water. Also, the minimum sewerage tariffs to the population are applied in small towns, that do not have functional wastewater treatment plants or the wastewater treatment

26 GD no. 814 of 17.10.2017 regarding the approval of the management plan of Dniester hydrographical district. In: Official Monitor no. 371-382 of 27.10.2017.

Page | 32 Technical Report N°6 Economical analysis of water use processes are episodic and insufficient, including in Cantemir (4.8 lei (0.24 €)/m3) Basarabeasca (9.0 lei (0.24 €)/m3), Leova (9.8 lei/m3) and Stefan Voda (10.0 lei/m3). In addition, the minimum rates in small towns are due to the more difficult socio-economic situation in their respective localities. The maximum quotas of these tariffs are approved in the towns of Edinet (17,7 MDL(0.89 €)/m3) and from TAU Găgăuzia (16.0 MDL(0.81 €)/m3). Thus, the difference between the minimum and maximum quotas is ≈13 MDL/m3, but is lower than other categories of consumers and continues to decrease. At the moment, tariff quota for providing sewerage and wastewater treatment services to the economic agents from DPBS HD is, on average, 28,7 MDL(1,45 €)/m3. The maximum quotas were approved towns as Glodeni (53 MDL(2.67 €)/m3) Comrat and Vulcăneşti (40.5 MDL (2.0 €)/m3), Edineț (37.9 MDL (1.9 €)/m3). The minimum quotas are set in Ungheni and Cahul (annex 4.4.8), due to the large volume of rendered sewerage services, as well as in Cantemir and Cimişlia. The maximum quota of 53 MDL/m3 in Glodeni exceeds by 6.3 times the minimum one of 15 MDL/m3 in Cahul. In the period under review, the average tariff quota for wastewater disposal and treatment received from the economic agents in HD to DPBS has increased with 41% (annex 4.4.8), inclusively with 65% at the AMAC enterprises from the Prut river basin and only with 18% in HS DBS. Thus, the maximum increase of these tariffs is observed in the towns from the Prut river basin, inclusively in Edineţ (4.7 times), Cahul (3 times), Nisporeni (2.7 times), and Ocnița (2.2 times). A slowly tariff increase (≤30%) for wastewater disposal and treatment received from the economic agents is set out in Fălești, Basarabeasca and Ceadâr-Lunga, but in Taraclia the tariff was decreased with 33%. Average tariff quota and rate (+56%) for providing wastewater discharge and treatment services received from budgetary organizations are almost identical with tariff quota of economic agent, but more but lower than the tariffs for sewerage and purification services provided to the population In 2015-2018, the tariffs for the discharge and treatment of waste waters received from the budget organizations in the cities of Cahul (3.8 times), Edinet (2.5 times), Cimislia (+2.0 times), Taraclia (+ 62%), Nisporeni (+33%), Ungheni (+26%) and Vulcanesti (+ 16%). The maximum tariffs are also applied to Glodeni (53 lei/m3), Vulcanesti and Taraclia (40.5 lei/m3), Edineţ (37.9 lei/m3) and Basarabeasca (34 lei / m3). Minimum tariffs are set in the bigger towns as Cahul (15.3 MDL/m3) and Ungheni (16.3 MDL/m3), as well in some smaller towns with a lower income as Cantemir (16.5 MDL/m3) and Cimişlia (17.2 MDL/m3). 4.3.1.4 The ratio between the tariffs and costs of water supply and sewerage services The enterprises of "Moldova Apă-Canal" Association from HD DPBS are characterized by low profitability, both in water supply and sewerage and wastewater treatment services (annex 4.4.9). Overall, the costs for water supply services exceeded the tariffs with 4.6 MDL(0.23 €)/m3)/m3 and the cost recovery rate from these tariffs is an average 79%. Despite the considerable increase (+71%) of

Page | 33 Technical Report N°6 Economical analysis of water use tariffs, at all AMAC enterprises from DPBS HD, except those from Ungheni, the costs considerably exceed the tariffs for water supply services. The biggest negative differences are observed at the Comrat (65% or 11.3 MDL(0.57 €)/m3), Ceadâr-Lunga (50% or 9.2 MDL/m3), Basarabeasca (48% or 6 MDL/m3), Ocniţa (42% or 7.8 MDL/m3) and Stefan Voda (38% or 7 MDL/m3), the smallest one – in Nisporeni, Briceni, edinet, Cahul, Taraclia (annex 4.4.9). Moreover, in almost towns of the study region these negative differences have been increased in the last years. Unlike to water supply services, the negative difference between the tariff and the cost for sewerage services is lower or only 1.5 MDL(0,08 €)/m3. The cost recovery rate from these tariffs exceeded, an average, 90% (annex 4.4.9). This is due, primarily, to higher tariff increasing for sewerage services to all water consumer categories (annex 4.4.2). The greatest negative differences are observed in Ceadir Lunga where the costs exceed by 2/3 the tariffs for sewerage services. Also, the significant tariff overrunning by costs of sewerage and wastewater treatment services are registered in smaller towns as Leova (55% or 7.8 lei/m3), Ocnița (29% or 5 MDL/m3), Stefan Voda (28% or 4 MDL/m3) and Glodeni (27% or 6.1 MDL/m3). At the same time, the tariffs for sewerage services exceed the costs at the AMAC enterprises from Cimislia (+43%), Edinet and Comrat (+30%). The obtaining and increasing of positive difference have been made possible not only due to the increase of sewerage tariffs, but also to more efficient use of inputs and to operational and strategic management optimization. As a result of the presence of negative difference between tariffs and costs as well as between the amount of sales and expenses, at the majority of AMAC enterprises from DPBS HD it is registered a low economical profitability, especially of operating assets. In the years 2014-2017, it is observed a significant decrease in economic profitability, which is due to intensifying inflationary processes and significant increase in purchase prices of energy and materials needed for service delivery of water supply and sanitation, as well as to the tariff non-adjusting. The increase of the electricity and fuel tariffs, which is the exclusive competence of ANRE, is accepted more easily than increase the tariffs for water supply and sanitation services, which is the responsibility of the LPAs. For this reason, the application (of 14.09.2014) of the new provisions of Law no. 303 of 13.12.2013 on the public water supply and sewerage service regarding the mandatory coverage of the expenses of the respective services will be very difficult, especially before the parliamentary and local elections of this period. This situation will substantially reduce the capacity of operators and LPAs to implement the investment projects, to achieve the strategic objectives of the provision population with quality water, to improve the ecological status of water resources. 4.3.1.5 The ratio between the incomes and expenditures of water and sanitation services Total sales revenues of AMAC enterprises from the DPBS HD are over 168 million MDL (8,2 mil. €), of which 89,7 million MDL (53%) ‒ from providing of water supply services and 53,5 million MDL (32%) ‒

Page | 34 Technical Report N°6 Economical analysis of water use from sewerage and treatment services(annex 4.4.10). The amount of incomes from sales is directly conditioned by tariffs applied for providing of respective services, by number and size of serviced settlement by production capacity of the operators, by volume of delivered drinking or technological water and discharged wastewater. It is also very important the number and the water needs of the economic agents served by the AMAC enterprises, because the tariff for this category of consumers is triple compared to households. Thus, the larger AMAC enterprises have maximum income in larger and more industrialized towns as Ungheni (23.3 million MDL or 1.2 million €), Cahul (23 million MDL), Edineț (16.4 million MDL), Comrat (13.2 million MDL), Ceadâr-Lunga (11.7 million MDL) and Hâncești (10 million MDL), but the minimum incomes ‒ at the enterprises from smaller cities as Cantemir (2.3 mil. MDL or 120 thousand €), Basarabeasca (2.4 million MDL), Nisporeni (2.9 million MDL), Vulcănești (4.0 mil. MDL) and Ocnița (4.1 million MDL). In the analysed period (2011-2017), the total sales revenues recorded a positive dynamic, by 63% in MDL or 28% in €, which is observed to all AMAC enterprises, and is due both to the increase of the volume of delivered water and of the wastewater received for treatment, as well as to the increase of the tariffs for the provision of water and sanitation services, and of other categories of incomes, in particular from the leasing of enterprises assets. The maximum increase is recorded in smaller towns, as Cimislia (4.8 times), Ocnita (3.6 times), Nisporeni (2.3 times), Leova and Taraclia (2.2 times). The increase revenue from sewerage services is higher (with 20%) than revenue from water supply services. Sales revenue per employee (Annex 4.4.11) is on average 116 thousand lei (5844 €) or about 2 times lower than the AMAC average, which is determined by the revenues from SA "Apă Canal" from Chisinau. The maximum income is recorded in larger enterprises with a higher volume of water supply and sanitation services, especially to economic agents, including Ungheni (169 thousand MDL/8514€), Edinet (149 thousand MDL), Comrat (148 thousand MDL), Hancesti (141 thousand MDL) and Cahul (128 thousand MDL/6400 €). Sales growth per employee is slightly higher (10%) than total sales revenue growth, and average wages and their dynamics are directly proportional to sales per employee. Overall, the total consumptions and expenditures for provision of water supply and sewerage services at AMAC enterprises from the DPMN DH are, on average, 157 million MDL or 8,4 million € and in 2017 − 94 million MDL or 9.4 million € (Annex 4.4.12), which represents 17% of the total expenditures of AMAC enterprises from the Republic. The maximum expenses is recorded in the larger cities and with higher consumption in industrial enterprises, including Cahul (24.6 million MDL or 1.2 million €), Ungheni (22.8 million MDL), Comrat (17.8 million MDL) and Edinet (14.7 million MDL/741 thousand €).). The minimum amounts are recorded in smaller towns and where the coverage of water supply

Page | 35 Technical Report N°6 Economical analysis of water use and sanitation services is lower, including in Cantemir (2,9 million MDL/146 thousand €), Basarabeasca (3.0 million MDL), Vulcanesti (4.6 million MDL) and Ocnita (4.9 million MDL). The growth rates of consumption and total expenditures are almost identical (about 60%) of the revenue from sales. Positive dynamics is also observed in all AMAC enterprises from DPBS HD and is due to both the increase of the volume of water delivered and of the wastewater received for treatment, as well as to the increase of depreciation of fixed assets, of wage costs and investment expenditures. The high level of wear (49%) and its growth imply an increase of operating and investment costs, especially for special building and for distribution networks, which is also characterized by the highest degree of wear. The maximum growth of the total expenditures are recorded in the smaller cities, including Ocniţa (3.9 times), Cimişlia (3.5 times), Nisporeni (2.7 times), Leova (2.5 times), Taraclia (2.1 times) and Vulcanesti (2.0 times). In the structure of total expenditures on the first position are the wage expenses, with 68.3 million MDL (3.3 million€) or 35% of the total amount (Annex 4.4.13). On the second position there is the purchase of the necessary materials, with 46.6 million MDL (€ 2.2 million) or 27%, followed by depreciation of long-term assets − 33.5 million MDL (1.6 million €) or 17% and expenses for medical and social insurance, with 18.9 million MDL (906 thousand €) or 9.7%. The maximum share, ˃40%, of wages expenses, is found at the smaller capacity enterprises, such as those in Briceni, Nisporeni, Cantemir, Basarabeasca, Vulcănești and Ștefan Vodă. In addition, the lack of „economies of scale” and higher wage costs per production unit (m3 of supplied or discharged water), conditioned the applying of higher tariffs, particularly for economic agents, lower wages and reducing of expenses for materials and networks modernization, with major negative effects on the profitability of operating enterprises and on the cost-quality ratio of provided services. The wage expenses record also an increase by about 66. Also, unlike to the Dniester basin it is observed a growth in the number of employees in the most AMAC enterprises from DPBS HD. Due to the predominance of small and medium towns, the average wage in the basin (4070 MDL/205 €) is smaller than the country average (5800 MDL/292 €). At the same time, wage growth rates far exceed the country average wages (+72% to +58%). In addition, the increasing of employees’ number is also caused by recent rapid expansion of water supply networks. The maximum increase in wage costs is mainly seen in the smaller AMAC enterprises, including Ocniţa (3.1 times), Cimişlia (2.8 times), Nisporeni (2.5 times), Taraclia (2.2 times). Wage difference and cadres’ fluctuation at the AMAC enterprises from DPBS HD are much lower than in the Dniester river basin where are located Chisinau and Balti cities, which differ significantly, after the respective indicators, from other localities. In addition, in the small towns it is very difficult to retrain and find another stable and decently paid job as that offered by the AMAC enterprises. In

Page | 36 Technical Report N°6 Economical analysis of water use addition, the award of employees is usually not based on performance and transparency criteria, but on professional or traditional holidays (New Year, Easter, March 8) and personal anniversaries (jubilee) etc. There is not an approved methodology on performance evaluation criteria and their reflection in the ordinary remuneration and awarding of employees. The most expenditures for materials consumption is related to the purchase of electricity for the functioning of water pumping stations, the fuels, pipes and other equipment and hydro-technical items, as well as the maintenance costs of water supply and sewage networks. An maximum share (˃30%) of the expenditure for materials is observed at Edinet and Glodeni, Basarabeasca and Comrat, and is explained by major investment costs for modernization of water supply and sewerage networks. For electricity expenses are assigned 50% of the costs for materials and 16% of total consumption and expenditures. They are conditioned by the technical condition of pumps and other facilities that contribute water capture, transportation, disposal and treatment and the origin of water sources and relief characteristics in the served settlements. Overall, there has been a steady increase of expenditures for materials, by over 50%, being caused by the similar increase of costs for the modernization and extension of the production infrastructure. The maximum increase of these costs is registered at the AMAC enterprises from Ocniţa (3.4 times), Cahul (3.0 times), Hânceşti (2.8 times), Falesti and Nisporeni (2.0 times). Electricity consumption, per unit of production, to water supply services shows a significant reduction of more than 30%. At the same time, there is an increase of more than 20% of electricity costs in the provision of sewage and treatment services. This situation is explained by the fact that water supply systems are in a rapid and massive upgrading and expansion and new plants and equipment have significantly lower electric energy consumption than the old ones inherited from the Soviet period. On the other hand, sewerage systems and treatment plants are much slower upgraded and wear degree increases raising electricity consumption. Expenses for long-term depreciation of assets are 33.5 million MDL (1.6 million €) or 17% of total expenditure. This indicator is conditioned by the wear of hydro-technical equipment, of buildings (administrative, collecting, pumping and treatment stations) and means of transport, and by recent changes of the national accounts system on asset depreciation. The accelerated increase (by 2.2 times) of depreciation costs is one of the main impediments to the development of enterprises for providing the public services of water supply and sanitation. The maximum increase of depreciation costs is found in the AMAC enterprises from Cimislia and Leova (18 times), Cantemir (11 times), Ocnita (8.4 times), Briceni (4.8 times), Ceadar Lunga 4.7 times) and Glodeni (4.0 times). However, in recent years, at the AMAC enterprises are showing a downward trend (≈20%) of the wear degree of transmission facilities, which is conditioned by rapid expansion and modernization of water supply networks. At the

Page | 37 Technical Report N°6 Economical analysis of water use same time, depreciation of sewage systems and treatment plants, along with their transmission facilities, continues to grow, and increases the harmful impact on water courses and objects, and body and worsens the geo-ecological and geo-medical conditions of the Prut river basin and component water bodies. For this purpose it is necessary to reshape the allocation priorities of capital investments and subsidies for infrastructure expansion and upgrading, so as to replace the maximum possible most vulnerable and dangerous components of the supply/sewerage system, to find the best solutions not only on technical and economic criteria, but also on environmental and social criteria. Despite significant growth of tariffs, in the majority of AMAC enterprises the expenses of water supply and sewerage services exceed those incomes, per total, with 13% or with 21,4 million MDL/1.1 million € (annex 4.4.14). At the same time, in 2016-2017, there is a decrease in the respective difference, almost, due to the increase of tariffs at the AMAC enterprises from the bigger towns of region, including Ungheni, Cahul and Edinet. Maximum negative differences can be seen in the towns from TAU Găgăuzia (as a result of political factor), including in Ceadâr-Lunga (37% or 4,4 million MDL) and Comrat (35% or 4,6 million MDL), as well as in small towns, including in Leova (29%), Basarabeasaca (26%), Cantemir (25%), and Taraclia (23%). Thus, the significant negative differences are not conditioned only by the tariff level, but by the supplied and discharged water volume, by increased wear of public network and by the low level of use of the production funds and available work force, by the local geomorphological the and production particularities, as well as by the low management efficiency. The incomes overcome the expenditures only at 2 enterprises from study region, including Edinet and Ungheni, which is due to the recent growth of tariff in these towns. On average, the expenditures for water supply service overcome the incomes with more than 19% or with 17 million MDL (860 thousand €), which is explained by slower growth in those revenues compared to revenues of sewerage and treatment services. Exceeding expenditures over revenues from water supply services is registered in all AMAC enterprises from HD DPBS, except Ungheni and Cimislia towns. The largest negative differences are found at the enterprises from Comrat (64% or 5,4 million MDL), Ceadâr-Lunga (49% or 2,9 million MDL), Basarabeasca (48%), Ocnița (42%), Cantemir and Stefan Voda (38%), Vulcănești (7%), Leova (31%). In conditions of recent rapid expansion of water supply networks is absolutely necessary appropriate adjustment of tariffs and optimizing expenditure, especially the maintenance costs of fixed assets. In the case of providing of sewerage and treatment services, expenditures exceed revenues only with 2% or with 1.0 million MDL (50 thousand €), which is much less than for water supply services. In addition, the negative differences have decreased in most enterprises from the study region (annex 4.4.14). This is explained by the faster growth of respective revenues compared to revenues of water supply services, and by maintaining a low level of quality of sewerage and treatment services, non-

Page | 38 Technical Report N°6 Economical analysis of water use inclusion in that tariff of the environmental damages, which would condition the increase of the costs and decrease the direct benefits of municipal enterprises in the field. Also, these companies frequently selectively provide the sewerage services, focusing primarily to the bigger consumers and locate more compact, as larger companies and budget organizations, apartment buildings and avoid connecting of small consumers, particularly of individual from poor neighbourhoods. The biggest negative difference between revenues and expenditures of sewerage and treatment services can be seen at the „Apa-Canal" enterprises from Ceadâr-Lunga (64% sau 2,4 mil. MDL), Leova (56% sau 833 ths MDL), Ocnița and Ștefan Vodă (29%). At the same time, revenues from sewerage services exceeds the expenditures for these services only at the "Apa-Canal" enterprises from Cimislia (+ 75%), Edineț (+30%), Comrat (29%) and Taraclia (+8 %). Due to the low profitability and frequent conflicts with the local authorities and low payment users, there are many cases of abandonment of the respective services on the whole perimeter of the locality or in the certain sectors of their. Conclusions: The methodology of determination, approval and application of tariffs for public water supply, sewerage and waste water treatment services is updated to legislative-normative acts in the field, including Water Framework Directive 2060/EC and focuses on the "beneficiary and polluter pays" and water supply and sewerage cost recovery from the service tariffs principles. Meanwhile, tariff shares for water supply and sewerage services are set only on categories of users and their ability to pay, but not on the complex value of the water objectives and sources, the cost – efficiency analysis and restoration of the ecological status of water sources. Despite the unique methodology for tariffs calculating, are observed large differences (5-6 times) between the maximum and minimum quotas approved by local councils, which shows the subjectivity of establishment and approval procedure of these tariffs. Due to abstracting from surface water sources, largest volume of delivered water and „economies of scale”, the minimum tariff quotas are set at the Cahul and Ungheni. For increase the effectiveness of enterprises in smaller towns it is necessary to expand the coverage of water supply networks both, including in the proximity rural localities. The most important categories of expenditures, which determine the quotas of approved tariffs, are the wage expenses and the expenses for the electricity required for the pumping and treatment of the water supplied to the supply network and the wastewater received in the sewerage network. Despite to the significantly lower wages compared to European countries, wage costs hold first place (30%) in the structure of expenditures, exceeding the expenditures for the purchase of necessary materials (27%), which generates a disproportionate ratio between wages and labor productivity and increased labour costs in this sector. This fact requires urgent measures to modernize technical

Page | 39 Technical Report N°6 Economical analysis of water use equipment, professional development of employees and technical and managerial staff. In the same time, we can see the intensity decrease and energy efficiency increase in the most enterprises "Apa- Canal" that is conditioned by both permanent increase of electricity tariffs and benefits of national energy projects. Despite the considerable increase (+71%) of tariffs, at all AMAC enterprises from DPBS HD, except those from Ungheni, the costs considerably exceed the tariffs for water supply services. Overall, the costs for these services exceeded the tariffs with 4.6 MDL(0.23 €)/m3)/m3 and the cost recovery rate from these tariffs is an average 79%. Increasing the costs of these services, in the conditions of non- adjustment of the tariffs, will significantly reduce investment costs, which will negatively affect the quality of the delivered water and the effectiveness of the services. Unlike to water supply services, the negative difference between the tariff and the cost for sewerage services is lower or only 1.5 MDL (0,08 €)/m3). The cost recovery rate from these tariffs exceeded, an average, 90%. This is due, primarily, to higher tariff increasing for sewerage services to all water consumer categories. Expenses for long-term depreciation of assets are 17% of total expenditures. This indicator is conditioned by the high wear of hydro-technical equipment, of buildings and networks of water supply and wastewater discharge, and by recent changes of the national accounts system on asset depreciation. The accelerated increase (by 2.2 times) of depreciation costs is one of the main impediments to the development of enterprises for providing the of water supply and sanitation public services. It is necessary that the increase in tariffs and their difference from the costs not only contribute to increasing the profitability, improve quality of water, optimize the ratio quality-price, but also use more economically, reduce the harmful impact and improve the quality of water resources. 4.3.2 Tax for water use According to Chapter VI (art. 19) of the Law on Natural Resources, payments for use of natural resources reflect monetary compensation by the water users of public expenditures for exploration, conservation and restoration of water resources. At the same time, according to Article 302 of the Fiscal Code, tax for water consumption are applied to individuals, who carry out entrepreneurial activities and to legal entities that extract water from the water fund and use water at hydroelectric power plants. The scope of the water tax covers agricultural, industrial and service enterprises of large and medium capacity serving, which have their own water capture systems. In addition, there is often a superficial record of water in agriculture and mining. The tax for water use is calculated by the payer, depending on the volume of water used, according to the data meters or, in their absence, under the technological norms of water use. These norms are conditioned by reserves of surface water and groundwater, by the amount of atmospheric

Page | 40 Technical Report N°6 Economical analysis of water use precipitation and the density of the hydrographic network, by the technological aggregates and by the field of water use. In case of normative water use, tax is included in the production cost, and in case of exceeding of it, is charged from the net income of the beneficiary after payment of the income tax but. The water tax is not applied to: a) water extracted from underground concomitantly with useful minerals; b) water extracted and delivered to the population, public authorities and state institutions; c) water extracted for fire fighting; d) water extracted by the enterprises of blind, deaf, disabled persons and public medical institutions; e) water extracted by the prison's institutions and delivered to them. Also, not paid water used in fishery. Under the recent amendments27,28, water tax is charged at the following rates: a) 0,3 MDL/1 m3 of water abstracted from the water fund; b) 16 MDL/1 m3 of natural mineral water and drinking water extracted for bottling; c) 2 MDL/1 m3 of extracted natural mineral water, which are not intended for bottling; d) 0.03 MDL/10m3 of water used at the hydropower plants. Therefore, the current methodology for calculating taxes for water consumption can be easily applied by beneficiaries. The gaps in the current water tax methodology. Despite its simplicity, the current methodology for calculating payments for water consumption contains a number of gaps: a) the amount equal to 1 m3 of water abstracted from surface and underground sources; b) is poorly reflected the assurance with water of territory; c) tax rates are not subject to complex value of water, but by reduced payment capacity; d) does not take into account the ecological status of surface water and of groundwater; e) does not stimulate recirculation and saving water; f) tax rates, depending on the water consumption, are not established on the river basin, but on the administrative-territorial units. Also, the groundwater tax should also reflect the costs of prospecting and geological exploitation performed for these purposes29. The payments and the tariffs for water use should include the costs of scientific investigations to determine the benefits and social costs of all variants of use to establish not only a fairer price, but also on the optimal use variant and norms for the use of potable water, of river and water courses30. The low amount of fees for the use of water makes frequent overtaking of the consumption norms and the increase of the volume of waste water discharges, especially in the agro-food complex The sum of water tax revenues records a fluctuated evolution, on the background of a general double- growth trend, which is conditioned both by the climatic conditions and water consumption, as well as

27 Low no. 177-XVI of 20.07.2007. In: Official Monitor no. 117 of 10.08.2007. 28 Low no. 172-XVI of 10.07.2008. In: Official Monitor nr. 134-137 din 25.07.2008. 29 Capcelea A. Republica Moldova pe calea dezvoltării durabile: realizări şi probleme. Chişinău: I.N.C.E.F., 1995. 30 Bacal P. Gestiunea protecţiei mediului înconjurător în Republica Moldova. Chişinău: ASEM, 2010, p. 116.

Page | 41 Technical Report N°6 Economical analysis of water use by the amount of tax for extraction of mineral water for bottling. as well as to some subjective factors typical of Moldovan political and economic reality. Thus, the amount of the water tax in HD DPBS was in the analysed period, on average, of 6.9 million MDL or 348 thousand € and in the year 2017 - of 7.3 million lei or 368 ths € (annex 4.4.15). The maximum revenues were collected in the Râşcani district (3.7 million MDl/186 ths €) and are almost exclusively due to the Costeşti-Stânca Hydro-Power Node, as well as to the more industrialized districts and larger urban centers, including Edinet (812 ths MDL/41 ths €), Cahul (658 ths MDL), Ungheni (323 ths MDL) and Comrat (330 ths MDL/16,6 ths €). The minimum sum is collected in smaller districts with insignificant irrigation use, including Cantemir, Leova, Glodeni and Nisporeni. Taxes for water consumption are transferred to the budget of administrative territorial units of second degree (districts and ), being used mostly for current financial assistance to local public services of prime necessity. As a result, economic and environmental effects of the application of these taxes are reduced. Because of low shares, not connected to the inflation rate, there is an acute lack of funds for efficient operation and modernization of water supply systems and improvement of ecological and medico-sanitary indicators of water sources. The current mechanism of water consumption taxes is focused only on getting fiscal effects and the economic and environmental effects are insignificant. That tax needs to be adjusted to the inflation rate, the cost of maintenance and restoration of water sources, the complex value of water resources. 4.3.3 Charges for water pollution. Water pollution payments are an instrument frequently used to offset external costs of water resource pollution. Thus, the size of these payments directly reflects the ecological costs of water use, deriving from the environmental damage caused to the polluting waste water receiving aquatic objectives, and the expenses required for the normative treatment of waste water and the restoration of pollutant- receiving aquatic ecosystems. Similar to the water use tax, the means of collecting water pollution payments should be used to implement public measures to maintain and improve water resources and their protection areas. According to Law on Payment for Environmental Pollution31, water pollution payment shall be applied for: 1) discharges of waste water pollutants into water bodies and sewerage systems; 2) discharges of pollutants into receiver-tanks, fields of filtration, drainage collectors; 3) water discharges from fishery ponds; 4) the rain leaks from the territory of enterprises; 5) the heat exchange water release. These payments are charged from polluters for the normative, over-normative and accidental discharges. The calculation formula includes the produce of: a) payment norm; b) toxicity coefficient (annex

31Law no. 1540 of 25.02.1998 regarding environmental pollution payment. In: Monitorul Oficial no. 54-55 of 18.06.1998.

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4.4.16); c) the real mass of discharges. Transforming the actual mass of pollutants into conventional tones is done by multiplying their mass by the toxicity coefficient. For water consumers who carry on discharges of pollutants into natural water bodies, the payment shall be established in accordance with pollution indices entered into the project documentation of treatment plants. In case when entrepreneurs discharge pollutants into the urban sewerage system, the amount of payment is determined by the public utility enterprises according to the costs for wastewater disposal and treatment at specific pollution indices. Payment for the discharge of pollutants is mandatory for all water consumers. At the same time, according to Article 2 of this law, payments for discharges of pollutants are collected only from the water supply beneficiaries who carry on an economic activity that generates pollutants. Usually, this payment shall be paid only by large and medium capacity enterprises and the majority of budgetary organizations are not included in the list of payers. For consumers of water which discharging pollutants into natural water, pay is determined in accordance with the pollution indices entered in the design documentation of the treatment plants. In the case where entrepreneurs dispose of pollutants in municipal sewage systems, the amount of the payment is determined by the municipal enterprises, according to the expenses for waste water evacuation and treatment and the specific pollution indices. According to the Environmental Pollution Payment Act, the payment standard for the discharge of pollutants by waste water into all districts and municipalities of HD DPBS is 198 MDL or 10 €/c.t. Payment norms have net lower rates than the actual costs of normative purification of waste water to sources of pollution, and the costs necessary to restore the aquatic objectives. These have been established since the early 1990s, not adjusted to the inflation rate and actual costs of the impact on air, water and the human body, the current environmental situation, and current pollution prevention and mitigation costs. This fact has stimulated the use of industrial technologies and waste water purification plants with increased level of wear. According to the 6th annex of Low on payment for environmental pollution, effluent charges should be applied for discharges of pollutants in the accumulation of dejections from the , pigs and cattle zoo technical complexes, which have collectors, with or without a protective screen. The size of this charge is equal to the multiplication of regional normative payment and the amount of wastewater discharged in m3. Payment for discharges of pollutants into the collector to the manure must be determined as the product of normative payment and discharge volume in m3. Is not applied the payments for discharges of pollutants from sheep and goats complexes, which have a high level of toxicity and often are spread in the proximity of localities. Also, the effluent charges for discharges of pollutants in the accumulation of dejections from the birds, pigs and cattle zoo technical complexes

Page | 43 Technical Report N°6 Economical analysis of water use apply in rare cases, and their sum is significantly lower than the costs of prevention and elimination of pollution and with damage caused. The amount of payments for discharge of pollutants is conditioned by the number of monitored enterprises, by volume of wastewater discharged and their toxicity, and by the volume of pollutants leakage with pluvial waters from the territory of enterprises monitored. The last indicator is conditioned both by the surface of the drain of the enterprise and the amount of precipitation from the reference period. In addition, the payment for leakage of pollutants with rainwater shall be paid only for exceeding of the established norms by applying of the multiplication coefficient. The sum of charges for discharges of the pollutants with the waste waters into the natural water basins was on average 1.4 million lei (table 4.4.17) or 70.7 thousand €. The maximum amounts of payments for the discharge of pollutants are collected at Briceni, Falesti, Ungheni, Cahul, Cimislia and Basarabeasca. Also, the amount of payments depends not only on the volume of pollution but also on the activity and efficiency of the territorial environmental authorities, which explains the biggest sums for some districts with fewer industrial plants and smaller production capacities such as Basarabeasca, Leova, Cantemir and Taraclia. The dynamics of payments for pollutant discharges increases by more than 2.3 times (Table 4.4.12), which is explained not so much by the increase of the volume and toxicity of the pollutants discharged with the waste water, but to the uniformity of the payment norm and the higher frequency of ecological control of water pollution sources. Approximately half of the amount of water pollution payments comes from agri-food companies, followed by fuel companies, service businesses, and transport companies. In the northern of the basin, the mining industry is among the first positions. Regional environmental authorities do not have the qualified staff and technical equipment necessary for the effective monitoring of pollution sources. As a result, much of the pollution with small and medium impact, and public institutions, are not monitored and do not pay for pollution. In addition, according to the recent amendments of Law 1540, the control of the payment of pollution charges was transferred to the Fiscal Service, and in the competence of environmental authorities and only the control of the correctness of the payment calculation was retained in the competence of the environmental authorities has been preserved only the correctness of payment calculation. The amount of expenditure for water protection varies depending on the number and capacity of enterprises with large amounts of wastewater discharged pollutants and their toxicity, especially from the food industry, energetics, building materials industry, light and chemical industry, fuel trade station, and by level of presenting the respective information to the statistical and environmental authorities. The ratio of payments for water pollution to water protection expenditures is on average 5.6%, being largely conditioned by the respective ratio in the districts where located the larger industrial enterprises, including in the Cahul districts (0.8%), Ungheni (1.3%), TAU Gagauzia (4.8%) and Hâncesti (11%).

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Therefore, payments for water pollution, in practice, do not determine the amount of costs for their protection. The increase of maintenance costs of wastewater discharging and treatment facilities, compliance with the new technological and environmental security requirements were the main reasons that an increasing number of industrial and agricultural enterprises have increased the ecological and economic efficiency, and payments for pollution are of insignificant importance in this purpose. At the same time, due to the very low normative payment for waste water discharges, industrial polluters often prefer not to use their own waste water treatment systems and benefit at reduced prices from the services of municipal wastewater treatment plants, which not initially designed for treatment industrial wastewaters. As a result, most wastewater discharged into natural basins is poorly treated and severely affects aquatic ecosystems and the human body. 4.3.4 Administrative penalties for law infringement of use and protection of water resources The applying of fines for law infringement of use and protection of water resources aims to prevent unauthorized use and pollution of water sources, compliance with the ecological and sanitary-hygienic requirements of the aquatic objectives and their protection zones. The fines also contribute to the accumulation of financial means for public measures to restore water resources, to compensation of environmental costs of water use. In addition, the application of fines is accompanied by actions to compensate for damage to water and of environmental costs of water usages. The amount of fines for law infringement of use and protection of water resources significantly exceeds the amount of fines imposed for contraventions against other natural resources32. Thus, the maximum amount of fines in the water field is from 3.0 thousand MDL (151 €) to 6.0 thousand MDL (302 €) − for individuals and 30-40 thousand MDL (1500-2000 €) for legal entities, being applied in cases of non- compliance with the water protection norms, which are caused water pollution (Article 109.1). A high amount of fines (up to 3,000 MDL for individuals and up to 14,000 MDL/700 € for legal entities) can also be applied for failing to comply with the legislation on state environmental expertise and assessing the impact on aquatic objectives (Article 156). The average amount (up to 1500 MDL/75€ for individuals and up to 12 thousand MDL/600€ for legal entities) can be applied for the majority of offenses related to aquatic resources and ecosystems, including those stipulated in articles 109.2-3, 110, 113, 144 and 14933. The minimum amount (up to 1000 MDL for individuals and up to 3000 MDL for legal entities) applies for non-payment of payments for water pollution (Article 143), non-compliance of the rules regarding the exploitation of hydro-technical installations and equipment and their deterioration (art. 111-112, 170- 176).

32 Bacal P. Economic Mechanism of Environmental Protection in the Republic of Moldova. Chișinău, 2018. pp. 191-224. 33 Offence Code of the Republic of Moldova. Chapter IX.

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The majority of fines are imposed for offenses of general application area, such as non-compliance with the water protection norms, which are caused water pollution and soil erosion (art.109.1); washing of vehicles in natural waters (art. 109.3); failure to size and regime of water protection areas (109.4); lack of valid authorization of water use (Art. 110.2); failure to low provision on state ecological expertise and environmental impact assessment (art. 156); non-payment for water pollution (art. 143). For offenses with particular application area as the: breach of the regime of economic activity in water protection areas (art. 113); non-complying with the size of riparian protection strips (art. 109.5); damaging to water protection, engineering and management hydraulic installations (Art. 112, 170-176) apply a very small number of fines, despite the fact that such infringements are committed frequently. During the analyzed period (2007-2017) there is an oscillating dynamic of number and of sum of fines on the background of a general increase tendency (4.4.17). The maximum sum of the fines were applied in districts of Orhei (66.5 thousand MDL/3.4 thousand €) and Ungheni (65.6 thousand MDL) and Hâncesti, and the minimum sums - in the smaller districts: Dubasari and Soldanesti. In most cases, are amended industrial and agricultural enterprises, as well as the individuals for the washing of vehicles (Art 109.3), and the budget organizations and households are very rarely amended, despite frequent violations by them. In addition, the application of fines is not usually accompanied by the procedure of damage compensation. 4.3.5 Evaluation and compensation of damage caused to water resources. According to the methodology in force, the damage assessment of water resources is done in the following situations: 1) unauthorized capture/use; 2) damage to groundwater; 3) discharge of overstock pollutant; 4) storm water run-off; 5) thermal pollution; 6) discharge of acids and/or alkali receiving waters; 7) spilling pollutants off; 8) floating solid waste pollution. Damage caused to groundwater is evaluated according to "Provisional Methodology for Estimating the Environmental Damage Caused by Groundwater Law Infringement" approved by the Ministry of Environment Decision no. 1808 of 18.08.1999, and the size of other types of damage to water resources is assessed according to "Methodology for Assessing the Environmental Damage Caused as a Result of Water Law Infringement " approved by Decision no. 163 of 07.07.2003 of the Ministry of Ecology, Construction and Territorial Development no. 163 of 07.07.2003. The amount of damage in the event of unauthorized water capture and use is determined as the produce of the water volume and the tax for 1 m3 of water. The size of the final amount of fines is established on the basis of branch and environmental standards of use, technological equipment types and categories of water use. In the existing methodology for assessment of damage caused to water resources, it is sufficient reflect the hydrological and ecological indicators of the affected aquatic objects and their spatial aspects, some technical-economic indices, such as the water use field, the part of the non-taxed

Page | 46 Technical Report N°6 Economical analysis of water use income subject to evasion for the caused damage. It is also necessary to include factors that would reflect the restoration costs of water objects, status of water capture, use, discharge and treatment installations, water supply extent of the territory, the ecological and sanitary-hygienic status of the water objects34. Despite these gaps, we can say that the existing methodology provides the necessary support for assessment of water damage. At the same time, due to acute shortage of technical equipment and accredited staff, most of the damage caused to waters is not assessed and subjected to compensation, and to detected offenders are applied only fines, which are significantly lower than the damage. As a rule, are applied action for damage compensation in cases of the unauthorized abstracted/used of water and only in rare cases for unauthorized discharges of polluted wastewater. The maximum sums of damages caused on waters are recorded in districts of Edinet (58 ths MDL/2,9 ths €), Ungheni (25,5 ths MDL) and Taraclia (13,9 ths MDL), especially from animal breeding complexes and treatment plants. 4.4 Financing the sector. Subsidies for rational use and protection of water resources Subsidies are an important tool that provides transfers from budgetary and non-budgetary sources for the implementation of priority measures for sustainable use and protection of water resources, the achievement of the objectives indicated in the Action Plans of the environmental and sectorial strategies in this field. The primary role of subsidies consists in the transfer from the state budget or other forms of state-controlled financing of a major share of the investment costs necessary to carry out the planned measures, which will generate major social and environmental benefits and will significantly contribute to increasing the population's access to quality drinking water, to diminish the harmful impact on aquatic objectives and the health of the population. Also, if the tariffs are intended to recover the individual operating costs of operators for providing of water supply and sewerage services, then subsidies are used to bear the investment social costs of expansion and modernization of the respective public systems, as well as for the restoration and protection of water resources and aquatic ecosystems. The subsidies can make a major contribution to support the environmental costs. Also, under the Water Supply and Sanitation Strategy, subsidies in this area should be: a) predictable to support budget planning; b) transparent; c) incentive to increase performance of operators; d) reduced staggered as tariffs rise. Overall, in the Republic of Moldova, the financing of the sector is mainly aimed to increasing the population access to the quality water sources, preventing and reducing the pollution of water resources

34Bacal P. The implementation of actions for compensation of ecological damages. In: Ecological performance in a competitive economy. Vol. I. : ASE, 2009, p. 63-70.

Page | 47 Technical Report N°6 Economical analysis of water use and restoring their protection areas. During the analysed period, the absolute majority of subsidies for water protection are financed by the National Environmental Fund (NEF). Till 2008, most of the approved projects in the water field had little financial support and were intended to carry out separate works, such as the arrangement of fountains and springs in rural areas, the cleaning of small rivers, the provision of water protection areas that not exceeded the limits of one or several localities. With the contribution of ecological funds, periodic sanitation actions were carried out on riparian areas and the cleaning of small riverbeds, such as „Water Caravan”, „Water - the source of life”, „A clean river from the village to the village”. As a result of the expansion of tariff headings by which it is applied the payment on the import goods that, in the utilization process, caused environmental pollution35, since 2008 there has been a multiple increase of NEF revenue, which is directly reflected in the sum of funded projects (annex 4.5.1-2). Therefore, since 2008 it is found an increase by about 15 times, from 11.8 million MDL to 160 million MDL/7.1 million €. Also, have been noticed a multiple increasing of financing capacities has contributed to the implementation of an ascending number of complex projects of appropriate infrastructure expansion and modernization of water supply, construction and reconstruction sewerage and discharged wastewater treatment systems. In 2010-2016 years, such projects have been implemented in the most districts, especially in the central and southern, including Hâncesti, Ungheni, Nisporeni, Cahul, Cantemir, Leova and Cimislia. In the North Region it is remarkable the Falesti and Râscani districts, actively involved in the implementation of the regional project „Apa-Nord Moldova”. Most complex water supply and sanitation projects are implemented in several stages (3-5) and over several years. According to the Audit Report of the Court of Accounts36, this situation frequently contributes to delaying the implementation of the respective projects and the partial and non-qualitative execution of some important works, especially the works related to the sewerage and wastewater treatment system in rural areas. Also, the NEF has frequently accepted the financing of subsequent instalments, as previous steps have not been fully realized or the beneficiaries have not presented the set of confirmatory documents. In addition, investment projects were approved in the absence of the necessary financial resources. Despite the multiple increase in the number and amounts of NEF-funded projects for the protection of water resources and the implementation of complex and major projects in this area, almost of allocations are intended to extend water supply and sewerage systems. A very small number of projects are funded for the construction of modern wastewater treatment plants (up to 10),

35 Annex 8 of Law 1540 regarding Payment for Environmental Pollution 36 Decision of the Court of Accounts no. 71 of 20.12.2017 on the Performance Audit Report on the FEN Management in the Budgetary Year 2016. In: Official Monitor No.77-83 of 09.03.2018

Page | 48 Technical Report N°6 Economical analysis of water use modernization and optimization of public service water supply and sewerage services. There are no financing projects for the cleaning of communal ponds, most of which have a critical ecological and sanitary-hygienic status, and present a real danger to the health of the local population. Moreover, these aquatic objectives are almost missing on the agenda of environmental authorities, and feasibility studies are very expensive and unwanted by central and local public authorities. A massive number of projects were approved around the parliamentary and local elections, especially before November 2014, and the sum of approved projects was not based on feasibility studies, often approximate and uniform amounts were earmarked, as 500 thousand, 1 million, 2 million MDL for the implementation a project stage. Under these circumstances, a large number of beneficiaries of NEF- funded projects did not meet the eligibility criteria set out in the Applicant's Guide37, and the expertise of the project proposals by the experts in the field was obviously superficial. In the urban areas, the focus is on the renovation of the sewage and treatment system, the pumping stations and the treatment of drinking water. In the rural areas - expanding the water supply system, accompanied, in some cases, by works to extend the sewerage network. As a rule, for the implementation of projects for extension and renovation of water supply systems, according to the size of rural localities, up to 3-5 million lei were allocated, which also include works for expansion and renovation of the sewerage systems and treatment - up to 10 million MDL/500 thousand €. Intercommunity projects are implemented in districts of Fălești (Prut- Fălești aqueduct), Râşcani, Ungheni (Manoileşti), Nisporeni (Nisporeni, Vărzăreşti and Grozeşti - 28 million lei), Hânceşti (26 million lei), Leova (Leova-, Leova-Iargara, Leova-Sărata-Răzeşi) and Cahul, some of which are co-financed by FNDR, GIZ, AAD, AEDC. In addition, NEF has begun financing the construction of Wastewater Treatment Plants (ZUC) according to Built Wetland Zone technology. A significant contribution to subsidizing the protection and improvement of water resources has foreign and budgetary sources attracted through the National Fund for Regional Development (NFRD), EIB, EBRD, AAD, AEDC. At the same time, due to insufficient coordination between the design and investment allocation programs, part of the projects are not fully implemented. It was finished the project "The Program for development of water companies", implemented in the Ceadâr-Lunga, Leova, and Hânceşti districts38. In addition, with the support of the World Bank and the National Program „ApaSan”39, co-financed by the Swiss Agency for Development and Cooperation, started the project "Elaborating the feasibility study on water supply and sanitation in the rural area". Within the project "Modernizing of local public services", supported by GIZ, were elaborated 12

37. Annex 1 to the Ruling on the Administration of the National Ecological Fund 38 Report of the Ministry of Environment on the implementation of the WSS Strategy in 2015 39 National Program for the Implementation of the Water and Health Protocol (2016-2025). Aproved by GD no. 1063 from 16.09.2016. Un: Monitorul Oficial no. 314 from20.09.2016.

Page | 49 Technical Report N°6 Economical analysis of water use feasibility studies and the regional projects "Improvement of water and sewerage services in Râşcani district", "Modernization of water supply and sewerage services in the Cahul and Leova districts". They also started projects on promoting market economy principles and of improving the efficiency of operating companies. The projects for the extension and modernization of the water supply and sewerage systems are also implemented with the financial support of the transfers from the state budget to the local budgets. The absolute majority of budget transfers during that period were intended to extend and modernize the water supply systems of rural settlements. The complex projects in the field of water supply and sewerage have been funded, especially in the urban areas. A very small number of projects have been funded for the modernization and construction of wastewater treatment station, including in Cahul, Falesti, Nisporeni, Briceni, TAU Gagauzia and Cimislia. According to Operational Plans and Annual Activity Reports of Regional Development Agencies, in the years 2010-2016, in the DH DPBS there were implemented 27 complex projects for water supply and sewerage, amounting 568 million MDL, including 17 projects, amounting to 401 million MDL (annexes 4.5.3-4), financed by NFRD and 10 projects, amounting to 155 million MDL, financed by the Germany Technical Assistance Fund (GIZ). The most relevant intercommunity water projects funded predominantly by the FNDR are the following: 1) The project to ensure the town of Falesti with water from the Prut riverbed (18.8 million MDL), which will be extended to 16 localities from the Prut river floodplain (40 mil. MDL); 2) Water supply and sewerage project of Risipeni, Bocşa villages (11.8 million MDL), which will be extended to other 9 localities from Falesti and Ungheni districts (30.5 million MDL); 3) Water supply of settlements in Narnova river basin (45 million MDL) from Nisporeni district and 5) Lăpuşniţa river basin (24.2 million MDL) from Hancesti rayon; 6) connection to the centralized water supply services of 12 thousand inhabitants from the village of Manoileşti and 11 other localities of the Ungheni district; 7) Construction and restoration of the sewerage system in town. Nisporeni com. Vărzăreşti, 8) modernization of the sewerage and purification system in Cimişlia and neighboring Ecaterinovca, total amount of 11.7 million MDL In the Leova district, 1 project for the construction of the Leova-Filipenii Noi-Romanovca aqueduct was implemented with the total amount of 10 million MDL, and there is 1 intercommunity water supply project for the communes Tomai, Sârma and Tochile-Răducani in the amount of 25 million MDL. In Cahul district, the NEF financed the implementation of an intercommunity water supply project for the communes of Manta, Crihana Veche and Pascani in the amount of 16.9 million MDL, as well as the reconstruction of the "Lacul Sărat/ Salt Lake" Recreation Area in Cahul, amount of 13.8 million MDL.

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GIZ has provided financial support for the implementation of 5 projects in Râşcani district (annexes 4.5.3-4), amounting to 26.8 million MDL, including: 2 projects for the construction of the water supply and sewerage system in Duruitoarea Veche, amounting to 5.4 mil. MDL and 6 projects for modernization of the sewerage and purification service in Costeşti, amounting to 18.4 million MDL. Compared to the other two development regions, in the Southern Development Region, GIZ was the main source of funding for environment projects approved by ADR. However, 3 of the 4 projects funded by GIZ in the field of water supply and sanitation were implemented in the Cahul district, including the extension of the municipal water supply and sewerage network in the Rosu village (17.6 million MDL), modernization of the treatment plant in Cahul (8.3 million MDL), including the reception of waste water from the Roşu village. GIZ will financed on-going projects on construction of Cahul- Alexandru Ioan Cuza (48.4 million MDL) and Leova-Iargara (57 million MDL) main aqueducts. There are 8 on-going projects with a total amount of 264 million MDL, including 5 projects, amounting 215 million MDL, financed by NFRD and 1 project, amounting to 48 million MDL, financed by GIZ. About half (13) of funded projects by NFRD and GIZ, amounting to 281 million MDL, are inter- community projects, including in the Făleşti (2), Ungheni (2), Nisporeni (3), Hânceşti (1), Cimişlia (1) Leova (2) and Cahul (1) districts. In the Cahul and Leova districts are implemented the projects of regionalization and optimization of water supply and sanitation services. Also, have been implemented two river projects, including in the Lapusnita and Nârnova river basins. The significant increase in the number and amount of projects funded in the years 2013-2016 is conditioned by relatively successful start of the implementation Strategy on water supply and sewerage for the years 2014-202840. The strategy is based on modern principles, including: a) integrated management of water resources; b) cost-effectiveness; c) full recovery of cost and investments; d) enhancing access to quality Services of water supply and sanitation; e) decentralization and regionalization of water supply, sewerage and treatment services; f) basin management of water resources. Also, this Strategy is supposed to be implemented in accordance with EU Directives in the field of water, Water Framework Directive 2000/60/EC, Directive 91/271/EEC regarding urban waste water treatment and Directive 98/83/EC regarding quality of water intended for human consumption. For the full achievement of the objectives set out in this Strategy, in the initial period (2014-2017) it is required annual contribution of 1.2% of consolidated budget incomes. In the next two periods it is expected to increase the contribution with 0,1%, so that in 2028 to reach 1.4% of the consolidated budget incomes (annex 4.5.5). It is also expected the gradual increase in internal sources and

40GD no. 199 of 20.03.2014 regarding the approval of the Strategy of Water Supply and Sanitation (2014 – 2028). In: Monitorul Oficial no. 72-77 of 28.03.2014.

Page | 51 Technical Report N°6 Economical analysis of water use stabilization of the external sources share and amount to about 20 million euros per year. To our opinion, in terms of increased inflation, much higher above forecasts in 2013, achieving this goal will be very difficult and the external sources will need to be increased to compensate the inflation rate and deficit of external sources. Taking into account the recent dynamics of the official exchange rate, the planned funds will have to be adjusted and additional sources should be found to cover the deficit generated by the inflation rate. Besides this, the scenario does not take into account the possible geopolitical Moldova‘s reorientation, which will have major negative implication and enormous missed benefits not only in water and sanitation provision, but in the other priority areas assisted by the EU. Also, according to the stipulations of this Strategy, budget support for investment projects for the years 2016-2028 will double and reach 6,4 billions MDL (annex 4.5.6), including 1.5 billions MDL or 375 million MDL annually in the first period (2014-2017), 2,1 billions MDL or 414 million MDL annually in the second period (2018-2022) and 2.9 billions MDL or 570 million MDL annually in the third period (2023-2028). In terms of increased inflation, much higher above forecasts in 2013, achieving this goal will be very difficult and the internal sources will need to be increased to compensate the inflation rate and deficit of external sources. Taking into account the share of settlements in the HD PDBS in subsidizing water sources protection by NEF, the transfers from the state budget for these purposes, the final period of implementation of the regional projects for extending water supply networks in the Dniester river basin (aqueduct Soroca Balti-Râşcani and Vadul lui Voda-Chisinau-Străşeni Calaraşi) and the initial phase of the Prut River basin projects (Leova-Ceadâr-Lunga Taraclia, Zagarancea-Corneşti etc.), we can conclude that the Prut river basin will benefit from budgetary support at the extent of about 40%. Thus, during the implementation of the Strategy on water supply and sanitation, for the needs of the communities in area of the HD DBS it will be necessary to allocate about 2.6 billion MDL or 160 million Euro. The annual contribution will be 250 million MDL, inclusive 220 million MDL for the first two periods (2014-2022) and 300 million MDL for the last one. Starting from the fact that in 2014-2016, only from NEF were allocated 450 million MDL, we can say that the financial targets of implementation of this Strategy can be achieved. Conclusion of chapter 4.4: Until 2016, about 80% of the number and amount of projects approved by the NEF were designated for water protection. At the same time, most of the projects in the field are allocated to APLs for the extension and modernization of water supply and sewerage systems, wells and springs, but rarely for the complex execution of measures for the ecological restoration of aquatic objectives. The vast majority of NEF-funded projects, including complex ones, do not exceed the boundaries of a community. The approval of the projects did not take into account the current trends of rural

Page | 52 Technical Report N°6 Economical analysis of water use depopulation, which covered over 80% of the localities in the north and south of the Republic and about 60% of the central districts41, as well as the real economic opportunities for the development of selected localities. The coverage of projects funded by the Regional Development Fund in cooperation with GIZ is limited and their contribution to improving water status and increasing the access of the population to quality water is insignificant. Most of these projects are also aimed at expanding the water supply network and services and do not focused to the restoration of ecological status of aquatic objectives.

41 Matei C., Hachi M., Sainsus V. Evoluția populațieii Republicii Moldova. Chișinău, 2017.

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4.5 Methodological reference and bibliography 4.5.1 Methodological reference The Economic Analysis of water use is based on recent analytical studies on the implementation of the Management Plan of River Basin, which is stipulated in EU Directive (2000/60/EC) on integrated water management and the WATECO Guideline on the Methodology of Economic Assessment of Water Use. For the study, it was used the management plans, which are being implemented, such as the Danube River Basin Management Plan, Management Plan of Prut-Bârlad River Space, Management Plans of Prut river basin and of Danube Prut and Black Sea Hydrographical District. Very valuable, in particular for analysis of water use, are research methodology and study of transboundary rivers in the Black Sea Region and Belarus (EPIRB Program). Also, for the elucidation of spatial, economic and social aspects of water use in Moldova, various publications in the field have been consulted, as well as analytical studies of authors of this chapter. The Economic Analysis of water use includes: 1) the national legal regulation regarding the water use and protection; 2) the particularities and trends of water use; 3) the economic mechanism for costs recovering of water use and protection; 4) financing of measures for sustainable use and protection of water resources. The main methods, which are used, are: statistical, analytical, comparative, analogical, as well as consultation with competent authorities in the field of assessing and managing of water resources. Statistical method was widely used in processing of statistical information on the water use in all administrative-territorial units from the DPBS. The analytical method was used for: a) to identify quantitative and qualitative aspects of water use; b) diagnosis of situation of water use and elaboration of recommendations to prevent problematic situations in this field; c) definition of priority directions of activity optimization of water resources management in the river basins. The comparative method was applied for establishing the trends in the branch and spatial aspects of the water use. The main informational and statistical support of this analysis included: 1) Generalized Annual Reports on Water Management Indicators of the Basins Department of Agency „Apele Moldovei”; 2) Annual Reports of Ecological Agencies and Inspection; 3) The Reports of water supply and sanitation companies of Association „Moldova Apa-Canal”; 4) The Report of National Bureau of Statistics on the public water supply and sewerages networks. The analysis comprised the 2007-2017 years. The legal framework for the use and management of water resources, regulating the provision of services of water supply and sewerage is stipulated in Water Law no. 272 of 23.12.2011, Law no. 1515 of 16.06.1993 on the protection of the environment, Law no. 1102 of 06.02.1997 on Natural

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Resources, Law no. 272 of 10.02.1999 on Drinking Water, Law no. 1402 of 24.10.02 on Public Utility Services, Law no. 303 of 12.13.2013 on Public Services of Water Supply and Sewerage, Decision of the National Agency for Energy Regulation (NAER) no. 164 of 29.11.2004 on Methodology for Determination, Approval and Application of Tariffs for Public Water Supply Services, Sewerage Systems and Waste Water Treatment, Title VIII of the Tax Code on the tax for use of natural resources, Offenses Code (Articles 109-113, 143-146, 156, 170-176); Law no. 86 of 29.05.2014 on Environmental Impact Assessment; Methodologies for assessing damage to surface water and groundwater souses capitalization and management of water resources, which are stipulated in Decision no. 163 of 07.07.2003 of the Ministry of Ecology, Construction and Territorial Development on approval of "Methodology for Assessing the Environmental Damage Caused as a Result of Water Law Infringement and Decision no. 1808 of 18.08.1999 of the Ministry of Environment on approval of "Provisional Methodology for Estimating the Environmental Damage Caused by Groundwater. Indicators used in the economic analysis of water use: a) Legal framework: 1) the competences of central and local public authorities in the management of water resources and their protection areas; 2) Obligations of water users, including for the special use of water; 3.) the regime of use and protection of water for domestic, industrial, agricultural, including irrigation, fisheries and recreational needs; 4) access to various uses of water resources; 5) the legal requirements for respecting the protection areas of aquatic ecosystems (rivers, lakes) and their endangered biotic components. b) Indicators regarding the volumes of abstracted and used water, discharged and treatment wastewater, including at level of hydrographical sub-basins and administrative-territorial units (districts, urban and rural area). 1. The volume of abstracted water, per total, from surface sources and from underground sources; 2. The volume of used water, per total, and for main usage categories: households, agriculture, including irrigation, industry, including hydro-energetics, fishery, tourism and agreement; 3. The number of primary water users; 4. The water losses; 5. Dynamics of abstracted and used water, of wastewater and of water losses; 6. The discharged and treatment wastewater, per total, and per degree of treatment; 7. Number and length of public water supply systems (2007-2017); 8. Number and length of public sewerage systems;

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9. Number of households / persons connected to the public water supply network; 10. Number of households / persons connected to the public sewerage network; 11. Access of population to public water supply network; 12. Access of population to public wastewater discharged network; 13. The number and capacity of the water catchment sources (total and functional), including probes and artesian wells; 14. The volume of delivered water by public water supply systems, per total and on main categories of water users; 15. The volume of discharged wastewater water by public sewerage network, per total and on main categories of water users and by degree of purification; 16. Number and capacity of water pumping stations, on project and de facto; 17. Water use per person and its correlation with access of public aqueducts; 18. Number and capacity of wastewater treatment stations (functional and operational), on project and de facto; 19. The level of wear and of operation of fixed assets for providing of water supply and sanitation services; 20. The operation coefficient of fixed assets for providing of water supply and sanitation services; 21. The number, surface and status of the lakes; 22. The usage categories of lakes; 23. The number and status of wells and springs. c) Indicators regarding the costs recovery mechanism of water use, including at level of administrative-territorial units (districts, urban and rural area). 1. The tariff quotas for providing of water supply services. Average quota and to main categories of users of public network (households, budget organizations, economic agents and other) (2007- 2018); 2. The tariff quotas for sewerage and wastewater treatment services (2007-2018); 3. Average tariff per 1 m3 of delivered drinking water and of discharged wastewater; 4. Average cost per 1 m3 of delivered drinking water and of discharged wastewater; 5. Difference between costs and tariffs per 1 m3 of delivered drinking water and of discharged wastewater and cost recovery rate from these tariffs; 6. The dynamics and structure (origin) of incomes, including from sales of water supply and sanitation services; 7. Sales revenue per employee and work productivity in this sector;

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8. The structure and dynamics of total expenditures for providing of water supply and sanitation services; 9. The wage expenses and work productivity in this sector; 10. The structure and dynamics of expenditures for materials consumption; 11. Expenses for long-term depreciation of assets; 12. Expenses for medical and social insurance; 13. The ratio between the incomes and expenditures of water and sanitation services, cost recovery rate from these incomes/revenue; 14. Profitability of sales; 15. Profitability of fixed assets; 16. Dynamics of water taxes by districts and source of origin; 17. Dynamics of water pollution charges; 18. The expenditures for water protection and its recovery rate from water pollution charges; 19. The number and sum of fines (penalties) applied for law infringement of use and protection of water resources. d) Indicators regarding subsidies approved for financing of public projects for improve access to sources of quality water, protection of water ecosystems and its protection zones: 1. Dynamics of the projects number funded by the NEF for water protection; 2. Dynamics of subsidies sum allocated from NEF for water protection; 3. Number of projects approved by Regional Development Agency; 4. The approved sum for financing of projects on water projects by Regional Development Agencies; 5. The number of sum of transfers from state budget; 6. Projected budget support for WSS sector in the period 2014-2027.

4.5.2 Bibliography 1. Activitatea sistemelor de alimentare cu apă şi de canalizare în anii 2007-2017. In: statistica.md. 2. Anexa 1 la Regulamentul privind administrarea Fondului Ecologic Național . 3. Articolul 13 din Legea RM nr. 1402 din 24.10.02 cu privire la serviciile publice de gospodărire comunală 4. Articolul 35.9 din Legea nr. 303 din 13.12.2013 privind serviciul public de alimentare cu apă şi canalizare (în vigoare din 14.09.2014). Monitorul Oficial nr. 60-65 din 14.03.2014.

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5. Articolul 7 din Legea RM nr. 303 din 13.12.2013 privind serviciul public de alimentare cu apă şi canalizare 6. Bacal P. Gestiunea protecţiei mediului înconjurător în Republica Moldova. Chişinău: ASEM, 2010, 116 p. 7. Bacal P. Mecanismul economic de protecție a mediului în Republica Moldova. Chișinău: Biotehdesign, 2018. 296 p. 8. Bacal P. The implementation of actions for compensation of ecological damages. In: Ecological performance in a competitive economy. Vol. I. Bucharest: ASE, 2009, p. 63-70. 9. Capcelea A. Republica Moldova pe calea dezvoltării durabile: realizări şi probleme. Chişinău: I.N.C.E.F., 1995. 10. Codul Contravențional al Republicii Moldova. 11. Danube River Basin Management Plan. In: icpdr.org/main/publications/danube-river-basin- management-plan. 12. Framework Directive. Luxembourg: Office for Official Publications of the European Communities, 2003. 13. Guidance document no. 1. Economics and the Environment. – The Implementation Challenge of the Water 14. HG nr. 199 din 20.03.2014cu privire la aprobarea Strategiei de alimentare cu apă şi sanitaţie (2014 – 2028). În: Monitorul Oficial nr. 72-77 din 28.03.2014. 15. HG nr. 548 din 13.06.2018 cu privire la organizarea şi funcționarea Inspectoratului pentru Protecţia Mediului. În: Monitorul Oficial nr. 210-223 din 22.06.2018. 16. HG nr. 549 din 13.06.2018 cu privire la constituirea, organizarea și funcționarea Agenției de Mediu. În: Monitorul Oficial nr. 210-223 din 22.06.2018 17. HG nr. 814 din 17.10.2017 cu privire la aprobarea Planului de gestionare a districtului bazinului hidrografic Nistru. În: Monitorul Oficial nr. 371-382 din 27.10.2017. 18. HG privind aprobarea Strategiei privind adaptarea la schimbările climatice. 19. Hotărârea ANRE din 18.12.2014. În: Monitorul Oficial nr. 33-38 din 13.02.2015 20. Hotărârea Curții de Conturi nr. 71 din 20.12.2017 privind Raportul auditului performanței asupra gestionării FEN în exercițiul bugetar 2016. În: Monitorul Oficial nr.77-83 din 09.03.2018 21. Hotărârea Ministerului Ecologiei, Construcțiilor şi Dezvoltării Teritoriului nr. 163 din 07.07.2003 cu privire la aprobarea Metodicii de evaluare a prejudiciului cauzat mediului înconjurător în rezultatul încălcării legislaţiei apelor.

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22. Hotărârea Ministerului Mediului nr. 1808 din 18.08.1999 cu privire la aprobarea „Metodicii provizorii de estimare a prejudiciului cauzat mediului înconjurător prin încălcarea legislației apelor subterane.” În: Monitorul Oficial nr. 72-77 din 28.03.2014. 23. Legea 172-XVI din 10.07.2008. În: Monitorul Oficial nr. 134-137 din 25.07.2008. 24. Legea 177-XVI din 20.07.2007. În: Monitorul Oficial nr. 117 din 10.08.2007. 25. Legea nr. 1540 din 25.02.1998 privind plata pentru poluarea mediului. În: Monitorul Oficial nr. 54-55 din 18.06.98. 26. Matei C., Hachi M., Sainsus V. Evoluția populațieii Republicii Moldova. Chișinău, 2017. 27. Planul de Gestionare a Bazinului Hidrografic Prut. Ciclul 1. 2017-2022. Chișinău, 2016. p. 79- 82. 28. Planul de management al spațiului hidrografic Prut-Bârlad. Ciclul II. 29. Programul Național pentru implementarea Protocolului privind Apa şi Sănătatea (2016-2025). Aprobat prin HG nr. 1063 din 16.09.2016. În: Monitorul Oficial nr. 314 din 20.09.2016. 30. Rapoartele anuale privind calitatea factorilor de mediu şi activitatea Agenţiilor şi Inspecţiilor Ecologice. 31. Raportul Ministerului Mediului privind procesul de implementarea a Strategiei AAS în anii 2015-2016 32. Starea sanitaro-igienică şi epidemiologică în Republica Moldova. Centrul Naţional Ştiinţifico- Practic de Medicină Preventivă. Chişinău, Rapoartele pe anii 2007-2016.

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Annexes

Annex 4.1 The abstracted and used water in the DPBS HD Annex 4.1.1 The volume and share of abstracted and used water by usage categories in the river basins of the DPBS HD (average of 2007-2017 years) Abstracted water Usage categories of water River agriculture Total groundwater Total household technological basins total irrigation ths m³ %42 ths m³ % ths m³ % ths m³ % ths m³ % ths m³ % ths m³ % Prut 23318 14,6 12545 54 17644 15 3795 22 1621 9,2 12337 70 3835 22 Prut riverbed 9383 5,9 1781 19 6786 5,8 3020 45 1044 15 2702 40 1096 16 Ialpug 5080 3,2 4445 88 4001 3,4 969 24 127 3,2 2597 65 234 5,8 Cahul 867 0,5 528 61 980 0,8 126 13 29 3,0 500 51 210 21 Cogâlnic 2985 1,9 2671 89 2660 2,3 868 33 59 2,2 1838 69 417 16 Kitai 253 0,2 245 97 245 0,21 51 21 16 6,7 192 78 6 2,4 Sărata 583 0,4 480 82 517 0,45 132 25 9 1,8 369 71 89 17 Hadjider 593 0,4 185 31 597 0,5 54 9,0 66 11 552 92 369 62 DBS 10361 6,5 8555 83 8888 7,7 2200 25 301 3,4 6048 68 1305 15 DPBS HD 33679 21,1 21111 63 26423 23 5993 23 1919 7,3 18384 70 5141 19 Sources: annexes 4.1.1-4.1.5 are elaborated by the author after data from generalized Annual Reports (2007-2017) on the Indices of water management. Basin Department of the "Apele Moldovei" Agency

Annex 4.1.2 The abstracted and used waters in the districts from the DPBS HD (average of 2007-2017 years) Abstracted water Usage categories of water agriculture Districts total surface groundwater total household technological total irrigation ths m³ ths m³ ths m³ % ths m³ ths m³ % ths m³ % ths m³ % ths m³ % 1 Ocniţa 440 150 290 66 410 82 20 36 8,8 290 70 105 25 2 Briceni 5074 1213 3861 76 2444 174 7,1 13 0,5 2300 92 1281 52 3 Edineț 3516 2219 1297 37 2393 402 17 392 16 1571 66 545 23 4 Râșcani 1100 330 770 70 1060 127 12 18 1,7 930 80 212 20 5 Glodeni 1225 485 740 60 1208 184 15 196 16 791 65 67 6 6 Fălești 1419 400 1019 72 1365 230 16 255 19 1114 68 271 17 7 Ungheni 3459 2578 881 25 2738 1191 43 314 11 1224 45 377 14 8 Nisporeni 915 140 775 85 887 92 10 19 2,2 757 85 132 15 9 Hâncești 1986 196 1790 90 1888 314 17 15 0,8 1567 83 205 11 10 Cimislia 1202 14 1187 99 1061 303 29 35 3,3 722 68 88 8,2 11 Basarabeasca 890 232 658 74 749 285 38 16 2,2 465 62 232 31 12 Cantemir 1304 508 795 61 1279 90 7 38 3,0 1116 87 348 27 13 Leova 1088 377 711 65 1020 212 21 44 4,3 751 74 134 13 14 Cahul 3857 2311 1546 40 3057 1085 35 365 12 1609 53 229 7,5 15 Taraclia 1329 517 812 61 1272 272 21 39 3,1 671 53 256 20 16 TAU Găgăuzia 3616 374 3242 90 2462 868 35 104 4,2 1420 58 410 17 17 Ștefan-Vodă 1260 505 755 60 1230 220 18 21 1,7 1030 80 344 28 Total 33682 12551 21130 63 26523 6100 23 1919 7,2 18380 69 5200 20

42 In case of total volume of captured and used waters is indicated share from the right bank of Dniester

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Annex 4.1.3 The dynamics of abstracted waters in the river basins of DPBS HD, in million. m3

Years Increase, River basin average 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 % Prut 29,71 25,17 28,02 24,0 24,12 24,24 21,44 20,17 21,03 19,1 19,5 23,3 66 Prut bed 11,93 10,33 10,76 9,36 9,02 9,71 8,84 8,17 8,91 8,1 8,1 9,3 68 Ialpug 5,68 4,84 4,98 4,99 5,24 5,39 4,79 4,91 4,90 5,0 5,2 5,1 91 Cahul 1,77 1,51 1,63 0,52 0,5 0,73 0,67 0,52 0,57 0,6 0,52 0,87 29 Cogâlnic 3,46 2,98 3,18 2,81 2,87 3,18 2,76 2,48 3,12 2,9 3,1 3,0 89 Kitai 0,38 0,33 0,29 0,27 0,24 0,24 0,22 0,2 0,2 0,2 0,21 0,25 55 Sărata 0,58 0,53 0,75 0,57 0,58 0,58 0,52 0,55 0,57 0,6 0,59 0,58 102 Hadjider 0,9 0,6 0,52 0,50 0,64 0,67 0,51 0,63 0,64 0,4 0,5 0,59 56 DBS HS 12,8 10,8 11,4 9,7 10,1 10,8 9,5 9,3 10,0 9,7 10,1 10,4 79 DPBS HD 42,5 36,0 39,4 33,7 34,2 35,0 30,9 29,5 31,0 28,8 29,6 33,7 70

45,0 40,0 35,0 30,0 25,0 20,0 15,0 10,0 5,0 0,0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 total surface water underground water total water losses tehnological losses Annex 4.1.4 Dynamics of the abstracted water volume and its loss in the DPBS HD, in million. m3

36 33 30 27 24 21 18 15 12 9 6 3 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 total use agriculture, without irigation households irigation tehnological

Annex 4.1.5 Dynamics, by usage categories, of water used in the DPBS HD, in million. m3

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Annexes 4.2 The production and financial indices of public water supply and sewerage services Annex 4.2.1 Status and using of public water supply systems in TAU from DPBS HD (2017 year)

Length Consumption Access of Number of of public litres per Pumping stations (PS) population to the Nr. Districts public aqueducts, km capita/day public aqueducts, aqueducts Capacity, ths Used total AMAC total AMAC %, Number m3/day degree, % 1 Ocniţa 1 35,4 35,4 52 18 2 3,5 10,2 14 2 Briceni 25 214 47,1 83 58 28 7,5 27,8 24 3 Edineț 24 226 118 61 51 5 12,3 10,1 36 4 Râșcani 31 257 45 1 5 64 5 Glodeni 25 204 34,9 52 42 20 10,7 37 6 Fălești 30 340 44,7 47 50 33 3,2 39,5 40 7 Ungheni 29 462 136 76 101 33 21,7 42,5 48 8 Nisporeni 15 340 19,5 39 15 10 6 15,5 40 9 Hâncești 52 538 133 47 77 46 12,5 12,5 36 10 Cimișlia 58 392 65,1 42 32 63 23,2 20,6 74 11 Basarabeasca 16 205 34,6 37 51 17 16,4 55,5 93 12 Leova 9 115 48,8 54 55 4 7,8 31 13 Cantemir 25 273 23 47 94 18 27,6 22,3 39 14 Cahul 56 506 104 62 82 80 6 36,1 57 15 Taraclia 13 283 57 56 55 36 13,3 21 60 16 TAU Găgăuzia 39 879 329 43 66 28,4 73 Comrat 18 381 122 59 22 47,3 Ceadâr-Lunga 12 376 161 44 24 16 Vulcănești 9 111 46 38 20 29,2 17 Ștefan-Vodă 34 320 45,8 49 60 31 12 11 65 Total 482 5554 1276 52 55 493 240 25 49 Sources: Annexes 4.2.1-4.2.7 are elaborated by the author after: 1) NBS reports on public water supply and sewerage systems. In: statistica.md; 2) The production and financial indices of the activity of public water supply and sewerage enterprises of AMAC. In: amac.md

473 482 432

331 308 288 299 255 267 227 239

70 70 71 71 71 68 67 63 66 60 60

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 water supply sewerage

Annex 4.2.2 Dynamics of number of public water supply and sewerage systems in the DPBS HD

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5554 5366 5013

4176 3827 3621 3412 3089 3205 2555 2675

689 750 532 543 540 537 619 617 625 608 678

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 water supply sewerage

Annex 4.2.3 Dynamics of length of public water supply and sewerage systems in the DPBS HD

Annex 4.2.4 Use of public water supply systems in the TAU from DPBS HD (2017 year) The volume of water supplied, in thousand m3 Loss of Degree of, în % Budgetary Economic abstracted Wear of Using of fixed Total households No. Districts organizations agents water, % fixed assets assets total AMAC total AMAC total AMAC total AMAC AMAC 1 Ocniţa 83 70 77 61,7 6 5,3 4,8 3 25 48 0,11 2 Briceni 524 137 469 137 42,6 9,1 12,8 7 20 46 0,29 3 Edineț 640 320 466 319 121 16 53,9 52,2 55 69 0,22 4 Râșcani 423 387 20,4 10,0 5 Glodeni 411 131 368 112 36 15,7 6,4 3,1 33 3,3 0,09 6 Fălești 506 275 460 243 20,7 9 27,4 23 36 27 0,13 7 Ungheni 1567 1223 1238 941 144 115 185 167 21 69 0,28 8 Nisporeni 372 78 322 61,3 34,3 13 15,2 4 29 32 0,08 9 Hâncesti 736 311 634 261 67,6 26,2 34,2 23,5 36 32 0,22 10 Cimislia 674 261 612 224 29,6 13,2 31,7 24,1 54 25 0,06 11 Basarabeasca 359 86 316 85,5 14,7 7,4 28,6 2,1 61 62 0,09 12 Leova 326 210 264 210 47,8 34,8 14,4 8,8 21 24,4 0,15 13 Cantemir 413 143 369 118 36,6 18,7 7,5 6,9 33 65,1 0,19 14 Cahul 1600 1039 1398 861 66,9 45,1 136 133 45 56 0,23 15 Taraclia 536 214,6 469 175 29,5 17,9 37,3 23,3 39 82,4 0,16 16 TAU Găgăuzia 1878 929 1691 807 95,2 53,2 92,3 69,2 Comrat 1001 477 882 402 62 33,6 57,9 41,4 20 41,9 0,1 Ceadâr-Lunga 656 316 606 284 27,5 15,7 23,1 16,6 40 18,6 0,05 Vulcănești 220 137 203 122 5,7 3,9 11,3 11,2 21 77,7 0,18 17 Ștefan-Vodă 569 149 419 134 34 8,5 11,4 6,5 24 77,4 0,19 Total 11617 5576 9958 4750 847 408 708 557 33,9 48 0,16

Annex 4.2.5 The volume of wastewater and its share per river basins of HD DPBS (average on 2007-2017) în bazinele naturale receptoare in retention total without insufficiently conventionally sufficiently River basins total basins treatment treated pure treated ths m³ %43 ths m³ ths m³ % ths m³ % ths m³ % ths m³ % ths m³ Prut 7315 9,3 5931 28 0,5 1328 22 3222 54 1335 23 1346 Prut albia 2045 2,6 1846 0 0 974 53 9 0,5 874 46 199

43 Ponderea din partea dreaptă a Nistrului

Page | 63 Technical Report N°6 Economical analysis of water use

Ialpug 977 1,2 654 52 7,9 417 64 135 21 7 1,1 238 Cahul 245 0,3 196 0 0 0 0 145 74 51 26 53 Cogâlnic 735 0,9 483 103 21 275 57 0 0 87 18 230 Kitai 27 0,03 0 0 0 0 0 0 0 0 0 25 Sărata 121 0,15 83 0 0 83 100 0 0 0 0 37 Hadjider 15 0,02 0 0 0 00 0 0 0 0 0 16 DBS HS 2100 2,7 1466 170 12 775 53 281 19 154 11 600 DPBS HD 9256 11,8 7307 183 2,5 2102 29 3503 48 1501 21 1940

Annex 4.2.6 The activity of public sewerage and wastewater treatment services in the DPBS HD (2017) Number of Length of Access of Treatment stations sewerage sewerage population to the Number of Capacity, Degree Nr. Districts systems network, km public sewerage units thousand m3/day of use, % Total AMAC Total AMAC systems, % Total AMAC Total AMAC AMAC 1 Ocniţa 1 1 15 4,6 9,0 2 1 3 1,5 12,5 2 Briceni 3 1 33,1 30 7,3 2 1 11,4 10 5,2 3 Edineț 5 2 56,6 52,7 13,0 3 1 5,8 5,3 15,6 4 Râșcani 4 20 3,2 3 1,2 1,9 5 Glodeni 4 1 25 18,2 10,5 1 0 11,2 6,2 6 Fălești 2 1 44 31,8 10,5 1 1 12,1 10 5,8 7 Ungheni 3 1 80,4 66 18,3 3 1 18,3 15 14,8 8 Nisporeni 4 1 43 6,8 6,1 3,0 1 1,5 1,5 1,8 9 Hâncești 4 1 34.8 26,7 5,3 4 1 5,4 3,7 15,0 10 Cimislia 7 1 62 4 4,5 4 1 7,4 1,2 21,0 11 Basarabeasca 2 1 17 16,3 10,3 1 1 1,4 1,4 41,4 12 Leova 2 1 25,2 24,2 10,0 4 1 4,7 4,7 6,2 13 Cantemir 1 1 8,9 8,9 5,0 1 1 3,5 3,5 5,3 14 Cahul 6 1 66 51,5 16,6 6 1 14,3 13,7 15,2 15 Taraclia 3 1 22,2 13,4 9,9 2 1 7,3 6,9 4,6 16 TAU Găgăuzia 7 167 14,7 6 3 15,8 14,2 17,1 Comrat 2 1 39,3 16,4 34,2 3 1 5,7 17,6 Ceadâr-Lunga 4 1 89 83,6 47,6 2 1 7 8,7 Vulcănești 1 1 17,6 42,6 23,4 1 1 1,5 9,1 17 Ștefan-Vodă 2 1 30 24,6 10,2 2 1 1,6 1,6 18,9 Total 60 19 750 312 11 48 17 126 94 13,8

Annex 4.2.7 The volume of wastewater discharged into the DPBS HD per categories of users (2017)

Volume of discharged wastewater, thousand m3 Insuficiently purified Nr. TAU Total householders Budgetary organizations Economic agents watewater total AMAC total AMAC total AMAC total AMAC ths m3 % 1 Ocniţa 73,8 48,7 65,1 41,2 5,7 4,1 3,0 2,7 48,3 100 2 Briceni 138 119 99,3 93,9 29,5 17,1 9,2 8,1 115 100 3 Edineț 395 302 137 134 117 25,4 142 142 4 Râșcani 21,3 18,7 2,3 1,2 5 Glodeni 88,5 86,6 66,9 66,9 18,4 16,2 3,2 3,2 6 Fălești 210 210 144 144 7,4 7,4 31,3 31,3 210 100 7 Ungheni 831 813 570 556 116 112 145 144 813 100 8 Nisporeni 105 99,9 61,8 52,7 28 13,8 15,1 13,1 9 Hâncești 207 203 126 126 45,2 42,1 35,5 35,5 203 100 10 Cimislia 99 92 60,3 44,3 15,8 15,5 23,3 23,3 92 100 11 Basarabeasca 211 211 58,7 58,7 7,9 7,9 16,5 16,5 211 100 12 Leova 106 106 63,9 63,8 35,9 35,5 6,4 17,9 106 100 13 Cantemir 67,7 67,7 56,9 56,9 7,1 7,1 2,7 2,7 67,7 100 14 Cahul 770 762 491 484 41,8 40,6 237,2 237 15 Taraclia 131 115 68,5 61,2 36,7 35,5 26,2 6,4 115 100 16 TAU Găgăuzia 638 638 327 326 84,8 64,9 70,7 86,5 Comrat 365 365 128 128 49,4 30 32,3 51,7 365 100

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Ceadâr-Lunga 224 224 162 161 31,8 31,3 29,3 25,7 223 100 Vulcănești 50 49,8 37,1 37,1 3,6 3,6 9,1 9,1 17 Ștefan-Vodă 104 104 78,8 78,8 18,5 18,4 6,3 6,3 104 100 DPBS HD 4196 3977 2475 2062 616 399 773 690 2671 68

Annex 4.3 The non-centralized water supply sources Annex 4.3.1 The number and status of wells and springs from districts of DPBS HD Wells Springs Districts total arranged % total arranged % Ocniţa 4159 3936 95 43 43 100 Briceni 14587 14038 96 56 39 70 Edineț 15412 15412 100 97 85 88 Râșcani 3681 3586 97 95 42 44 Glodeni 4927 3941 80 155 103 66 Fălești 4189 3815 91 30 19 63 Ungheni 5028 4897 97 101 54 53 Nisporeni 1571 1230 78 138 138 100 Hâncești 4232 3628 86 79 62 78 Cimișlia 2915 662 23 5 5 100 Basarabeasca 680 360 53 5 3 60 Cantemir 1574 78 5,0 55 10 18 Leova 3975 2937 74 14 14 100 Cahul 1592 95 6,0 42 42 100 Taraclia 194 165 85 26 21 81 UTA Găgăuzia 3167 1662 52 27 19 70 Căușeni 1280 633 49 6 4 67 Ștefan-Vodă 1117 1050 94 9 8 89 DPBS HD 74280 62125 84 983 711 72 Total RM 178134 145097 81 3042 1990 65 Data sources of annexes 4.3: State Ecological Inspectorate

Annex 4.3 The use of accumulation lakes (reservoirs) in the districts from DPBS HD Categories of use Located Districts Number Surface general irrigation fishery agrement antierozional mixt oncourse on lateral Ocniţa 118 480 17 0 60 8 32 4 43 75 Briceni 225 1183 106 21 98 6 4 14 43 182 Edineț 195 876 6 32 7 - 144 39 156 Râșcani 193 3208 113 9 71 - - 6 16 177 Glodeni 231 1751 53 1 177 - - 154 80 Fălești 221 2213 93 5 123 - - 77 149 Ungheni 111 1385 61 3 47 - - 36 77 Nisporeni 101 696 82 5 13 - - 66 35 Hâncești 117 1300 47 3 63 - - 50 67 Cimișlia 38 418 3 8 22 - - 32 6 Basarabeasca 17 166 10 1 6 - - 4 12 Cantemir 66 570 52 14 - - 46 21 Leova 75 848 25 46 - - 13 5 66 Cahul 99 4135 49 15 31 - - 37 62 Taraclia 40 946 20 20 - - 24 16 TAU Găgăuzia 62 1563 19 28 - - 7 38 24 Căușeni 29 398 3 1 25 - - 24 1 Ștefan-Vodă 78 1164 20 4 44 - - 10 71 1 DPBS HD 2016 23300 773 82 920 21 36 198 805 1207

Annex 4.4

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The cost recovery of water use in the DPBS HD Annex 4.4.1 Tariffs for public water supply services of AMAC enterprises from DPBS HD on categories of consumers, in MDL and €/m3 (without VAT) Years Category of users 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 growth, in % MDL 10,1 10,6 12,1 12,7 14,7 15,1 16,3 16,3 16,3 16,3 17,2 17,2 171 Average tariff € 0,61 0,69 0,78 0,77 0,90 0,97 0,98 0,88 0,78 0,74 0,83 0,87 143 MDL 7,4 7,9 9,2 9,7 11,6 11,8 12,7 12,8 12,8 13,4 14,3 14,3 193 households € 0,44 0,51 0,60 0,59 0,71 0,76 0,76 0,69 0,61 0,61 0,68 0,72 162 bugetary MDL 25,9 26,2 25,8 27,9 29,8 30,7 31,9 32,3 32,3 33,7 34,8 34,8 134 organizations € 1,56 1,72 1,66 1,70 1,83 1,97 1,91 1,74 1,55 1,53 1,67 1,75 112 economic MDL 27,6 28,0 29,5 31,0 32,7 33,0 35,1 35,1 35,6 35,1 35,7 35,8 129 agents € 1,66 1,83 1,90 1,89 2,01 2,12 2,10 1,89 1,70 1,59 1,72 1,80 108 Exchange rates MDL/€ 16,6 15,3 15,5 16,4 16,3 15,6 16,7 18,6 20,9 22,1 20,8 19,9 120 Sources: Annexes 4.4.1-4.4.14 are drafted by the author according to the data from: 1 Financial and production indices of the activity of water supply and sewage enterprises of AMAC. Years 2011-2017; 2) Information Bulletin on Tariffs for Water Supply and Sewerage Services at AMAC Companies for 2007-2012; In: amac.md

Annex 4.3.2 The tariffs for public sewerage services at the AMAC enterprises from the DPBS HD, in MDL and €/m3 (without VAT) Years Category of users 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 growth, in % MDL 9,52 9,59 11,38 12,41 13,81 14,42 15,8 15,8 15,8 15,8 16,88 16,88 177 Average tariff € 0,57 0,63 0,73 0,76 0,85 0,92 0,95 0,85 0,76 0,72 0,81 0,85 148 MDL 5,82 6,04 7,43 8,42 9,56 9,92 10,59 10,59 10,59 11,0 11,75 11,75 202 households € 0,35 0,40 0,48 0,51 0,59 0,64 0,63 0,57 0,51 0,50 0,56 0,59 169 bugetary MDL 18,88 19,01 20,19 20,37 23,22 23,92 25,35 25,35 25,74 27,65 29,47 29,47 156 organizations € 1,14 1,24 1,30 1,24 1,42 1,53 1,52 1,36 1,23 1,25 1,41 1,48 131 MDL 20,31 20,44 22,2 23,3 24,7 25,55 27 27 27 27,7 28,7 28,7 141 economic agents € 1,22 1,34 1,43 1,42 1,52 1,64 1,61 1,45 1,29 1,26 1,38 1,45 118 Annex 4.4.3 The average tariffs for public water supply services of AMAC enterprises from DPBS HD, in MDL/m3 (without VAT) No. Towns Years Increase, % 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 1 Ocniţa 9,5 9,5 9,5 14,2 15,5 19,2 19,2 19,2 19,2 19,2 19,2 19,2 202 2 Briceni 12,5 12,5 12,5 12,8 12,8 12,8 12,8 12,8 12,8 12,8 12,8 12,8 103 3 Edineț 9,1 13,5 21,4 21,4 21,4 21,4 21,4 21,4 21,4 21,4 24,3 24,3 266 4 Glodeni 14,6 14,6 14,6 19,5 23,6 23,6 23,6 23,6 23,6 23,6 23,6 23,6 162 5 Fălești 10,2 10,2 10,2 10,2 12,4 12,4 14,5 14,5 14,5 14,5 14,5 14,5 142 6 Ungheni 4,0 6,2 6,2 6,2 7,7 7,7 9,0 9,0 9,0 9,0 15,0 15,0 374 7 Nisporeni 10,8 10,8 15,1 15,1 21,9 13,7 16,9 16,9 16,9 16,9 16,9 16,9 156 8 Hâncești 8,3 9,0 9,0 9,0 14,0 22,4 22,1 22,1 22,1 22,1 22,1 22,1 265 9 Cimișlia 8,0 8,0 10,0 10,0 14,1 14,1 14,1 14,1 17,0 17,0 213 10 Basarabeasca 6,5 6,5 9,4 9,4 9,4 9,7 9,7 9,7 9,7 9,7 9,7 9,7 149 11 Leova 6,3 8,3 8,3 8,3 13,7 13,7 21,0 21,0 21,0 21,0 21,0 21,0 334 12 Cantemir 8,8 8,8 13,3 13,3 14,1 14,1 14,1 14,1 14,1 14,1 14,1 14,1 160 13 Cahul 9,0 9,0 11,3 11,3 11,3 11,3 11,3 11,3 11,3 11,3 13,9 13,9 155 14 Taraclia 15,7 15,7 15,7 16,5 13,6 13,6 13,6 13,6 13,6 13,6 15,0 15,0 95 15 Comrat 7,5 7,5 12,3 12,3 14,2 14,2 19,0 19,0 19,0 19,0 19,0 19,0 255 16 Ceadâr Lunga 14,1 14,1 12,5 12,5 15,8 18,9 18,9 18,9 18,9 18,9 18,9 18,9 134 17 Vulcănești 8,5 8,5 10,8 10,8 15,5 15,5 15,5 15,5 15,5 15,5 15,5 15,5 183 18 Ştefan Vodă 15,4 15,4 17,6 17,6 17,6 17,6 17,6 17,6 17,6 17,6 17,6 17,6 114 DPBS HD 10,1 10,6 12,1 12,7 14,7 15,1 16,3 16,3 16,3 16,3 17,2 17,2 171 Total AMAC 9,4 10,0 11,3 12,2 13,6 14,0 14,8 14,9 15,0 15,3 15,7 15,7 167

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25

20

15

10

5

0

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Annex 4.4.4 Tariff dynamics for water supply services to households in the towns of DPBS HD, MDL/m3 60,0 55,0 50,0 45,0 40,0 35,0 30,0 25,0 20,0 15,0 10,0 5,0 0,0

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Annex 4.4.5 Tariff dynamics for water supply services to economic agents in the DPBS HD, MDL/m3

Annex 4.4.6 The dynamics of average tariff of public sewerage services for AMAC enterprises from DPBS HD, in MDL/m3 (without VAT) No. Years Towns Increase, % 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 1 Ocniţa 7,0 7,0 7,0 12,4 14,3 18,1 18,1 18,1 18,1 18,1 18,1 18,1 259 2 Briceni 11,1 11,1 11,1 14,3 14,3 14,3 14,3 14,3 14,3 14,3 14,3 14,3 129 3 Edineț 7,2 7,2 17,6 17,9 17,9 17,9 17,9 17,9 17,9 17,9 27,0 27,0 373 4 Glodeni 21,1 21,1 21,1 22,6 25,0 25,0 25,0 25,0 25,0 25,0 25,0 25,0 118

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5 Fălești 10,6 10,6 10,6 10,6 13,4 13,4 16,7 16,7 16,7 16,7 16,7 16,7 158 6 Ungheni 5,7 5,7 5,7 5,7 7,5 7,5 8,6 8,6 8,6 8,6 9,4 9,4 164 7 Nisporeni 7,4 7,4 12,0 12,0 10,0 9,1 19,7 19,7 19,7 19,7 19,7 19,7 265 8 Hâncești 7,6 8,4 8,4 8,4 13,9 16,5 13,6 13,6 13,6 13,6 13,6 13,6 179 9 Cimișlia 8,4 8,4 8,4 8,4 8,4 8,4 8,4 8,4 17,2 17,2 205 10 Basarabeasca 7,5 7,5 8,8 8,8 8,8 11,5 11,5 11,5 11,5 11,5 11,5 11,5 153 11 Leova 7,1 7,4 7,4 7,4 16,6 16,6 21,2 21,2 21,2 21,2 21,2 21,2 299 12 Cantemir 4,8 4,8 7,0 7,0 6,5 6,5 6,5 6,5 6,5 6,5 6,5 6,5 135 13 Cahul 3,7 3,7 4,5 4,5 4,5 4,5 4,6 4,6 4,6 4,6 9,2 9,2 250 14 Taraclia 18,3 18,3 18,3 26,5 19,5 19,5 20,0 20,0 20,0 20,0 16,0 16,0 87 15 Comrat 7,5 7,5 16,7 16,7 19,3 19,3 26,8 26,8 26,8 26,8 26,8 26,8 357 16 Ceadâr Lunga 14,4 14,4 14,5 14,5 18,3 21,3 21,3 21,3 21,3 21,3 21,3 21,3 147 17 Vulcănești 9,9 9,9 11,8 11,8 16,7 16,7 16,7 16,7 16,7 16,7 16,7 16,7 168 18 Ştefan Vodă 10,9 10,9 13,9 13,9 13,7 13,7 13,7 13,7 13,7 13,7 13,7 13,7 125 DPBS HD 9,5 9,6 11,4 12,4 13,8 14,4 15,8 15,8 15,8 15,8 16,9 16,9 177 Total AMAC 8,7 9,0 10,3 11,0 11,9 12,4 13,6 13,5 13,5 13,9 14,0 14,0 160

20

18

16

14

12

10

8

6

4

2

0

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Annex 4.4.7 Tariff dynamics for sewerage services to households on the DPBS HD, MDL/m3

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60 55 50 45 40 35 30 25 20 15 10 5 0

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Annex 4.3.8 Tariff dynamics for sewerage and treatment services to economic agents in the DPBS HD, MDL/m3

Annex 4.4.9 The ratio between the tariff and the cost of water and sewerage services in DPBS HD, in MDL/ m3 (2017) Water supply Sewerage and treatment Total Localities Difference Difference Difference Tariff Cost Tariff Cost Tariff Cost MDL € %44 MDL € % MDL € % 1 Ocniţa 18,4 26,2 -7,8 -0,39 70 17,1 22,1 -5 -0,25 77 35,5 48,3 -12,8 -0,64 73 2 Briceni 13,8 16,2 -2,4 -0,12 85 15,1 17,6 -2,5 -0,13 86 28,9 33,8 -4,9 -0,25 86 3 Edineț 23,7 27,1 -3,4 -0,17 87 28,6 20,1 8,5 0,43 142 52,3 47,2 5,1 0,26 111 4 Glodeni 18,9 22,3 -3,4 -0,17 85 22,6 28,7 -6,1 -0,31 79 41,5 51 -9,5 -0,48 81 5 Fălești 13,7 16,6 -2,9 -0,15 83 14,5 14,8 -0,3 -0,02 98 28,2 31,4 -3,2 -0,16 90 6 Ungheni 12,7 12,1 0,6 0,03 105 9,6 9,8 -0,2 -0,01 98 22,3 21,9 0,4 0,02 102 7 Nisporeni 18,1 19,6 -1,5 -0,08 92 18,1 20,6 -2,5 -0,13 88 36,2 40,2 -4,0 -0,20 90 8 Hâncești 23,5 28,5 -5 -0,25 82 14,4 15,6 -1,2 -0,06 92 37,9 44,1 -6,2 -0,31 86 9 Cimișlia 13,7 17,5 -3,8 -0,19 78 8,4 4,8 3,6 0,18 175 22,1 22,3 -0,2 -0,01 99 10 Basarabeasca 12,4 18,4 -6 -0,30 67 16,2 16,7 -0,5 -0,03 97 28,6 35,1 -6,5 -0,33 81 11 Leova 18,5 24,4 -5,9 -0,30 76 14,2 22 -7,8 -0,39 65 32,7 46,4 -13,7 -0,69 70 12 Cantemir 12,5 17,4 -4,9 -0,25 72 6,4 6,4 0 0 100 18,9 23,8 -4,9 -0,25 79 13 Cahul 13,8 15,4 -1,6 -0,08 90 9,8 10,9 -1,1 -0,06 90 23,6 26,3 -2,7 -0,14 90 14 Taraclia 15,9 17,1 -1,2 -0,06 93 17,3 19,1 -1,8 -0,09 91 33,2 36,2 -3 -0,15 92 15 Comrat 17,5 28,8 -11,3 -0,57 61 21,2 15,1 6,1 0,31 140 38,7 43,9 -5,2 -0,26 88 16 Ceadâr-Lunga 18,5 27,7 -9,2 -0,46 67 17,2 28,3 -11,1 -0,56 61 35,7 56 -20,3 -1,02 64 17 Vulcănești 19,2 25,3 -6,1 -0,31 76 22,2 23,3 -1,1 -0,06 95 41,4 48,6 -7,2 -0,36 85 18 Ştefan-Vodă 18,4 25,4 -7 -0,35 72 14,1 18,1 -4 -0,20 78 32,5 43,5 -11 -0,55 75 DPBS DH 16,8 21,4 -4,6 -0,23 79 15,9 17,4 -1,5 -0,08 91 32,8 38,9 -6,1 -0,31 84 AMAC 10,8 11,4 -0,6 -0,03 95 5,4 5,8 -0,4 -0,02 93 16,2 18,5 -2,3 -0,12 88 Source: annexes 4.4.9-4.4.14 are elaborated by the author according to the ˮFinancial and Production Indicators of the activities of the water supply and sewerage services from "Moldova Apă-Canal" Association. Year 2017. p. 75. In: amac.md

Annex 4.4.10 Dynamics of sales revenue at AMAC enterprises from DPBS HD, in thousand MDL Years Towns Average Growth, % 2011 2012 2013 2014 2015 2016 2017 Ocniţa 1126 1317 2156 2225 2884 3825 4088 2517 363

44 The cost-recovery rate of water supply and sewerage services in the DPBS HD

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Briceni 3134 3587 4166 4419 4786 5528 5583 4458 178 Edineț 13934 13862 13862 13126 11903 13738 16369 13828 118 Glodeni 4896 5127 6988 6920 7276 9029 8483 6960 173 Fălești 7413 7796 8582 10144 10244 10775 11953 9558 161 Ungheni 12960 16418 18440 18265 17937 17710 23327 17865 180 Nisporeni 2291 2692 3507 4261 4778 4900 5300 3961 231 Leova 3410 4193 5536 6621 6767 6384 7396 5758 217 Cantemir 1474 1650 1768 1968 2258 2218 2337 1953 159 Cahul 14572 15462 15128 15698 19879 21175 22967 17840 158 Prut river basin 65209 72103 80132 83648 88712 95282 107803 84699 165 Hâncesti 10253 10000 11900 8922 9818 9907 10820 10232 106 Cimislia 1564 3468 3782 4533 5194 4369 7433 4335 475 Basarabeasca 2296 2269 2461 2386 2394 2321 2409 2362 105 Taraclia 3303 3553 3744 4698 5869 6946 7252 5052 220 Comrat 7363 7736 9473 10239 11419 12217 13209 10237 179 Ceadâr-Lunga 8000 8292 8559 9027 10268 9973 11672 9399 146 Vulcănești 2160 2668 2818 3027 3551 3804 3968 3142 184 Ștefan-Vodă 4402 4684 4800 4995 5349 5529,7 6113 5125 139 DBS HS 39340 42670 47538 47826 53862 55068 62876 49883 160 MDL 104549 114773 127670 131474 142573 150350 170679 134581 163 DPBS € 6414 7357 7645 7069 6822 6816 8194 7188 128

Annex 4.4.11 Dynamics of sales revenue per worker at AMAC enterprises from DPBS HD, in ths MDL,€ Years Towns Average Growth, % 2011 2012 2013 2014 2015 2016 2017 Ocniţa 70,4 94,1 86,2 89 79,2 91,1 97,3 87 138 Briceni 53,1 71,7 82 81,8 97,3 106 105 85 198 Edineț 120 124 124 109 99,4 121 149 121 120 Glodeni 53,7 64,9 71,3 67,2 76,0 97,1 88,4 74 165 Fălești 61,5 59,5 75,3 81,8 78,4 82,3 87,9 75 143 Ungheni 81 101 118 116 120 121 169,0 118 209 Nisporeni 47,7 63 60,5 72,2 78,3 78,3 78,3 68 164 Leova 51,7 65,5 83,9 93,3 103 117 151 95 292 Cantemir 54,6 61,1 68 67,9 80,9 82,2 86,6 72 159 Cahul 82,2 87,9 82 83,9 109 118 128 99 155 Prut river basin 67,6 79,3 85,0 86,1 92,1 101 114 89,4 169 Hâncesti 93,2 93,5 102 116 124 122 141 113 151 Cimislia 51,7 53,6 63,8 69,7 96,4 76,7 143 79 276 Basarabeasca 48,1 49,3 58,6 56,8 59,9 70,4 73,0 59 152 Taraclia 54,1 56,4 61,4 69,1 80,4 87,9 99,3 73 184 Comrat 82,7 109 125 126 138 144 148 125 179 Ceadâr-Lunga 85,1 92,1 96,2 110 124 123 137 110 161 Vulcănești 47,6 55,6 62,6 67,3 78,1 90,6 92,3 71 194 Ștefan-Vodă 79,3 86,7 87,3 94,2 104 111 122 98 154 DBS 67,7 74,5 82,0 88,7 100 103 120 91 176 MDL 67,7 77,2 83,7 87,3 95,8 102 116 90 172 DPBS € 4,2 4,9 5,0 4,7 4,6 4,6 5,6 4,8 135 MDL 174 178 183 185 192 199 224 191 129 Total AMAC € 10,7 11,4 11,0 9,9 9,2 9,0 10,7 10,3 101

Annex 4.4.12 Dynamics of total expenses at AMAC enterprises from DPBS HD, in thousand MDL and € Years Towns Average Growth, % 2011 2012 2013 2014 2015 2016 2017 Ocniţa 1240 1815 2413 2392 3402 4226 4867 2908 392 Briceni 3484 4295 4647 5130 3713 6547 6414 4890 184 Edineț 13026 13026 13026 14593 15481 15131 14691 14139 113 Glodeni 4638 6148 8201 8456 9816 9502 9941 8100 214 Fălești 7926 8488 9272 10491 11538 11881 13061 10380 165 Ungheni 17757 19406 21296 21234 22541 22158 22809 21029 128

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Nisporeni 2817 3909 4242 5042 6621 7000 7600 5319 270 Leova 3878 4427 5308 7184 7119 6832 9542 6327 246 Cantemir 1669 1801 1938 2070 2433 2581 2909 2200 174 Cahul 16927 17869 20613 20941 24053 24676 24590 21381 145 Prut river basin 73361 81183 90956 97534 106717 110535 116424 96673 159 Hâncesti 11003 10681 11959 11672 10751 10178 12192 11205 111 Cimislia 2235 4501 5087 5562 6741 7388 7711 5604 345 Basarabeasca 2479 2639 3043 2763 2804 2206 3043 2711 123 Taraclia 4312 4316 4240 5166 6888 8113 8927 5994 207 Comrat 10951 13050 12059 12908 13653 15271 17818 13673 163 Ceadâr-Lunga 8492 8431 8826 11682 11831 14396 16027 11384 189 Vulcănești 2295 3011 3055 3479 4223 4789 4627 3640 202 Ștefan-Vodă 5967 6113 5776 5900 6639 6465 7244 6301 121 DBS 47734 52743 54044 59131 63530 68806 77589 60511 163 MDL 121095 133925 145000 156665 170247 179341 194013 157184 160 DPBS € 7429 8585 8683 8423 8146 8130 9314 8387 125 MDL 896354 951360 1049583 1188388 1219551 1178670 1129080 1087569 126 Total AMAC € 54991 60985 62849 63892 58352 53430 54205 58386 99

Anexa 4.4.13 The structure of expenditures at AMAC enterprises from DPBS HD, in thousand MDL (2017) Materials Depreciation (wear) Wages Insurance Towns Total thousand MDL % thousand MDL % thousand MDL % thousand MDL % Ocniţa 4867 1290 27 947 19 1676 34 457 9,4 Briceni 6414 1166 18 869 14 3000 47 825 12,9 Edineț 14691 5453 37 1536 10,5 4506 31 1239 8,4 Glodeni 9941 3803 38 940 9,5 2829 28 778 7,8 Fălești 13061 3922 30 1154 8,8 4699 36 1285 9,8 Ungheni 22809 4843 21 2373 10 9815 43 2702 11,8

Nisporeni 7600 1180 16 3000 39 900 11,8 Leova 9542 1578 17 3136 33 2644 28 692 7,2 Cantemir 2909 515 18 649 22,3 1143 39 293 10,1 Cahul 24590 5236 21 4531 18,4 9452 38 2407 9,8 Prut river basin 116424 28987 25 16134 14 42764 37 11578 9,9 Hâncesti 12192 3661 30 2648 22 3581 29 978 8,0 Cimislia 7711 540 7 1552 20 2480 32 682 8,8 Basarabeasca 3043 947 31 213 7,0 1322 43 358 11,8 Taraclia 8927 1719 19 1994 22 3289 37 857 9,6 Comrat 17818 5809 33 3049 17 4702 26 1682 9,4 Ceadâr-Lunga 16027 2658 17 6365 40 4534 28 1247 7,8 Vulcănești 4627 1124 24 539 11,7 2275 49 586 12,7 Ștefan-Vodă 7244 1145 16 998 14 3307 46 914 12,6 DBS 77589 17604 23 17358 22 25490 33 7303 9,4 DPBS 194013 46590 24 33492 17 68254 35 18881 9,7 Total AMAC 1129080 377954 33 144708 13 307792 27 82497 7,3

Annex 4.4.14 Profitability of water supply and sewerage public services at AMAC enterprises from DPBS HD, in thousand MDL (2017). Aprovizionarea cu apă Canalizare și epurare Profitability Towns Difference Difference of sales of assets Income Expen-ditures MDL € % Income Expen-ditures MDL € % % % 1 Ocniţa 1287 1834 -546 -28 70 820 1060 -240 -12 77 4,8 -1,4 2 Briceni 1892 2211 -320 -16 86 1797 2100 -303 -15 86 13,3 -3,2 3 Edineț 7562 8653 -1091 -55 87 8604 6038 2565 129 142 31,3 9,7 4 Glodeni 2473 2921 -447 -23 85 2167 2475 1951 -16 88 0,3 -1,4 5 Fălești 3748 4548 -801 -40 82 2656 2704 -48 -2 98 13,1 -1,5 6 Ungheni 15549 14797 752 38 105 7779 7979 -200 -10 97 32,1 6,8 7 Nisporeni 1414 1537 -123 -6 92 1438 1641 -203 -10 88 8 Hâncesti 7305 8837 -1533 -77 83 2936 3164 -228 -11 93 10,1 0,02

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9 Cimislia 4364 2882 1482 75 151 1506 381 1125 57 395 24,4 -0,12 10 Basarabeasca 1059 1570 -511 -26 67 1350 1387 -37 -2 97 9 -10,4 11 Leova 3895 5121 -1226 -62 76 1497 2330 -833 -42 64 -10,6 -0,1 12 Cantemir 1797 2487 -690 -35 72 426 427 -1 0 100 10,5 -8,6 13 Cahul 14359 15968 -1609 -81 90 7443 8303 -860 -43 90 15,8 -0,13 14 Taraclia 3404 3671 -267 -13 93 1983 1832 151 8 108 4,2 -2,2 15 Comrat 8353 13706 -5354 -270 61 4447 3163 1284 65 141 0,8 -0,8 16 Ceadâr-Lunga 5853 8736 -2884 -145 67 3757 6170 -2413 -122 61 -15,9 0,04 17 Vulcănești 2635 3468 -833 -42 76 1108 1159 -51 -3 96 23,5 4,1 Ștefan-Vodă 2752 3785 -1033 -52 73 1458 1876 -418 -21 78 25 9,2 DH DPMN 89700 106731 -17032 -858 84 53171 54187 -1016 -51 98 11,3 -0,01

Annex 4.4.15 Dynamics of revenues of tax for water use in the districts from DPBS HD, in thousand MDL Years Districts Average Growth, % 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Briceni 44,3 66,5 58 49,2 517 414 326 252 432 293 355 207 251 466 Ocniţa 52,0 35,5 19,1 24,8 88,2 53,3 45,0 48,1 86,2 96,8 51,7 62,9 55,3 121 Edineț 633 589 364 615 168 684 636 272 481 208 623 812 507 128 Râșcani 1477 6358 4704 6253 6463 3241 3482 5235 735 3210 4367 3699 4102 250 Glodeni 250 190 122 71,3 262 83 133 60,6 39,6 56,0 42,0 59,4 114 24 Fălești 50,8 93,6 88 97,6 85,6 81,6 76,6 75,2 81 70,0 64,7 70,7 78 139 Ungheni 300 390 263 386 449 516 410 347 364 327 355 323 369 108 Nisporeni 47,2 43 18 17,2 15,3 37,9 50,4 42 25,6 110 75,5 94,2 48 200 Hâncești 71 14,8 16,5 18,2 23,2 27,6 27,7 26,6 59,1 73,8 90,5 99,8 46 141 Cimislia 30,6 67,4 45,3 87,2 63,9 3,5 61,1 77,6 181 12,1 149 164 79 537 Basarabeasca 40,1 116 17,3 32,5 154 86 90,1 82,2 77,5 68,4 109 118 83 294 Cantemir 17,2 18,9 15,7 25,7 21,6 27,7 24,2 21,9 22,5 34,5 43,5 43,4 26 252 Leova 24,3 31,5 4 3,8 36,9 88,3 38 70,4 25,8 37,9 56,7 52,0 39 214 Cahul 355 483 427 418 541 606 493 671 745 593 692 658 557 185 Taraclia 62,2 43,5 5,4 60,6 26,8 22,9 29,9 35,8 43,6 52,3 72,1 108 47 174 TAU Găgăuzia 174 390 312 339 232 208 188 286 636 495 502 543 359 312 Ștefan Vodă 35,5 149 -82,2 51,3 101 193 310 120 296 147 127 174 135 490 MDL 3664 9080 6397 8551 9249 6374 6421 7724 4333 5886 7776 7288 6895 199 DPBS HD € 221 593 413 521 567 409 384 415 207 267 373 367 395 166 Annex 4.4.16 Coefficient of toxicity for some pollutants discharged with wastewater Coefficient of Coefficient of Substance Substance toxicity toxicity Mercury (Hydrargium) 2000 Phosphates 5 Phenols 1000 Nitrogen ammonium salts 2,56 Cadmium, trivalent chromium 200 Trivalent bismuth 2 Copper, zinc, nickel, cobalt and formaldehyde 100 The completely BOD and suspended solids 0,33 Hexavalent chromium and nitrites 50 Nitrate 0,1 Petroleum products, arsenic, cyanides, lipids 20 Sulphates 0,01 Detergents, iron, lead 10 Chloride 0,003 Source: Annex 2 of the Law on payments for environmental pollution

Annex 4.4.17 Dynamics of water pollution charges in the districts from DPBS HD, in thousand MDL Years Districts Average Growth, % 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Briceni 101 193 238 153 294 152 173 195 203 161 84,4 177 84 Ocniţa 30,45 48 64 40,5 41,3 28,6 38,4 41,6 31,1 32,8 16,4 38 54 Edineț 64,1 87,9 109 104 181 101 140 144 144 67 36,3 107 57 Râșcani 15,8 25,7 32,7 27,2 43,9 29,5 38,7 40,1 39,2 35,3 66,3 35,8 421 Glodeni 38,9 32,8 71,5 56,1 101 80,7 51,1 79,6 72,6 42,0 59,0 62 152 Fălești 56,7 54,1 87 99 113 62,7 82 139 127 60 123 91 218 Ungheni 23,3 33,0 43,6 56,3 128 82,7 125 160 145 118 144 96 619 Nisporeni 9,5 3,4 12,7 15,1 44 20,1 45,1 23,1 26,0 24,1 22 254

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Hâncești 88,1 86,5 98,7 69 95,4 65 71,4 91,5 83 77,4 92,7 84 105 Cimislia 60,8 45,3 72,6 57,2 95,4 85,6 105 103 116 145 235 102 387 Basarabeasca 47,3 55,4 44,5 50,8 68,5 56,3 63,3 44,3 85,6 60,9 288 79 609 Cantemir 56,8 58,7 65,4 68,7 78,1 67,5 94,0 108 108 113 123 85 216 Leova 23,6 48,9 39 45,1 58,9 34,5 97,4 103 128 130 121 75 514 Cahul 27,8 36,5 44,7 51,3 65,7 60,2 54,8 76,1 95 76 249 76 895 Taraclia 23,1 27 30,3 34,7 54,2 54,5 75,1 96,1 116 116 151 71 653 TAU Găgăuzia 133 138 198 169 180 106 122 136 158 165 132 149 99 Ștefan Vodă 44,5 46,4 65,7 57,1 70,3 49,0 51,1 51,6 55,1 61,6 36,7 53,6 82 DPBS MDL 836 1026 1308 1152 1682 1160 1402 1652 1729 1486 1982 1403 237 HD € 50,3 67,1 84,4 70,2 103,2 74,4 83,9 88,8 82,7 67,4 95,2 70,7 189

Annex 4.4.18 Dynamics of the fines imposed for law infringement of use and protection of water resources, in thousand MDL Districts Years Average Growth, % 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Briceni 1,4 1,2 10,2 8,5 42,8 35,2 25 42,6 65,2 79,2 93 36,8 6643 Ocniţa 1 2,15 0 6 12,1 7 9 19,2 30,7 8,9 22,1 10,7 2205 Edineț 2,9 2,7 3,5 9,2 19 25 22 8 64 39 129 29,4 4436 Râșcani 1,3 1,0 3,8 4,6 5,7 7,7 7,7 7,8 7,2 7,4 9,5 5,8 757 Glodeni 1,6 1,5 2 4,1 7,2 6,4 22,2 19 70,8 12,6 77,1 20,4 4819 Fălești 12,48 5,28 17,6 51,5 15,8 18,6 27,52 85,8 120 38,4 121 46,7 968 Ungheni 4,2 6,4 3,3 12,8 27,6 30,6 62,2 69,6 73,2 65,6 23,9 34,5 569 Nisporeni 5,4 2,2 13 7,8 18 12,8 17 36 36,5 9,2 18,4 16,0 341 Hâncești 3,8 0 10 41,4 9,2 50,1 28,8 50,8 54,2 16,8 60,6 29,6 1595 Cimislia 1,9 1,3 10 10,6 9,2 13,2 49,8 27,4 36,5 48,8 79,4 26,2 4179 Basarabeasca 0 0 0,4 1 5,4 21,4 23,4 5 4,8 9,4 43,2 10,4 Cantemir 1,2 7,1 5,7 2,4 0 8,8 10,2 28,2 63 26 49,5 18,4 4125 Leova 9,3 8,4 15 11,8 15,9 22,2 29,9 18,7 74,9 39,8 127 33,9 1362 Cahul 1,4 0,4 0 0,8 6,4 6,3 30 37,6 36,2 18 6,3 13,0 450 Taraclia 2,6 8,9 17 43,4 40,9 34,2 56,8 121 82 57,5 59,6 47,6 2292 UTA Găgăuzia 6,9 31 41 13 32,3 18,6 53,1 27,1 45,2 31,6 50,1 31,8 726 Ștefan Vodă 4,4 1,6 10,2 6,6 2,6 14,4 18,9 7,1 14,6 3,1 26,5 10,0 604 MDL 61,7 80,9 163 235 270 332 494 611 879 511 995 421 1613 DPBS HD € 3,7 5,3 10,5 14,4 16,5 21,3 29,6 32,9 42,0 23,2 47,8 22,5 1285 Data sources of annexes 4.4.17-18: State Ecological Inspectorate

Annex 4.5 Financing measures for rational use and protection of water resources Annex 4.5.1 Dynamics of the projects number funded by the NEF for water protection in DPBS HD Years UTA Nr. 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Total 1 Briceni 1 3 3 0 1 0 5 3 1 1 18 2 Ocniţa 2 2 2 0 0 0 1 2 1 10 3 Edineţ 0 0 1 1 0 1 7 2 4 3 19 4 Râşcani 1 3 2 3 6 3 6 6 9 2 41 5 Glodeni 0 1 0 3 2 1 0 4 3 3 1 18 6 Făleşti 0 1 2 5 6 3 5 14 10 15 61 7 Ungheni 2 1 4 2 5 5 8 14 16 4 1 62 8 Nisporeni 5 6 4 6 6 4 8 9 7 5 4 64 9 Hânceşti 2 6 4 3 7 5 7 24 14 10 82 10 Cimişlia 2 1 3 3 2 2 10 6 10 8 47 11 Basarabeasca 4 0 2 2 1 0 2 1 4 6 22 12 Leova 1 3 3 0 1 2 5 15 14 12 1 57 13 Cantemir 8 1 3 4 6 3 8 17 11 7 69 14 Cahul 2 3 2 8 7 4 5 6 3 4 45

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15 Taraclia 0 1 2 2 2 1 1 3 1 2 15 16 UTA Găgăuzia 1 3 2 3 1 1 4 9 5 6 35 17 Ştefan Vodă 1 2 1 2 2 0 5 5 4 3 25 DPBS HD 32 37 40 47 55 35 87 140 117 91 7 690 Republic of Moldova 88 85 94 100 126 105 188 309 265 249 11 1620 Surse: The annual report of National Environmental Fund (NEF)

Annex 4.5.2 Dynamics of subsidies allocated from NEF for water protection in DPBS HD, in mil. MDL Years Districts No. 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Total 1 Briceni 0,29 3,7 0,37 0 0,01 0 2,5 1,7 1,3 0,15 0 10 2 Ocniţa 0,19 2,5 6,0 0 0 0 0,51 0,5 0,75 0 0 10,5 3 Edineţ 0 0 0,04 0,09 0 1,5 7,1 1,5 2,5 5,1 0 17,9 4 Râşcani 0,05 0,34 0,04 1,2 3,6 0,95 2,7 4,5 8,9 3,6 0 25,6 5 Glodeni 0,21 0,01 0 3,9 1,6 1,3 0 2,1 2,8 4,5 2 18,4 6 Făleşti 0 0,01 0,02 8,4 5,2 2,0 20,5 19,9 13,6 19,4 0 89 7 Ungheni 0,2 0,01 0,9 1,1 4,6 7,8 7,9 12,4 14,9 4,7 6,0 60,4 8 Nisporeni 0 0,88 0,04 1,1 0,64 5,8 8,3 2,7 31 6,0 13,6 70 9 Hânceşti 0,3 2,2 2,2 5,8 7,8 7,1 14,5 58,7 17,9 19,8 0 136 10 Cimişlia 0,19 0,2 0,29 3,7 0,15 2,9 13,2 3,6 13,6 10,3 0 48,1 11 Basarabeasca 0,52 0 0,02 1,9 0,83 0 1,3 0,5 4,6 8,8 0 18,4 12 Leova 0,15 0,4 10,0 0 0,1 1,6 5,6 18,8 16,9 10 2,6 66 13 Cantemir 1,1 0,01 0,06 1,2 4,4 2,6 7,6 13,2 11,5 18,4 0 60 14 Cahul 0,13 0,95 0,2 8,2 6,0 15,5 9,8 7,2 3,1 5,3 0 56,4 15 Taraclia 0 0,05 0,28 0,03 3,3 1,2 0,5 2,2 1,0 2,0 0 10,5 16 UTA Găgăuzia 0,1 0,5 0 3,4 1,2 1,6 5,0 7,8 8,5 7,6 0 32,7 17 Ştefan Vodă 0,67 0,28 0,01 2,3 3,1 0 4,5 7,1 6,5 4,1 0 28,6 MDL 4,1 11,8 20,5 42,2 42,5 51,8 111 161 159 130 24,2 759 DPBS HD € 0,25 0,77 1,3 2,6 2,6 3,3 6,6 8,7 7,6 5,9 1,2 38,2

Annex 4.5.3 Number of projects approved by Regional Development Agency in the HD DPBS Total 2010-2016 years 2017-2020 years No. Districts Total NFRD GIZ Total NFRD GIZ Total NFRD GIZ 1 Râşcani 5 0 5 5 0 5 0 0 0 2 Glodeni 1 1 0 0 0 0 1 1 0 3 Făleşti 4 4 0 2 2 0 2 2 0 4 Ungheni 2 2 0 1 1 0 1 1 0 5 Nisporeni 2 2 0 1 1 0 1 1 0 6 Hânceşti 2 2 0 1 1 0 1 1 0 7 Cimişlia 1 1 0 1 1 0 0 0 0 8 Leova 3 2 1 2 1 1 1 1 0 9 Cahul 6 2 4 5 2 3 1 0 1 10 Taraclia 1 1 0 1 1 0 0 0 0 Total 27 17 10 19 10 9 8 7 1 Sources: Operational Plans and Reports of North, Central and South Regional Development Agencies

Anexa 4.5.4 The approved sum to water projects by Regional Development Agencies, in million MDL Total 2010-2016 years 2017-2020 years Districts No. Total NFRD GIZ Total NFRD GIZ Total NFRD GIZ 1 Râşcani 23,8 0 23,7 23,8 0 23,7 0 0 0 2 Glodeni 40 40 0 0 0 0 40 40 0 3 Făleşti 101 93,7 0 30,6 23,2 0 70,5 70,5 0 4 Ungheni 55,6 51,6 0 32,8 28,9 0 22,8 22,7 0 5 Nisporeni 80,1 79,7 0 45 45 0 35,1 34,7 0 6 Hânceşti 45,9 45,9 0 24,2 24,2 0 21,7 21,7 0 7 Cimişlia 11,7 11,7 0 11,7 11,7 0 0 0 0 8 Leova 92 34,9 56,7 66,9 10 56,7 25,1 24,9 0 9 Cahul 105 30,7 74,3 56,6 30,7 25,9 48,4 48,4

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10 Taraclia 13,2 13,2 0 13,2 13,2 0 0 0 0 DPBS MDL 568 401 155 305 187 106 264 215 48 HD € 31,8 22,4 8,7 17,5 10,7 6,1 12,3 10,0 2,2

Annex 4.5.5 Estimated capital investment in WSS sector ( (2014-2027) Source: Water Supply and Sanitation (WSS) Strategy (2014 – 2027)

Annex 4.5.6 Projected budget support for WSS sector in the period 2014-2027 2014-2017 2018-2022 2023-2027 Total Suportul bugetar Total HD DPBS Total HD DPBS Total HD DPBS Total HD DPBS Contribuţia din surse interne, 1,545 0,6 2,1 0,83 2,8 1,1 6,4 2,6 în milioane lei (2,1)46 (0,85) (2,8) (1,1) (3,7) (1,5) (8,8) (3,5) Echivalent ( milioane EURO) 96,7 39 130 52 173 69 399 160 contribuţia din surse externe, milioane Euro 64 26 90 36 100 40 254 102 Source: Annex 1 of Water Supply and Sanitation (WSS) Strategy (2014 – 2027)

45 For the years 2014-2017, the reference exchange rate was 15.5 MDL / 1 €, for 2018-2022 - 16.0 MDL / 1 € and for 2023- 2027 - 16.5 MDL / € 1 46 The figures in brackets are calculated based on the Euro / MDL reference rate of 19.5 MDL / Euro.

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