Банкеръ Weekly

Briefs

WATER PRICES WILL INEVITABLY GO UP

The only real method to improve the quality of services in the water supply sector is to raise the price of water, experts of the Bulgarian Association of Water Supply and Sewerage (BAWSS) said. People in Bulgaria consume some 500-600 million cubic metres of water every year. If the price is raised by BGN0.10 or BGN0.20 per cubic metre, it will still be socially acceptable. Meanwhile, more than BGN100MN-BGN200MN will be accumulated annually and can be invested in improvement of the quality of water supplying infrastructure, the Chairman of the Association, engineer Tenyo Peichev, said on November 25. Consumers should realize that this is the only way to collect the money needed for rehabilitation of the network which will reduce significantly the losses, the engineer added. Currently, leaks from the water supply network in different parts of the country reach 70% and each company calculates them in the price it asks from final consumers.Along with the huge losses of transported water, there are a number of other problems - water-supply restrictions that last the whole year in many towns of the country, a low level of sewerage (70% in towns and 2.1% in villages), insufficient number of purifying stations, etc. In fact, all these issues are described in the draft strategy for sector development prepared by the Ministry of Regional Development and Public Works. The draft also stipulates that BGN6.7BN be invested in rehabilitation of the transportation network, reduction of losses, and construction of purifying stations. The money will be provided by European funds, credits and the treasury, as well as from increased prices of the water (initially, by BGN0.10 per cubic metre only). As the document was officially presented, however, it suddenly disappeared. The Ministry officials keep promising that they will announce details only when it is coordinated with the other departments. But while the state officers are hanging about, companies from the branch requested higher prices - not by BGN0.10, but by BGN0.20 per cubic metre.The association sees no other solution beside raising the water prices, considering the modest BGN2MN budget support launched in 2003 to water supply companies and the stipulated BGN1MN increase of that amount in 2004. These amounts are quite symbolic and there are fewer chances for attracting foreign capitals because of the lack of a clear state (as well as municipal) policy in that sphere. Both the failed concessions in Shoumen and Varna and the dubious example with Sofia Water prove that.There's no doubt that big Western companies are much more able to get credits, and what is more - under better conditions. Still, water supply companies can apply by themselves for privileged credits from European funds and international financial institutions, as long as they meet the requirements. Whether they are always able to do so is a different question. For example, the Stara Zagora-based company failed to get an EUR20MN credit for reconstruction of the water transportation infrastructure, because... it was not clear who its owner was.It seems that the water problems do not disturbe the managers of the supply companies who are used to waiting for the government (or the municipalities) to solve their problems. That's why they always propose two options for development of the water supply companies: raising the prices and getting assistance from the state budget. Nobody talks about financing from the European Union pre-accession funds, and applications and projects in that aspect are quite few.A report for preliminary evaluation of two pilot projects in the water supply companies in Plovdiv and Bourgas was signed with the European Bank for Reconstruction and Development (EBRD) last week. The analysis is financed with EUR600,000 by the Trust Fund of the Central European Initiative (which money is managed by the EBRD, too).One of Bulgaria's most modern waste water treatment stations was built in Plovdiv. The CHF5.5MN needed for its equipment came from Switzerland and the construction works worth BGN3.5MN were paid by the Bulgarian government. Still, examples like this one are too rare. What is certain now is that mayors and municipal parliaments will soon approve new higher prices of the water.

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