Банкеръ Weekly

Briefs

WATER AND SEWAGE COMPANIES TO PAY FINES UP TO BGN50,000

Local water and sewage companies will be paying huge fines for non-observing undertaken commitments if the Parliament approves the provisions of the bill for regulations of water supply and sewage services. The heaviest financial sanctions - between BGN20,000-50,000 - will be imposed for non-fulfilment of their long-term business plans. Under the project drafted by the Ministry of Regional Development and Public Works, each water supply and sewage operator shall be obliged to work out such a plan for three years initially, and for every five years afterwards. The plans should consist of a production, repair, investment and social part. They will be presented to and defended in front of a specialized regulatory body. As the BANKER weekly has already written, these functions will be entrusted to a new directorate within the structure of the incumbent State Commission for Energy Regulation (SCER), whose competence will be entirely in the water supply and sewage sector. As of the beginning of 2005 the institution is projected to begin operating under its new name - State Commission for Energy and Water Regulation. The business plans should comply with certain criteria, set in advance (e.g. for the quality of water, that will be specified in a separate ordinance). Any water and sewage company whose prices are above the rates, fixed by the regulatory body, will be fined to pay BGN50,000. The highest penalty also threatens the water companies which have not built their new networks in conformity with the Cabinet-approved National Programme for Building Waste Waters Treatment Stations in Population Centres. An operator that has not submitted the required information to the State Commission for Energy and Water Regulation will be fined by BGN10,000-30,000. Sanctions of BGN1,000 to BGN5,000 have been stipulated for officials who have allowed or committed a violation, and the size of penalty may go up trice for a repeated infringement. It will not be a surprise if the fines turn out a major source of proceeds into the budget of the future regulatory body, especially considering the fact that most of the local water companies are still operating according to principles that have nothing in common with the market ones. Each water and sewage company has a monopoly position in the respective region and it is not clear what components are included in its price formation. One thing, however, is certain - consumers are those who pay for all leakage along the network. In fact, a special ordinance with the law will include a methodology for setting the admissible losses of water. They won't be set in per cent as until now, but in cubic metres per kilometre of the water supply network for a fixed period of time (a second, a month, or a year). Thus, it will be observed if the volume of losses is reduced, Plamen Nikoforov, head of the Water Directorate with the Ministry of Regional Development and Public Works, explained in front of the BANKER weekly. But it's hardly probable that the evil practice of water squandering that has been prevailing for several decades, would be easily overcome. The budget of the State Commission for Energy and Water Regulation will be also filled in by the so-called water and sewage fee, payable annually by water operators in quarterly instalments (on the basis of the consumed and invoiced quantity of water for the previous three months). This will undoubtedly influence the price which end clients pay. According to the Minister of Regional Development and Public Works Valentin Tserovsky, the hike will be by some BGN0.001/cu m, i.e. at average consumption of 3 cu m per capita, a family of 3 will be paying BGN0.009 for maintenance of the regulatory body.

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