Банкеръ Weekly



Six months before the start of 2007 when according to the project calculations of the World Bank the price of water should be about BGN2/cu m, water and sewage companies in this country published their proposals for the forthcoming price hikes. Most of them demanded in the beginning of the week an increase between 20% and 35 per cent. An exception is only the private concessionare of the capital city's Sofiyska Voda water and sewage utility which has impertinently asked for a 69% hike.
If the State Commission for Energy and Water Regulation (SCEWR) approves the demands of the water and sewage operators the new prices will enter into effect in August at the earliest. Thus, still this summer water in the capital might cost BGN1.44/cu m after VAT, up from the present BGN0.85/cu m. In fact, exactly such an increase was approved back last year by the Sofia Municipal Council, but the price hike was not approved then. The increase might not be by 69% now, branch experts predicted, justifying their stance by the disagreement of Sofia's Mayor Boyko Borissov. On Monday the Mayor asked to see the business plan of Sofiyska Voda for the next three years on which basis the new water prices would be approved. Although the Sofia Municipality does not have the rights of the regulator SCEWR, we should be acquainted with the motives for the new prices, Mr. Borissov said, recalling that the municipality was trying to renegotiate the concession agreement. The way in which the concession agreement is being fulfilled now does not justify demanding such a price, the capital's Mayor concluded.
Although the price hike demands of water and sewage companies in Northeastern Bulgaria are far more modest, the price of water there will be the highest, approximating BGN2/cu m. The reason is that pumps are used there and fuels for them account for a considerable share in the cost price.
The most expensive water will be in Dobrich - BGN2.40/cu m, although the local water and sewage supplier wants some 30% rise. Presently, the price of water is BGN1.90/cu m and has not been changed since 1999, while prices of electricity, fuels and inputs for water and sewage utilities have increased seriously, said Velichko Vassilev, manager of the local company. However, pundits recalled that the most probable reason for the high price of water in Dobrich were the huge wastes, allowed by the company. Four lawsuits and an investigation are currently going on against Georgi Gospodinov, former head of the water and sewage utility in Dobrich. In the beginning of June he was sentenced on probation for six months by the Regional Court due to a disadvantageous deal for repair of water meters Mr. Gospodinov was accused as well of embezzling through inexact documents for construction and assembly works BGN173,873 with the help of the heads of Kavarna and Tervel regions, the lawyer Plamen Priparzhenski, and the business lady Dimitrichka Vassileva.
No proposal for a price rise has been made in Razgrad yet where consumers also pay almost BGN1.90/cu m for water. However, SCEWR's Deputy Head Lyutskan Dalakchiev is of the opinion that the company should even demand a 25% reduction of its tariff.
The Yovkovtsi water and sewage utility, managing the water supply company in the Veliko Tarnovo region, will ask for 31% higher prices as of August, its manager Evgeni Nikolov announced. The proposal is that the new price of water in the region should go up from the current BGN1.24/cu m to BGN1.62/cu m. And the utility in Pleven demanded a 28% increase, said Genoveva Vassileva from the company, explaining that the price hike was a result of the necessary reconstruction of infrastructure and the fact that water tariffs here had not been changed for four years. If the proposal is approved, water in Pleven will cost BGN1.64/cu m, up from the present BGN1.28/cu m.
The demanded price increase of the water and sewage utility in Shoumen is among the most modest. It insists on just a 20% hike and if its proposal is accepted the population there will be paying BGN1.93/cu m after VAT as of August, up from the current BGN1.60/cu m.
Although the water and sewage companies in Southern Bulgaria also insist on a 20-30% price hike, water will be cheaper there than in Northern Bulgaria. One of the highest proposals for a price rise, by 35%, is that of the Yambol-based utility.
The water company in Plovdiv where the price of water is among the cheapest in the country, asks for a 25% rise. If the proposal is accepted, potable water in the second biggest Bulgarian city will be BGN1.16/cu m. Industrial consumers will be divided in three categories according to the pollution of waters from their operation. They will be paying respectively BGN0.36/cu m, or BGN0.48/cu m, or BGN0.72/cu m for water treatment.
The price of water will be even cheaper in Pernik where the local company demands just a 20% price increase. And the tariff for industrial purposes won't change at all. Thus, Stomana Industry and the Pernik Heating Utility will be buying the water at the current prices.
By July 18 the seventy water and sewage utilities will have to move to the SCEWR their 3-year business plans, with an accent on the reduction of water wasting. Our country occupies one of the first places in Europe with regard to the waste of potable water - over 60 per cent. According to the managers of domestic water and sewage companies, however, the main reason for the demanded price hikes are the increased prices of energy sources and higher production costs. The necessity of reconstruction of infrastructure and the reduction of leakages come only on the third place and the money projected for the purpose is trifling as compared to the huge amounts that are necessary in fact. According to calculations of the last two governments, the domestic water sector will need at least BGN12BN by the year 2015. Until then the price of water will reach some EUR2/cu m, according to Plamen Nikoforov, Head of the Water Supply and Sewage Department in the Ministry of Regional Development and Public Works. That is to say -somewhere around the lower level of tariffs in eastern Europe where water price are in the range of EUR1.1/cu m in Spain and EUR4.7/cu m in Denmark.

Ten per cent will be deducted from the monthly bill of consumers in cases of proven bad water supply. The sanction is stipulated in the general terms of water and sewage operators, regulating their relations with clients. If there are any doubts about the good quality of potable water, if water supply is interrupted, or in cases of unregulated interruption of water supply, consumers will be able to file claims at the respective water and sewage companies. They will be moving them to the water regulator and inspection will be appointed to establish if they have good reasons. If it is proven that water supply is bad through the fault of the respective water and sewage utility the SCEWR will order in written to return 10% of the monthly bill of consumers who have been injured. The money will be probably deducted for the bill for the following month, SCEWR insiders explained.

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