Apa Nova Bucharest

Veolia Water Romania Water Supply in the city of Bucharest 1

Veolia Water Romania

Where we are ? Where we are? 2

Veolia Water Romania

Short presentation Short presentation APA NOVA BUCHAREST  In charge of the operation of the water and waster water public services for the city of Bucharest APA NOVA PLOIESTI  In charge of the operation of the water and waster water public services for the city of Ploiesti

VEOLIA APA SERVICII  In charge of the development in Romania (Municipal)  Operation of water and wastewater public services in the cities around Bucharest  Operation on water and wastewater industrial services (international Airport….)  Development of services for cities and private persons (cleaning network, cleaning tanks, after meters….) « 3

Veolia Water Romania

A little history A little history

1997  Creating of C.E.S.E.R. (Compagnie d’Exploitation des Services d’Eau en Roumanie) 1999  International tender organized by World Bank for the delegation of the water and waste water public services of the city of Bucharest  International consultation by the Municipality of Ploiesti for the delegation of the water and waste water public services

2000  In March Compagnie Générale des Eaux (now VEOLIA) won the tender in Ploiesti - Beginning of the concession contract  In November Compagnie Générale des Eaux won the tender in Bucharest – Beginning of the concession contract 2006  C.E.S.E.R. became V.A.S. (Veolia Apa Servicii) « 4

Veolia Water Romania

Focus on the concession contract of BUCHAREST Focus on the concession contract of BUCHAREST

APA NOVA BUCHAREST Company full dedicated for the operation of the water and waste water public services of the city of BUCHAREST  Location : South-East of Romania  Population : 2,5 Millions habitants  S.A.: Shareholders 73% VEOLIA WATER – 17% City of BUCHAREST – 10% employees of ANB Focus on the concession contract of BUCHAREST BUT WHY CHOOSE TO ENTRUST TO A PRIVATE COMPANY THE OPERATION OF A SO STRATEGIC PUBLIC SERVICE ?

FOR OUR EXPERIENCE ?

OUR REPUTATION ?

OUR EFFICIENCY ? YES BUT… Focus on the concession contract of BUCHAREST ABOVE ALL THERE WAS :

 A WILL

 A NECESSITY

 A SOLUTION Focus on the concession contract of BUCHAREST

IMPORTANT DIFFICULTIES TRIGGERS THE PROCESS OF PUBLIC SERVICES DELEGATION

 Water Municipal Company in a very bad financial situation does not allow to provide the service  Many technical problems disrupt the continuity and the quality of the service

 Problems of water quality Focus on the concession contract of BUCHAREST

WE ARE FLEXIBLE

ADAPTATION OF CONTRACT PROPOSED BUCHAREST PERFORMANCE CONTRACT WITH THE OBLIGATION TO REACH AND MAINTAIN 24 LEVELS OF SERVICE WITH A SYSTEM OF BONUS/MALUSDE (ANGLO-SAXON MODEL)

THE MUNICIPALITY REMAINS THE OWNER OF THE INFRASTRUCTURE AND IS SHAREHOLDER OF THE COMPANIES Focus on the concession contract of BUCHAREST

WHAT INITIAL OBSERVATIONS ?  Inadequate organization/ Overstaffing

 Discontinuity in the services provided

 Billing not based on the meter readings

 Average consumption > 400 l/d/capita

 Lake of security in the drinking water supply

 Efficiency of the network < 50%

 Lake of protection of the workers  Lake of tools and work equipment  Lake of knowledge of the networks

 Old technical works  Lake of customer orientation Focus on the concession contract of BUCHAREST WHAT HAVE WE MADE TO IMPROVE THAT ?

 The expertise of Veolia • Methodology – Good practices  A deep reorganization of the municipal company became private company • Services restructuring – creating new jobs  Staffing resources required to perform operational tasks • Nearly 41 M€ of investments in equipment – tools - vehicles  The introduction of flexibility in our daily works • Less« specialists » - flexibility in our operations

 Significant investments in the infrastructures • Nearly 244 M€ of investments in water treatment plants and networks  Significant investments in professional training programs (internal or external) • 4 M€ invested in training programs in all the subjects  A significant social progress for the employees of our companies • Social fund = 9% of Wage Bill – employees shareholders of the company– medical protection Focus on the concession contract of BUCHAREST

THE STAKEHOLDERS OF THE CONTRACT

BUCHAREST

Municipality of Bucharest - Owner of the infrastructure - Monitors the performance of the contract and the investments

APA NOVA BUCHAREST - Insures the operation and maintenance of infrastructures serving customers - Manages the infrastructures of the service, enhances, restores and maintain the operating assets

Focus on the concession contract of BUCHAREST

THE STAKEHOLDERS OF THE CONTRACTS

BUCHAREST

TECHNICAL REGULATOR (AMRSP – Municipal institution) - Monitoring and certification to obtain the levels of service - Assists ANB in its relations with the third parts

ECONOMIC REGULATOR (ANRSC – State institution) - Verification of the correct application of the tariff adjustment mechanisms in accordance with the concession contract THE EXPERTS PANEL (independent) 3 independent international experts (neither Romanian nor French), each with specific competences (a water engineer, an economist, a financial analyst) Examines and approves for extraordinary tariff adjustments by ANB Focus on the concession contract of BUCHAREST TECHNICAL REGULATOR  Municipal authority for the regulation of public utilities Bucharest – AMRSP

 Established by the Municipality as independent body

 Financed by a regulatory levy included in the water and sewerage tariff, collected and transferred by ANB to AMRSP

 Responsible for monitoring the overall development of the concession on behalf of Municipality

 Responsible for the assessment and certification of the achievement of the LoS

 Responsible for proposing penalties in case of ANB default in achieving the LoS

 Status of LoS certification: all due LoS have been certified as achieved

Focus on the concession contracts of PLOIESTI and BUCHAREST

ECONOMIC REGULATOR  National Authority for regulation of public utilities – ANRSC

 Established by the Romanian Government

 Financed by all operators based on a regulatory levy

 Responsible for the evaluation and approval of all tariff adjustments

 Responsible for the evaluation of the requests and evidences for issuing the license of operation for all operators

 Status of tariff adjustment requests: all adjustments have been approved

 Status of licensing process: licenses issued

Focus on the concession contracts of PLOIESTI and BUCHAREST INTERNATIONAL REGULATOR

 Experts Panel consisting of 3 independent individual experts (neither Romanian nor French), each with his own particular expertise field: . hydro-technical engineer . regulatory economist . financial analyst

 Responsible for the evaluation and conclusion regarding the fairness and accuracy of the extraordinary tariff adjustments

 Responsible for mediation on disputes between parties on contractual issues. Examples of issues submitted for mediation: . methods and details on LoS assessment (A4, A5, A7, A8, B2, C1) . responsibilities for environmental restoration risks . penalty claims

 Status regarding the agreement on the extraordinary tariff adjustments: all implemented as recommended

 Status of mediation reports: conclusions and recommendations accepted by the parties Focus on the concession contract of BUCHAREST AFTER 12 YEARS WHAT IS THE RESULT ?

 Continuity of the service 24h / 24h  Water complying with European standards

 Billing based on meter readings  Average consumption 180 l/d/capita  Productive and modern working methods

 Security and autonomy in the water supply  Improvement of the efficiency of the network (decrease of losses with 180 Mm3)  Security on the perimeter of the works  Improvement of the working conditions and social progress  Certifications ISO 9001-2000 / ISO 14001-2004 / OHSAS 18001-1999 (AFAQ) Focus on the concession contract of BUCHAREST

LOSSES IN THE NETWORK (in Millions m3)

250

200

150

100

50 ANB LOSSES IN THE NETWORK (in Millions m3)

2005 2001 2002 2003 2004 2006 2007 2008 2009 2010 2011 Focus on the concession contract of BUCHAREST

ANB TOTAL ENERGY CONSUMPTION (in MWh/y)

200

150

100 ANB TOTAL ENERGY CONSUMPTION (in MWh/y) 50

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Focus on the concession contract of BUCHAREST

ANB CUSTOMER SATISFACTION (in %)

100

50 ANB CUSTOMER SATISFACTION (in %) 40

30 2002 2004 2006 2007 2008 2009 2010 2011 Focus on the concession contract of BUCHAREST CONCLUSION AFTER 12 YEARS VEOLIA PROVIDES IN BUCHAREST A VERY EFFICIENT WATER AND WASTE WATER SERVICE IN ROMANIA

But is it enough to say that ? Not exactly !

Because what about the cost of the service ? Focus on the concession contract of BUCHAREST

BUCHAREST : 5,85 RON with VAT / m3 whether 1,34 € / m3 or 0,585 bani / l or 0,134 cent / l

BOTTLE OF WATER : 2 RON / l or 200 bani / l Focus on the concession contract of BUCHAREST

« By 2008, efficiency gain had produced cost savings totalling US$ 349 Millions. The Concessionaire has financed US$ 259 Millions in investment, without public subsidy, while keeping tariffs well below the Romanian average. Not all water concessions have been as successful. »

Communication of International Finance Corporation part of World Bank Group February 2011 about the concession contract of Bucharest Focus on the concession contract of BUCHAREST SECOND CONCLUSION AFTER 12 YEARS VEOLIA PROVIDES IN BUCHAREST A VERY EFFICIENT WATER AND WASTE WATER SERVICE IN ROMANIA

With an affordable price for the population Focus on the concession contract of BUCHAREST

MULTUMESC

THANK YOU