romanian experience in financing compliance with...
TRANSCRIPT
Romanian Experience in Financing Compliance with EU Water
Directives
Sorin CaianBDO Business Advisory
Tirana, 3 November 2016
Context
• The Romanian water sector:o Regionalisation started in 2003 from 600 utilities, now
there are 43 ROCs
o The second “wave” of regionalization toward rural areas
o Large scale investment projects with EU financing focused mainly on rural areas
• Reduction of the VAT for water and wastewater services:o 9% for water and 20% for wastewater (from 24%)
• Cost-Benefit Analysis Guide with clear financial principles for sustainable development on medium and long-term
Total revenues of 43 ROCs
Total investments
• ISPAo 30 large cities benefited of 600 million Euro
investments
• SOP Environment 2007-2013 o Available funds of more than 3.2 billion Euro for the
waster and wastewater sector
o EU funds absorption level of 70%
o Some projects will continue to be implemented in the new investment period
Water network investments
“Water and Jobs”
Water Water Water Water
WastewaterWastewater Wastewater Wastewater
SupportSupport
Support Support
Administration Administration Administration Administration
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
2012 2013 2014 2015
Personnel number (cumulated for the entire sector)
Total investments (SOP Environment, own sources, other sources) in 2015
-
10,000,000.00
20,000,000.00
30,000,000.00
40,000,000.00
50,000,000.00
60,000,000.00
Total investments (SOP Environment funds, own sources and other sources) in water and wastewater activities, for year 2015 (RON)
Total investments (SOP Environment funds, own sources and other sources) Average
Main challenges
• Regionalisation was a mandatory condition for receiving grants
• Applying the solidarity principle
• The available funds didn’t cover all investment needs, but..
• The implementation capacity was not sufficient
Cost benefit analysis
• Funding gap – difference between the ROC financing capacity and the project value
o Financed 85% EU funds, 13% state budget, 2% local budget
• Minimum level for affordability ratio on long-term: o2.5% for the average household => Higher level of bill in
order to cover O&M costs and depreciation
o If exceeding 3.5%, social subsidy measures should be considered
• Coverage of equivalent depreciation of public assets through tariffs:
o Scheduled over maximum 30 years considering affordability constrains
o Follow a linear pattern
Large Infrastructure Operational Program2014 - 2020
• Total investment estimated value is 6.2 billion Euro
-
50,000,000
100,000,000
150,000,000
200,000,000
250,000,000
300,000,000
350,000,000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43
Medium-term investment plans (amounts in Euro)
Certain facts…
• Each Regional Operator will have a medium term tariff strategy based on the Cost-Benefit Analysis of EU financed investment projects covering the period 2017-2023
• By the end of investment implementation (2021-2022), each operator will need to come with a new tariff strategy to gradual include the depreciation of public patrimony into the tariff
