Ministry of Environment and Water Management, Romania Managing Authority for SOP Environment

Sectoral Operational Programme Environment

- SOP Environment and other programmes for UWWTD implementation -

April 21st 2008

Florian BURNAR

Water sector - Key actors in RomaniaWater sector - Key actors in Romania

• Ministry of Environment – authority responsible for water sector Ministry of Environment – authority responsible for water sector

policypolicy

• Ministry of Administration and Interior – authority responsible Ministry of Administration and Interior – authority responsible

for public services policyfor public services policy

• National Authority for Community Services RegulationNational Authority for Community Services Regulation

• Local authorities Local authorities

• OperatorsOperators

Transition periods for water DirectivesTransition periods for water Directives

• Waste water (Directive 91/271/EEC)– sewage systems and waste

water treatment plants

• 2013/2015 – 263 agglomerations of more than 10,000 p.e.

• 2018 – 2346 agglomerations of between 2,000 and 10,000

p.e.

• Sensitive area – advanced wastewater treatment

• Drinking water (Directive 98/83/EC)

• 2015 – compliance with quality parameters for drinking

water

Cost assessment - environmental sectorsCost assessment - environmental sectors

1

54

19

0

2

4

6

8

10

12

14

16

18

20

€ Billion

Water

Waste

Air

Other sectors

Water sector – top priority

The most demanding environmental sector! • 19 bil. Euro – total estimated investment costs for

compliance with EU Directives• Approx. 8.6 Bil. euro needed by 2013, only approx. 4

billion Euro available within SOP framework• Optimisation of investment cost at macro level – a

must• Regionalisation – part of the solution (economies of

scale)

Constraints

• Compliance with the commitments in the AT – sine-qua-non requirement

• Limited financial resources high investment need;

• Limited period of time (2007-2013)

Conclusion:

• Need for investment prioritization;

Available EU funds in Romania

EU programmes – the “cheapest” financing source for investments in environmental infrastructure

PRE–ACCESSIONPHARE, ISPA, SAPARD, LIFE –approx. 180 mil. Euro/

year

POST–ACCESSIONSCF – approx. 500 - 600 million Euro/year expected for environmental projects

ISPA programme overview

42 Financing Memoranda signed for environmental sector, out of which: 29 projects for modernization of water/waste water infrastructure; 7 projects for solid waste management; 6 TA projects.

Total amount of approved ISPA projects – approx. Euro 1.4 billion: 1 billion Euro ISPA grant; 400 million Euro – national co-financing

However, only major municipalities (population over 100,000) – access to EU funds

2007-2013 Financial Perspective

National Development PlanNational Strategic Reference Framework7 OPs:

Human Resources DevelopmentDevelopment of Administrative CapacityEnvironmentTransportCompetitivenessRegional Operational ProgrammeTechnical Assistance

Sectoral Operational Programme Environment

2007 - 2013

Correlation between NSRF, NDP and SOP Environment

NSRF

NDP

Priority 2 – Development of infrastructure at European standards

Priority Axis 3 – Protection and improvement of environmental quality

SOP ENVIRONMENTGlobal Objective – Improvement of living standards and environment,

focusing in particular on meeting the environmental acquis

Specific Objective 1Improve the access

to water infrastructure, by providing water supply and wastewater services

in most urban areas by 2015

Specific Objective 2Improvement of soil quality,

by improving waste management

and reduction in the number of old ecological burdens

in min. 30 counties by 2015

Specific Objective 3Reduction of negative environmental impact caused by old municipal

thermal plants in most polluted localities

by 2015

Priority Axis 1Extension and modernization

of water and waste water infrastructure

Priority Axis 2Development

of integrated waste management systems

and rehabilitation of old ecological burdens

Priority Axis 4 Development of management

systems for protected areas

Priority Axis 5Implementation

of adequate infrastructure of natural risk

prevention in most vulnerable

areas

Specific Objective 4Protection

and improvement of biodiversity

and natural assets by supporting

NATURA 2000 implementation

Specific Objective 5 Reduction of the incidence

of natural disasters for the population, by implementing

preventive measures in most vulnerable areas

by 2015

Priority Axis 3Improvement

of municipal heating systems in selected priority areas

LONG-TERM OBJECTIVES

458

214329

3,2661,167

173

Water/w aste w ater Waste management and historically polluted sites

Urban heating Biodiversity

Floods and coastal erosion Technical Assistance

Distribution of total financial contribution per Priority Axes - Community funding + national counterpart - (in million Euro)

Total allocation SOP ENV:

Euro 5.610 million

SOP Environment – Strategy

• Priority Axis 1 – Water regional W/WW projects

• Priority Axis 2 – Waste regional IWM projects

• Priority Axis 3 – District heating selected localities (highly polluted from district heating)

• Priority Axis 4 - Nature protection implementation of Natura 2000 network

• Priority Axis 5 - Flood prevention selected areas – most vulnerable to floods

SOP Water Sector Strategy

Strong strategic approach to maximize cost-efficiency - key to meet compliance with the water sector acquis in the limited timeframe.

Main elements:• Group communities in clearly defined geographical areas and develop jointly

long term investment programmes for water sector development – improve infrastructure and LOS while maintaining affordable level of tariffs and ensuring sustainability of investments

• Building capacity programmes - provide for clear accountabilities of key stakeholders, while keeping the appropriate expertise to each level of competence (MA, IB, municipalities, operators)

• Ensure strong coordination of domestic funds with EU funds for water sector investments, both at strategic and operational level

• Deliver efficiency gains by:– Using economies of scale and saving resources

– Optimising investments and operational costs at regional level

– Optimising project selection by reducing costs for applicants and by reducing duplication of appraisal;

– minimising transactions costs to ensure value for money in terms of administrative overheads

Priority Axis 1 - Extension and modernization of water and wastewater systems

Specific objectives– Provide adequate water and sewerage services, at accessible tariffs – Provide adequate drinking water quality in all urban agglomerations– Improvement in purity of watercourses – Improvement of the level of WWTP sludge management

Indicative operations• Construction/modernization of water sources intended for the drinking

water abstraction;• Construction/rehabilitation of water treatment plants• Extension/rehabilitation of water and sewerage networks.• Construction/upgrading of wastewater treatment plants• Construction/rehabilitation of sludge treatment facilities• Metering, laboratory equipment, leakage detection equipment, etc

Problems addressed by SOP Environment – Priority Axis 1

InfrastructureInfrastructure

• Only 52% of population have access to centralized water/wastewater services

• Almost 80% of wastewater discharged in natural receivers untreated or insufficiently treated

• Most of the existing water infrastructure – in poor status due to long term under-investments

Operational aspectsOperational aspects

• Excessive fragmentation of water sector systems and services

• Inappropriate maintenance and operating services in most small and medium agglomerations

FundingFunding

• Lack of capacity to attract substantial funding for investment needs in majority of small and medium agglomerations

• Private sector – not interested to invest in short term

• Limited capacity to implement large scale projects; only 35 large municipalities managed to attract funds to implement major investment programmes

Building Capacity Programme in the Water Sector

Romanian authorities designed programmes to support LA to:– Increase capacity of LA to implement internationally

financed programmes– Promote self sustainable regional utilities by introducing

principles of cost recovery and efficiency of services– Strengthen the capacity of LA to monitor effectively their

public services

Regionalisation via ROC and AoM (AoM/IDA) – key element in

order to comply with the acquis and to ensure basic living

standards (specific objective of prirority 1 under SOP)

• No viable alternative identified

Pre-accession Programmes for Regionalisation

Regionalisation of water services - mainly supported by pre-Regionalisation of water services - mainly supported by pre-accession programmes, including so far 36 of 42 counties: accession programmes, including so far 36 of 42 counties:

– 1 Phare TA project - SAMTID1 Phare TA project - SAMTID for 11 countiesfor 11 counties• Limited investments in DW infrastructure and reorganisation of local Limited investments in DW infrastructure and reorganisation of local

water serviceswater services– 2 ISPA 2 ISPA TA projects – FOPIP for other 25 countiesTA projects – FOPIP for other 25 counties

• Project preparation in parallel with institutional support for Project preparation in parallel with institutional support for regionalisationregionalisation

– External loan – for the rest of 6 countiesExternal loan – for the rest of 6 counties• Project preparation in parallel with institutional support for regionalisationProject preparation in parallel with institutional support for regionalisation

• Slightly different approach, but the same final objectiveSlightly different approach, but the same final objective

Capacity Building Programme in the Water Sector

• Objective - Support the LA to implement an integrated multi-Objective - Support the LA to implement an integrated multi-annual capital investment programme in order to improve the annual capital investment programme in order to improve the standards of municipal water and wastewater services by standards of municipal water and wastewater services by creating efficient, financially viable regional service providers creating efficient, financially viable regional service providers able to plan and implement long term investments, in line with able to plan and implement long term investments, in line with National Development Plan (NDP) and EU policies and National Development Plan (NDP) and EU policies and practices. practices.

• Access to EU funds – an incentive to move from a large number Access to EU funds – an incentive to move from a large number of weak services providers to a limited number of big and of weak services providers to a limited number of big and strong operator, capable to provide services at affordable strong operator, capable to provide services at affordable levels of tariffs, but ensure full cost recovery and loan levels of tariffs, but ensure full cost recovery and loan reimbursement for local authoritiesreimbursement for local authorities

Targets of Regionalization

• Improved operation of existing regional systemsImproved operation of existing regional systems

• Investment planningInvestment planning

• Optimization of available resourcesOptimization of available resources

• Capability of meeting EU W & WW Directive requirementsCapability of meeting EU W & WW Directive requirements

• Improved management performanceImproved management performance

• Improved lending capability; Access to EU investmentsImproved lending capability; Access to EU investments

• Limitation of political involvement in the supply of water and Limitation of political involvement in the supply of water and wastewater serviceswastewater services

• Regional Operator as the mechanism for provision of service to small Regional Operator as the mechanism for provision of service to small communitiescommunities

• Availability of more similar companies for benchmarking Availability of more similar companies for benchmarking comparisons comparisons

Overall target – to provide that 2600 localities of more than 2000 p.e. Overall target – to provide that 2600 localities of more than 2000 p.e. meet 2018 targetsmeet 2018 targets

• AoM/IDAAoM/IDA – role to monitor and supervise the implementation of the investments, the – role to monitor and supervise the implementation of the investments, the financial and operational performance of the ROCfinancial and operational performance of the ROC

• ROCROC – role to implement the investment plan and to perform services in line with – role to implement the investment plan and to perform services in line with delegation contract and AoM/IDA’s decisionsdelegation contract and AoM/IDA’s decisions

• ContractContract of delegation of services between AoM/IDA-ROC (the core of the of delegation of services between AoM/IDA-ROC (the core of the operational and institutional organisation of regionalised water and wastewater operational and institutional organisation of regionalised water and wastewater management)management)– AoM/IDA has decision-making and control powers (acc. to Law 241/2006 AoM/IDA has decision-making and control powers (acc. to Law 241/2006

reflected in the delegation contract) on:reflected in the delegation contract) on:• Water Sector StrategyWater Sector Strategy• Long term investment planLong term investment plan• Public assets managementPublic assets management• ROC Utility performanceROC Utility performance• Tariff policyTariff policy

– ROC has maximum of security in the performance of its contractual obligations in order ROC has maximum of security in the performance of its contractual obligations in order to to build its capacity of self-financingbuild its capacity of self-financing investments included in the long term development investments included in the long term development planplan

– Introduces the regional mission of the operator Introduces the regional mission of the operator

– Introduces the role of the AoM/IDA as a contracting partyIntroduces the role of the AoM/IDA as a contracting party

Regionalisation – Main Elements of Institutional Organisation

Regionalization map

Project pipeline – water sector

Regional Long term investment Plans (Master Plans)

Intended to help in prioritization of CF investments.

prepared at the level of each county of Romania;

represents a tool for identification of investment needs in the long run (30 years);

Provides for a clear picture of agglomerations acc. to UWWTD;

Specific information and plans summary

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• Identification of all agglomerations at county level (maps and data base)

• “Clustering” of Agglomerations based on techno-economic assessment

• Options Analysis (central/de-central)

• Discussion with stakeholders

• Preparation of Long-term investment plan

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Definition of agglomerations in Master Plan

• Detailed option analysis

• Preparation of final/detailed maps and data base on selected agglomerations

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Feasibility study level

Scenarios “Definitions of UWWTD”

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Border Line

Cluster Line

Agglomeration

WWTP Interconnection

“Clustering” of Agglomeration

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Example RomanExample Roman

page 30

Example for Agglomerations – Detailed Definition of Boundaries

Boundary of Agglomeration

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Compliance Dates – RO Accession Treaty

• Water Supply above 10.000 inhabit. => 31.12.2015

• Wastewater collection above 10.000 P.E. => 2013

• Wastewater treatment above 10.000 P.E. => 2015

• Below 10.000 P.E. Intermediate targets => (% on national level).

• Latest compliance dates:

• for Water Supply: 2015!

• for Wastewater: 2018!

Proposed CF investments

• Balanced proposal between water – wastewater (slightly more for wastewater) focused on Accession Treaty (AT) obligations:– significant contribution to AT obligations– beneficiary population (major agglomerations)

• Balanced proposal between rehabilitation and extension networks for water and sewerage networks

Priority for CF investments

• Investments in order of priority:– WWTPs in major agglomerations (sludge treatment

facilities included)– Wastewater network in major agglomerations

(extensions first, rehabilitation where critically important)

– DWTPs (new or rehabilitation) where justified by insufficient quality and/or quantity)

– Distribution networks (extensions and/or rehabilitation where critically important)

– Stormwater management facilities, where appropriate

Selection of priority investments

Two step approach:

Step 1: Mandatory criteria– Compliance date

– Association agreement

Step 2: Ranking– Size of agglomeration (highest weight)

– Health improvement

– Environmental improvement

– Efficiency improvement

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Priority Investment Measures

Phasing of Investment measures Approval of LA of MPs and

investment list is mandatory!! Maps of agglomerations should be

included in the Urbanism Plan (by LA)

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Types and Purpose of Indicators

Type of Indicator Purpose

Project Performance indicators

Evaluation of Projects and investment componentsCompare situation before and after project implementation => ImpactBenchmarking

compare indicators of different agglomerations compare with international standards values

Check technical plausibility and feasibility of proposed measuresCompare unit costs

Programming indicators

Monitor achievement of (SOP) targetsAggregation of project results and costs at county and national level

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Programming Indicators (PRI)

• Selected indicators can be used for comparison with SOP targets for programming purposes at national level (MESD)

– How much did we already (or will we) achieve on county and national level at a (after implementation of projects)?

– What are the costs (estimated and real costs) to reach interim targets (i.e. Until 2015)

– How far are we away from defined final targets?

– How much will it cost to reach final targets?

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Plausibility Check

• Check plausibility of data using indicators

• Compare indicators of each agglomeration and benchmark selected ones (i.e. Unit cost indicators)

• If major deviation, more detailed evaluation is necessary (explain reasons for difference)

• Compare data before / after project

• There has to be a significant impact (change)

i.e. If substantial part of the sewer network is rehabilitated (high investment costs) =>reduction of infiltration water should also be significant

Additional investments to the SOP in the water sector

• National Rural Development Programme co-financed by the EU in the period 2007–2013 and co-ordinated by the Ministry of Agriculture and Rural Development (MARD), will include investments in the water infrastructure in rural areasProtocol signed between MESD and MARD for ensuring complementarity of investments I n the MP framework and avoiding double financing!

• Governmental Programmes for development water and environmental infrastructure

• Foreign loans or various forms of PPP are also solutions considered in some of the urban agglomerations.

SOP Planning 2008 - 2010

• Mid 2008 – finalizing the process of submission of the first 10 projects to the EC for approval; 4 projects already approved!

• 2008: another 30 applications for major projects under preparation: part of them to be submitted to the EC in 2008, part of them in 2009;

• 2009: all major projects submitted to the EC;• 2010: starting of preparation of project pipeline for

next programming period.

SOP expected results - 2013

Population benefiting of new/improved water/wastewater services: approx 10 million p.e.;

Total compliance with the water and wastewater directives in localities more than 10.000 inhabitants but also part of the biggest rural localities.

Thank you for attention!

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