ФОНД ИНСТИТУТ ЭКОНОМИКИ ГОРОДА INSTITUTE FOR URBAN ECONOMICS. Prepared for the EAP Task Force of OECD By the Institute for Urban Economics

Transcription

1 ФОНД ИНСТИТУТ ЭКОНОМИКИ ГОРОДА INSTITUTE FOR URBAN ECONOMICS MONITORING OF WATER AND SEWERAGE UTILITIES Final report on Russian water and wastewater utilities Prepared for the EAP Task Force of OECD By the Institute for Urban Economics Moscow, 1

2 CONTENTS Introduction...5 Acknowledgements...7 Analysis of Indicators...8 A. Coverage Water coverage... 8 B. Water Consumption and Production Water production Water consumption C. Unaccounted for water Unaccounted for water D. Metering practices Proportion of connections that are metered Proportion of water sold that is metered E. Pipe Network Performance Pipe Breaks Sewerage Blockages F. Cost and Staffing Unit Operational Cost Staffing Labor Costs as a proportion of Operational Costs Contracted-out service costs as a proportion of operational costs G. Quality of Service Continuity of Service Complaints about W&S services Wastewater treatment H. Billings and Collections Average Tariff W&S Water charges as a proportion of average per capita income Ratio of industrial to residential charges Collection Period I. Financial Performance Working Ratio Debt Service Ratio J. Utility investment policy Investments Net Fixed Assets K. Energy consumption...42 L. Environmental impact of utility operations...44 Structural analysis...46 Annex 1. List of Water Utilities participated in the Performance Benchmarking Indicators Review

3 Annex 2. Performance Indicators...54 Indicator 1.1 Coverage with water services...54 Indicator 2.1 Coverage with sewerage services...55 Indicator 3.1. Water production per capita...56 Indicator 3.2. Water production per connection...57 Indicator 3.3. Water production per household...58 Indicator 4.1. Water consumption per capita...59 Indicator 4.2. Water consumption per connection...60 Indicator 4.3. Water consumption per household...61 Indicator 5.1. Metered water consumption per capita...62 Indicator 5.2. Metered water consumption per connection...63 Indicator 5.3. Metered water consumption per household...64 Indicator 6.1. Unaccounted-for-water as a percentage of net water supplied...65 Indicator 6.2. Unaccounted-for-water in cubic meters per km of water distribution network per day...66 Indicator 6.3. Unaccounted-for-water in cubic meters per connection per day...67 Indicator 7.1. Proportion of connection with operating meter...68 Indicator 8.1. Proportion of water sold that is metered...69 Indicator 9.1. Number of pipe breaks per year expressed per km of the water distribution network...70 Indicator 9.2. Number of pipe breaks per one connection per year...71 Indicator Number of sewerage clogs per year expressed per km of sewers...72 Indicator Number of sewerage clogs per one connection per year...73 Indicator Unit operational cost expressed as annual operational expenses per annual volume of water sold...74 Indicator Unit operational cost expressed as annual operational expenses per annual volume of water produced...75 Indicator Number of staff expressed per thousand water connections...76 Indicator Number of staff expressed per thousand of both water and sewerage connections...77 Indicator Number of staff expressed as per thousand of water service population...78 Indicator Number of staff expressed as per thousand of water and sewerage service population...79 Indicator Labor costs as a proportion of operational costs...80 Indicator Contracted-out service costs as a proportion of operational costs...81 Indicator Continuity of service...82 Indicator Complaints of water and sewerage services per connection...83 Indicator Proportion of sewage treated in total volume of sewerage services...84 Indicator Total water operating revenues expressed as per one cubic meter of water sold per month...85 Indicator Total operating revenues per one water connection per month...86 Indicator Total operating revenues per one household served per month...87 Indicator The percentage of water bill to the average personal income...88 Indicator Residential fixed charge...89 Indicator Residential fixed charge as a proportion of the average tariff per connection per year...90 Indicator Ratio of industrial to residential charges...91 Indicator Connection charge to water system...92 Indicator Connection charge to water system as a proportion of average per capita income...93 Indicator Connection charge to sewer system...94 Indicator Connection charge to sewer system as a proportion of average per capita income...95 Indicator Collection period...96 Indicator Working ratio

4 Indicator Debt service ratio...98 Indicator Total annual investments expressed as a percentage of total annual operating revenues...99 Indicator Total annual investments per capita served Indicator Total annual net fixed assets value per capita served Indicator Energy consumption of water production Indicator Energy consumption of sewerage Indicator Energy consumption per one cubic meter of service produced volume Indicator Energy consumption per one cubic meter of the service produced Indicator Biological Oxygen Demand in waste water Indicator Total annual Nitrogen discharge Indicator Total annual phosphorus discharge Indicator Total solids in waste water discharge Additional Indicator. Residential share in billed water Additional Indicator. Residential share in metered water Additional Indicator. Residential share in consumed sewerage service Additional Indicator. Residential share in total annual bills for water and sewerage services Additional Indicator. Residential share in total water operating revenue Additional Indicator. Residential share in total sewerage operating revenue

5 INTRODUCTION This report summarizes the results of the monitoring that covered water and wastewater utilities in the Leningrad, Perm, and Samara oblasts of the Russian Federation. The monitoring was a follow-up to the indicative survey of Russian water and wastewater utilities performed in by the Institute for Urban Economics with the organizational support of the OECD ЕАР Task Force and financial assistance from the German Ministry of Environment 1. The monitoring was aimed to collect and process information on the surveyed Russian utilities operations in and the first half of. The monitoring covered 51 utilities 2 serving a total area with over 2.8 million residents (approximately 2% of overall Russian population) and providing water supply services that range, volume-wise, from 140 thousand cubic meters per annum (Malyshevka utility, Kinel district of the Samara oblast) to almost 180 million cubic meters per annum (Permvodokanal utility). The aggregate volume of water production by all participating utilities in capped 449 million cubic meters. Over the period under review, the minimum and maximum individual utility coverage were 1,600 persons and about 1 million persons (Malyshevka and Permvodokanal, respectively). As compared to the indicative survey performed in, the monitoring covered 9 out of 14 surveyed utilities in the Leningrad oblast, 28 out of 32 surveyed utilities in the Samara oblast, and all 14 survey participants in the Perm oblast (see table below). 1) by population served Participation in the monitoring ( ) Participation in the performance benchmarking indicators review ( ) Less than 25 thousand peoples % From 25 to 50 thousand peoples % From 50 to 100 thousand peoples % Over 100 thousand peoples % 2) by regions Permskaya Oblast % Leningradskaya Oblast % Samarskaya Oblast % Krasnodarsky Krai % Other regions 0 8 0% Share, % All monitored utilities were grouped by regions and the type of service. 1 For the findings of the indicative survey see the Institute's Web site at 2 The list of all utilities covered by the monitoring is presented in Annex 1. 5

6 The groups of utilities by regions included: 1. Leningrad oblast utilities; 2. Perm oblast utilities; 3. Samara oblast utilities. By the type of service, utilities were grouped as follows: 1. Utilities providing only water supply and sewerage services (vodokanals); 2. Diversified utilities with multiple operations, including water supply, sewerage and other services (housing maintenance, heat supply, etc.). The monitoring was based on the assumptions and conditions similar to those of the indicative survey: all utilities covered by the monitoring volunteered for participation; the participating utilities provided information required for the computation of indicators inasmuch as it was practicable (under no obligation to submit all information requested); the Institute for Urban Economics did not perform a full verification of supplied data on the results of water and sewerage operators activities, proceeding from the assumption that all information provided by utilities is accurate; where the information received from utilities was clearly unreliable 3 it was removed from the database, with the respective box in the final indicator table marked "n/a" to specify that the data required for indicator computation was not available. For formalization purposes, information on utility condition and results of operations was translated into standard indicators designed and commonly used by the World Bank. In addition, the Institute for Urban Economics designed extra indicators that characterize the scope of water supply and sewerage services by consumer groups. Similarly to the indicative survey, consolidated indicators for all monitored utilities were computed based on the principle that original source data is used in consolidated indicator calculations only for those utilities that had provided complete information required for their derivation. 3 Some of the obvious inconsistencies were as follows: the number of residential consumers having access to water supply services exceeded the total number of persons residing in the utility service area; the number of consumers with access to both water supply and sewerage services exceeded the total number of consumers covered by sewerage services; payroll exceeded total annual production costs; annual billed water exceeded the volume of water supplied to the distribution system; water billed based on meter readings in the absence of metered connections. 6

7 ACKNOWLEDGEMENTS This work would not have been possible without the organizational and methodological support of the OECD Secretariat of the EAP Task Force and the Ministry of Environment of Germany. The completion of the monitoring required the coordination of efforts of many experts in various regions of the country. In the course of our work we developed an especially rewarding relationship with the authorities of the constituent entities of the Russian Federation that were the major focus of the monitoring. The Institute for Urban Economics would like to thank the following individuals for their assistance in the organization and completion of the Monitoring: Ildar D. Khairullin, Director of Housing and Utilities Department of the Perm oblast Administration; Oleg V. Mayorov, Deputy Director of Economic Development and Investment Department of the Samara oblast Administration; Valery Z. Goncharov, Chairman of the Housing and Utilities Commission of the Leningrad oblast Government Ivan N. Grigoriev, Vice Governor of the Leningrad oblast Government. Without your commitment and support, this project would not have come through. 7

8 ANALYSIS OF INDICATORS A. Coverage 1. Water coverage Overall, water coverage by monitored utilities increased in the first half of to 88.9% as against 86.0% in. The lowest indicator value was retained by water and sewerage utilities of the Leningrad oblast (83.2% in the first six months of ), the highest by utilities of the Perm oblast where it reached 91.8% by the end of the first half of. In the last eighteen months, diversified utilities provided water supply services to approximately 88.6% of residential consumers in their service area. In the period from, the indicator value in this group increased by nearly 3%, but remained almost unchanged throughout the last one and a half year. In the period from through the first half of the water service coverage of vodokanals was the same. On the whole, the number of water operators serving all residents in their respective service areas increased from 12 in to 14 in the first half of. One utility in provided water services to less than 50% of residents in their service areas. 94% Indicator 1.1. Water service coverage 92% 90% 88% 86% 84% 82% 80% Average Leningrad oblast Perm oblast Samara oblast W&S Utilities Diversified utilities Indicator 1.1. Water service coverage Russia Azerbaijan Baltic States Kazakhstan Ukraine Moldova Kyrgiz 100% 90% 80% 70% 60% 50%

9 2. Sewerage coverage On the whole, sewerage coverage by all monitored utilities throughout the last eighteen months remained unchanged, totaling in the first half of to 73.3%. The highest indicator value was that of water and sewerage utilities in the Leningrad oblast 78.4% by July. The lowest indicator value throughout the period under analysis was shown by water and sewerage utilities of the Samara oblast 66.9% by the end of the period. It should be noted that indicator values and patterns over the last eighteen months for these two regions were completely opposite: for Samara oblast utilities serving predominantly rural communities, the indicator value increased by 2.1%, while for Leningrad utilities serving mostly urban communities, it dropped by 3.8%, exceeding in the first half of the level by only 2.1%. Overall, of all participating utilities, five operators did not provide sewerage services in their respective areas throughout the monitoring period. From 11 to 17 utilities had more than 75% sewerage coverage in - years. 90% Indicator 2.1 Sew erage service coverage 80% 70% 60% 50% 40% 30% Average Leningrad oblast Perm oblast Samara oblast W&S Utilities Diversified utilities Indicator 2.1 Sew erage service coverage Russia Azerbaijan Baltic States Kazakhstan Ukraine Moldova Kyrgiz 100% 90% 80% 70% 60% 50% 40% 30% 20%

10 B. Water Consumption and Production 3. Water production Water production per consumer reduced over the last eighteen months and made up 410 liters per day in the first half of. The maximum indicator value throughout the analyzed period was shown by Leningrad oblast utilities 506 liters per day, the minimum by Samara oblast utilities 356 liters per day. The group of Leningrad utilities was the only one where the value of this indicator increased in as compared to. Noteworthy was the trend towards minimizing the difference in indicator values among vodokanals and diversified utilities: water production per consumer by vodokanals exceeded in that for diversified utilities by more than 1.5 times, whereas in the first half of this difference did not exceed 3%. 550 Indicator 3.1 Per capita daily water production (lpcd) Average Leningrad oblast Perm oblast Samara oblast W&S Utilities Diversified utilities Indicator 3.1 Per capita daily w ater production (lpcd) Russia Azerbaijan Baltic States Kazakhstan Ukraine Moldova Kyrgiz Water production per connection reduced to cubic meters per month. However, the divergence of indicator values between vodokanals and diversified utilities was much greater: vodokanals produced 5.7 times more water per connection in, this ratio in the first half of was brought down to 2.3 times. 10

11 350 Indicator 3.2 Water production in cubic meters per connection per month Average Leningrad oblast Perm oblast Samara oblast W&S Utilities Diversified utilities 60 Indicator 3.3 Water production in cubic meters per household per month Average Leningrad oblast Perm oblast Samara oblast W&S Utilities Diversified utilities Indicator 3.3 Water production in cubic meters per household per month Russia Azerbaijan Baltic States Kazakhstan Ukraine Moldova Kyrgiz

12 4. Water consumption Daily water consumption throughout the monitoring period reduces from 321 to 316 liters per consumer, monthly water consumption per household remained unchanged. The charts that present indicator 4.1 quite clearly demonstrate the close relationship between water consumption and the type of service. The minimum consumption per consumer in - was by diversified utilities serving predominantly rural communities, but throughout the analyzed period this indicator increased more than 1.25 times (from 212 liters in to 278 liters in the first half of ), whereas the same indicator by vodokanals reduced from 372 to 329 liters. 500 Indicator 4.1 Per capita daily water consumption (lpcd) Average Leningrad oblast Perm oblast Samara oblast W&S Utilities Diversified utilities Indicator 4.1 Per capita daily w ater consumption (lpcd) Russia Azerbaijan Baltic States Kazakhstan Ukraine Moldova Kyrgiz

13 Indicator 4.2 Water consumption in cubic meters per connection per month Average Leningrad oblast Perm oblast Samara oblast W&S Utilities Diversified utilities Indicator 4.3 Water consumption in cubic meters per household per month Average Leningrad oblast Perm oblast Samara oblast W&S Utilities Diversified utilities Indicator 4.3 Water consumption in cubic meters per household per month Russia Azerbaijan Baltic States Kazakhstan Ukraine Moldova Kyrgiz

14 C. Unaccounted for water 6. Unaccounted for water The maximum proportion of unaccounted-for water in total water produced throughout the analyzed period was registered in, when it came to 26.7%. Over the last eighteen months, this indicator dropped by almost a quarter, down to 22.6% by the end of the first half of. A similar trend was exhibited by the Samara oblast (reduction from 29.5% to 19.4%), and the Perm oblast (from 27.9% to 23.1%). The Leningrad oblast set a different trend since the indicator had been steadily growing and by July reached 24%. 40% Indicator 6.1 Unaccounted-for-water as a percentage of net water supplied 30% 20% 10% 0% Average Leningrad oblast Perm oblast Samara oblast W&S Utilities Diversified utilities Indicator 6.1 Unaccounted-for-w ater as a percentage of net w ater supplied Russia Azerbaijan Baltic States Kazakhstan Ukraine Moldova Kyrgiz 60% 50% 40% 30% 20% 10% 0% The highest indicator level was by diversified utilities starting from, it invariably exceeded 30%, and over the last one and a half year grew from 32.7% to 34%. Water losses by vodokanals over the last eighteen months reduced from 24.1% to 20.5%. 14

15 Water losses per km of water distribution network decreased overall within the period of monitoring from 45.3 to 36.7 cubic meters. In contrast to vodokanals, diversified utilities in the first half of had water losses that were nearly two times less (44.9 and 22.8 cubic meters, respectively), which was quite predictable given the peculiarities of diversified utilities operations (as compared to vodokanals, lower water production with a more extended water supply network). Far more important was the following fact: this indicator value for vodokanals decreased over the last eighteen months almost by 1.5 times, while for diversified utilities it increased from 20.6 in to 22.8 in first half of Indicator 6.2 Unaccounted-for-water in cubic meters per km of water distribution network per day Average Leningrad oblast Perm oblast Samara oblast W&S Utilities Diversified utilities Indicator 6.2 Unaccounted-for-w ater in cubic meters per km of w ater distribution netw ork per day Russia Azerbaijan Baltic States Kazakhstan Ukraine Moldova Kyrgiz

16 Indicator 6.3. Unaccounted-for-water in cubic meters per connection per day 3,0 2,5 2,0 1,5 1,0 0,5 0,0 Average Leningrad oblast Perm oblast Samara oblast W&S Utilities Diversified utilities Indicator 6.3. Unaccounted-for-w ater in cubic meters per connection per day Russia Azerbaijan Baltic States Kazakhstan Ukraine Moldova Kyrgiz 2,5 2,0 1,5 1,0 0,5 0,

17 D. Metering practices 7. Proportion of connections that are metered The last eighteen months showed an upward trend in the share of metered connections both overall and by groups of utilities. The highest growth was by diversified utilities: metered connections increased overall throughout the analyzed period by more than ten times, from 0.9% in to 11.7% in the first half of, with this indicator having grown by more than two times over the last one and a half year. The share of metered connections for vodokanals was increasing at a less great pace, which can be explained by the initially high level of this indicator in comparison with diversified utilities: the share of metered connections for vodokanals was 11.5% already in, i.e. almost the same level that diversified utilities achieved by the first half of. 30% Indicator 7. 1Proportion of connection with operating meter 25% 20% 15% 10% 5% 0% Average Leningrad oblast Perm oblast Samara oblast W&S Utilities Diversified utilities Indicator Proportion of connection w ith operating meter Russia Azerbaijan Baltic States Kazakhstan Ukraine Moldova Kyrgiz 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Overall, the share of metered connections increased from through the first half of by nearly three times, including throughout the last eighteen months by two times. Regionally-wise, the highest growth in this indicator as well as its absolute value was registered by utilities of the Samara oblast. 17

18 8. Proportion of water sold that is metered Despite the significant growth in the indicator characterizing metered connections, the proportion of water billed per meter readings over the last eighteen months changed only slightly. Throughout the last one and a half year, this indicator value increased overall from 33.1% to 37.6%. Such increase was due mainly to diversified utilities where the indicator, from to the first half of, grew by almost 1.5 times, from 16.1% to 25.6%. 50% Indicator 8.1 Proportion of water sold that is metered 40% 30% 20% 10% 0% Average Leningrad oblast Perm oblast Samara oblast W&S Utilities Diversified utilities Indicator 8.1 Proportion of w ater sold that is metered Russia Azerbaijan Baltic States Kazakhstan Ukraine Moldova Kyrgiz 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

19 E. Pipe Network Performance 9. Pipe Breaks In, monitored utilities reduced water distribution network malfunctions from 0.8 to 0.7 failures per km of network. For first six month of, malfunctions decreased by almost two times. In contrast to vodokanals, malfunctions of diversified utilities water distribution networks were at a slightly higher level: 0.67 and 0.92 malfunctions in, 0.71 and 0.74 in, respectively. It is necessary to note, however, that the level of this indicator counting upon 1 month, on results of first six months was almost same, as on results of. 1,2 Indicator 9.1 Number of pipe breaks per year expressed per km of the water distribution network 1,0 0,8 0,6 0,4 0,2 0,0 Average Leningrad oblast Perm oblast Samara oblast W&S Utilities Diversified utilities Indicator 9.1 Number of pipe breaks per year expressed per km of the w ater distribution netw ork Russia Azerbaijan Baltic States Kazakhstan Ukraine Moldova Kyrgiz 5,50 5,00 4,50 4,00 3,50 3,00 2,50 2,00 1,50 1,00 0,50 0,

20 10. Sewerage Blockages The number of sewerage failures dropped in from 1.2 () to 0.8 failure per km of sewers. The main reason for the overall decline in this indicator by monitored utilities was the reduction in sewerage failures in the Samara oblast (3.1 failures per km of sewers in, 1.8 failures in ). In the Leningrad oblast, sewerage failures throughout the analyzed period invariably remained at the level of failures per km of sewers. Diversified utilities in decreased the number of sewerage failures by almost four times, from 2.3 to 0.6 failures per km of sewers. It is necessary to note, however, that the level of this indicator counting upon 1 month, on results of first six months was almost same, as on results of. 4 Indicator 10.1 Number of sewerage clogs per year expressed per km of sewers Average Leningrad oblast Perm oblast Samara oblast W&S Utilities Diversified utilities Indicator 10.1 Number of sew erage clogs per year expressed per km of sew ers Russia Azerbaijan Baltic States Kazakhstan Ukraine Moldova Kyrgiz

21 F. Cost and Staffing 11. Unit Operational Cost Utility unit operational costs during the period of monitoring significantly increased both in relation to water production and billed water. The average ratio of operational costs per annual water produced for all participating utilities increased more than 1.5 times, from $0.1 per cubic meter in to $ ,6 Indicator 11.1 Unit operational cost expressed as annual operational expenses per annual volume of w ater sold (USD/cu m sold) 0,5 0,4 0,3 0,2 0,1 0,0 Average Leningrad oblast Perm oblast Samara oblast W&S Utilities Diversified utilities Indicator 11.1 Unit operational cost expressed as annual operational expenses per annual volume of w ater sold (USD/cu m sold) Russia Azerbaijan Baltic States Kazakhstan Ukraine Moldova Kyrgiz 0,4 0,3 0,2 0,1 0,

22 0,5 Indicator 11.2 Unit operational cost expressed as annual operational expenses per annual volume of water produced (USD/cu m produced) 0,4 0,3 0,2 0,1 0,0 Average Leningrad oblast Perm oblast Samara oblast W&S Utilities Diversified utilities Indicator 11.2 Unit operational cost expressed as annual operational expenses per annual volume of w ater produced (USD/cu m produced) Russia Azerbaijan Baltic States Kazakhstan Ukraine Moldova Kyrgiz 0,30 0,25 0,20 0,15 0,10 0,05 0,

23 12. Staffing In the period from to July, staff numbers in monitored utilities decreased from 55.2 to 53.2 persons per thousand water connections, from 83.3 to 76.7 persons per thousand water and sewerage connections, from 5.2 to 5.1 persons per thousand water service population, and from 6.4 to 6.3 persons per thousand water and sewerage service population. The maximum indicator value in the first half of was shown by Perm oblast utilities, the minimum by the Samara oblast. Vodokanals had 2-3 times more staff per thousand water connections than diversified utilities, with indicator values having remained virtually unchanged for vodokanals, and reduced for diversified utilities in the period from through the first half of. Staff numbers per thousand water service population for both water and diversified utilities was almost the same ( persons), while staff per thousand water and sewerage service population was, quite naturally, higher for diversified utilities. Indicator 12.1 Number of staff expressed per thousand water connections (persons) Average Leningrad oblast Perm oblast Samara oblast W&S Utilities Diversified utilities Indicator 12.1 Number of staff expressed per thousand w ater connections (persons) Russia Azerbaijan Baltic States Kazakhstan Ukraine Moldova Kyrgiz

24 Indicator 12.2 Number of staff expressed per thousand of both water and sewerage connections (persons) Average Leningrad oblast Perm oblast Samara oblast W&S Utilities Diversified utilities Indicator 12.3 Number of staff expressed as per thousand of water service population (persons) Average Leningrad oblast Perm oblast Samara oblast W&S Utilities Diversified utilities Indicator 12.4 Number of staff expressed as per thousand of water and sewerage service population (persons) Average Leningrad oblast Perm oblast Samara oblast W&S Utilities Diversified utilities 24

25 13. Labor Costs as a proportion of Operational Costs Throughout the entire analyzed period from to, Leningrad oblast utilities were the only utilities to show a steady growth in labor costs as a proportion of operational costs: this indicator was 31.6% in, and reached 42.4% in the first half of (the maximum value as compared to other regions participated in the indicative survey). Overall, this indicator over the last eighteen months for monitored utilities was changed very slightly, from 27.7% in to 27.5% in. 46% Indicator 13.1 Labor costs as a proportion of operational costs 41% 36% 31% 26% 21% 16% Average Leningrad oblast Perm oblast Samara oblast W&S Utilities Diversified utilities Indicator 13.1 Labor costs as a proportion of operational costs Russia Azerbaijan Baltic States Kazakhstan Ukraine Moldova Kyrgiz 35% 30% 25% 20% 15% 10% 5% 0%

26 14. Contracted-out service costs as a proportion of operational costs On the whole, the last eighteen months showed no significant changes: the indicator value from to fluctuated within 21% to 23%, and in the first six months of declined by 1% as against the previous year. Diversified utilities decreased this indicator from 21.1% to 17.4%, vodokanals had a slightly higher indicator value that in the first half of made up 20.9%. 40% 35% Indicator 14.1 Contracted-out service costs as a proportion of operational costs 30% 25% 20% 15% 10% 5% 0% Average Leningrad oblast Perm oblast Samara oblast W&S Utilities Diversified utilities Indicator 14.1 Contracted-out service costs as a proportion of operational costs Russia Azerbaijan Baltic States Kazakhstan Ukraine Moldova Kyrgiz 25% 20% 15% 10% 5% 0%

27 G. Quality of Service 15. Continuity of Service In the period from to July, the vast majority of monitored utilities provided round-the-clock water supply service, consequently, the uninterrupted service indicator remained almost unchanged and in the first half of was 23.8 hours. Samara oblast utilities increased it over the last eighteen months from 23.9 hours to its maximum, i.e. 24 hours. It should be noted that the monitoring revealed that this indicator value for diversified utilities was higher than for vodokanals (23.9 and 23.8, respectively). 25 Indicator Continuity of service, (Hrs/day) Average Leningrad oblast Perm oblast Samara oblast W&S Utilities Diversified utilities Indicator Continuity of service, (Hrs/day) Russia Azerbaijan Baltic States Kazakhstan Ukraine Moldova Kyrgiz

28 16. Complaints about W&S services In, the overall number of water and sewerage service quality complaints per connection was 7.1%, having grown by 1.3% as against. The number of complaints about the quality of water and sewerage services provided by diversified utilities exceeded that for vodokanals throughout the last eighteen months by almost four times. 14% Indicator 16.1 Number of water and sewerage complaints per connection 12% 10% 8% 6% 4% 2% 0% Average Leningrad oblast Perm oblast Samara oblast W&S Utilities Diversified utilities Indicator 16.1 Number of w ater and sew erage complaints per connection Russia Azerbaijan Baltic States Kazakhstan Ukraine Moldova Kyrgiz 8% 7% 6% 5% 4% 3% 2% 1% 0%

29 17. Wastewater treatment Over the last eighteen months, the indicator characterizing the proportion of wastewater treatment in total sewerage services decreased only slightly: from 84% by the end of to 82% in the first half of. The maximum value of this indicator, beginning from, was retained by Leningrad oblast utilities: 96% in and in, and 95% in the first half of. The most significant decline in this indicator was registered by Perm oblast utilities: 88%, 81%, and 78%, respectively. The proportion of wastewater treatment in total sewerage services provided by diversified utilities had been exceeding 100% since, and in the first half of totaled to 110%. 120% Indicator 17.1 Proportion of sew age treated in total volume of sew erage services 110% 100% 90% 80% 70% 60% Average Leningrad oblast Perm oblast Samara oblast W&S Utilities Diversified utilities Indicator 17.1 Proportion of sew age treated in total volume of sew erage services Russia Azerbaijan Baltic States Kazakhstan Ukraine Moldova Kyrgiz 160% 140% 120% 100% 80% 60% 40% 20% 0%

30 H. Billings and Collections 18. Average Tariff W&S On average, all utilities in the three regions surveyed exhibit an obvious growth trend in actual revenue: in Leningrad and Perm oblast from $0.8 per cubic meter of water sold in to $0.13 in, in Samara oblast from $0.07 to $ ,30 Indicator 18.1 Total annual water operating revenues expressed as per one cubic meter of water sold (USD/cu m ) 0,25 0,20 0,15 0,10 0,05 0,00 Average Leningrad oblast Perm oblast Samara oblast W&S Utilities Diversified utilities Indicator 18.1 Total annual w ater operating revenues expressed as per one cubic meter of w ater sold (USD/cu m) Russia Azerbaijan Baltic States Kazakhstan Ukraine Moldova Kyrgiz 0,5 0,4 0,4 0,3 0,3 0,2 0,2 0,1 0,1 0,

31 Indicator 18.2 Total annual operating revenues per one water connection (USD) Average Leningrad oblast Perm oblast Samara oblast W&S Utilities Diversified utilities Indicator 18.3 Total annual operating revenues per one household served (USD) Average Leningrad oblast Perm oblast Samara oblast W&S Utilities Diversified utilities Indicator 18.3 Total annual operating revenues per one household served (USD) Russia Azerbaijan Baltic States Kazakhstan Ukraine Moldova Kyrgiz

32 19. Water charges as a proportion of average per capita income The indicator characterizing water charges as a proportion of average per capita income did not exceed 1% throughout the analyzed period, which was quite an acceptable level for this indicator. Diversified utilities customers including predominantly rural residents spent in 2.2% of their monthly income for water supply services because of the lower per capita income within this consumer group. 2,5% Indicator The percentage of water bill to the average personal income 2,0% 1,5% 1,0% 0,5% 0,0% Average Leningrad oblast Perm oblast Samara oblast W&S Utilities Diversified utilities 32

33 21. Ratio of industrial to residential charges Over the last eighteen months, the level of cross subsidies among monitored utilities decreased overall from 3.7 times () to 3.2 times (first half of ). The maximum level of cross subsidies was registered by Perm oblast utilities: in -, the cost of water per cubic meter for industrial customers was 10 times higher than that for residential consumers, in - over 7 times, in the first half of it went down to 5.3 times. The minimum indicator level was shown by Leningrad oblast utilities: less than 3 times in the period from through, less than 2 times in subsequent years, and 1.5 times throughout the last two and a half years. 12 Indicator Industrial to Residential Ratio Average Leningrad oblast Perm oblast Samara oblast W&S Utilities Diversified utilities Indicator Industrial to Residential Ratio Russia Azerbaijan Baltic States Kazakhstan Ukraine Moldova Kyrgiz

34 23. Collection Period The collection period indicator which is the quotient of accounts receivable/total revenues steadily decreased throughout the period from to July. In the first half of, the best situation with collection period was registered by Perm oblast utilities where accounts receivable matched total revenues for 2 months. The highest indicator for the period from to was retained by Leningrad oblast utilities: in, accounts receivable corresponded to revenues for 10 months, while in the first half of this indicator plunged to the level of 4 months. One of the reasons of reduction of the indicator last one and a half year was absence of substantial increase of a level of the tariff which has taken place basically the previous years. Apparently from tables 2 and 4, on results of 15 utilities have kept constant the tariff for services of water supply for the population ( - 3 enterprises) and 18 enterprises have kept constant the tariff for services of water supply for industrial consumers ( - 7). Table 1. Tariff level for industrial customers No data available Less than 1 ruble Of 1 to 2 rubles Of 2 to 3 rubles Of 3 to 4 rubles Of 4 to 5 rubles Of 5 to 10 rubles Of 10 to 15 rubles Over 15 rubles Table 2. Changes of tariff for industrial customers in comparison with a level in previous year No data available Less than 100% % Of 100% to 150% Of 150% to 200% Of 200% to 300% Of 300% to 400% Of 400% to 500% Tariff has been reduced 5 Tariff has not changed 34

35 Over 500%

36 Table 3. Tariff level for residential customers No data available Less than 1 ruble Of 1 to 2 rubles Of 2 to 3 rubles Of 3 to 4 rubles Of 4 to 5 rubles Of 5 to 10 rubles Of 10 to 15 rubles Over 15 rubles Table 4. Changes of tariff for residential customers in comparison with a level in previous year No data available Less than 100% % Of 100% to 150% Of 150% to 200% Of 200% to 300% Of 300% to 400% Of 400% to 500% Over 500% Tariff has been reduced 7 Tariff has not changed 36

37 Indicator 23.1 Collection period (months) Average Leningrad oblast Perm oblast Samara oblast W&S Utilities Diversified utilities Indicator 23.1 Collection period (months) Russia Azerbaijan Baltic States Kazakhstan Ukraine Moldova Kyrgiz

38 I. Financial Performance 24. Working Ratio Overall, water and sewerage services were a profitable business for all monitoring participants: the working ratio decreased in from 105% to 99%, and in the first half of further decreased to 89%. It should be noted, however, that in two regions Leningrad and Samara oblasts water supply and sewerage service expenses exceeded billings (the indicator value capped 100%), and only in the Perm oblast this indicator, exceeding 100% in, subsequently fell to the first-half level of 82%. The expenses/billings ratio for diversified utilities remained maximum throughout the analyzed period and by the second half of was 129%. 1,8 Indicator 24.1 Working ratio 1,6 1,4 1,2 1,0 0,8 Average Leningrad oblast Perm oblast Samara oblast W&S Utilities Diversified utilities Indicator 24.1 Working ratio Russia Azerbaijan Baltic States Kazakhstan Ukraine Moldova Kyrgiz 120% 110% 100% 90% 80% 70% 60%

39 25. Debt Service Ratio Since, all monitored utilities have been showing a significant growth in the indicator that characterizes the ratio of debt service costs to total water and sewerage service billings. From to, this indicator was within 0.2% 0.3%, but in it grew to 0.7%, and reached its maximum in, having set at 1.1%. The growth in this indicator is due to the vodokanals changed debt policy (0.2% in, 1.3% in ). For diversified utilities, this indicator did not exceed 0.1%. Indicator Debt service ratio 3,5% 3,0% 2,5% 2,0% 1,5% 1,0% 0,5% 0,0% Average Leningrad oblast Perm oblast Samara oblast W&S Utilities Diversified utilities 39

40 J. Utility investment policy 26. Investments The ratio of total capital investments to billings over the last eighteen months dropped from 20.1% to 11.6%, total capital investments per capita in the utility service area reduced over the last one and a half year by two times, from 86 to 47 rubles, the ratio of depreciation charges to billings steadily declined throughout the period from to, having lowered to 6.9% by the second half of. Depreciation charges per capita in the utility service area reduced over the last one and a half year by 1.5 times and in the first half of came to 28.1 rubles. 40% Indicator Total annual investments expressed as a percentage of total annual operating revenues 35% 30% 25% 20% 15% 10% 5% 0% Average Leningrad oblast Perm oblast Samara oblast W&S Utilities Diversified utilities 7 Indicator Total annual investments per capita served (USD) Average Leningrad oblast Perm oblast Samara oblast W&S Utilities Diversified utilities 40

41 27. Net Fixed Assets Overall, the value of fixed assets owned by monitored utilities remained virtually unchanged throughout the last eighteen months, and in the first half of made up $50 per capita of population in their respective service areas. 600 Indicator 27.1 Total annual net fixed assets value per capita served (USD) Average Leningrad oblast Perm oblast Samara oblast W&S Utilities Diversified utilities Indicator 27.1 Total annual net fixed assets value per capita served (USD) Russia Azerbaijan Baltic States Kazakhstan Ukraine Moldova Kyrgiz

42 K. Energy consumption The cost of energy consumption by water and sewerage utilities almost doubled as against, from 0.63 to 1.08 rubles per kwh. Overall, energy consumption related to water supply services provided by monitored utilities reached its maximum in 1.24 kwh per cubic meter of water. Despite the first-half decrease to 1.05 kwh, this indictor still exceeds the level recorded in - ( kwh per cubic meter of water). Energy consumption for sewerage services over the analyzed period changed only slightly, within kwh per cubic meter of wastewater, and in the last eighteen months amounted to 0.42 kwh per cubic meter of wastewater. 2,5 Indicator 30.1 Energy consumption per cubic meter of produced water 2,0 1,5 1,0 0,5 0,0 Average Leningrad oblast Perm oblast Samara oblast W&S Utilities Diversified utilities 1,4 Indicator Energy consumption per cubic meter of discharged water 1,2 1,0 0,8 0,6 0,4 0,2 0,0 Average Leningrad oblast Perm oblast Samara oblast W&S Utilities Diversified utilities 42

43 1,8 Indicator Energy consumption per one cubic meter of service produced volume 1,6 1,4 1,2 1,0 0,8 0,6 0,4 0,2 0,0 Average Leningrad oblast Perm oblast Samara oblast W&S Utilities Diversified utilities 1,4 Indicator Energy consumption per cubic meter of production in monetary equivalent (in rubles) 1,2 1,0 0,8 0,6 0,4 0,2 0,0 Average Leningrad oblast Perm oblast Samara oblast W&S Utilities Diversified utilities 43

44 L. Environmental impact of utility operations For all monitored utilities, phosphorus discharge reduced throughout the last eighteen months from 2.3 to 2.1 grams per cubic meter. Nitrogen discharge increased from 8.6 to 9.8grams per cubic meter, suspended matter content decreased from 17.2 to 16.5 grams per cubic meter, wastewater BOD in the first half of made up 18.2 grams per cubic meter. 40 Indicator Discharge BOD (g per cu m) Average Leningrad oblast Perm oblast Samara oblast W&S Utilities Diversified utilities 44

45 70 Indicator Nitrogen discharge (g per cu m) Average Leningrad oblast Perm oblast Samara oblast W&S Utilities Diversified utilities 14 Indicator Phosphorus discharge (g per cu m) Average Leningrad oblast Perm oblast Samara oblast W&S Utilities Diversified utilities 40 Indicator Suspended matter discharge (g per cu m) Average Leningrad oblast Perm oblast Samara oblast W&S Utilities Diversified utilities 45

46 Structural analysis Throughout the period under analysis, residential customers remained the main consumers of water supply and sewerage services: the ratio of residential consumers to total water billed over the last eighteen months increased from 65% to 72%, the ratio of residential consumers to provided sewerage services over the same period, although declined from 73% to 66%, still exceeded that of other sewerage service consumers. At the same time, a larger share of proceeds from water supply and sewerage services is received from other consumers. Thus, the residential consumers to total billings ratio in the first half of reached 48%, while in it did not exceed 30%. The ratio of residential consumers to revenues from water supply services in the first half of reached 47%, which for sewerage services was just a little higher. The residential consumers to water connections ratio throughout the analyzed period starting from was over 80%, the indicator characterizing the residential consumers to sewerage connections ratio was at approximately the same level. 80% 70% Additional Indicator. Residential share in billed water 60% 50% 40% 30% 20% 10% 0% Average Leningrad oblast Perm oblast Samara oblast W&S Utilities Diversified utilities Additional Indicator. Residential share in metered water 40% 35% 30% 25% 20% 15% 10% 5% 0% Average Leningrad oblast Perm oblast Samara oblast W&S Utilities Diversified utilities 46

47 Additional Indicator. Residential share in consumed sewerage service 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Average Leningrad oblast Perm oblast Samara oblast W&S Utilities Diversified utilities Additional Indicator. Residential share in total annual bills for w ater and sew erage services 60% 50% 40% 30% 20% 10% 0% Average Leningrad oblast Perm oblast Samara oblast W&S Utilities Diversified utilities Additional Indicator. Residential share in total water operating revenue 60% 50% 40% 30% 20% 10% 0% Average Leningrad oblast Perm oblast Samara oblast W&S Utilities Diversified utilities 47

48 ANNEX 1. LIST OF WATER UTILITIES PARTICIPATED IN THE PERFORMANCE BENCHMARKING INDICATORS REVIEW. Permskaya Oblast Utility Participation in the monitoring ( ) Participation in the performance benchmarking indicators review ( ) Population served water (thousand peoples) MUP Vodokanal of the city of Gremyachinsk Yes Yes Less than 25 MUP Vodokanal МУП of the city of Krasnovishersk Yes Yes Less than 25 MUP Vodokanal of the city of Osa Yes Yes Less than 25 MP Vereschaginskiye kanalizatsionniye seti Yes Yes Less than 25 MUP Gorvodokanal of the city of Kizel Yes Yes From 25 to 50 MUP Raivodokanal of Permsky Region Yes Yes From 25 to 50 UMP VKKh of the city of Chernushka Yes Yes From 25 to 50 MUP Vodokanal of the city of Chaikovsky Yes Yes From 50 to 100 MUP Vodokanal of the city of Krasnokamsk Yes Yes From 50 to 100 KG MUP Vodokanal of the city of Kungur Yes Yes From 50 to 100 MUP VKKh of the city of Lisva Yes Yes From 50 to 100 MUP Gorvodokanal of the city of Chusovoi Yes Yes From 25 to 50 MUP Vodokanal of the city of Berezniki Yes Yes Over 100 MP Permvodokanal Yes Yes Over 100 Leningradskaya Oblast MUP Vodokanal of Lodeinopolsky Region Yes Yes Less than 25 48

49 Utility Participation in the monitoring ( ) Participation in the performance benchmarking indicators review ( ) Population served water (thousand peoples) MUP Lugazhilkomkhoz Yes Yes Less than 25 MP ZhKH of Krasny Bor No Yes Less than 25 MP ZhKH EKSPO of the city of Nikolskoye No Yes Less than 25 MUP ZhKH Vodokanal of the Administration of Municipality Tosnensky Region Yes Yes From 25 to 50 MP Vodokanal of the city of Tikhvin Yes Yes From 25 to 50 MP ZhKH of the Slantsevsky Region Yes No From 25 to 50 Sertolovskoye MUP VTES No Yes From 25 to 50 MP Vodokanal of the city of Viborg Yes Yes From 50 to 100 Vodokanal of Gatchina city Yes Yes From 50 to 100 MUP ZhKH Severnoye, Lomonosovsky Region Yes Yes From 50 to 100 MKKP of the city of Pikalevo Yes Yes From 50 to 100 OAO Vodokanal-Servis of the city of Volkhov No Yes From 50 to 100 Vodokanal of the city of Kingisepp No Yes From 50 to 100 LO DGUP ZhKH Lenzhilkomservis No Yes Over 100 Samarskaya Oblast MP PU ZhKH Sukhodol Yes Yes Less than 25 DP Kommunalnik MUP ZhKH of Krasnoarmeisky Region Yes Yes Less than 25 MUP Krasnoyarskoye ZhKH Yes Yes Less than 25 MUP Mirnenskoye ZhKH Yes Yes Less than 25 49

50 Utility Participation in the monitoring ( ) Participation in the performance benchmarking indicators review ( ) Population served water (thousand peoples) Novosemeikinskoye MZhKP Yes Yes Less than 25 MUP Volzhskoye ZhKH Yes Yes Less than 25 MUP Novo-Buyanskoye ZhKH Yes Yes Less than 25 MUP Neftegorskoye Yes Yes Less than 25 Bolsheglushitskoye PO ZhKH Yes Yes Less than 25 MUP ZhKH Domashkinskoye of Kinelsky Region Yes Yes Less than 25 MUP ZhKH Malishevka of Kinelsky Region Yes Yes Less than 25 MUP ZhKH Chubovskoye of Kinelsky Region Yes Yes Less than 25 MUP ZhKH Komsomolskoye of Kinelsky Region Yes Yes Less than 25 MP VKKh of the city of Pokhvistnevo Yes Yes Less than 25 MUP Kinel-Cherkasskoye PO ZhKH Yes Yes Less than 25 MUP PO ZhKH of Shigonsky Region Yes Yes Less than 25 MMUP ZhKH of Alekseevsky Region Yes Yes Less than 25 Yelkhovskoye Enterprise of ZhKH Yes Yes Less than 25 Enterprise of ZhKH of Koshkinski Region Yes Yes Less than 25 Sergievskoye MPP OzhKH Yes Yes Less than 25 MP PO ZhKH of the administration of Isaklinsky Region Yes Yes Less than 25 Chelno-Vershinskoye MUP PO ZhKH Yes Yes Less than 25 Pestravskoye MPO ZhKH No Yes Less than 25 50

51 Utility Participation in the monitoring ( ) Participation in the performance benchmarking indicators review ( ) Population served water (thousand peoples) MP PO ZhKH of Bogatoye No Yes Less than 25 MUP ZhKH of Pokhvistnevsky Region No Yes Less than 25 MUP MTS of the Pokhvisntevsky Region No Yes Less than 25 MUP Vodokanal of the city of Kinel Yes Yes From 25 to 50 OAO UK ZhKH of the city of Otradny Yes Yes From 25 to 50 OAO UK ZhKH of the city of Chapayevsk Yes Yes From 50 to 100 MUP Zhilkomhoz of the city of Zhigulyevsk Yes Yes From 50 to 100 MP VKKh of the city of Novokuibishevsk. Yes Yes Over 100 OOO Sizranvodokanal Yes Yes Over 100 Krasnodarsky Krai Viselkovskoye MP ZhKH No Yes Less than 25 Uspenskoye MP ZhKH No Yes Less than 25 Beloglinskoye Multiprofile p/p ZhKH No Yes Less than 25 Starominskoye UMP ZhKH No Yes From 25 to 50 MUP Vodokanal of the city of Primorsko-Akhtarsk No Yes From 25 to 50 Leningradskoye MUP ZhKH No Yes From 25 to 50 MU MP ZhKH of Otradnensky Region No Yes From 25 to 50 Kuschevskoye Board of Water Utilities GUP Yuzhvodoprovod No Yes From 25 to 50 RUMP Vodokanal of the city of Temryuk No Yes From 25 to 50 51