• Abstract and Figures
• Public Full-text

CONTRIBUTION TO THE NATIONAL POLICY DIALOGUE ON WATER POLICY IN MOLDOVA IMPROVING DOMESTIC FINANCIAL SUPPORT MECHANISMS IN THE WATER AND SANITATION SECTOR IN MOLDOVA FINAL REPORT May 2015 Acknowledgements and Disclaimers This project was undertaken by the OECD, with the financial support of the European Union, which is gratefully acknowledged. This report has been prepared by Alpha Plus Consulting in cooperation with Treevelop as a contribution to the National Policy Dialogue (NPD) on Water Policy in Moldova conducted in cooperation with the European Union Water Initiative (EUWI) and facilitated by the OECD EAP Task Force and UNECE. The principal authors of the report are Suren Poghosyan of Alpha Plus Consulting and Giel Verbeeck of Treevelop. The authors are grateful for great contributions and useful ideas from Mr. Alexander Martusevich (OECD/EAP Task Force) who managed this project, Ms. Serafima Tronza (Ministry of Environment), Iuri Tronza and Eugenia Veverita (national experts) and other participants of the 20th and 21st meetings of the EUWI National Policy Dialogue on Water Policy in Moldova. The authors are also thankful to Mr Krzysztof Michalak and others from OECD for their useful comments. The analysis, statements and any eventual errors and material omissions are, however, solely the responsibility of the authors. The views presented in this report are those of the authors and can in no way be taken to reflect the official opinion of the Government of Moldova, the European Union (EU), the OECD or of the governments of the EU and OECD member countries. 1 | Page Table of Contents EXECUTIVE SUMMARY ............................................................................................................................ 4 1 INTRODUCTION ............................................................................................................................. 10 2 RATIONALE AND METHODOLOGY................................................................................................. 12 3 PFM SYSTEM AND FINANCIAL PERFORMANCE IN WSS SECTOR IN MOLDOVA ............................ 19 4 SOCIAL SUPPORT SYSTEMS IN MOLDOVA RELATED TO WSS ....................................................... 43 5 SOCIAL SUPPORT SYSTEMS IN REFERENCE COUNTRIES ............................................................... 61 6 ENHANCEMENT OF DOMESTIC FINANCIAL SUPPORT MECHANISMS FOR WSS IN MOLDOVA: SCENARIO ANALYSIS ............................................................................................................................. 79 7 CONCLUSIONS AND RECOMMENDATIONS ................................................................................... 87 BIBLIOGRAPHY ...................................................................................................................................... 98 Annex 1: IBNET country performance overviews all referred countries .............................................. 99 Annex 2: Financial flows and performance of selected Apacanals in 2013 ........................................ 104 Annex 3: Survey stakeholders’ perceptions regarding social support systems .................................. 106 Annex 4: Social aspects of ANRE 2015 tariff methodology ................................................................ 109 Annex 5: Elaborated example of a rebate system in tariff methodology ........................................... 111 2 | Page LIST OF ABBREVIATIONS AND ACRONYMS ADA Austrian Development Agency ANRE National Agency for Regulation in Energy AST Advanced Social Technologies BNS National Bureau of Statistics BOOST BOOST (data tool developed at the World Bank) CALM Congress of Local Authorities in Moldova CBO Community Based Organizations CMIF Compulsory Medical Insurance Funds DFSM Domestic financial support mechanism(s) EAP Environmental Action Programme EBRD European Bank for Reconstruction and Development EEA European Environment Agency EECCA Eastern Europe, Caucasus and Central Asia EIB European Investment Bank EUWI European Union Water Initiative GDN Global Development Network GDP Gross Domestic Product GDP PPP GDP Purchasing Power Parity GIZ Deutsche Gesellschaft für Internationale Zusammenarbeit GNI Gross National Income IBNET International Benchmarking Network for Water and Sanitation Utilities IFC International Finance Corporation IFRS International Financial Reporting Standards IMF International Monetary Fund Icd Litres per capita per day LPA Local Public Administration MDG Millennium Development Goals MDL Moldovan Lei MOE Ministry of Environment MOF Ministry of Finance MRDC Ministry of Regional Development and Construction MTBF Medium-term budget framework NEF National Environmental Fund NFRD National Fund for Regional Development NPD National Policy Dialogue NRW Non-revenue water NSRD National Strategy for Regional Development OECD Organization for Economic Cooperation and Development O&M Operation and Maintenance PFM Public Financial Management PIU Project Implementation Unit PPP Public–private partnership SEAM Solidarity Water Europe in Moldova SEE South-East Europe SPSP Sector Policy Support Programme for WSS in Moldova (EU-funded) SSIB State Social Insurance Budget UNICEF United Nations Children's Fund USD US dollar VAT Value Added Tax WDI World Development Indicators WFD Water Framework Directives WHO World Health Organizations WSS Water Supply and Sanitation Exchange rates: (as of Nov. 30, 2014): EUR 1 = MDL 18.7; (as of April 30, 2015): EUR 1 = MDL 20.3 3 | Page EXECUTIVE SUMMARY The main purpose of this project has been to propose options for improving and strengthening domestic financial support mechanisms (DFSMs) for water supply and sanitation (WSS) in Moldova assuming the overarching ultimate objective to ensure access to WSS services at affordable price (or cost) for all, especially for households. This is a challenging task taking into account shifts in the economy and socio-demographic developments over the last two decades, ambitious sector development targets related to EU integration objectives, as well as the challenges and risks for the water supply and sanitation sector in Moldova. In the Moldovan policy context, the following main processes and frameworks are important: • Association Agreement with the EU, requirements of the Water Framework Directives (WFD) and other water related EC directives • Recently approved national Environmental Strategy and Sector Strategy for WSS • A policy goal of “Water to All”. This is a more ambitious target than water MDGs. • EU Water Initiative – National Policy Dialogue on water in Moldova. Key challenges in the WSS sector in Moldova are as follows: The WSS infrastructure is well beyond its optimal level in two ways: o It is deteriorated and significant capital investments are required in near future to maintain the quality of the services provided o Socio-demographic changes in the country in the recent decade had affected the density of, and the demand for water from, rural population i.e. the WSS systems are often oversized compared with actual population size in various communities, diminished due to (a) migration to cities, and high labour migration from Moldova, as well as (b) metering and other demand management measures). This factor is even more stressed when using the old-Soviet standards and norms of construction of new WSS systems while the consumption pattern has significantly changed over the past 20 years for the aforesaid reasons. Meeting the targets set in the National strategies on environmental and WSS sectors and the Association agreement, including the need for significant WSS infrastructure extension (especially in rural areas), Exposure to various risks, including the risks of floods and droughts exacerbated by climate variability and change. Poor coverage and quality of WSS services, which slows down the economic development in the rural areas. Heavy dependence on donor community in allocating capital investments in the WSS sector. Explicit and implicit subsidization of the WSS sector by the government and municipalities, which diverts scarce resources from investments in the sector to operational support with poor efficiency nature. Lack of effective combination of demand and supply side financial support mechanisms that will also be linked with effective social policies, etc. The Moldovan WSS sector governance and regulation is fragmented in many ways. There is no single body responsible for the whole sector. Approaches to sector planning and financial flows are various and often not synchronized. Social, tariff, investment and sector policymaking is divided amongst various actors who not always coordinate as appropriate. Financial challenge and the present role of DFSMs Tariffs. WSS tariffs are set by local public administrations (LPAs) taking into consideration the social aspects; the tariffs do not fully cover operation and maintenance (O&M) costs, nor can they provide 4 | Page for investment. Until very recently there was no universal tariff methodology applicable across the country. With the publication of the tariff methodology this can now be addressed. Affordability of tariffs is different because of high variations in tariff rates, uneven distribution of income amongst urban and rural areas and amongst regions in Moldova. Furthermore, differences in consumption pattern also create differences in affordability. Transfers. As was noted above, financing capital investment in the WSS sector in Moldova is highly dependent on donor support. Taxes. Apart from financial

Load more

  114

Copy Link