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Development of Water Services in the River Basins of Eastern Latvia

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Development of Water Services in the River Basins of Eastern Latvia ISPA Information Sheet Measure N°: 2001/LV/16/P/PE/007 Measure title: Development of water services in the river basins of Eastern Latvia Authority responsible for implementation: Ministry of Environmental Protection and Regional Development 25 Peldu iela, LV – 1494 Rīga, Latvia E-mail: [email protected] Final beneficiaries: municipalities of Aluksne, Cesis, Cesvaine, Dagda, Kekava, Kegums, Lielvarde, Limbazi, Livani, Ogre, Preili, Priekuli, Salacgriva, Salaspils, Sigulda, Smiltene, Valka and Valmiera Indicative Description This measure aims at improving the water services in 18 municipalities in the catchment area of 3 main rivers in the eastern part of Latvia (Daugava, Gauja and Salaca) in order to comply with the national requirements and meet current EC regulations requirements: protection of the water intake areas; quality of the drinking water (particularly regarding iron and manganese) by water treatment, network rehabilitation and extension; effluents according to European standards by improved wastewater treatment and network extension; and sludge disposal routes according to European standards. It comprises the following components: - construction of 12 new and reconstruction of 3 potable water treatment plants to ensure a drinking water quality in compliance with the directive 98/83/EC; - rehabilitation of water reservoirs to ensure permanent water supply pressure for consumers; - rehabilitation of 6% of the distribution networks and extension by about 48 km of the networks; - construction of 4 new and rehabilitation of 11 wastewater treatment plants (as well as conveying of sewerage from Kekava and Priekuli to larger WWTP) to ensure compliance with the directive 91/271/EEC; - rehabilitation of 8% of the sewerage collection systems and extension by about 68 km of the networks; - adequate sludge treatment and disposal (dewatering, appropriate sludge treatment, compliance for use in agriculture and forestry). - institutional strengthening programme for organizational change, training and modern management techniques in order to improve performance of the water utilities. Economic and social cost-benefit analysis A standard cost-benefit analysis has not been undertaken, given that it is not possible to quantify satisfactorily many of the economic benefits of this measure. Given the need to comply with EC directives, a practical alternative to cost-benefit analysis is cost-effectiveness analysis. The investments chosen were selected on the basis of the following factors: cost- Rue de la Loi 200, B-1049 Bruxelles - Belgique - Bureau: CSM2 4/115. Téléphone: ligne directe (+32-2)299.24.70, standard 299.11.11. Télécopieur: 296.51.84. Internet: [email protected] P:\16f2_016\WPRO_01157\TEXTES_01157\ISPA\Updating\docs\word220102\letwater_en.doc effectiveness of the long term investment plan, short-term investment prioritisation and affordability constraint. The main quantifiable benefits include: - increase of the population’s connection to the drinking water network (in 2005 between 43% for Kegums to 91% in Limbazi); - increase of the population’s connection to the sewerage network (in 2005 between 43% for Kegums to 92% in Valmiera); - lower operating and maintenance costs due to energy savings, labour cost savings and material cost savings; - employment impact: 605 temporary direct jobs during construction phase (25 months) and 7 direct jobs in operational phase. Other benefits cover the following: - improved service standards for consumers ; - decrease of the pollution: reduced discharge of untreated wastewater, reduced damages to groundwater and reduced infiltration of sewage thanks to the extension of the network; reliable sludge handling; the reduction of the pollution load into the Baltic Sea is estimated by 2005 at: -10.1% of P load, -7.6% of N load, - 5.0 % of SS load and - 2.3% of BOD load ; - reduction in health risks: reduced discharge of nutrients, improvement of the drinking water quality and improvement of the groundwater table. Main elements of financial analysis The financial analysis of the measure is based on the principles of user charge acceptability and affordability. A summary of the results is presented below (measure lifetime of 20 years from 2001 to 2020) using a discount rate at 8%: NPV between € - 6 175 000 for Valmiera and € 0 for Smiltene (neutral scenario); and NPV between € - 425 000 for Salacgriva and € 3 439 000 for Salaspils (scenario with ISPA grant). The increase of tariffs will ensure full recovery of operating costs, maintenance expenditure and debt service costs. The increase of tariffs between 2001 and 2005 will vary between 11.5% for Aluksne and 106% for Valmiera. Current water tariffs for customers vary from 0.14 €/m3 in Valmiera to 0.57 €/m3 in Limbazi. Current water tariffs for industries vary from 0.23 €/m3 in Kegums to 0.62 €/m3 in Smiltene. Current wastewater tariffs for customers vary from 0.17 €/m3 in Valmiera to 0.57 €/m3 in Limbazi. Current wastewater tariffs for industries vary from 0.26 €/m3 in Cesvaine to 1.59 €/m3 in Valka. The average water tariffs in 2006 will be 0.55 €/m3 for customers and 0.67 €/m3 for industries. The average wastewater tariffs in 2006 will be 0.67 €/m3 for customers and 0.95 €/m3 for industries. The ISPA grant is set at a level which will ensure that tariffs, while enabling recovery of costs, will remain within an affordability limit of 4-5% of household incomes, considered as an acceptable rate. According to the Latvian law, each municipality shall financially assist the low- income part of the population. Environmental impact analysis None of the projects within this measure fall under the scope of Annex I. According to the thresholds set in the Latvian EIA legislation, none of the projects within this measure require an EIA. After preliminary screenings, the relevant Latvian authorities have decided that no significant detrimental effects are expected from these projects. Only in 2 cases (Valmiera and Salacgriva), the Valmiera Regional Environmental Board will consider this issue again when the outline design of the WWTPs will be developed. All possible impacts have been taken into account and mitigation measures proposed in the following municipalities: in Cesvaine, Livani, Ogre, Salacgriva, Salaspils, Sigulda, Smiltene and Valmiera (mitigation for protection of potable water supply) and in Dagda, Preili, Smiltene and Valmiera (mitigation of impact from backwash from the iron removal plant). The measure will be subject to a regular monitoring concerning the drinking water quality, the groundwater quality and quantity, the wastewater effluents and the wastewater sludge quality. Cost and assistance (in €) Total cost Non eligible cost Total eligible ISPA grant Grant Rate cost (% as of eligible costs) 71 737 000 4 137 000 67 600 000 44 616 000 66 % The ISPA rate of intervention as of total cost is 62.2 %. The involvement of the Nordic Environment Finance Corporation (NEFCO), of the Nordic Investment Bank (NIB) and of the European Investment Bank (EIB) is foreseen. .
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