This chapter presents the context within which the economic regulatory system (ERS) for water supply and sanitation (WSS) in the Republic of Moldova (hereafter “Moldova”) has to operate. It confronts ambitious sector policy objectives driven by the Association Agreement with the European Union (the EU water acquis), the Paris Agreement on Climate and WSS-related Sustainable Development Goals, and set out in the National Development Strategy (Moldova 2020) and the WSS strategy for 2014-28. It compares performance of the Moldova’s WSS sector with its Danube Region peers highlighting several challenges such as non-revenue water, customer satisfaction and operating cost coverage. Finally, it formulates nine demands on the economic regulatory system (ERS).
Enhancing the Economic Regulatory System for Moldova’s Water Supply and Sanitation
Chapter 1. The context of Moldova’s economic regulatory system for water supply and sanitation
Abstract
Background
Economic regulation can be defined as all rules, procedures, practices, institutions, standards and norms, that set, monitor, enforce the economic aspects (tariffs, service standards) of water supply and sanitation (WSS) under given policy objectives (Castalia, 2005). As a natural monopoly sector, WSS requires economic regulation, either by contract (e.g. like in public-private partnership arrangements not yet in use in Moldova’s WSS), or by competent regulatory authority (i.e. a professional regulator).
The Republic of Moldova (hereafter “Moldova”) took important steps forward in the development of its economic regulatory system (ERS) for WSS with the adoption of Law 303 on Water Supply and Sanitation in 2013. This led to the nomination of the National Energy Regulatory Agency of the Republic of Moldova (ANRE) as the competent regulatory authority for WSS in 2014.
A sound ERS, however, includes much more than the establishment of a regulator. The 2000 Almaty Ministerial conference provided an idea of what one may expect from a sound ERS (OECD EAP Task Force, 2000[1]):
economic efficiency i.e. ensuring the best possible use of resources for the most productive outcomes
cost recovery i.e. providing revenues to meet the costs of operations, maintenance and administration
fairness i.e. treating all customers equally and excluding any abuse of market power by the natural monopoly
financial stability i.e. minimising revenue fluctuation
resource conservation and resource use efficiency by providing environmental and economic incentives, respectively
social orientation of water services, without making the water utility a social agency.
In the context of transition countries, it is possible to add (OECD EAP Task Force, 2000[1]):
ruling out of unfunded mandates in the environmental, social and public obligation sphere
simplicity and “understandability”.
To ensure the above outcomes, it is required to:
provide the right governance of the regulatory agency
ensure the proper integration, co‑ordination and communication with the other constituents of the ERS.
Moldova’s ERS has to perform within two important contexts:
“Policy”: the internal and external policy objectives of Moldova.
“Capacity”: the characteristics of the WSS providers and their stakeholders, including in terms of number, production capacity, operations, physical condition and financial situation.
“Policy” sets the ambition. It provides direction on what must be achieved or accommodated by the ERS. Internationally, Moldova has committed to WSS-related objectives in the Association Agreement with the EU and the Sustainable Development Goals (SDGs), as well as the Paris Agreement on Climate. National strategy and policy documents also reflect commitments to WSS-related goals. Both international and domestic commitments are further described in section 1.2.
“Capacity” constrains the policy ambition. The WSS sector in Moldova faces challenges that will make it hard to absorb funds, regionalise, increase tariffs, co-finance, plan and manage projects required for compliance with the policy objectives.
As suggested in Figure 1.1, balance is needed between policy ambition and financial and human resources, planning, management and absorption capacity. A sound ERS would aim to achieve the balance and maintain it
Policy objectives
The policy framework for WSS in Moldova is explicit. Its targets are defined in:
Moldova’s Association Agreement with the EU
SDGs and Paris Agreement
National policies and strategies (incl. WSS and adaptation to climate change) (UNDP, 2009[2])
Association Agreement
The 2014 Association Agreement (AA) with the EU became effective as of 1 July 2016. The AA foresees in particular compliance with the relevant EU water directives. These include:
Water Framework Directive (WFD)
For Directive 2000/60/EC of the European Parliament and of the Council of 23 October 2000 establishing a framework for Community action in the field of water policy as amended by Decision No 2455/2001/EC, the AA provides for the following:
adoption of national legislation and designation of competent authorities within three years of the AA becoming effective
analysis of River Basin Districts (RBDs) and establishing programmes for monitoring of water quantity and quality within six years
preparation, consultation and publication of RBD management plans within eight years.
Urban Waste Water Treatment Directive (UWWTD)
For Council Directive 91/271/EEC of 21 May 1991 concerning urban wastewater treatment as amended by Directive 98/15/EC and Regulation (EC) No 1882/2003, the following timetable has been agreed:
adoption of national legislation and designation of competent authority/authorities within three years
assessment of the status of urban wastewater collection and treatment within five years
identification of sensitive areas and agglomerations within six years
preparation of technical and investment programmes for the implementation of the urban wastewater treatment requirements within eight years.
Flood Risk Directive
For Directive 2007/60/EC of the European Parliament and of the Council of 23 October 2007 on the assessment and management of flood risks, the AA provides the following implementation deadlines:
adoption of national legislation and designation of competent authority(ties) within three years
preliminary flood assessment within four years
preparation of flood hazards maps and flood risks maps within six years
establishment of flood risk management plans within eight years.
Drinking Water Quality Directive
For Council Directive 98/83/EC of 3 November 1998 on the quality of water intended for human consumption as amended by Regulation (EC) No 1882/2003, the AA provides for the following implementation deadlines:
adoption of national legislation and designation of competent authority (ties) within three years
establishment of standards for drinking water within four years
establishment of a monitoring system and a mechanism to provide information to consumers within six years.
Nitrates Directive
Council Directive 91/676/EEC of 12 December 1991 concerning the protection of waters against pollution caused by nitrates from agricultural sources as amended by Regulation (EC) No 1882/2003 is to be implemented with the following deadlines:
adoption of national legislation and designation of competent authority/authorities within three years
identification of polluted waters or waters at risk and designation of nitrate vulnerable zones and establishment of action plans and codes of good agricultural practices for nitrate vulnerable zones within five years.
Implementation of the above directives is costly. WSS customers will pay the bulk of compliance costs. Only the cost of compliance with the pollution directive may be borne by agriculture and industry. Climate adaptation measures covered by the AA will be an additional cost for WSS, although not that significant (OECD EAP Task Force, 2013[3]). Section 2.4 provides estimates for the associated costs.
Article 9 of the WFD provides for two principles that have far-reaching consequences for the ERS:
1. Full cost recovery i.e. the costs of WSS shall include not only operation and capital costs, but also the environmental and resource costs associated with the consumption of the service.
2. Polluter pays principle i.e. the cost of environmental degradation is borne by the person that causes it. This may also be regarded as an application of the first principle.
The two principles imply that WSS consumers will eventually pay for the full costs of service provision. In most cities, including Chisinau, the present tariffs represent only a part of the full costs. Annex A provides a table on the tariff rates charged in all 40 main service areas.
Sustainable development goals
The second series of high-level policy objectives is the WSS-related Sustainable Development Goals (SDGs). SDG6 is to ensure availability and sustainable management of water and sanitation for all. The SDG6 objectives are an elaboration of the human right to water that entitles everyone to sufficient, safe, acceptable, physically accessible and affordable water for personal and domestic uses (UN CESCR – General Comment 15, para 2). The main commitments made under Goal 6 Water and Sanitation are (to be achieved by 2030, unless indicated differently below):
Achieve universal and equitable access to safe and affordable drinking water for all (100% of population).
Reduce water pollution.
Increase water-use efficiency.
Introduce integrated water resource management (IWRM) at all levels, including transboundary.
Protect and restore water-related ecosystems (by 2020).
For each of the SDG6 objectives, indicators have been formulated. Table 1.1 provides all SDG6 goals and indicators.
Table 1.1. SDGs commitments applicable for Moldova
TARGETS |
INDICATORS |
||
---|---|---|---|
6.1 |
By 2030, achieve universal and equitable access to safe and affordable drinking water for all |
6.1.1 |
Proportion of population using safely managed drinking water services |
6.2 |
By 2030, achieve access to adequate and equitable sanitation and hygiene for all and end open defecation, paying special attention to the needs of women and girls and those in vulnerable situations |
6.2.1 |
Proportion of population using safely managed sanitation services, including a hand-washing facility with soap and water |
6.3 |
By 2030, improve water quality by reducing pollution, eliminating dumping and minimising release of hazardous chemicals and materials, halving the proportion of untreated wastewater and substantially increasing recycling and safe reuse globally |
6.3.1 6.3.2 |
Proportion of wastewater safely treated Proportion of bodies of water with good ambient water quality |
6.4 |
By 2030, substantially increase of water-use efficiency across all sectors and ensure sustainable withdrawals and supply of fresh water to address water scarcity and substantially reduce the number of people suffering from water scarcity |
6.4.1 6.4.2 |
Change in water-use efficiency over time Level of water stress: freshwater withdrawal as a proportion of available freshwater resources |
6.5 |
By 2030, implement integrated water resources management at all levels, including through transboundary co‑operation as appropriate |
6.5.1 6.5.2 |
Degree of integral water resources management implementation (0-100) Proportion of transboundary basin area with an operational arrangement for water co‑operation |
6.6 |
By 2020, protect and restore water-related ecosystems, including mountains, forests, wetlands, rivers, aquifers and lakes |
6.6.1 |
Change in the extent of water-related ecosystems over time |
6.A |
By 2030, expand international co‑operation and capacity-building support to developing countries in water- and sanitation-related activities and programmes, including water harvesting, desalination, water efficiency, wastewater treatment, recycling and reuse technologies |
6.A.1 |
Amount of water- and sanitation-related official development assistance that is part of a government-coordinated spending plan |
6.B |
Support and strengthen the participation of local communities in improving water and sanitation management |
6.B.1 |
Proportion of local administrative units with established and operational policies and procedures for participation of local communities in water and sanitation management |
Source: (UN, 2015[4]), The 2030 Agenda for Sustainable Development, https://sustainabledevelopment.un.org/content/documents/21252030%20Agenda%20for%20Sustainable%20Development%20web.pdf.
Some of the remaining 16 SDGs also relate to WSS, such as SDG11 (sustainable cities and communities) and SDG13 (climate action). Progress on indicators is to be monitored at country level. With support of the United Nations Development Programme (UNDP), Moldova has completed identification of data sources and owners. There is still a lot of work ahead to monitor progress in Moldova adequately. Data were available for only three of ten SDG6 indicators when this report was finalised.
Furthermore, the global SDGs must be translated into domestic priorities and integrated into policy and budgetary frameworks. Preliminary UNDP analysis shows most SDG6 objectives are only partially aligned with national policy due, for instance, to ambiguity or inconsistency in national policies. There is work ahead here as well towards establishing national targets and indicators to monitor progress. Fortunately, the water-related articles of the EU Association Agreement are well aligned with SDG6 objectives.
Preliminary analysis on adaptation of the SDGs to domestic priorities also shows that Moldova intends to deliver on some SDG objectives well before 2030 – those covered already under specific targets of national policy and strategy.
The Paris Agreement on Climate underlines the ambitions with respect to the SDGs for Moldova. Its impact on the demands on the ERS is therefore not further analysed here.
National policy and strategy
In addition to external commitments, the following domestic policy documents determine expectations from the ERS in the years to come. These are:
National Development Strategy (Moldova 2020)
From the three domestic WSS-related documents, the National Development Strategy (NDS) is the highest in ranking. This is because it has been developed as an over-arching socio-economic strategy by a number of collaborating ministries.
According tovarious studies, access to clean water and sanitation is one of the most cost-effective development interventions and is critical for reducing poverty. It is therefore remarkable that the NDS only mentions water sporadically compared to, for instance, education and transport. In fact, access to water is often a condition for education and increased mobility. It is not possible to derive concrete WSS-related policy objectives from the NDS.
Water Supply and Sanitation Strategy (2014 – 2028)
The national Water Supply and Sanitation Strategy is concerned with the plan to comply with the EU acquis, including its financing. It schedules investment priorities as follows:
1 400 km network extension for water supply
511 km for network extension for wastewater sewerage
42 new or rehabilitated water treatment plants (WTPs)
49 new or rehabilitated wastewater treatment plants (WWTPs).
The strategy speaks out in favour of regionalisation of services to improve absorption capacity and management and to reduce operating costs.
National Environmental Strategy (2014 – 2023)
Water scarcity in Moldova is already foreseen by the 2020s or, at latest, by the early 2030s (UNDP, 2009). In the absence of climate change adaptation measures, this will create a barrier for further economic development. The National Environmental Strategy includes adaptation to climate change, targets on access to WSS, wastewater treatment and sludge management.
An important objective is to ensure access to safe piped water supply for 80% of the population and to sanitation systems and services for 65% of the population by 2023 (see Table 1.2). This degree of coverage has been achieved for the urban population. However, 55% of the population in Moldova lives in rural areas, making achievement of the target a formidable challenge.
The WSS strategy was developed in 2011/12 and officially approved in March, 2014, whereas the National Environmental Strategy was developed in the years thereafter. The two strategies are government-endorsed documents with the same status; one does not follow from the other. The government of Moldova is committed to implementation of both documents (as well as to the implementation of the NDS).
Table 1.2. WSS specific objectives extracted from the National Environmental Strategy (2014 – 2023)
№ |
Action title |
Time frame |
Responsible institution |
Monitoring indicators |
Estimated costs, MDL |
Sources of financing |
---|---|---|---|---|---|---|
65 |
Development of the water supply and sanitation infrastructure, as well as ensuring access, by the year 2023, of some 80% of the population to safe water supply and sanitation systems and services, and development of regional water supply and sanitation systems Soroca – Balti, Vadul lui Voda – Chisinau – Straseni – Calarasi, Prut – Leova – Basarabeasca – Cimislia and Ceadir – Lunga |
2023 |
Ministry of Environment; Ministry of Regional Development and Construction |
Aqueducts, sewerage networks – built; wastewater treatment stations, population – connected |
3 910 415 850 |
State budget; foreign investment and assistance; National Ecological Fund; Regional Development Fund |
66 |
Promoting the principles of market economy and promoting public-private partnership in the field of water supply and sanitation |
2015 |
Ministry of Environment; Ministry of Economy |
Economic instruments – applied, public-private partnerships– established |
105 600 |
State budget |
67 |
Assessment of the situation regarding urban wastewater collection and treatment and identification of sensitive and less sensitive areas |
2020 |
Ministry of Environment; Ministry of Health |
Assessment study – realised; sensitive areas – identified |
Within the approved state budget limits |
State budget; foreign assistance |
68 |
Elaboration of technical and investment programmes to implement requirements for urban wastewater treatment in accordance with the provisions of Council Directive 91/271/EEC of 21 May 1991 concerning urban wastewater treatment |
2022 |
Ministry of Environment |
Directive provisions – transposed and implemented |
2 825 068 800 |
State budget; foreign assistance |
Source: (UNEP, 2014[5]) “Environmental Strategy for the years 2014-2023”, https://www.unenvironment.org/resources/report/environmental-strategy-years-2014-2023.
Water supply and sanitation sector performance
Moldova’s ambitious policy agenda is to be realised in a developing institutional and regulatory environment and also in severe economic hardship. At purchasing power parity (PPP), gross domestic product (GDP) per capita in Moldova is just 55% of the average for countries in South Eastern Europe (SEE) that are non-EU members. This ranks Moldova as by far Europe’s poorest country. Figure 1.2 provides a snapshot of the capacity of the WSS sector in Moldova. Annex 1.A compares indicators of Moldova’s WSS sector with those of non-EU and Danube Region average values.
The WSS sector in Moldova is well behind its Central and South East European peers with respect to:
Access to WSS, which is around 65% for water and still significantly lower for sanitation.
Wastewater treatment, at 24% of the population connected.
Staff levels are two-three times above benchmark levels of three-five staff per thousand connections: water plus wastewater.
Affordability of service, which for most of the population is above 5% of household expenditures, as illustrated by the recent affordability assessment (see Figure 2.5). Investment from utilities’ own resources in WSS per capita is on average 30% below other non-EU countries in SEE. It is 90% below the Danube average (i.e. including also new EU member states in the Danube basin).
While at least in line with the Central and South East European average, significant challenges remain in several other fields (Pienaru et al., 2014):
non-revenue water (presently at 41%)
customer satisfaction
operating cost coverage (presently at 0.99 compared to a benchmark of 1.5) (see Table 1.3 and Figure 1.3 for more details).
Table 1.3. IBNET data for WSS in Moldova (2012-16), based on 43 largest, urban utilities
2012 |
2013 |
2014 |
2015 |
2016 |
||
---|---|---|---|---|---|---|
1.1 Water coverage (percentage) |
84 |
81 |
80 |
81 |
81 |
|
2.1 Sewerage coverage (percentage) |
70 |
67 |
65 |
66 |
65 |
|
4.1 Total water consumption (lcd) |
133 |
129 |
125 |
127 |
126 |
|
4.7 Residential water consumption (lcd) |
103 |
100 |
98 |
100 |
98 |
|
6.1 Non-revenue water (percentage) |
44 |
41 |
40 |
42 |
44 |
|
6.2 Non-revenue water (m3/km/d) |
30 |
26 |
23 |
24 |
26 |
|
8.1 Water sold that is metered (percentage) |
90 |
88 |
88 |
87 |
74 |
|
11.1 Operational costs W&WW (USD/m3 sold) |
1.05 |
1.13 |
1.07 |
0.86 |
0.70 |
|
12.2 Staff (W&WW/per 000 W&WW Conn) |
15.0 |
13.0 |
12.0 |
12.0 |
11.0 |
|
12.4 Staff (W&WW/per 000 W&WW pop served) |
2.0 |
1.8 |
1.8 |
1.8 |
1.7 |
|
18.1 Average revenue W&WW (USD/m3 sold) |
1.14 |
1.12 |
0.99 |
0.74 |
0.70 |
|
23.1 Collection period (days) |
282 |
274 |
190 |
174 |
127 |
|
24.1 Operating cost coverage ratio (before depreciation) |
1.09 |
0.99 |
0.94 |
0.87 |
1.01 |
Note: The challenges for WSS in Moldova have been documented extensively.
Source: Pienaru et al. (2014); IBNET database www.IB-NET.org (accessed on 5 April 2017).
The International Benchmarking Network for Water and Sanitation Utilities (IBNET) provides online access to the world largest database for water and sanitation utilities performance data through www.ib-net-org.
Demands on ERS for WSS in Moldova
Given the disparity between the limited capacity (human resources, financial, absorption) of the sector and the ambitious policy commitments, the demand on the ERS in Moldova is intense. There are nine demands on ERS that can be derived from the policy objectives:
1. Monitor and steer towards improved performance in WSS and on incentives for efficiency.
Rather than applying fixed standards, the ERS shall trigger developments leading to improved performance. Two key factors are increased transparency and negotiations with utilities on performance improvement trajectories, including for staff, non-revenue water, specific energy consumption, etc. This shall be done on the basis of business plans (or corporate development plan).
2. Focus regulatory efforts on large, regionalised entities.
Romania and Kosovo are seen as successful examples of regionalisation. Following their practice, the ERS in Moldova may consider leaving the economic regulation of small, non-regionalised entities completely to municipalities.
3. Facilitate the emergence of sustainable business models in WSS.
The traditional municipal water utility (Apacanal) model is not the standard solution or panacea for the sector’s challenges. Regionalisation of WSS services has been foreseen on paper, but is hardly functioning in practice. Apart from horizontal integration, a number of alternative solutions may be suitable in particular service areas. These include reconsidering and facilitating:
the right degree of vertical integration
the optimal combination of water production, distribution, sewerage and wastewater treatment may differ across regions and between rural and urban areas
the use of private sector participation, including outsourcing services.
4. Allow for tariff increases to fund operation of WWTPs.
When WWTPs become operational, tariffs must be increased to cover the jump in operating costs. If tariffs do not rise, WWTPs won’t have enough cash flow to start operations.
5. Offer well-targeted mechanisms for protection of poor and vulnerable citizens.
Considering the necessary increases in tariffs and the human right to WSS, social safety nets are needed to ensure access for poor and vulnerable citizens.
6. Set the overall affordability constraint for the population within which tariffs may rise.
Unlike most SEE countries, the overall affordability constraint in Moldova is real. For some service areas, average expenditure on WSS is already above the commonly used threshold of 4% of household expenditure. A clearly defined affordability ceiling is needed. To meet affordability criteria, rural service areas may have to merge with richer, urban areas. A uniform tariff would be applied through the service area with the richer areas cross-subsidising the poorer ones.
7. Recognise the need to bridge the funding gap through (affordable) loans and other forms of market-based (repayable) external finance.
The foreseen peak in capital expenditure cannot be covered by tariffs, transfers and taxes (3Ts) alone. Such peaks require external, repayable finance, mostly through loans from international financial institutions (IFIs). This can bridge, but not close, the funding gap; only the 3Ts can close it, as illustrated in Figure 1.4. This requires an ERS that recognises the cash flow consequences of external financing. That ERS should allow tariffs to accommodate debt service obligations, if taxes and transfers have not been committed to do so.
8. Allow for adequate and cost-effective ways to achieve SDG6 through revised design and construction norms for WSS and service quality standards, among others.
Given the challenge of meeting the SDGs, more flexible, appropriate approaches to WSS are needed, particularly in sanitation and in rural areas. This should be possible without breaking any construction or service norms or standards.
9. Apply dedicated economic instruments to co-finance investment, particularly in wastewater treatment (OECD, 2010[6]).
The WFD calls for water pricing in accordance with the full cost recovery and polluter pays principle. Full cost recovery implies charging not only the operating and capital costs of service, but also the environmental and resource costs. In Moldova, however, full cost recovery in WSS cannot be achieved through tariffs alone in the years up to 2030. The ERS will have to provide for other complementary economic instruments such as charges, taxes and market-based instruments. At the same time, these instruments can generate funds needed for co-financing WSS capital expenditure, particularly for wastewater treatment.
The demands are summarised in Annex 1.B. They were discussed among stakeholders and in an Expert Meeting on 16 November 2016. Furthermore, Annex 1.A.2 provides an overview of the relations, the necessary balance and the possible conflicts between these demands. From the overview, one can see that the demands on the system are compatible or can be reconciled.
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[14] UNECE (2014), Environmental performance review, Republic of Moldova. Third Review Synopsis., UNECE, https://www.unece.org/fileadmin/DAM/env/epr/epr_studies/Synopsis/ECECEP171_Synopsis.pdf.
[5] UNEP (2014), Environmental strategy years 2014-2023, https://www.unenvironment.org/resources/report/environmental-strategy-years-2014-2023.
[27] Verbeeck, G. (2013), Increasing market-based external finance for investment in municipal infrastructure, https://www.iwapublishing.com/sites/default/files/documents/online-pdfs/WUMI%208%20%284%29%20-%20Dec13.pdf.
[35] Verbeeck, G. and B. Vucijak (2014), “Towards effective social measures in WSS”, Towards effective social measures in WSS, https://1drv.ms/b/s!Anl6ybs2I7QGhdUX96FsaFC6JTUpIA.
Annex 1.A. Indicators of Moldova’s WSS sector in comparison with Non-EU and Danube Region average figures (sector data from Danube programme)
Indicator |
Year |
Source |
Value |
Non-EU average |
Danube average |
Danube best |
|
---|---|---|---|---|---|---|---|
Context for services |
|||||||
Socio-economic situation |
|||||||
Population (M. Inhabitants) |
2013 |
World Bank 2015 |
3.559 |
24.524 |
8.451 |
n.a. |
|
Population growth (compound growth rate 1990 – 2013) (percentage) |
1990-2013 |
World Bank 2015 |
-0.16 |
-0.54 |
-0.37 |
n.a. |
|
Share of urban population (percentage) |
2013 |
World Bank 2015 |
45 |
67 |
63 |
n.a. |
|
GDP per capita, PPP (current international USD) |
2013 |
World Bank 2015 |
4 669 |
8 489 |
16 902 |
n.a. |
|
Poverty headcount ratio (USD 2.50 a day); PPP (percentage of pop) |
2011 |
World Bank 2015 |
7.07 |
0.64 |
1.65 |
n.a. |
|
Administrative organisation |
|||||||
No. of local government units (municipalities) |
2011 |
IMF 2012 |
981 |
6 303 |
1 987 |
n.a. |
|
Av. size of local government units (inhabitants) |
2013 |
Author’s elab |
3 628 |
3 891 |
4 253 |
n.a. |
|
Water resources |
|||||||
Total renewable water availability (m³/cap/year) |
2008-12 |
FAO Aquastat 2015 |
3 315 |
9 156 |
7 070 |
n.a. |
|
Annual freshwater withdrawals, domestic (percentage of total withdrawal) |
2013 |
World Bank 2015 |
14 |
20 |
26 |
n.a. |
|
Share of surface water as drinking water source (percentage) |
2014 |
ICPDR 2015 |
33 |
27 |
31 |
n.a. |
|
Organisation of services |
|||||||
Number of formal water service providers |
2012 |
AMAC 2015 |
52 |
824 |
661 |
n.a. |
|
Average population served (inhabitants) |
2013 |
Author’s elab. |
29 430 |
18 882 |
9 496 |
n.a. |
|
Dominant service provider type |
Joint stock water and sanitation companies |
||||||
Service scope |
Water and/or sanitation |
||||||
Ownership |
State-owned |
||||||
Geographic scope |
Municipal |
||||||
Water services law? |
Yes |
||||||
Single line ministry? |
No |
||||||
Regulatory agency? |
Yes (ANRE) |
||||||
Utility performance indicators publicly available? |
Yes (www.amac.md) |
||||||
National utility association? |
Yes (AMAC for water and wastewater with limited coverage) |
||||||
Private sector participation |
No |
||||||
Access to services |
|||||||
Water supply |
|||||||
Piped supply – average (percentage) |
2010 |
Author’s elab. |
51 |
71 |
83 |
100 |
|
Piped supply – bottom 40% (percentage) |
2010 |
Author’s elab. |
27 |
61 |
76 |
100 |
|
Piped supply – below $2.5/day (PPP) (percentage) |
2010 |
Author’s elab. |
10 |
39 |
61 |
100 |
|
Including from public supply- average (percentage) |
2010 |
BNS 2010 |
43 |
63 |
74 |
99 |
|
Sanitation and sewerage |
|||||||
Flush toilet – average (percentage) |
2010 |
Author’s elab. |
35 |
69 |
79 |
99 |
|
Flush toilet – bottom 40% |
2010 |
Author’s elab. |
15 |
60 |
70 |
98 |
|
Flush toilet – below $2.50 (PPP) (percentage) |
2010 |
Author’s elab. |
5 |
38 |
54 |
100 |
|
Including with sewer – average (percentage) |
2012 |
IBNET 2015 |
38 |
70 |
66 |
94 |
|
Wastewater treatment |
|||||||
Connected to wastewater treatment plant (percentage) |
2013 |
IBNET 2015 |
24 |
36 |
45 |
95 |
|
Performance of services |
|||||||
Service quality |
|||||||
Residential water consumption (litres/capita/day) |
2012 |
AMAC 2015 |
126 |
116 |
122 |
n.a. |
|
Water supply continuity (hours/day) |
2012 |
IBNET 2015 |
21 |
17 |
20 |
24 |
|
Drinking water quality (percentage of samples in full compliance) |
2014 |
Mediu 2014 |
86 |
86 |
93 |
99.9 |
|
Wastewater treatment quality (percentage of samples in full BOD5 compliance) |
- |
- |
- |
n.a. |
79 |
100 |
|
Sewer blockages (number/km/year) |
2013 |
IBNET 2015 |
12.1 |
12.1 |
5.0 |
0.2 |
|
Customer satisfaction (percentage of population satisfied with services) |
c |
Gallup 2013 |
61 |
44 |
63 |
95 |
|
Efficiency |
|||||||
Non-revenue water (percentage) |
2013 |
IBNET 2015 |
41 |
31 |
35 |
16 |
|
Non-revenue water (m³/km/day) |
2013 |
IBNET 2015 |
25.5 |
59 |
35 |
5 |
|
Staff productivity (water and wastewater) (number of employees/per 000 connections) |
2012 |
AMAC 2015 |
13.3 |
13.3 |
9.6 |
2.0 |
|
Staff productivity (water and wastewater) (number of employees/per 000 inh. served) |
2013 |
IBNET 2015 |
2.2 |
2.0 |
1.7 |
0.4 |
|
Billing collection rate (cash income/billed revenue) (percentage) |
2012 |
AMAC 2015 |
92 |
98 |
98 |
116 |
|
Metering level (metered connections/connections) (percentage) |
2012 |
IBNET 2015 |
80 |
70 |
84 |
100 |
|
Water Utility Performance Index (WUPI) |
n.a. |
Author’s elab. |
58 |
59 |
69 |
94 |
|
Financing of services |
|||||||
Sources of financing |
|||||||
Overall sector financing (€/capita/year) |
Author’s elab |
17 |
21 |
62 |
n.a. |
||
Overall sector financing (share of GDP) (percentage) |
Author’s elab. |
0.5 |
0.35 |
0.45 |
n.a. |
||
Percentage of service cost financed from tariffs |
Author’s elab. |
86 |
65 |
67 |
n.a. |
||
Percentage of service cost financed from taxes |
Author’s elab. |
5 |
30 |
13 |
n.a. |
||
Percentage of service cost financed from transfers |
Author’s elab. |
9 |
5 |
20 |
n.a. |
||
Service expenditure |
|||||||
Average annual investment (share of overall sector financing) (percentage) |
Author’s elab. |
13 |
14 |
38 |
n.a. |
||
Average annual investment (€/capita/year) |
Author’s elab. |
2 |
3 |
23 |
n.a. |
||
Estimated investment needed to achieve targets (€/capita/year) |
2013-2017 |
Eptisa 2012 |
11 |
15 |
43 |
n.a. |
|
Of which, share of wastewater management (percentage) |
Author’s elab. |
67 |
42 |
61 |
n.a. |
||
Cost recovery |
|||||||
Average residential tariff (incl. water and wastewater) (€/m³) |
2012 |
AMAC 2015 |
0.85 |
0.51 |
1.32 |
n.a. |
|
Operation and maintenance unit cost (€/m³) |
Author’s elab. |
0.76 |
0.69 |
1.20 |
n.a. |
||
Operating cost coverage (billed revenue/operating expenses, ratio) |
2012 |
IBNET 2015 |
0.99 |
0.75 |
0.96 |
1.49 |
|
Affordability |
|||||||
Share of potential WSS expenditures over average income (percentage) |
2010 |
Author’s elab. |
4.5 |
2.1 |
2.6 |
n.a. |
|
Share of potential WSS expenditures over bottom 40% income (percentage) |
2010 |
Author’s elab. |
6.8 |
2.9 |
3.8 |
n.a. |
|
Share of households with potential WSS expenditures above 5% of average income (percentage) |
2010 |
Author’s elab. |
32.2 |
2.7 |
14.1 |
n.a. |
|
Sustainability of services |
|||||||
Sector sustainability assessment |
n.a. |
Author’s elab. |
50 |
54 |
64 |
96 |
Source: Water and Wastewater Services in the Danube Region project’s web-site: www.danube-water-program.org (accessed 13 June 2017) and author’s own elaboration
Annex 1.B. Relationship needed for balance and possible conflicts between the demands on ERS
Incentives (1) |
Regionalisation (2) |
Business models (3) |
Tariffs (4) |
Social measures (5) |
Affordability (6) |
External finance (7) |
Cost-effective capex (8) |
Dedicated economic instruments for WSS (9) |
|
---|---|---|---|---|---|---|---|---|---|
Incentives (1) |
Equals |
May stimulate regionalisation |
Shall be neutral to the business model applied* |
May be included in tariffs* |
May offset social measures* |
Influences cost/benefits and (indirectly) affordability* |
Shall be neutral towards the use of external finance* |
May influence cost/benefits of (specific) capex* |
Are the active ingredient of economic instruments |
Regionalisation (2) |
Is in need for more incentives towards it |
Equals |
Is one of the alternative business models |
Regionalisation can lead to tariff harmonisation* |
May be seen itself as a (long-term) social measure |
Improves affordability (over longer term) |
Eases access to external finance |
Allows for more cost-effective capex |
Allows for more efficient application of economic instruments |
Business models (3) |
Introducing more business models incentivises efficient service provision |
Have increased potential in a context of regionalisation |
Equals |
May require a differentiated tariff for differentiated services* |
Shall not affect eligibility for social measures* |
May ease the affordability of services |
May be designed (also) to facilitate external finance |
May improve the adoption of cost- effective capex |
Shall allow for equal application of economic instruments* |
Tariffs (4) |
Provide operators and consumers with incentives |
Are generally harmonised over regions |
Tariff system shall cover all business models* |
Equals |
Tariffs structure can distort social measures* |
Affect affordability* |
(Future) tariffs help attract external finance |
Shall induce operators into using cost- effective capex* |
Are a major class of economic instruments |
Social measures (5) |
Can smoothen the application of incentives |
Shall mitigate any (transitory) adverse social effects of regionalisation |
May in principle ease the adoption of alternative business models |
May mitigate the effect of tariff increases |
Equals |
Directly improve affordability for parts of the population |
Improve affordability and thus take away possible obstacles to external finance |
Should not be applied to justify unaffordable capex*** |
Can smoothen the application of economic instruments* |
Affordability (6) |
May limit the application of incentives* |
May be a reason to enter into regionalisation, but may also be an obstacle** |
May be a reason to opt for alternative business models |
May put a ceiling on tariffs |
Is the main reason to apply social measures |
Equals |
May prevent external financiers from stepping in* |
Shall be a main argument for cost-effective capex |
May be an obstacle to the application of economic instruments* |
External finance (7) |
Provides incentives towards improved performance |
May directly result of regionalisation |
May be accessed through allowing for sustainable business models |
May put upward pressure on tariffs |
May underline the need for social measures |
May conflict with affordability* |
Equals |
May be a stimulus towards cost-effective capex |
Shall be compatible with economic instruments* |
Cost-effective capex (8) |
May neutralise/change the effect of incentives |
Has more possible applications in a context of regionalisation |
May be realised through the application of sustainable business models |
Cost-effective tends to keep tariffs low |
Reduces the need for extensive social measures |
Keeps tariffs affordable |
Eases access to external finance |
Equals |
May neutralise/change the effect of Eis |
Dedicated economic instruments for WSS (9) |
Are designed to provide incentives |
Are easier on regionalised entities |
Shall be neutral to the business model applied* |
Can be applied as part or on top of tariffs |
May offset social measures* |
Affect affordability of services* |
Shall be neutral towards the use of external finance* |
After what is cost-effective capex* |
Equals |
Notes: *Need for a balance.
** May be a risk as well as an opportunity.
*** Bears a possible conflict.
**** The numbers in brackets relate to the nine demands on the ERS formulated on the preceding pages.
Source: Author’s own elaboration.