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Utility reform in Romania example in Cluj

Utility reform in Romania example in Cluj. Presentation of The Regional Environmental Center for Central and Eastern Europe. Christelle Kapoen May 2008. Contents. Romanian water sector Challenges Reform strategies Development of C.A.S.S.A, Cluj water / wastewater utility

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Utility reform in Romania example in Cluj

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  1. Utility reform in Romaniaexample in Cluj Presentation of The Regional Environmental Center for Central and Eastern Europe Christelle Kapoen May 2008

  2. Contents • Romanian water sector • Challenges • Reform strategies • Development of C.A.S.S.A, • Cluj water / wastewater utility • Institutional development • Pricing policies • Success factors

  3. 1. Romanian water sector • Institutional responsibilities • Ministry of Environment and Water responsible for water resource management • Apele Romana, national water authority, responsible for implementation of water policies • National Authority for Regulation and Tariffs is responsible for the pricing strategy in the water sector • Service responsibilities • Decentralized local utilities under municipal/county government

  4. Situation in 90’s • Decentralization of water sector with aim to give autonomy, but low independency • Detoriated water system • Especially the sewerage network and wastewater treatment systems • Low level of connections in rural area • 17 % water 3 % waste water • Low tariffs, low collection rate, low affordability • Lack of investments, and dependency on national government

  5. 2. Challenges • EU accession • Acquis communautaire • Attract International funding • EU, EBRD, WB, .. • Commercial banks and private sector operators • Attract investment to extend water / wastewater networks and systems and rehabilitation of old ones • Improve cost-recovery / operational efficiency

  6. 3. Reform strategies • Reform of municipal utilities • Autonomous public utilities and improve operations, efficiency and cost-recovery • Regionalisation where possible to improve efficiency • Attract EU funds (ISPA, EU cohesion funds, ..) • Example: Cluj water • Private sector participation • Outsourcing of operations (O&M, investment etc) to improve operations, efficiency and self-sufficiency • Attract private capital • Example: Bucharest concession with Veolia

  7. 4. Development of C.A.S.S.A

  8. Situation WWTP WTP Sources

  9. Situation in Cluj in 90’s • R.A.J.A.C., municipal utility • Detoriated system & poor operation • Lack of investment for rehabilitation and extension, especially wastewater • Inefficiency: overstaffing, poor O&M management, bad debts • Many surrounding villages/towns were worse off than Cluj

  10. Objectives for development and reform • Development, rehabilitation and extension of networks and systems • Capacity building to transform the utility to an efficient service provider recovering costs • Regionalisation: increase of scale  efficiency • Meeting EU regulations and funding requirements

  11. Funds for development • Several funds for development like EBRD, EU (ISPA, Phare) and others • Support from national government • About 130 million Euro for investments • about 19 million Euro loan EBRD (MUDP, SAMTID) • About 17 million Euro loan EIB (ISPA)

  12. Institutional / organisation development • Establishment of Company Apa Somes • Autonomy // Accountability • Efficient utility operations • HRM (reduce over-staffing) and HRD (staff development) • Improved O&M • Revision of tariff system, billing & collection • Public awareness and PR • Regionalisation: centralisation of utilities from Cluj, Salaj and 7 other towns • Efficiency in supporting functions (finance, HRM etc) • Synergies with O&M

  13. Reform to improve cost-recovery • Asset management and budgeting • Tariff revision plan • Charging improvement • Improvement of metering: installation, calibration, Meter reading • Collection rate improvement / bad debt policy

  14. Pricing for C. Apa Somes S.A. Recovery of costs for • Connection (fee for making the connection) • Water usage / wastewater collection Bill contains several elements • Metered water usage • Wastewater collection (100% water) • Meteorological consumption (property size) • Special tax for investments • VAT

  15. Tariff policy implementation • Charging based on consumption • No differentiation between consumer groups • No Pro-poor policies

  16. 5. Success factors • Relate investment plan with investment needs, • Laws and regulations (health, environment, etc) • Current systems condition • Urban planning • Relate investment plan with cost-recovery plan (affordability) and reform plans • Design reform strategy and business plan before Capacity Building • Autonomy and decision making power • Organise investments very well incl. contracting and supervision with contractors (FIDIC)

  17. Thank you

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