Water charging policy in Strezevo Irrigation System

1 ILIJA KONDINSKI 1 MSc. of Civil Engineering, JP "Strezevo" - Bulevar 1 Maj bb - 7000 Bitola, Republic of Macedonia, Email: [email protected]

Abstract The irrigated agriculture is the biggest water consumer in the Republic of Macedonia. The ability and willingness to pay of the Macedonian farmers, due to numerous political, economical, social and other factors, are low. As a result of these, we had a poor irrigation water charges collection, because of which nearly all of the water economy enterprises are in a bad economical state. The legal regulations which affect this issue will be analyzed, along with the real shown influences on the irrigation water charging policy. The undertaken actions in Public Enterprise Strezevo for improving the water charge collection and the results that have been achieved will be presented. Keywords: irrigation water charging, ability to pay, willingness to pay.

General data The Strezevo Irrigation System (SIS) is situated in the south-western part of the Republic of Macedonia. It is multipurpose system which obtains irrigation of 20.200 ha net cultivated area and domestic and industrial water supply. The town of Bitola is an administrative, economic and cultural center of that area. Around forty villages within command area of the irrigation system are represented the rural environment. The Irrigation Pipeline Network (IPN) of the Strezevo Irrigation System enables an irrigation of the part of Pelagonia Plain limited by the river Semnica at the north, river Crna at the east, Macedonian-Greek border at the south and the Main Supply Channel at the west. The terrain conditions allows sufficient gravity pressure for sprinkling irrigation of more than 90% of the agricultural area covered by the IPN. IPN is a network of main and lateral pipelines with total length of 534 km. The 11 main pipelines (104 km total length), are attached to the Main Supply Channel through 10 intake structures, at the 2 - 2.5 km mutual distance, covering correspondent net area from 175 - 3,217 ha (see Table 1). The seven main pipelines are made of steel pipes and another three ones from Glass Fiber Reinforced Polyester (GRP) pipes (3).

Table 1. Irrigation pipeline network - Intakes, main pipelines and corresponded irrigated areas

Intake No. Main pipeline Irrigated net area [ha] 1 SR1 (1C)* 557 2 G1 (2C) 1.190 3 SR7 (3C) 1.937 4 SR9 (4C) 1.496 5 G2 (5C) 3.217 6 G3 (6C) 2.567 7 SR11 (7C) 2.195 8 G4 (8C) 2.100 9 SR12 (9C) 2.293 10 G5 (10C) 1.873 SR13 (11C) 175 * The pipeline has not been built yet

The lateral pipelines (total 428) are connected to the main pipelines. They are made of hard PVC pipes, with 430 km total length, placed at mutual distance of 600 m and 30-60 ha solely service area. At every 100 m along the lateral pipelines, there are watering valves (hydrants) where the irrigation equipment is attached. The total arable area covered by the SIS are consisted of 10.293 ha private property and 9.907 ha state (former social) property. The size of the plots in the private sector is as follows:

BALWOIS 2010 – Ohrid, Republic of Macedonia – 25, 29 May 2010 1/8 Table 2. The size of the plots in the private sector in Strezevo Irrigation System

Possessed by the Size of plots Net area household [ha] [ha] [%] < 1 11 1.300 1 ÷ 3 31 3.100 3 ÷ 10 58 5.893 Total 100 10.293

There is wide range of used irrigation equipment: linear and corner systems, different types of portable sprinkling sets, self-propelled vanes, typhoons and drip irrigation systems, but there are still lot of farmers which have no or not sufficient irrigation equipment. According to the design crop pattern the mostly presented crops are: wheat (23.7%), sugar beet (19.6%), alfalfa (17.3%), maize (11.3%), tobacco (6.1%), sunflower (4.9%) and, so called "high value" crops - vegetables, orchards, hops and vineyards (18,1%).

______Main Supply Canal • Main Canal Offtakes ______Irrigation Pipeline Network • Head Office and Command Center

Figure 1. Strezevo Irrigation System, layout of infrastructural facilities

BALWOIS 2010 – Ohrid, Republic of Macedonia – 25, 29 May 2010 2/8 Irrigation Water Charge - a basic condition for sustainable management of Irrigation Schemes The irrigated agriculture is the biggest water consumer in Macedonia. Key participants in this process are Water Economy Enterprises as suppliers of water and irrigation water users, which generally can be divided into two groups: farmers and privatized joint stock companies formed after the dissolution of the former socialistic agrocombinates. Generally, privatized agrocombinates, which in most cases use state land under long term concession, pay the water fee regularly. As legal entities, whose economic viability is directly related to the tendency to achieve higher yields from the crops, and because one of the main factors is the irrigation, they are aware of the great importance of water, thus trying to maintain good relations with water economy enterprises. The ability and willingness to pay the water irrigation fee by farmers, as a result of numerous political, economic, social and other factors is low. The result is the poor recovery of irrigation water charges, because almost all the companies providing services in water supply for irrigation are in a difficult financial situation.

Legislation The structure and manner of collection of the water irrigation charges are regulated by the Water Management Enterprise Law (Official Gazette of RM No. 85 of 31.12.2003). Irrigation water are delivered on the basis of long-term contracts for water supply which are made by the Water User Associations and annual contracts for the supply of water in the irrigation season that is made with individual users. According to the mentioned contracts an annual charge (fixed part) and a charge for the delivered water amount (variable part) shall be paid. The annual charge is the amount of the costs of ongoing annual maintenance of the irrigation system and is paid in advance by December 31 each year for the next year. Its value is in correlation with irrigated plot size. The fixed part ensured a basic income even in dry years when there was little or no irrigation demand. In SIS, for a long time, the fixed part was equivalent to 50% of the total projected cost of operation and maintenance (O&M) and depreciation charges for the coming year (now this portion is 10%). The charge for the delivered quantity of water is the cost of the amount of water supplied to the consumers, according to its volume, which is paid on a monthly basis following the delivery. This variable part in SIS was based on a per hectare price for the different crops with the price per crop loosely reflecting water consumption. The Billing Service in SIS delivers the bill for this charge once a year, after the current irrigation season ends. Since 1992, the irrigation water price in SIS has not been increased, and it is 0,016 EUR/m3. The fixed part of the irrigation water fee amounts 7,05 EUR/ha. The irrigation water fee per hectare in SIS is depending from the value of net crop water requirement, and it varies within the limits: 20 - 70 EUR/ha.

Undertaken activities to increase the irrigation water fee collection in Strezevo Irrigation System At the end of 2009, especially in November, within the activities of the Billing Service in SIS, an extra action has been taken to send Notices for unpaid debt for irrigation to the farmers for the period 2006 - 2008. The year 2006 is taken as the last year for which a lawsuit may be filed to the court in jurisdiction. In the Notices the date of 05.12.2009 was referred as the deadline for regulating the commitment of farmers to pay the debt, and after which the unpaid debt was to be paid by court order. Until 25.12.2009 no complaints have been filed, leaving space for paying many of the debts. It should be noted that no interest penalty for the delay of payment of the farmers’ debts from past years has been taken into account. The innovation in the delivery of the Notices was that instead of the usual way by mail, the Notices were delivered to the users’ houses by the employees of the Billing Service aided by numerous employees of the administration and other operational sectors of the SIS.

BALWOIS 2010 – Ohrid, Republic of Macedonia – 25, 29 May 2010 3/8 The Notice distribution, 4333 in total, was completed within 14 calendar days. The Notices were distributed during the morning and for those users who were not home at the time, the Notices were distributed in the afternoons and on weekends. Proof that the Notice has been received by the user was his signature or the signature of a family member, after which the original was left to the user, and a copy was taken by the deliverer. This manner of notice distribution, with the involvement of a great number of employees from the SIS has resulted in several benefits including: an increase in the percentage of received Notices and the immediate introduction of a large number of employees from different sectors in the SIS with the problems that arise in the process of invoicing, delivery and payment of water irrigation charge by the farmers. Employees have become more aware of a very important segment of the work of the SIS - the way of collecting money, directly from which the financial viability of the company depends and among other things, their salary. The personal experience from encounters with the users was filed by the employees on the form of Notice, also making formal remarks at the same time like: user does not want to receive the Notice, the user receives but does not sign the Notice, the user does not live at the given address, the user is deceased, correction of the personal data of users (name, address) and informal observations concerning the reasons for the denial of the Notices, some written personally by the users. Some of these interesting comments will be listed separately and annotated. Useful information about the willingness to pay (the users who accepted the Notices) and the ability to pay (partly represented by the users that paid the debt in the regular and extended period without raising a complaint), has been obtained by the statistical processing of data obtained in the action of the delivery of the notices and actions that followed later: payment of debts by a certain number of users in a given period, the filing of lawsuits against a number of users assessed as able to pay by the Billing Service. The action has helped detect objective and subjective reasons for the poor state of the collection of irrigation water fee. Weaknesses have been detected in the Billing Service, in terms of errors in the users’ data (personal data, address), errors in the amounts of water irrigation charges (wrong data for the size of the plots and the type of crops), the lack of considering justified comments from previous years by the users (ranging from the lack of a standardized procedure for handling these remarks to the lack of responsibility of certain individuals) etc. Part of the weaknesses stem from situations that do not depend on the Billing Service: unfinished inheritance cases of deceased users, unfinished cases of change of ownership on the basis of inheritance, gift and purchase of agricultural land by the Land Cadastre Service, the failure of reporting changes of ownership and changes of personal data and address by users to the Billing Service. The insubmission of data for the renting of the agricultural land by the owners, related to the common practice of their avoiding reporting to the State Tax Department, where it is necessary to submit a Leasing Agreement, also represents a major problem. The frequent change of tenants, causing situations like the current tenant refusing to pay the unpaid debt of the former one, also represents a problem for the Billing Service. During the statistical processing of the Notices for the period 2006-2008, they were primarily grouped by the address of the residence of the owner, rather than the land belonging to the appropriate Cadastral municipality. According to the size, the city of Bitola was singled out, on the one hand, as a place in which most of the owners of agricultural land reside and as a major center of the migration for residents from the rural areas which are covered by the SIS, especially the young population. On the other hand, there are around 40 rural settlements, dominated by a few villages, which have become suburban neighborhoods and a larger number of rural settlements which are facing dramatic population loss. The second criterion for grouping the users was the number of unpaid annual bills in the period 2006- 2008: three, two and one unpaid annual irrigation bill. An assumption is that willingness to pay is mainly highlighted by the number of unpaid bills for the mentioned period.

BALWOIS 2010 – Ohrid, Republic of Macedonia – 25, 29 May 2010 4/8 The third grouping criterion was the average annual amount of water user's debt, deployed in 10 categories:

Category I II III IV V VI VII VIII IX X Value in MKD 50- 100- 200- 500- 1000- 2000- 3000- 4000- over 0-50 Denars 100 200 500 1000 2000 3000 4000 5000 5000 The official exchange currency rate is 1 € = 61.5 MKD Denars.

The number of categories and their scope was determined to show the presence of the average size of the debts that farmers own to the SIS. Each user owning one cumulative account for all his plots within the SIS, which in most cases are quite small and separated among them by substantial distances.

Research Results The total number of Notices delivered to users is 4333. If it is known that the average number of individual users is 6570, this means that there is insufficient willingness to pay at 66% of individual users. From 4333 users that have received Notices, within the regular and extended payment term (05.12.2009 and 20.12.2009 respectively), 1504 users have paid the bills (34.7%) and, in the first cycle, 662 users have been sued (15.3%) for non payment. In this cycle the water users who have a debt from year 2006 are chosen, because if the complaint is not submitted before 31.12.2009, there is no legal possibility to charge the bill.

Table 3. Number of unpaid bills for the period 2006 - 2008 before Notice delivery (including 01.11.2009)

Urban Rural Total Unpaid bills for No % No % No % 3 years 1021 65.8 2105 75.7 3126 72.1 2 years 238 15.3 295 10.6 533 12.3 1 year 292 18.8 382 13.7 674 15.6 Total 1551 100.0 2782 100.0 4333 100.0

Table 4. Number of paid bills for the period 2006 - 2008 in regular (including 05.12.2009) and extended payment term (including 20.12.2009)

Urban Rural Total Unpaid bills for No % No % No % 3 years 358 61.2 584 63.5 942 62.6 2 years 96 16.4 145 15.8 241 16.0 1 year 131 22.4 190 20.7 321 21.3 Total 585 100.0 919 100.0 1504 100.0

Table 5. Number of sued water users in the first cycle (deadline 31.12.2009)

Urban Rural Total Unpaid bills for No % No % No % 3 years 85 86.7 496 87.9 581 87.8 2 years 8 8.2 44 7.8 52 7.9 1 year 5 5.1 24 4.3 29 4.4 Total 98 100.0 564 100.0 662 100.0

From 1551 warned users in urban center Bitola, in the payment term, before the submission of the complaint has taken place, 585 users or 37,7% have paid, while from 2782 warned users in rural areas, 919 users or 33% have paid, so the difference between the urban and rural area is 4,7%. The number of sued users in the first cycle in Bitola is 98 or 6,3% compared to the total delivered Notices. Of these 98 notices, 85 (86,7%) are for three unpaid bills. The number of sued users in the first cycle in rural areas is 564 or 20,4% compared to the total delivered notices. Of these 564 notices, 496 (87,9%) are for three unpaid bills.

BALWOIS 2010 – Ohrid, Republic of Macedonia – 25, 29 May 2010 5/8 Table 6. Distribution of Notices by user's resident place

No of average annual bills classified in predefined intervals in Unpaid bills for MKD Denars

No Place of Notices o 0-50 N 1 year 50-100 3 years 2 years 100-200 200-500 500-1000 over 5000 1000-2000 2000-3000 3000-4000 4000-5000

1 Baresani 71 63 1 7 0 4 8 10 26 18 5 0 0 0 2 Bistrica 197 133 27 37 16 17 27 47 34 36 7 5 4 4 3 194 138 18 38 6 22 41 84 32 7 0 0 0 2 4 Velusina 68 65 2 1 5 10 13 16 13 10 0 1 0 0 5 Graesnica 46 36 6 4 1 4 7 10 9 3 4 2 2 4 6 Dragarino 11 9 1 1 0 0 1 1 2 5 2 0 0 0 7 Dragozani 41 36 2 3 1 2 13 15 10 0 0 0 0 0 8 Dragos 50 50 0 0 2 18 13 8 5 4 0 0 0 0 9 Egri 72 35 27 10 0 2 7 9 9 13 7 7 3 15 10 Zabeni 73 50 11 12 2 1 11 12 9 12 8 4 9 5 11 34 25 4 5 5 3 4 4 9 5 3 0 0 1 12 91 52 22 17 1 0 4 5 9 16 18 9 9 20 13 124 83 25 16 3 7 14 31 29 32 6 1 1 0 14 Krstoar 76 74 2 0 0 1 11 25 23 16 0 0 0 0 15 Kisava 45 37 4 4 1 10 5 14 4 10 0 1 0 0 16 144 89 19 36 8 11 21 36 39 13 6 3 2 5 17 Kukurecani 257 221 13 23 3 7 14 41 59 85 33 10 2 3 18 Lazec 108 66 7 35 1 5 12 8 16 28 16 12 4 6 19 32 26 3 3 0 1 2 4 9 11 1 2 1 1 20 Medzitlija 10 5 1 4 0 0 0 1 2 5 0 0 0 2 21 Mogila 305 269 17 19 3 12 18 62 90 76 33 7 1 3 22 24 10 2 12 5 1 5 1 4 4 4 0 0 0 23 Opticari 16 6 3 7 0 1 1 3 4 3 2 0 0 2 24 D. Orizari 156 106 19 31 5 9 4 20 37 47 19 7 4 4 25 G. Orizari 200 154 26 20 7 14 29 48 53 38 6 4 1 0 26 Poesevo 76 46 18 12 0 5 12 17 14 3 6 9 3 7 27 Porodin 61 52 6 3 0 6 20 20 12 3 0 0 0 0 28 Rastani 8 7 1 0 0 0 0 1 3 4 0 0 0 0 29 Trn 27 15 1 11 2 0 1 1 0 6 4 4 3 6 30 120 104 7 9 3 12 27 46 21 8 2 1 0 0 31 Zmirnevo 22 22 0 0 1 1 2 10 5 2 1 0 0 0 32 Other villages 23 21 0 2 3 5 9 1 1 3 0 0 0 1 Total Rural 2782 2105 295 382 84 191 365 611 592 526 193 89 49 91 1 Bitola (Urban) 1343 835 227 281 145 218 306 349 156 121 22 10 5 11 2 Other cities 32 27 2 3 3 9 6 8 3 3 0 0 0 0 Foreign 3 countries 176 159 9 8 0 16 15 52 50 29 7 4 1 2 Total Urban 1551 1021 238 292 148 243 327 409 209 153 29 14 6 13 Total (R&U) 4333 3126 533 674 232 434 683 1020 801 679 222 103 55 104 [%] 100.0 72.1 12.3 15.6 5.4 10.0 15.8 23.5 18.5 15.7 5.1 2.4 1.3 2.4 73.2 26.8

From the review in the Table 6 it can be concluded that in the city of Bitola and in rural areas most of the Notices are set in a category of 200-500 denars. Above this category the number of notices in the

BALWOIS 2010 – Ohrid, Republic of Macedonia – 25, 29 May 2010 6/8 rural part is bigger than correspondent number in urban part, implying that the users in rural areas have larger plots, while below this category, the bigger numbers belong to urban part. So, the owners in the city have small and scattered plots, which generally are abandoned, and the owners received relatively small annual bills which consist only from the fixed part of irrigation water charge. Regarding the other remarks that were noted on the forms by the distributors, the majority of them are related to changes of the users' residence address, their moving to Bitola and other cities in the Republic and people that have moved abroad.

Table 7. Most common remarks on Notices Urban Rural Total Remarks on Notices No %* No %* No %* Removal to Bitola 2 0.1 20 0.7 22 0.5 Other cities in RM 18 1.2 7 0.3 25 0.6 Foreign countries 52 3.4 70 2.5 122 2.8 Total 72 4.6 97 3.5 169 3.9 Deceased 69 4.4 159 5.7 228 5.3 Change of name 51 3.3 269 9.7 320 7.4 Change of address 31 2.0 9 0.3 40 0.9 Tenant 152 9.8 220 7.9 372 8.6 Refuse to accept the Notice 114 7.4 331 11.9 445 10.3 Notice left at the door - nobody answered 92 5.9 273 9.8 365 8.4 Total delivered Notices 1551 2782 4333 *The percentage is related to the correspondent total number of delivered Notices.

There are also records of deceased users, whose land usually is not distributed to successors. The real number is certainly higher, because the nature of these notes is informal, according to the free will statements of user's close relatives or neighbors (deliverers were not necessarily obliged to ask certain questions). Under the change of name are listed the notes which indicate the name of a son or daughter having the same surname with the entitled user. A Tenant is considered a person that was recorded on the Notice as a tenant as well as a person who has a different surname with the entitled user. Many of the notes relate to the situation when the user refuses to accept the notice (10.3%), with a greater percentage of rejection in rural areas (11.7%) than in the city (7.4%). The percentage of users that after several attempts have not been found at home, in which cases the notice is left at the door, is also high.

Review of some facts and users' remarks about the delivered Notices • "I do not pay because I do not irrigate." This issue has been posed by users numerous times, but it is well explained in the Water Law that even in the cases when there are no irrigation, the landowner of a plot which is located within irrigation scheme is obliged to pay an annual charge for covering the operational and maintenance costs of irrigation system, and the amount of bill is in correlation with the plot size. The Billing Service ought to make an effort (campaign) to explain the all issues related to irrigation water pricing from the legal point of view to the water users and other concerned public. • The maximum recorded value of annual debt for one user in this group is 26000 denars, and the minimum value - 0.5 denars. There has been registered a case of refusal to accept the Notice for annual debt of 25 denars (0.8 €). • There have been 10 cases of illiterate users registered, which shows the generally low level of education of farmers, especially at older generations. • It often happens in nursing families, especially in rural areas, where young people emigrate abroad or in the cities, so there is no one to work the land. These people are often unable to find tenants to work on their property. A possible solution for this problem is the establishment of an Agricultural Land Use Agency, which would record the plots which are not planted and would offer them for lease on behalf of the owner.

BALWOIS 2010 – Ohrid, Republic of Macedonia – 25, 29 May 2010 7/8 • Complaints also arrive due to the great distances from some plots to the hydrants, up to 300 m, which is the upper limit for discharging of the obligation for payment of the water fee in SIS. • The user does not know where the mentioned plots are and claims that he has no land. • Two cases where the owners have moved in a Senior citizen’s home. • Four users said that they were not paying their bills because they suffered damage to the crops due to failures of the pipeline irrigation network, so they require compensation of debts. • A user asked the SIS to provide him with irrigation equipment. Several users have complained that they do not own irrigation equipment or that they do not possess agricultural mechanization, and due to this, they don't use the land. • There are many cases of unresolved ownership of land property, so the existence of several potential successors imposes the question to whom should the bill be submitted to. A solution for these cases is a legal requirement for initiating a procedure for resolving ownership relations, within a reasonable time period. • The delivery of Notices has shown that among the users who don’t pay are several full-time employees in the SIS. • There are house numbers recorded in the user’s addresses that do not exist. These mistakes should be corrected by the Billing Service. • Many users do not fulfill their obligation to report changes of address of residence. It often happens that apartments have been lease to students or families who refuse to tell the new address of the owner. • An unknown user has been registered at the village of Kravari (no name and surname). • There is a Notice for a user with an unknown address. • There were 3 cases when the estate was sold, SIS has been informed, and the owner continues to receive bills. This indicates weaknesses in the operations of the Billing Service in respect of the annual update of data. • An error of the Billing Service was registered when the bill for 2009 was introduced as an unpaid debt for 2008, which was already paid by the user.

Conclusions From the mentioned above one can conclude that the willingness to pay, here approximated by the percentage of accepted Notices for unpaid bills and the ability to pay, partly represented by the percentage of bills paid during regular and extend payment term, are very low. The reasons for this situation are numerous, and more important of them are: • Farmers' low income from agricultural production, especially in cases of lack of irrigation equipment; • Small agricultural holdings, which do not allow rational market production; • Large number of nursing farming families in rural areas; • Migration of working age population of the villages in the city; • Low educational level of farmers; • Unpleasant treatment of farmers by the Billing Service, Water users refuse to receive Notice both for small and large amounts equally. It is said that the reasons for non-payment of small bills are not only from economic reasons. In cases of agricultural nursing families an Agricultural Land Use Agency would be of great help, whose goals would be to manage the land on behalf of the users who are not in the position to deal with the land or are unavailable (have migrated in other cities in RM or in foreign countries) in order to put all available arable land into agricultural production.

References Kondinski I. 2006. Water Consumption Forecast and Water Demand Management in Strezevo Irrigation System, BALWOIS Conference on Water observation and Information System for Decision Support, Ohrid, Republic of Macedonia. Vukelic Z, Taseva Jankovic J, Kondinski I. 2005. Irrigation Management Transfer in European Countries of Transition – Macedonian Report. ERWG/EWTSIM Project on IMT in European Countries with Transition Economy, International Workshop in Slubice, Poland. 13–15.05.2005. Bosworth B, Cornish G, Perry C, van Steenbergen F. 2002. Water Charging in Irrigated Agriculture - Lessons from the literature. Report OD 145. HR Wallingford: Oxon, UK. Study for Selection of Irrigation Equipment for the System "Strezevo". "Vodostopanstvo-Melioproekt" Skopje, Water economy Institute - Skopje. Skopje. 1980

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