September 2004
ASSESSMENT AND DEVELOPMENT OF
MUNICIPAL WATER AND WASTEWATER
TARIFFS AND EFFLUENT CHARGES IN
THE DANUBE RIVER BASIN.
Volume 2: Country-Specific Issues and
Proposed Tariff and Charge Reforms:
Bosnia i Herzegovina Case Study
AUTHORS
Ms. Ramiza Alic / Hydro-engineering Institute, Sarajevo
TARIFFS AND CHARGES VOLUME 2
PREFACE
The Danube Regional Project (DRP) consists of several components and numerous
activities, one of which was "Assessment and Development of Municipal Water and
Wastewater Tariffs and Effluent Charges in the Danube River Basin" (A grouping of
activities 1.6 and 1.7 of Project Component 1). This work often took the shorthand
name "Tariffs and Effluent Charges Project" and Phase I of this work was undertaken
by a team of country, regional, and international consultants. Phase I of the
UNDP/GEF DRP ended in mid-2004 and many of the results of Phase I the Tariffs and
Effluent Charges Project are reported in two volumes.
Volume 1 is entitled An Overview of Tariff and Effluent Charge Reform Issues and
Proposals. Volume 1 builds on all other project outputs. It reviews the methodology
and tools developed and applied by the Project team; introduces some of the
economic theory and international experience germane to design and performance of
tariffs and charges; describes general conditions, tariff regimes, and effluent
charges currently applicable to municipal water and wastewater systems in the
region; and describes and develops in a structured way a initial series of tariff,
effluent charge and related institutional reform proposals.
Volume 2 is entitled Country-Specific Issues and Proposed Tariff and Charge
Reforms. It consists of country reports for each of the seven countries examined
most extensively by our project. Each country report, in turn, consists of three
documents: a case study, a national profile, and a brief introduction and summary
document. The principle author(s) of the seven country reports were the country
consultants of the Project Team.
The authors of the Volume 2 components prepared these documents in 2003 and
early 2004. The documents are as up to date as the authors could make them,
usually including some discussion of anticipated changes or legislation under
development. Still, the reader should be advised that an extended review process
may have meant that new data are now available and some of the institutional detail
pertaining to a specific country or case study community may now be out of date.
All documents in electronic version Volume 1 and Volume 2 - may be read or
printed from the DRP web site (www.undp-drp.org), from the page Activities /
Policies / Tariffs and Charges / Final Reports Phase 1.
TARIFFS AND CHARGES VOLUME 2
We want to thank the authors of these country-specific documents for their
professional care and personal devotion to the Tariffs and Effluent Charges Project.
It has been a pleasure to work with, and learn from, them throughout the course of
the Project.
One purpose of the Tariffs and Effluent Charges Project was to promote a structured
discussion that would encourage further consideration, testing, and adoption of
various tariff and effluent charge reform proposals. As leaders and coordinators of
the Project, the interested reader is welcome to contact either of us with questions
or suggestions regarding the discussion and proposals included in either volume of
the Project reports. We will forward questions or issues better addressed by the
authors of these country-specific documents directly to them.
Glenn Morris: glennmorris@bellsouth.net
András Kis: kis.andras@makk.zpok.hu
TARIFFS AND CHARGES VOLUME 2
A Case Study of Municipal Water System Management and the Impacts of Tariff and Effluent Charges:
3
Doboj, Bosnia and Herzegovina
TABLE OF CONTENT
1 INTRODUCTION ......................................................................................................................... 5
1.1 THE CASE STUDY SITE ............................................................................................................ 5
1.2 THE PROCESS OF THE STUDY AND STRUCTURE OF THE REPORT ............................................ 5
2
CURRENT OPERATING CONDITIONS OF THE MANAGEMENT UNIT ....................... 7
2.1 GEOGRAPHICAL SETTING ........................................................................................................ 7
2.2 INFRASTRUCTURE.................................................................................................................... 7
2.2.1
Water Supply ................................................................................................................... 7
2.2.2
Sewerage System ............................................................................................................. 9
2.3 OWNERSHIP OF ASSETS ......................................................................................................... 10
2.4 RELATIONSHIP BETWEEN THE MUNICIPALITY AND THE MWWU ........................................ 11
2.5 ORGANIZATION OF THE MWWU........................................................................................... 12
2.6 MANAGEMENT AND ADMINISTRATION ................................................................................. 14
2.7 PERSONNEL ISSUES................................................................................................................ 15
2.8 AVAILABILITY OF INFORMATION AND REPORTING............................................................... 15
2.9 SERVICE USERS ..................................................................................................................... 15
2.10 WATER MANAGEMENT FEES................................................................................................. 18
3 CURRENT
REGULATORY
CONDITIONS........................................................................... 19
3.1 WATER SECTOR INSTITUTIONAL FRAMEWORK - CENTRAL LEVEL INSTITUTIONS ............... 19
3.2 WATER SECTOR INSTITUTIONAL FRAMEWORK - LOCAL LEVEL INSTITUTIONS ................... 20
4
CURRENT FINANCIAL CONDITIONS OF THE MANAGEMENT UNIT....................... 22
4.1 FINANCIAL MANAGEMENT: ACCOUNTING PRACTICES ......................................................... 22
4.2 TARIFF SETTING, BILLING AND COLLECTION OF REVENUES ................................................ 23
4.3 FINANCIAL RESULTS ............................................................................................................. 24
4.4 MWWU OPERATING COSTS.................................................................................................. 24
4.5 BALANCE SHEET.................................................................................................................... 25
5
FUTURE OPERATING CONDITIONS AND DEVELOPMENT OPTIONS OF THE
MANAGEMENT UNIT...................................................................................................................... 26
5.1 PLANS AND GOALS FOR WATER AND WASTEWATER SERVICES ........................................... 26
5.1.1
Water ............................................................................................................................. 26
5.1.2
Wastewater .................................................................................................................... 27
5.2 INVESTMENTS ........................................................................................................................ 28
6 SCENARIO
DESCRIPTIONS................................................................................................... 35
6.1 BASELINE SCENARIOS ........................................................................................................... 35
6.2 SUSTAINABLE SCENARIOS..................................................................................................... 36
6.3 UPGRADE SCENARIOS............................................................................................................ 37
6.4 OVERVIEW OF SCENARIO FEATURES..................................................................................... 38
7 SCENARIO
RESULTS............................................................................................................... 39
7.1 TARIFFS ................................................................................................................................. 39
7.1.1
Water Tariffs.................................................................................................................. 39
7.1.2
Wastewater Tariffs ........................................................................................................ 42
7.2 CURRENT ACCOUNTS ............................................................................................................ 44
8 BURDEN
INDICES .................................................................................................................... 46
9 RECOMMENDATIONS ............................................................................................................ 48
9.1 ACCOUNTING AND FINANCIAL ANALYSIS............................................................................. 48
9.2 AUTONOMY AND OWNERSHIP ............................................................................................... 48
9.3 MANAGEMENT REFORM ........................................................................................................ 49
9.4 TARIFF REFORM..................................................................................................................... 49
10 REFERENCES ............................................................................................................................ 51
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UNDP/GEF Danube Regional Project
ABBREVIATIONS
ASTEC Model
Accounts Simulation for Tariffs and Effluent Charges Model
B&H
Bosnia and Herzegovina
BOD
Biological Oxygen Demand
DW
Directorate
for
Waters
EIB
European Investment Bank
EBRD
European Bank for reconstruction and Development
EU
European Union
FB&H
Federation of Bosnia and Herzegovina
KM
Convertible
Mark
MA
Municipality
Assembly
MB
Management
Board
MoAFW
Ministry of Agriculture, Forestry and Water Management
MWWU Municipal
Water
and Wastewater Utility
MWWU Doboj
Municipal Water and Wastewater Utility of Doboj
MU
Management
Unit
O&M
Operate and Maintenance
RS
Republic
of
Srpska
SFOR
Stabilization Forces
SU
Service
User
UFW
Unaccounted
For
Water
WB
World
Bank
WMI
Water
Management
Institute
W&WW Water
and
Wastewater
Ramiza Alic, Hydro-engineering Institute, Sarajevo
Bosnia and Herzegovina
A Case Study of Municipal Water System Management and the Impacts of Tariff and Effluent Charges:
5
Doboj, Bosnia and Herzegovina
1 Introduction
This Case Study is part of the project entitled "Assessment and Development of Water and
Wastewater Tariffs and Effluent Charge Designs for Nutrient reduction in the Danube River Basin".
"Municipal Water and Wastewater utility Doboj"(MWWU Doboj) in Doboj town was selected for
investigation in the case study.
The main objective of this case study is to strengthen the financial capacity of the MWWU Doboj, and
indirectly of other MWWUs as well, to the extent required to achieve the financial sustainability and
operational efficiency through tariff reform. Beside that the proper selection and implementation of
reform of water and wastewater tariffs can result in the improvement of the protection of water
resources in the Danube region of B&H.
1.1 The Case Study Site
A number of wastewater utilities were pre-selected and site visited in order to assess their physical
conditions, the existing institutional capacities, and financial capacities, before actually selecting
MWWU Doboj for case study examination.
The Municipality of Doboj is composed of the town Doboj with its surroundings and 70 villages. The
population of Doboj (urban part) is 28,000. Before the war (1992-1995) Doboj was a very important
node in railway and road network.
The public utility "Water and Wastewater" Doboj in its present form was established in 1990. The
performance of the utility was badly hampered because of the war. Since then the situation is gradually
improving but there is still need to improve especially:
· the financial performance,
· protection of water sources,
· efficiency of water distribution (high amount of leakages in distribution network (50%),
·
· and wastewater collection and treatment (drainpipes are blockage, the wastewater overflows
during the precipitations, higher town zones are not connected to the sewage system, non-
rehabilitated sewage channel in water source Luke, unproper function of the pump station,
there is no measuring of sewage flow rate,
· there is no wastewater treatment in Doboj).
MWWU Doboj takes care of the production, supply and distribution of drinking water and the
collection of wastewater within its field of activities. The utility would perform these duties so that
safe and good quality water is supplied to all the customers at affordable price and with smallest
possible disturbance in supply. While performing its work the utility would respect all laws and by-
laws of the Republic of Srpska.
1.2 The Process of the Study and Structure of the Report
First the general operating conditions of MWWU Doboj were assessed, including regulatory,
management and financial aspects. These conditions will be described at length in Chapters 2, 3 and 4.
Another report, the "National Profile for Municipal Water and Wastewater Management in Bosnia and
Herzegovina", also part of the present project, provides further details on the more general state and
federal level conditions and regulations.
The investment needs of MWWU Doboj were then listed, prioritized and phased to implementation
stages of short term priority investments, sustainable investments, and upgrade investments into a
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UNDP/GEF Danube Regional Project
higher level of service. These phases also represent the urgency of the identified investments. The
investments are described in Chapter 5.
In Chapter 6 scenarios are defined for the purpose of modeling with the ASTEC Model (Accounts
Simulation for Tariffs and Effluent Charges Model), partly based on the investment priorities of
Chapter 5, but also assessing other features, such as the requirement to recover costs and the
availability of grant financing for the investments.
Chapter 7 presents the results of the scenarios, supplemented with an analysis of the tariff and current
account consequences, while Chapter 8 examines how the economic burden falling on service users
changes through the scenarios.
Finally, in Chapter 9 policy recommendations are offered, as a way of concluding the case study.
Ramiza Alic, Hydro-engineering Institute, Sarajevo
Bosnia and Herzegovina
A Case Study of Municipal Water System Management and the Impacts of Tariff and Effluent Charges:
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Doboj, Bosnia and Herzegovina
2 Current Operating Conditions of the Management Unit
2.1 Geographical Setting
The area of the Bosna river basin covers the central part of Bosnia, which is the most populated and
industrialized area in BiH. The river basin area is 10,500 km2, and the population is 1,820,000 and the
population density 180 persons/km2. The biggest cities are Sarajevo (510,000), Zenica (146,000),
Tuzla (132,000) and Doboj (about 80,000, of which the urban area has 28,000).
The biggest industries and mines as well as the biggest settlements are located in this basin, and their
wastewater discharges have seriously affected the water quality. The river is polluted downstream of
Sarajevo, which is located close to the source "Vrelo Bosne" at the altitude of 494 meters. Three
quarters of the total industrial effluent is discharged into the Bosna and its tributaries.
The Municipality of Doboj is centrally located in the Republic of Srpska. It is bordered to the north by
the municipalities of Derventa and Modrica and by the FB&H in South and East. The Municipality of
Doboj is composed of the town of Doboj with its surroundings and 70 villages. The town of Doboj is a
relatively small urban area located on the West bank of the Bosna River.
The economy of the municipality has been badly stricken by the effects of the war. The lime factory is
out of production and so are companies such as Trudbenik (compressor and pneumatic tools) and
Hemoproduct (aluminum sulphate and pipes). The unemployment rate is high and the average income
of families is very low (cca 300-400 KM/month).
2.2 Infrastructure
2.2.1 Water Supply
2.2.1.1 Water Sources
Existing water supply system of Doboj is projected to use two sources located closed the river Bosna:
groundwater source "LUKE" and groundwater source "RUDANKA". These wells are also used at
present.
Groundwater source "LUKE": Water was pumping from the next wells:
- 5 sapped wells (ø 2000 mm; depth 8 - 9 m);
- 3 sapped wells (ø 1000 mm; depth 11 -13 m);
- 3 boring - hole well (ø 350 mm; depth 10 -15 m);
- 2 technological well (ø3500 mm; depth 8 - 10 m);
1 sapped " recharge " well (ø 1000 mm; depth 9 m). Maximum the wells capacity during a dry seasons
is 6,000 m3/day.
Groundwater source "RUDANKA" is located at North of the town close to the bank of river Bosna in
the village Rudanka. Water used to be pumped from 7 wells (diameter 350 mm; depth 9 - 13 m ). Two
of these wells are now out of use because they do not have sufficient capacity. Maximum capacity for
this source during dry season is 4,000 m3/day.
Total capacity for both sources in rainy season is about 14,000 m3/day. From the both of these sources,
water was pumped from wells to collective tanks and then pumped with secondary pumps into the
distribution network. Water was disinfected- cleared with gas - chlor before the tank.
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UNDP/GEF Danube Regional Project
2.2.1.2 Environmental Performance of Water Sources
The source LUKE is in the middle of the housing and industrial area, which is only partially connected
to the sewer system. The occupants of the houses not connected rely on septic tanks and soak pits in
their sewage disposal. These are partly located in the protective exclusion area of the well field.
Secondly, there is an open sewer channel, mainly today for storm water, discharging into the river
Bosna, also near LUKE well field, at a distance of 300m. This channel has not been rehabilitated and
is prominent danger for the well's field. The most critical threat to the sustainability of this source
constitutes the main road between Sarajevo city and Bosanski Samac city, where traffic is time to time
really heavy and loads of hazardous materials are transported daily on the road. There are also other
industrial activities located directly on the exclusion zone. The water supply seems in great jeopardy,
especially from accident risk.
2.2.1.3 Distribution System
Main pipelines
Three main pressured pipelines:
Luke I, ø 350, length 1600 m, iron, installed 1960.
Luke II, ø 225, length 1600 m PVC, installed 1996.
Rudanka I, ø 250, length 6500 m asbestos-cement, installed 1968.
Booster-pump station
Booster pump station, or the second, the third and the fourth height pump station are connected with
height reservoirs of the zone of the low pressure. All pump stations and installations are old, but still in
function.
Distribution network
Total length of water supply distribution network is 120 km. Distribution network is made from
different type of materials during the years. Distribution system is old and partly out of function. That
is the reason for 50% of leakages. Distribution network damages are daily. It is estimating that 15-20%
of distribution network requires urgent reconstruction.
Reservoirs
All 4-height zones have reservoirs. All reservoirs are old and damaged during the last war. Three
reservoirs are in function. They are equipped with devices for level controlling. This system is high
priority for rehabilitation.
Environmental performance of distribution system
The high amount of leakages presents twofold environmental problems:
- Leakage, together with infiltrated surface water, increases fluidization and disturbances of the
soil, contributing to landslides and share,
- In areas where pressure fluctuation in the distribution pressure is high, exfiltration increases
fluidization of soil and infiltration during low-or no-pressure situation, resulting in
contamination of the distribution system.
Ramiza Alic, Hydro-engineering Institute, Sarajevo
Bosnia and Herzegovina
A Case Study of Municipal Water System Management and the Impacts of Tariff and Effluent Charges:
9
Doboj, Bosnia and Herzegovina
2.2.2 Sewerage System
2.2.2.1 General Review
The sewage system in Doboj is combined system (storm water and wastewater) that collects the
wastewater from households and wastewater from central part of the town to the disposal site several
kilometers downstream. The whole sewage system is gravitational, and divided into two separate
zones with separate discharges. Upper zone collects wastewaters from second pressure zone of water
supply system, while lower zone collects wastewater from town's center. Although the terrain is very
suitable for gravitational sewage network, the wastewater from the highest regions of the town
(especially water distribution zones three and four) is not discharging into the sewage system. The
sewage from those settlement areas is collecting into the septic tanks, and infiltrates into the ground.
There is only one pump station in the town, used only when water level in river Bosna is too high for
gravitational discharge.
The main sewage pipeline goes from industrial zone in the south, to discharge point approximately 3.5
km downstream, toward north. Most of the wastewater generated in industrial zone is collecting with
this pipeline. On the south of the industrial zone is settlement area with scattered houses. This
settlement is not connected on sewage system. The wastewater is collecting in the septic tanks, with
infiltration in the ground, which endangers the potable water sources.
The total length of the combined sewage network in Doboj is approximately 80 km, with 80% of the
population connected to the sewage network.
The wastewater is discharged into the river Bosna, without any kind of treatment. The "Bosanka" and
"Trudbenik" factories, as well as town's hospital have wastewater treatment plants (mechanical
treatment, aerator and settling basin), but they are not in function.
2.2.2.2 The Sewage Network
In Doboj, the question of ownership and responsibilities for sewage network is partially unsolved and
unclear. According to the Plancenter final report of "Development of water services in the town of
Doboj" from February 2000, only 5% of sewage network is responsibility of MWWU Doboj, and the
rest of 95% is responsibility of the Doboj municipality, which allocated their duty to the municipal
enterprise "Dobojinvest". This situation makes the maintenance of the sewage network difficult. None
of the mentioned companies have money for maintenance. The fact that MWWU Doboj has some
departments and staff for sewage maintenance, the responsibility for sewage system is it's duty. But
however, the MWWU Doboj can charge low prices for wastewater collecting, which is not enough for
any kind of maintenance and development of sewage system capacities.
2.2.2.3 Wastewater Pump Stations
The sewage system has only one pump station. The pump station was constructed with the purpose to
pump wastewater to the river Bosna during high water levels in river. The location of the pump station
is near the discharge points of both gravitational systems. It is manually controlled pump, so the
wastewater from connections is directed to the pump station using the water gate.
2.2.2.4 Functioning and Maintenance of the Sewage System
The pump station is controlled manually only during the high water level in river Bosna, so the most
of the time pump station is not controlled.
The unclear question of ownership and responsibilities over sewage network makes maintenance
difficult, and there are not enough available capacities. There are only three workers on maintaining
the sewage network. There is no vacuum cistern or equipment for flushing. The program for
systematical flushing and cleaning of sewage network was never planned or proposed.
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UNDP/GEF Danube Regional Project
2.2.2.5 Critical Technical Problems in the Sewage System
- Unclear question of ownership and responsibilities for sewage network;
- The drainpipes are blocked, and the wastewater overflows during precipitation. The manholes
are half-filled with sand and sludge. There is no systematic maintenance of the sewage system.
- The map of the sewage system is old (the map has not been updated since 1967), the data on
sewage network are inadequate. Information on breaks, blockages and reparations does not
exist in map form.
- Inadequate capacity of sewage network in some town areas. The overflow is often. Tool,
material and equipment for maintenance and rehabilitation do not exist.
- Higher town zones are not connected to the sewage system. During precipitation this fact
causes safety problems (land-slides) and health threat (wastewater overflows) in lower
regions.
- Accumulation sewerage holes in some urban zones are in the area of potable water sources.
This represent serious treat to Doboj's water supply.
- Non-rehabilitated sewage channel in water source Luke.
- The rehabilitation and maintenance are necessary for proper functioning of the pump station.
- No one has a responsibility to collect wastewater samples from sewage network. Without
continuous sampling, the data on wastewater quality is not reliable.
- There is no measuring of sewage flow rate, or data on sewage flow.
-
After discussion with in MWWU Doboj financial manager addressed problems in ownership issue and
that MWWU Doboj does not want to rehabilitate something that is belong to other legal entity. In their
"Plan of activities for 2003" utility planned the following investments from own assets:
- rehabilitation of pipelines in the street "Milos Obili" length 250m with household's
connection
KM
46,250
- changing of the water meters ø ½ -100 mm
KM 30,000
- changing of the valves
KM 30,000
2.3 Ownership of Assets
The official name of MWWU Doboj indicates the fact that the ownership of water utilities belongs to
the RS. The ownership is determined by the RS legislation which transformed the so called social
ownership, dominant in the ex-Yugoslavia, into RS ownership. Although all public companies are
State companies, some of them operate "in the interest of " one or more municipalities. The division
between companies "of State interest" and "of municipal interest" is based on the amount of company
capital, and on the field and geographical territory of company activities. In companies of municipal
interest, the members of the governing bodies, representing the owner, are elected by the Municipal
Assembly.
During the process of transformation cca 60-65% of utility's capital was allocated to the state, but it is
not defined if it is state on high level (RS) or lower level (Municipality). 35-40% of the utility's capital
was privatized through internal shares and vouchers.
As it was mentioned earlier, MWWU Doboj owns only 5% of the sewage infrastructure, while 95% is
owned by one of the municipal enterprises, in essence, it is owned by the municipality.
Ramiza Alic, Hydro-engineering Institute, Sarajevo
Bosnia and Herzegovina
A Case Study of Municipal Water System Management and the Impacts of Tariff and Effluent Charges:
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Doboj, Bosnia and Herzegovina
2.4 Relationship Between the Municipality and the MWWU
There are several potential (and many existing) problems with this excessive municipal control that
can adversely impact on the ability of the utility to operate effectively. The following is a sampling of
some of the problems observed.
The water utility currently does not have adequate degree of autonomy. The system operates under
fairly strict control of the municipality, and this control is frequently exercised in ways that are
contrary to the viability of the utility. A common problem seems to be the ignorance (by the Director
and the Management Board) of the duties and responsibilities set out in the Statute. Municipal officials
sometimes interfere in the utilities' operations.
The relations between the municipality (Municipality Assembly - MA) and MWWU Doboj are
presented in Figure 1.1. The MA has appointed a Management Board (MB) and Supervisory Board
(SB) for MWWU Doboj. MB consist of three members, two appointed by the MA and one by
MWWU Doboj.
Figure 1 Organization of Relations Between Municipality and MWWU Doboj
The MB appoints the Chairman of the Management Board and Chairman of the Supervisory Board.
The Management Board reports to the Supervisory Board, which further reports to the Mayor. The
budget, water tariffs, investments among other matters are presented by the Management Board,
approved by the Supervisory Board and ratified by the Municipal Assembly. The Management Board
has also appointed the Director.
The relations between MWWU Doboj and Doboj Municipality are regulated on the basis of mutual
Performance Agreement prepared in 1989, when the department of communal services (Public Utility
"Progress"), then responsible for water supply and sewerage, street cleaning, solid waste management
and funeral services, was split into separate "companies". According to this agreement MWWU Doboj
is responsible for water and wastewater services only in the town of Doboj and has a relative
independence in its actions. MWWU Doboj does not receive any subsidies from the municipality.
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UNDP/GEF Danube Regional Project
2.5 Organization of the MWWU
The functions of the utility are presented below according to the organization chart shown in figure
below:
Figure 2 Organization Chart of MWWU Doboj
Technical Sector
The functions of the five departments of the Technical Sector are:
Planning and development:
- Research and planning of new civil works and rehabilitation of facilities and network;
- Control of house connections for water supply and sewerage collection; and
- Development of data collection and management information systems.
Quality control:
- Frequent sampling from well fields and distribution network;
- Sample analysis; and
- Monitoring the water quality development in watercourse.
Construction, operation and maintenance of the water supply system:
- Water supply and distribution;
- Operation at and maintenance of well fields, pumping station and water reservoirs;
- Rehabilitation and new civil works at well fields, pumping stations and water reservoirs;
Ramiza Alic, Hydro-engineering Institute, Sarajevo
Bosnia and Herzegovina
A Case Study of Municipal Water System Management and the Impacts of Tariff and Effluent Charges:
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Doboj, Bosnia and Herzegovina
- Maintenance of the workshop for water meter calibration and services for repairs and
replacement;
- Maintenance of the registration book and lists for registered and repaired damages; and
- Currying out continuous leak detection on the Doboj network.
Sewerage
- Operation and maintenance of the re-pumping station for wastewater;
- Operation and maintenance of the network for wastewaters collection;
- Rehabilitation and civil works at the re-pumping station for wastewater;
- Rehabilitation, civil works and design for new house connections on the network for
wastewater collection;
- Maintenance of the registration book and lists for registered and repaired damages; and
- Carrying out continuous detection of damages in Doboj network.
Workshop
- Organization and carrying out of routine repair and maintenance of MWWU mobile units;
- Mechanical works, repair and maintenance of mechanical and electrical equipment for water
supply and wastewater collection; and
- Facilitating transportation services and excavation for MWWU activities.
Commercial Sector
The functions of the two departments of the Commercial Sector are:
Commercial:
- Maintenance and revision of the list of customers and the customer database;
- Development of relations between customers and management;
- Billing
- Revenue collection; and
- Collection of debts.
Financial
- Bookkeeping services;
- Water tariff settings; and
- Contacts with financial institutions.
Sector for General Affairs
The functions of the Sector for General Affairs are:
- Accessory services to other departments; and
- Managing the restaurant for the Utility's personnel.
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UNDP/GEF Danube Regional Project
2.6 Management and Administration
Every utility operates under a Management Board and the Director, who are elected for four-year
periods.
MWWU Doboj has a Management Board with three members, one of them being an employee of the
utility. MWWU Doboj has also a Supervisory Board comprising three members elected by the
Municipal Assembly. A company employee cannot be a member of this board. The Supervisory Board
controls the company.
In Doboj, all significant decisions of the board are subject to review and approval of the Municipal
Assembly. With the approval of its appointing body, the Management Board passes:
- the company's Statute;
- long and medium-term development programme;
- investment plans and programme;
- annual operational and business programme;
- reports on business and annual statement of accounts; and
- decisions on the profit apportioning.
Independently, the Management Board:
- passes the company's general acts;
- passes a programme for the modernization of the company;
- passes the company's business policy;
- considers and adopts the Director's reports on the condition and protection of workers' rights;
and
- the Rule Book on its own work.
The Management Board, on behalf of the owner, concludes a contract on mutual rights and
responsibilities with the Director who independently makes decisions within his jurisdiction. The
Director:
- represents the company, is responsible for the legality of work;
- organizes and manages the operation and business;
- puts forward the outline of the business policy;
- puts forward programme for operation and development of the Company;
- puts forward acts to be approved by the Management Board;
- executes decisions of the Management Board;
- signs a collective agreement;
- puts forward general acts of the company;
- appoints and dismisses persons with special jurisdictions and responsibilities in the company
and informs the Management Board accordingly;
- decides on individual rights, duties and responsibilities of employees or worker related to the
work of the company in compliance with the Law and the collective agreement;
- and performs other jobs in accordance with the Law, general acts and decisions of the
Management Board.
Ramiza Alic, Hydro-engineering Institute, Sarajevo
Bosnia and Herzegovina
A Case Study of Municipal Water System Management and the Impacts of Tariff and Effluent Charges:
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Doboj, Bosnia and Herzegovina
The internal organization and staff of the company is defined in detail in the Rule Book on the
Organization and Systematization of the Jobs and Working Tasks. Job descriptions and detailed
competence requirements are defined for each manager and worker. The Rule Book of MWWU Doboj
was updated in March 1999 (replacing the previous book from 1996).
2.7 Personnel Issues
A serious problem is caused by the high number of inexperienced and non-qualified staff, as well as
the high age of personnel. In Doboj about 90% of the staff left the company before the war in the
1990's, many of the new employees are not qualified for their positions.
Table 1
Service Connections and Staff
Population
Employees per
Number of
Number of
Town
served by
1,000 people
utility staff
connections
water supply
served
Doboj 84
28,000
4,243
2.7
2.8 Availability of Information and Reporting
Access to information regarding the financial and operative performance of the MWWU has proven
difficult. This is largely due to poor organization of data or, partly, complete lack of it.
Limitations of time and incomplete responses prevent a clear understanding of the extent to which data
gathering, availability of information and reporting is practiced. The information obtained indicates
room for considerable improvement. In many of the interviews, directors could not provide answers to
requests for data. This seems a clear indication of significant problems with data collection and
reporting procedures.
2.9 Service Users
Water supply and collection wastewater services are providing by the MWWU to Doboj city and its
surrounding (villages): Lipac, Svjetlaca, Plane, Miljkovac, Velika Bukovica, Mala Bukovica, Caire i
Plocnik. Not all of the inhabitants have access to drinking water, and even less of them are on the
wastewater network. Within the city of Doboj all of the population (28,000 people) receive water
service, and the wastewater of 85% of the population (23,800) is collected. Outside of Doboj a share
of the consumers have their own systems of water supply and they do not use MWWU Doboj services
or do not have access to it.
The water distribution system is divided in four zones. About 80% of consumers are in first zone, 10
% in the second and altogether 10% in the third and fourth zone. Consumers in the first zone have
water service 24 hours a day. In the other zones water supply is irregular, with consumers in the third
and fourth zone receiving water only for a few hours daily.
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UNDP/GEF Danube Regional Project
The categories of service users (SUs) defined for purposes of ASTEC modeling are in Table 2. SUs
have been differentiated based on a number of criteria:
- Legal form: household; legal entity (within that industrial facilities, private shops and public
institutions)
- Consumed service: water; water and sewage as composite services (i.e. consumption of one
service is related to consumption of the other service); water and sewage as independent
services (i.e. consumption of the two services is not related, e.g. a company may decide to self
supply one service, and purchase only the other one, therefore service levels are independent
from each other in the longer time horizon)
- Housing type: individual; multi-family building
- SFOR
There is a fixed tariff for water consumption only, it is computed based upon the size of the water
meter at the connection, in fact, it is called a water meter charge. The water meter charge varies from
user to user, and since there is no data available by SU categories on its level, the figures in the table
are estimates. The SFOR does not pay a fixed charge, but needs to pay an increased variable tariff
after its consumption.
Monthly charges for water meter by size of water meter are the following:
Ø 15 mm - KM 1.05 (EUR 0.54)
Ø 20 mm KM 1.05 (EUR 0.54)
Ø 25 mm KM 2.63 (EUR 1.35)
Ø 30 mm KM 3.68 (EUR 1.89)
Ø 40 mm KM 4.70 (EUR 2.41)
Ø 50 mm KM 19.48 (EUR 9.99)
Ø80 mm KM 21.59 (EUR 11.07)
Ø 100 mm KM 27.38 (EUR 14.04)
Variable tariffs include any related fees and charges, such as the water management fee (for more
detail see the next section).
From the perspective of MWWU Doboj there are actually a lower number of accounts for the
households of multi-family buildings, as many buildings have only one account and the building
associate or house board collects the payments from the apartments. For purposes of modeling,
however, the number of apartments was used. As metering is not available for all apartments in these
buildings, the incentive for careful use of water is limited, and these households actually use more
water than the households in individual homes.
Ramiza Alic, Hydro-engineering Institute, Sarajevo
Bosnia and Herzegovina
A Case Study of Municipal Water System Management and the Impacts of Tariff and Effluent Charges:
17
Doboj, Bosnia and Herzegovina
Table 2
Main Features of Service Users
Annual
Annual
Fixed
wastewater Variable
water use
annual
Variable
discharge wastewater
Name of the SU
Number of The service per account water tariff water tariff per account
tariff
category
accounts
*
(m3/year) (KM/year)
(KM/m3)
(m3/year)
(KM/m3)
Individual houses with
sewage
1 567
WSc
176
13.86
0.2935
176
0.132
Individual houses
without sewage
2 296
W
167
13.86
0.2935
Multi-family buildings
3 160
WSc
301
13.86
0.2935
291
0.132
Industry with sewage
224
WSi
819
198
1.0735
772
0.462
Industry without
sewage
63 W
819 198 1.0735
Small private shops
with sewage
715 WSc
140
40 1.0735
136 0.462
Small private shops
without sewage
140 W
140
40 1.0735
SFOR
1
W
96 000
2.1235
Public institutions
29
WSc
9 138
600
1.0735
8 724
0.462
* W = water only, WSc = both water and sewage, as composite services, WSi = both water and
sewage, but as independent services
Billed water by categories in year 2002 is shown in Table 3. The figures here do not exactly match
annual consumption times the number of accounts from Table 2, as some of the information there is
more recent.
Table 3
Billed Water in 2002 (m3)
Industry and
SFOR Private
shops
House
Board
Individual
TOTAL
institution
multi-
houses
family
building
586,000 86,000 128,000 981,000 726,000
2,507,000
Source: Financial department of MWWU Doboj
Produced water in 2002 was 5,028,200 m3, and billed water in m3 was 2,507,560. On the base above
data total leakages in distribution network in 2002 were 49.86%, which is a major cause for financial
problems.
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UNDP/GEF Danube Regional Project
2.10 Water Management Fees
According to the Water Law the Ministry of Agriculture, Forestry and Water Management is entitled
to collect water fees from water users and polluters. There are two types of water fees:
- general water fee, which is like a normal tax based on the salaries and wages paid by the
employer; and
- specific water fee based on water abstraction and pollution
MWWU Doboj is paying the specific water management fees for water exploitation activities in
amount of 0.035 KM/m3 or 0.018 EUR/m3;
The specific water management fee that MWWU Doboj pays (on the base of the utility's Price list) is
0.02 KM/m3.
The obligors of specific water fee for water protection are (Water Law, Art. 92):
- legal persons, citizens (self-employed), and households that discharge their wastewater
directly or through a public or private wastewater system into a watercourse, impounding
water reservoir or groundwater;
- legal persons, citizens (self-employed), and households that within their activities, emit
harmful substances into the atmosphere or in agricultural, forestry and/or construction site;
and
- legal persons, citizens and owners of motor-vehicles and trailers, locomotives and wagons,
and motor-ships.
The Decision determines water protection fee for 1 population equivalent (p.e.), based on the average
24 hour discharge of wastewater, according to the number of population. This varies from 0.51 EUR
per p.e. for less than 10,000 p.e. to 7,538 EUR plus 0.00248 EUR per p.e. for more than 2,000,000 p.e.
(Water Law, Art. 4). Doboj has 21,250 p.e. and pays 1 KM/p.e.
Water management fee is revenue within the Ministry for Agriculture, Forestry and Water
Management.
Ramiza Alic, Hydro-engineering Institute, Sarajevo
Bosnia and Herzegovina
A Case Study of Municipal Water System Management and the Impacts of Tariff and Effluent Charges:
19
Doboj, Bosnia and Herzegovina
3 Current Regulatory Conditions
Most of the relevant information can be found in the National Profile, including economic regulation.
In this chapter a description of the central and local institutions is provided.
3.1 Water Sector Institutional Framework - Central Level Institutions
General Remarks
The authorities and institutions in charge of water management and their respective competencies are
prescribed in the Water Law (March 20, 1998). The Water Law also assigns duties to other authorities
not primarily in charge of water management but with responsibilities connected with the water sector.
This summary focuses on the statutory duties of said authorities and institutions as prescribed in the
Law. These duties can be categorized as follows:
- Exercise of statutory powers - involve issuance of generally binding water management
regulations
- Policy-making; administrative functions; financing; - are primarily internal matters for the
administration, and may only indirectly affect outside subjects
- Regulatory functions - have a direct effect on the rights and obligations of natural and legal
persons in each individual case,
- Operative functions - consist of practical executive work,
- Commercial activities - exercise of commercial functions extends the operations of an
administrative authority to the private sector.
Water sector authorities and institutions are:
- RS National Assembly
- RS Government
- Ministry of Agriculture, Forestry and Water Management
The Ministry of Agriculture, Forestry and Water Management (MoAFW) is the main authority in
charge of administrative and technical duties regarding water management. According to the Water
Law, the MoAFW is among other responsible for:
- defines provisions relative to harmful and hazardous substances and sanitary-technical
conditions for wastewater;
- proposes programme for systematic water and wastewater control and provisions relative to
the control methods;
- defines conditions (staff, equipment etc.) for companies authorized to control surface and
groundwater quality;
- proposes to the Government the basis of and rates for the general water management fee, and a
method for their calculation;
- proposes to the Government the basis of and rates for the specific water management fees;
- defines instructions for the method and time limit for payment of specific water fees;
- establishes inventory of existing water management facilities, financed by grants, taxes or
public contributions;
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UNDP/GEF Danube Regional Project
- Ministry of Health and Social Protection
- Ministry of Urbanism, Communal Planning and Ecology
- Other Ministries
Directorate for Waters (DW) The Directorate for Waters (DW), established under the MoAFW, is in
charge of implementing the long-term, medium-term and annual plans for water management
development. For this purpose, the DW stipulates contracts with the Water Management Institute
(planning, design, research) and the Water Engineering Companies (flood protection, construction,
maintenance).
The DW is in charge of the allocation of major resources for the water sector. Particular attention
should be given to the transparency in the distribution of resources and to the accountability of the DW
for its use of the public revenues.
- Water Engineering Companies
- Water Management Institute
The Water Management Institute (WMI) is subordinated the MoAFW. The WMI has its main office in
Srspko Sarajevo and branch offices in Trebinje, Bijeljina and Banja Luka.
- Institute for Water
- RS Hydro-Meteorological Institute
3.2 Water Sector Institutional Framework - Local Level Institutions
Municipal Water Management Authorities
The Water Law assigns certain licensing and enforcement competencies to the municipality.
In addition, the municipal authorities have the competence to:
- approve measures of flood protection for areas not covered by the master plan for flood
protection;
- decide on anti-erosion measures;
- approve general regulations for the utilization and maintenance of rural water supply systems;
- grant permissions for a third party to connect to a rural water supply system constructed by
others;
- provide materials and other conditions for maintenance, reconstruction and further
development of water works facilities for which the DW is not responsible; and
- in the event of water shortage, temporarily limit or discontinue the water usage.
In addition to the RS legislation, the utilities are governed by local level regulations. They include in
Doboj:
- Decision on Organizing Public Company MWWU Doboj, (City Council); and
- Statute of the Basic State Public Utility Doboj (Management Board).
Ramiza Alic, Hydro-engineering Institute, Sarajevo
Bosnia and Herzegovina
A Case Study of Municipal Water System Management and the Impacts of Tariff and Effluent Charges:
21
Doboj, Bosnia and Herzegovina
The Statute defines the name of the company, main office, scope of activities and the internal
organization of the company, obligation for preparation and passing of annual, middle-term and long-
term programme for work and development, and the establishment of a long-term development
strategy of the company; company management (bodies, responsibilities, meetings and process of
making a decisions, incl. Management Board, Director, possible other boards).
The primary activities of MWWU Doboj, according to the Statute, are:
- production and distribution of water, and
- treatment and collection of sewage (wastewater and storm water).
The secondary activities cover a wide range of tasks, such as project preparation and supervision,
O&M, rehabilitation and construction of relevant facilities, supervision and control of the development
of rural water undertakings, etc.
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UNDP/GEF Danube Regional Project
4 Current Financial Conditions of the Management Unit
4.1 Financial Management: Accounting Practices
The MWWU follows its Accounting laws of RS.
The accounting laws specify the use of an existing, standard chart of accounts that are very general for
all public entities, and the laws set strict requirements for the use of account numbers. These official
charts of accounts, because they were designed for use by all public organizations, are considered
inadequate, and not sufficiently transparent, for use by modern water and wastewater utilities.
Recording of Expenditures
Almost all of the operating and non-operating expenditures are first recorded in interim accounts.
Later, only twice a year, costs (as lump sums) are transferred into income statement accounts. As a
consequence, the income statement is not capable of being used to indicate the performance of the
MWWU Doboj on a monthly basis.
Recording of Revenue
MWWU Doboj records both water and wastewater sales in a single account, and the recording system
does not differentiate income by customer type.
Cost-Center Accounting
The MWWU Doboj like other MWWUs in RS have not cost-center based accounting systems. One
consequence of this is that tariffs cannot be based on the equivalent costs of providing water and
wastewater services.
Management Accounting
In accordance with existing accounting laws of the RS, balance sheets, income statements, cash flow
statements and other relevant financial reports are submitted twice a year to the Agency for Payment
Operations. In many cases, these reports are the only source of extensive financial information
available to the members of the board of directors and to senior management of the MWWU Doboj.
Management of the MWWU Doboj gets reports on more frequent basis only on accounts receivable.
Compensation system
MWWU Doboj is using compensation system because has no sufficient cash. Compensation system is
actually transaction with water bills. For example: Army owed the MWWU Doboj for water service,
the MWWU Doboj owed the Company for electricity for electric service, and the company for
electricity owed the government for taxes.
Budget
Such as most water and wastewater utilities in RS and MWWU Doboj does not prepare budget by
department (cost centre). Some format of inventory of revenue and expenditure exists but it could not
be used like comprehensive document serving in operational planning and like management tool.
Ramiza Alic, Hydro-engineering Institute, Sarajevo
Bosnia and Herzegovina
A Case Study of Municipal Water System Management and the Impacts of Tariff and Effluent Charges:
23
Doboj, Bosnia and Herzegovina
4.2 Tariff Setting, Billing and Collection of Revenues
Water and wastewater tariffs are proposed by the MWWU on the base of calculation of financial
department in the MWWU. Recommended water and wastewater tariffs would be ratified by the
Executive Council of Municipality.
About 80% of users are households. Delivery of bills and water meter reading is quarterly. Payment of
bills is, however, monthly. The reason for this frequency is on the one hand the hope for improved
payment, on the other, liquidity problems of the MWWU.
Water meters of industry and institutions are both read and billed monthly.
Billed and collected revenue by categories in 2002 is shown in Table 4 and Figure 3 below (including
collected account receivable from previous periods from industry and institution this is the reason for
more collection than billing for industry in 2002):
Table 4
Billed and Collected Revenue in 2002 (EUR/year)
Ratio of
Collected
Collected and
Category
Billed Revenue
Revenue
Billed Revenue
Industry and institution
508,421
722,598
142.13%
small private shops
76,316
52,601
68.93%
multi-family building
211,178 184,785 87.50%
individual houses
145,231
79,229
54.55%
TOTAL 1,170,397
1,039,213
88.79%
Source: Financial department of MWWU Doboj
Figure 3 Billed and Collected Revenue in 2002 (EUR/year)
BILLED AND COLLECTED REVENUE IN W&WW UTILITY
DOBOJ IN 2002
800000
700000
600000
500000
billed revenue
400000
300000
collected revenue
200000
100000
0
Industry and
small private
multy-family
individual
institution
shops
bulding
houses
According to the data from above tables collect rate in MWWU Doboj is 88.79%, but this collection
rate is not actual because it includes collected account receivables (from industry and institutions)
from previous periods, while some of the current period bills will only be collected in the next period.
The above issues have been discussed with the financial manager of the Doboj MWWU and it has
been suggested to him that these revenues are separately recorded, which is not the case at present.
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UNDP/GEF Danube Regional Project
4.3 Financial Results
Review of financial result of MWWU Doboj in 2002 in KM and EUR is presented in Table below:
Table 5
Financial Balance at MWWU Doboj in 2002
in
KM
in
EUR
Operating revenue
1,967,307
Operating revenue
1,008,875
Other revenue
310,541
Other revenue
159,251
Total revenue
2,277,848
Total revenue
1,168,127
Operating expenditure
2,396,736
Operating expenditure
1,229,095
Other expenditure
17,506
Other expenditure
8,977
Total Expenditure
2,414,242
Total Expenditure
1,238,072
Balance (Loss)
136,394
Balance (Loss)
69,945
Source: Income Statement 2002 of MWWU Doboj
4.4 MWWU Operating Costs
The main operating costs are summarized in Table 6.
Table 6
Main Operating Costs of the Doboj MWWU (EUR)
Ratio of O&M and
Cost Category
Cost
Ratio of Total Cost
Amortization
Material 111,069
11.95%
Fuel 21,223
2.28%
Electricity 154,504
16.63%
Personnel 530,770
57.12%
Administration 103,689
11.16%
Other 7,983
0.86%
O&M Costs
929,237
100.00%
75.06%
Amortization 308,836
24.94%
Total Expenditures
1,238,074
100.00%
Personnel costs make up the majority of O&M costs. Considering that supposedly MWWU Doboj is
over employed, there is substantial room for cost savings through more rational use of human
resources.
Ramiza Alic, Hydro-engineering Institute, Sarajevo
Bosnia and Herzegovina
A Case Study of Municipal Water System Management and the Impacts of Tariff and Effluent Charges:
25
Doboj, Bosnia and Herzegovina
4.5 Balance Sheet
Review of assets and liabilities in MWWU Doboj on December 31, 2002 is presented below.
Table 7
Assets and Liabilities of MWWU Doboj as of 31 Dec, 2002
in
KM in
EUR
ASSETS
Non - current assets
10,946,440
5,613,559
Intangible assets
2,397,352
1,229,411
Tangible assets
8,549,088
4,384,148
of which
Buildings
8,332,046
4,272,844
Equipment
217,042
111,304
Current assets
811,055
474,369
Stocks
119,962
119,962
Debtors
566,807
290,671
Trade
debtors
559,942
287,150
other
debtors
6,865
3,521
Cash in hand and at banks
124,286
63,736
11,757,495
6,087,928
LIABILITIES
Capital
11,005,841
5,644,021
Creditors
751,654
385,463
Long-term
5,039
2584
Short-term 746,615
382879
11,757,495
6,029,484
1 EUR = 1.95 KM
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UNDP/GEF Danube Regional Project
5 Future Operating Conditions and Development Options of the
Management Unit
5.1 Plans and Goals for Water and Wastewater Services
The source of this information is primarily the Project "Institutional strengthening water sector in
Republic Srpska" Plancenter Ltd in association with Institution for water sector of Republic Srpska,
February 2000.
5.1.1 Water
5.1.1.1 Water Production
The basic long-term goal related to water supply is providing water to the whole urban population
inside of the service area. The water supply system would be extended in the future and include certain
urban zones that are according to urban development plans.
Planned the growth of population which will be provided with water from public system is shown in
Table below:
Table 8
Expected Change in Urban Population Served by Drinking Water
Parameter 1999
2005
20
10
2015
Urban population
28,000
33,000 33,000
33,000
Connected to the water 21,000 26,500
28,000 30,000
supply system
% of population included
75 80
85 91
in services
It is expected that water production per capita (586 l/c/d in 1999) will decrease to 360 l/c/d by 2005
and 240 l/c/d by 2015. At the same time UFW will also decrease substantially.
One of the reasons for decrease of consumption in category of household might be accurate metering
in case that all consumers are supplied with meters. It is assumed that accurate metering will motivate
consumers on costs savings, consequently on water savings.
Ramiza Alic, Hydro-engineering Institute, Sarajevo
Bosnia and Herzegovina
A Case Study of Municipal Water System Management and the Impacts of Tariff and Effluent Charges:
27
Doboj, Bosnia and Herzegovina
Table 9
Estimated Water Production by Scenario with Expected Growth of
Population
1999 2005 2010 2015
l/c/d m3/d l/c/d m3/d l/c/d m3/d l/c/d m3/d
Household 235
4935
150
3975
130
3640
130
3900
Industry 72
1512
50
1325
40
1120
30
900
Commercial 36
756
30
795
25
700
20
600
Public sector
48
1008
30
795
30
840
20
600
UFW*
195
4095
100
2650
70
1960
40
1200
TOTAL 586
12306
360
9540
295
8260
240
7200
* Unaccounted For Water Losses during distribution
5.1.2 Wastewater
5.1.2.1 Quantity of Wastewater
The main long- term objective related to the wastewater in Doboj is collection of wastewater from
whole urban residence and industries.
Table 10 Plan for Residence Connected to Sewerage System by Scenario with
Expected Growth of Population
Parameter
1999 2005 2010 2015
EU
level
Urban residence
28,000
33,000
33,000
33,000
35,000
Connected on
21,000
26,500
28,000
30,000 35,000
water supply
Connected on sewerage
17,000
22,000
24,000
27,000
33,000
% of residence serviced
80
83
85
89 94
with sewage
Today the quantity of wastewater is estimated on the basis of wastewater concentration. The level of
infiltration is expected to decrease to 50% of all wastewater discharge after reconstruction of the
sewerage system.
Table 11 Plan for Future Discharge of Wastewater by Scenario with Expected Growth
of Population
Sewerage
1999 2005 2010 2015
EU
Level
l/c/d m3/d l/c/d m3/d l/c/d m3/d l/c/d m3/d l/c/d m3/d
Wastewater 70
1,190
95
2,090
110 2,640
120 3,240
120
3,960
Infiltration
430 7,310
405
8,910
250 6,000
120 3,240
120
3,960
TOTAL 500
8,500
500 11,000
360 8,640
240 6,480
240
7,920
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UNDP/GEF Danube Regional Project
5.1.2.2 Quality of Wastewater
The data about wastewater quality was not available. Wastewater quality is estimated on the basis of
measurements in similar locations. The following data is used related to specific load:
BOD7
60g /c/d
Total of phosphorus
2g/c/d
Total nitrogen
12g/c/d
Table 12 Expected Load of Wastewater Pollutants by Scenario with Assumed Growth
of Population
1999
2005
2010
2015
EU Level
Parameter
kg/d
kg/d
kg/d
kg/d
kg/d
BOD7 1,020
1,360
1,440
1,620
1,980
Total of
34 44
48
54
66
phosphorus
Total nitrogen
204
264
288
324
396
5.1.2.3 Wastewater Treatment
Wastewater treatment plant exists neither in Doboj city nor in the whole catchments of the Bosna
river.
Extension of the coverage of wastewater collection to the entire town and treating all wastewater
before discharge are the major challenges of MWWU Doboj in the long-term. According to the
financial analysis the least cost solution for the upgrading of the sewage collection is the construction
of a new separate sewerage system. The existing combined network should be rehabilitated to serve
for stormwater drainage. The proposed option is also environmentally best.
The selection of the location of the proposed wastewater treatment plant will be based on
environmental impacts on, e.g. groundwater abstraction, and future land use of the town.
The proposed wastewater treatment plant (to be constructed 2010-2015) shall comply with the
requirements of the EU.
5.2 Investments
The investment needs of MWWU Doboj are listed, prioritized, phased to implementation stages and
justified in detail in the Project "Institutional strengthening of the water sector in the Republic of
Srpska Pilot Component".
The Investment program was divided in to short-, medium-, and long-term Investment programs
according to the urgency of the identified investment need. Further prioritization was prepared inside
each individual program according to the estimated impact of the investments on the economy and
service level of the utility.
In order to prioritize the required short-, medium- and long-term investments an investment strategy is
presented in Table 13. The prioritization criteria comprise five main groups:
- Reduction of operation costs;
- Increment of revenue;
- Improvement of sustainability of services;
- Improvement of service level; and
- Reductions of environmental pollution.
Ramiza Alic, Hydro-engineering Institute, Sarajevo
Bosnia and Herzegovina
A Case Study of Municipal Water System Management and the Impacts of Tariff and Effluent Charges:
29
Doboj, Bosnia and Herzegovina
Table 13 Prioritization of Investment Needs
INVESTMENT
Category Priority
/
Term
Short
Medium
Long
Water production facilities
Protection measures at well field Luke
IS
1
Pumps, internal piping and EA-installations of wells
RO
2
Construction of overflow dam
ISL
2
Data collection and automation system
RO
1
1
2
Improvement of pumping at both well fields
ISL
2
Hardness removal plants
ISL
3
Planning a new well field
IS/ISL
3
Water distribution system
Replacement of the most leaking pips
RO/IR
1
1
Further rehabilitation of the other network
IR
2
2
Cleaning and inspection of network
RO
1
1
Replacement of house connections
RO/IR
1
Replacement of household taps and valves
RO/IR
1
Replacement/installation of new line valves
RO
1
1
2
Refurbishment of water meter workshop
IR
2
Customer water meters and spare parts
IR
1
Additional leakage detection equipment
RO
2
Renovation of water reservoirs
ISL
3
Procurement of repair material
RO/IR
1
Extension of network
IR
4
2
2
Wastewater collection system
Procurement of cleaning equipment
RO
2
Sewer cleaning, inspection and infiltration study
ISL/RO
2
Making most urgent repair for sewers
ISL
1
Design and construction of separate sewer system
RO
1
Extension of the separate sewer system
IR
1
Wastewater Treatment Plant
Construction of wastewater treatment plant
REP
1
Source: Project "Institutional strengthening of the water sector in the Republic of Srpska Pilot
Component"
CATEGORY
PRIORITY
LEVEL
RO = Reduction of operation costs
1 = highest priority
IR = Increment of revenue
2 = high priority
IS = Improvement of sustainability
3 = medium priority
ISL = Improvement of service level
4 = low priority
REP = Reductions of environmental Pollution
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UNDP/GEF Danube Regional Project
The proposed financing plan for the investments is shown in Table 14. The financing arrangements of
the project are still at a preliminary stage.
Table 14 Proposed financing plan for the investments (1000 EUR)
Financing source
Short-
Medium-term Long-
TOTAL %
term
term
Loan finance
1,795
5,641
7,436
28
Government grant
Foreign grant
6,084
4,103
10,187
38
Municipal equity
1,501
1,501
6
Internal financing
6,176
1,706
7,882
28
TOTAL 7,585
7,971
11,446
27,002
100
The project financing is based on an assumption that 30% of the costs is covered with long-term loans
which would be equivalent to EUR 7.436 million. The loan term used in the projections is 15 years
including a grace of 5 years for the principal repayment. The fixed interest rate used in financial
projections is 7% per year. A commitment fee of 1% is also applied. In reality, the loan interest would
most probably be floating following the market rate development. The potential sources of loan
finance are such agencies like World Bank/International Bank for Reconstruction and Development
(WB/IBRD), European Bank for Reconstruction and Development (EBRD) and European Investment
Bank (EIB) through their specific programmes for environmental infrastructure development.
Grant financing is assumed to be 38% of the costs and to be received from foreign donors (such is EU)
at an amount of EUR 10.187 million. The replacement of household taps and valves as well as 50% of
replacement of house connections are assumed to be financed by Municipal equity. The amount of
EUR 1.501 million is not including financial projections of the MWWU. The availability of own
finance is based on tariffs that are assumed to be affordable to customers.
Financing assumptions and conditions during scenario modelling in Chapter 6 will be simpler:
investments will be either fully financed from loan or 80% from grant and 20% from loan. 80% of
grant financing may be an extreme assumption, our goal with this figure is to establish one end of a
wide range of financing and related tariff consequences.
Table 15 through Table 16 include the estimated short, medium and long term investments costs. The
period of amortization for buildings was assumed to be 30 years, and for mechanical and electrical
installations 15 years.
Ramiza Alic, Hydro-engineering Institute, Sarajevo
Bosnia and Herzegovina
A Case Study of Municipal Water System Management and the Impacts of Tariff and Effluent Charges:
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Doboj, Bosnia and Herzegovina
Table 15 Estimated Short Term Investment Costs (Km)
SHORT-TERM INVESTMENTS
unit no.
LOCAL
INVESTMENTS
FOREIGN
INVESTMENTS
TOTAL
Investments for water production:
Protection of LUKE sources
unit
1
2,621,808
44,800
2,666,608
Rehabilitation of wells on LUKE and RUDANKA sources
peace
8
292,000
329,600
621,600
Construction of dam
unit
1
1,140,000
0
1,140,000
Installation of the system of data collection
unit
1
115,500
94,600
210,100
Total short -term investments for water production
4,169,308
469,000
4,638,308
Investments for water distribution:
change of pipeline
peace
17
608,439
542,064
1,150,503
change of household's connection
%
60
1,402,500
1,402,500
2,805,000
change of taps and valves in households
peace
60
472,500
1,149,750
1,622,250
change of the most damaged valves
peace
30
300,000
261,600
561,600
rehabilitation of calibration space for water meter
unit
1
67,500
432,220
499,720
purchasing of new water meter and spare parts
unit
1
16,500
115,060
131,560
purchasing of akusto-corelator
unit
1
5,000
60,000
65,000
adapting of the height reservoirs
peace
3
499,400
330,000
829,400
purchasing of the rehabilitation's material
unit
1
80,000
100,000
180,000
Total short -term investments for water distribution
3,451,839
4,393,194
7,845,033
Investments for wastewater collection:
purchasing of equipment for cleaning
unit
1
150,000
530,000
680,000
cleaning of sewerage
cleaning of sewerage
unit
1
800,000
300,000
1,100,000
rehabilitation of the most critical point of sewerage
unit
1
150,000
123,000
273,000
Total short -term investments wastewater collection
1,100,000
953,000
2,053,000
General investments
purchasing of the new vehicle
peace
5
150,000
150,000
purchasing of communication system
unit
1
15,000
15,000
purchasing of computers and network
unit
1
45,000
45,000
system of information managing + software
unit
1
20,000
25,000
45,000
Total general investments
20,000
235,000
255,000
TOTAL SHORT - TERM INVESTMENTS
8,741,147
6,050,194
14,791,341
32
UNDP/GEF Danube Regional Project
Source: Project "Institutional strengthening of the water sector in the Republic of Srpska Pilot Component"
Table 16 Estimated Sustainable Investment Costs (Km)
LOCAL
FOREIGN
unit no.
TOTAL
MEDIUM -TERM INVESTMENTS
INVESTMENTS
INVESTMENTS
1. Investments for water production:
Improving of pumping from both sources (LUKA & RUDANKA)
unit
1
192,500
660,625
853,125
Telemetric and data collection
unit
1
135,000
205,450
340,450
Total medium -term investments for water production
327,500
866,075
1,193,575
2. Investments for water distribution:
change
of
pipeline
peace
7 363,275 323,625 686,900
rehabilitation
of
others
pipeline
%
6 183,267 163,275 346,542
cleaning, control and planning of the rehabilitation
unit
1
207,360
29,952
237,312
change of valves
peace
50
1,008,877
734,577
1,743,454
Total medium -term investments for water distribution
1,762,779
1,251,429
3,014,208
3. Investments for wastewater collection:
designing and construction of the new separately system of sewage
unit
1
5,263,500
5,818,200
11,081,700
Total medium -term investments wastewater collection
5,263,500
5,818,200
11,081,700
4. General investments
purchasing of the 5 tone track
peace
1
90,000
90,000
purchasing of the tractor to dig
peace
1
150,000
150,000
computer unit
1
25,000
25,000
computer
software
unit
1 40,000 265,000 265,000
Total general investments
40,000
265,000
305,000
TOTAL MEDIUM - TERM INVESTMENTS
7,393,779
8,200,704
15,594,483
Source: Project "Institutional strengthening of the water sector in the Republic of Srpska Pilot Component"
Ramiza Alic, Bosnia and Herzegovina
A Case Study of Municipal Water System Management and the Impacts of Tariff and Effluent Charges:
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Doboj, Bosnia and Herzegovina
Table 17 Estimated Upgrade Investment Costs (Km)
LOCAL
FOREIGN
unit no.
TOTAL
INVESTMENTS
INVESTMENTS
LONG-TERM INVESTMENTS
1. Investments for water production:
Improving of water quality, water softening plant unit
2
3,543,400
1,260,240
4,803,640
automatically system
unit
1
100,000
200,300
300,300
Total long -term investments for water production
3,643,400
1,460,540
5,103,940
2. Investments for water distribution:
construction of the new network
unit
1
421,113
382,830
803,943
rehabilitation pipelines
%
8
215,359
195,781
411,140
cleaning , control and planning of rehabilitation
unit
1
207,360
29,952
237,312
new linear valves
peace
15
150,000
130,800
280,800
Total long -term investments for water distribution
993,832
739,363
1,733,195
3. Investments for wastewater collection:
designing and construction of the wastewater treatment plant
unit
1
4,916,000
3,406,000
8,322,000
construction of the new wastewater network for connecting all houses
unit
1
3,410,000
3,751,000
7,161,000
Total long -term investments wastewater collection
8,326,000
7,157,000
15,483,000
TOTAL LONG - TERM INVESTMENTS
12,963,232
9,356,903
22,320,135
Source: Project "Institutional strengthening of the water sector in the Republic of Srpska Pilot Component"
34
UNDP/GEF Danube Regional Project
Table 18 Summary Table for Investments
LOCAL INVESTMENTS
FOREIGN INVESTMENTS
TOTAL
1. Total short -term investments
8,741,147
6,050,194
14,791,341
2. Total sustainable investments
7,393,779
8,200,704
15,594,483
3. Total upgrade investments
12,963,232
9,356,903
22,320,135
TOTAL
INVESTMENTS
29,098,158 23,607,801 52,705,959
Source: Project "Institutional strengthening of the water sector in the Republic of Srpska Pilot Component"
Ramiza Alic, Bosnia and Herzegovina
A Case Study of Municipal Water System Management and the Impacts of Tariff and Effluent Charges:
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Doboj, Bosnia and Herzegovina
6 Scenario Descriptions
Scenarios have been constructed around the notion of "progression" a development from baseline
conditions through medium term sustainability to upgrade of the infrastructure. In this chapter we
provide a description of the scenarios as well as the description of data used in the scenarios, or
reference to such data if they appeared in earlier chapters.
Altogether nine scenarios have been constructed and modeled. Most attention was given to baseline
scenarios, as the first priority of MWWU Doboj is to achieve a balance of revenues and expenditures
in the short run, only after this can medium and long term investments be considered. Features of the
scenarios will be described in this chapter, ending with a table which includes the most important
characteristics in a concise way, making comparison of scenarios easier.
In the modeled scenarios two component tariffs are used (a fixed and a variable tariff), since this is
also the structure used at present by the MWWU Doboj for water services, therefore the resistance
towards a two component tariff is lower in Doboj than in many other settlements, and returning to a
simple variable tariff may considerably lower the efficiency of the tariff regime. In cost recovering
scenarios the tariffs are structured so that fixed tariffs will recover fixed costs, and variable tariffs
recover variable costs, for every single service user category. The economic efficiency properties of
this pricing regime are described in detail in Volume 1 of the project report.
Each scenario received a code for easier identification, such as B1- which is the Simple Baseline
scenario.
6.1 Baseline Scenarios
Within the set of baseline scenarios first a progression from present tariffs to cost recovering tariffs is
being modeled (B1 through B3), while in B4 and B5 short term, priority investments will be
introduced. To indicate the presence of priority investments, the letter P is attached to the codes of
these scenarios; B4P and B5P. These investments alone are not sufficient for sustainable operations,
but they are key to stabilizing the water service of the MWWU by replacing some of the least reliable
pieces of infrastructure, reducing leakage and improving the protection of the water base.
B1 Simple baseline
In this scenario only actual expenditures are included on the cost side, namely variable (operating)
costs, fixed costs (e.g. management costs, maintenance costs), water tariffs and effluent charges.
Amortization costs are excluded, since they do not represent an actual short-term payment obligation
for the company. Costs have been allocated for modelling purposes through several steps: first
distribution of costs between water and wastewater services, then separation of fixed and variable
costs, and lastly distribution of costs among main service user categories. Costs within these categories
are then distributed to actual SU groups in proportion to water consumption and wastewater discharge.
Some of the costs are distributed to leaked water as well, which is then redistributed among service
users based on their baseline consumption of water. This feature will gain importance in scenarios
with reduced leakage.
Tariffs in this scenario are not required to cover costs, present day, two component tariffs are used for
water services, and a simple variable tariff for wastewater services (see Table 2).
B2 Baseline with cost recovery
Same as Scenario B1, but cost recovering tariffs are applied. Cost recovery takes place individually for
each service user entity, for instance each household pays exactly as much as the cost behind its
consumption. The Doboj MWWU will, nevertheless, not break even financially as it is not able to
collect all of the bills, their revenue shortfall will be equal to non-paid bills. Similarly to B1, there is a
two component tariff scheme. In B2, however, the fixed tariff should cover fixed costs, while the
36
UNDP/GEF Danube Regional Project
variable tariff (commodity charge) should cover variable costs, therefore in addition to a change in
overall payment (due to the requirement of cost recovery), payments will be restructured.
B3 Baseline with cost recovery, tariffs of non-payers are covered by payers
Same as scenario B2, except that missing payments from non-payers are also recovered by payers
through increased tariffs. Payers, in effect, have to carry a larger burden than what is justified by their
consumption, so that the company can break even. An alternative to this strategy would be reduction
of non-payment or a combination of reduced non-payment and increased tariffs. As the costs and
achievements of such strategies have not been quantified, we decided not to model them.
B4P Baseline with priority investments, 80% financed through grant
In this scenario on top of present fixed and operating costs, short term priority investments, with a
value of 6.4 million KM, will be introduced in order to keep the water system in good operating
conditions on the short run and to save some of the costs. No investments are carried out in the
wastewater sector, all of the resources are dedicated to water services. The investments are financed
80% from grant, and 20% from a loan with a 15-year repayment period and 9% real interest rate.
Detail on actual components of the priority investments can be found in Chapter 5.2.
As a result of the investments, not only will further deterioration of the service be postponed, but
leakage will be reduced from 2.45 million m3/year (51% of produced water) to 2 million m3/year
(46%). Moreover, the operating costs of water service will be reduced by 10%, as the need for
emergency repairs will be lower.
Cost recovery is required similarly to B3, i.e. missing payments from non-payers are also recovered by
payers, therefore the company itself reaches a revenue neutral status.
B5P Baseline with priority investments, entirely financed from loan
Same as scenario B4P, except that all of the short term priority investments are financed from a
commercial loan. The feasibility of this scenario is questionable, since commercial loans in general are
difficult to obtain for Bosnian MWWUs due to the perceived high risk of non-payment. There are
many more possibilities for financing investments at MWWUs, such as soft loans and equity, selecting
specific combinations of these would alter the final results to some extent due to different costs of
capital, but B4P and B5P results in a range of capital costs, and subsequent tariffs, which are already
meaningful for decision makers.
6.2 Sustainable Scenarios
In case of sustainable scenarios a higher level of investments is carried out, than in baseline, in order
to ensure reliable long term operation of the company. The change in assets has an influence on
operating costs, as well.
S1 Sustainable investments, financed 80% through grant.
In Scenario S1, in addition to short term priority investments, as described in Scenarios B4P and B5P,
the rest of the planned short term and all of the planned medium term investments are also carried out.
For a list of these investments, please refer to Chapter 5.2, Table 15 . It is assumed that 80% of all
investments are financed through grant, while 20% is financed through commercial loan with 20 years
repayment period. The sustainable scenario is additional to the baseline scenario. If sustainable
investments are carried out within a few years after the baseline investments, then the repayment
periods of the loans of the baseline and sustainable scenarios will overlap. This is exactly what has
been modeled in S1, both of the loans are being repaid simultaneously, contributing to an increased
financial burden for service users.
In the present scenario about 10.6 million KM is spent on water services in addition to the 6.4 million
KM of the baseline priority investments. Much of the 10.6 million KM serves replacement and
Ramiza Alic, Bosnia and Herzegovina
A Case Study of Municipal Water System Management and the Impacts of Tariff and Effluent Charges:
37
Doboj, Bosnia and Herzegovina
rehabilitation of pipelines and replacement of valves. As a result leakage, in our estimate, will be
reduced to 1.5 million m3/year from 2 million m3/year of the B4P and B5P scenarios. In Scenarios B4P
and B5P 10% of water related operating expenditures were saved. In the present scenario an additional
10% of savings in water service operating costs are assumed, primarily because of a further improved
infrastructure which needs even less emergency repair than under baseline priority investments.
About 13.3 million KM is spent on purchasing equipment for cleaning the wastewater network,
execution of the cleaning, designing and constructing the new sewerage network parts of the old
network will be used for storm water collection. As a result of the new investments, the operating costs
will increase by 0.02 KM/m3 of wastewater. Rehabilitation of the existing sewage network is an
important contribution to sustainability, as current overflows and leakage of the sewerage poses a
hazard to water bases under Doboj, from which part of the city water supply is provided.
Cost recovery is required similarly to Scenarios B3, B4P, and B5P; missing payments from non-payers
are also recovered by payers, therefore the company itself reaches a revenue neutral status.
S2 - Sustainable investments, entirely financed from loan
Same as S1, except that all investments are financed from a commercial loan.
6.3 Upgrade Scenarios
In these scenarios both the water and the wastewater infrastructure is upgraded, as described in Table
17 in Chapter 5.2. Water related investments primarily focus on a water softening plants and
improvements of the distribution network. Wastewater investments will result in extension of sewage
network to cover all households which have water services, while investments into the wastewater
treatment plant (WWTP) will make it possible to achieve tertiary treatment.
The difference between the two modeled upgrade scenarios is the source of financing the investments.
U1 Upgrade, 80% financed through grant
In this scenario 6.8 million KM is spent on water infrastructure. While some of the operating costs
increase, others decrease, and the net effect is not clear. Consequently, no change in water service
operating cost has been assumed compared to the sustainable scenario, which is equivalent to 20%
decrease of operating costs compared to the baseline. Leakage, however, is assumed to decrease with
another 0.5 million m3/year, to 1 million m3/year, indirectly contributing to lower unit costs of water
provision.
15.5 million KM is invested into wastewater infrastructure. Out of this sum, about 600,000 KM is
recovered through connect charges from newly connected households. Wastewater related operating
costs increase by 0.35 KM/m3, primarily due to treatment of effluents.
For both water and wastewater investments 80% grant financing, and 20% commercial loan has been
assumed. The commercial loan is entered into the model with a 20 year repayment period and 9% real
interest rate. The upgrade scenario is additional to the sustainable and baseline scenarios. If upgrade
investments are carried out within a few years after the sustainable investments, then the repayment
periods of the loans of the baseline, sustainable and upgrade scenarios will overlap. This is exactly
what has been modeled in U1, all three categories of loans are being repaid simultaneously,
contributing to an increased financial burden for service users.
Cost recovery is required similarly to Scenarios B3, B4P, B5P, S1 and S2; missing payments from
non-payers are also recovered by payers, therefore the company itself reaches a revenue neutral status.
U2 - Sustainable investments, entirely financed from loan
Scenario U2 is the same as U1 in every respect, except that all investments are financed from a
commercial loan instead of partial grant financing.
38
UNDP/GEF Danube Regional Project
6.4 Overview of Scenario Features
To help review and determine which scenarios are directly comparable with one another, Table 19describes the most important scenario characteristics.
Table 19 Review of the Most Important Scenario Features
Scenario Cost
Basis Cost Non-Payment Cumulative
Cumulative
Leakage
Change of
Change of
Source of
Recovery
Covered by
Water
Wastewater
(million
Unit Water
Unit
Investment
Required
Payers,
Investments
Investments
m3/year)
Operating
Wastewater
Financing
Marginal
(million KM) (million KM)
Costs
Operating
Cost Pricing
Compared to
Costs
the Baseline Compared to
the Baseline
B1 Baseline
- - 2.4 -
-
-
B2 Baseline
-
-
2.4
-
-
-
B3 Baseline
- -
2.4 -
-
-
B4P Baseline
+
6.4 -
2.0
-10%
-
80%
grant
Priority
20% loan
Investments
B5P Baseline
+
6.4 -
2.0
-10%
-
100%
loan
Priority
Investments
S1 Sustainable
17.0 13.3 1.5 -20%
+0.02KM/m3 80%
grant
20% loan
S2 Sustainable
17.0 13.3 1.5 -20%
+0.02KM/m3 100%
loan
U1 Upgrade
23.9 28.8 1.0 -20%
+0.35KM/m3 80%
grant
20% loan
U2 Upgrade
23.9 28.8 1.0 -20%
+0.35KM/m3 100%
loan
Ramiza Alic, Bosnia and Herzegovina
A Case Study of Municipal Water System Management and the Impacts of Tariff and Effluent Charges:
39
Doboj, Bosnia and Herzegovina
7 Scenario Results
7.1 Tariffs
7.1.1 Water Tariffs
Table 20 and Table 21 provide an overview of how water tariffs change through the scenarios. All
scenarios include two-part tariffs, and since cost recovery is required separately for fixed costs through
fixed tariffs, and variable costs through variable tariffs, fixed and variable tariffs usually do not change
to the same direction and degree as we switch from one scenario to another. For instance, if the fixed
tariff increases, while the variable tariff decreases, the net effect on consumers is difficult to
comprehend. Therefore, in order to ease comparison of scenarios, the average water price has been
computed for each SU and each scenario by adding all tariffs per account and dividing the sum with
total water consumption per account. The average water price derived this way is in Table 22.
While B1 included actual 2004 tariffs, tariffs in all other scenarios were required to recover costs.
Except for B2, all costs are recovered by the MWWU. In B2 only those costs are recovered, which are
associated with those SUs, which do pay their tariffs. As the requirement of cost recovery is imposed,
households will face increased tariffs (both fixed and variable tariffs) compared to scenario B1, while
all other users will have to pay less on average for a cubic meter of water. Essentially households,
which are also the largest consumers of water in Doboj, are at present cross-financed by industrial
water users, SFOR, small shops and public institutions. The extent and peculiarities of cross financing
will be described in section 7.2.
In scenario B1 payments of variable tariff make up around 80% of all water service payments. Fixed
costs in the baseline, however, represent around 40-45% of all costs, therefore in the cost recovering
scenarios the ratio of fixed tariffs increases, and the ratio of variable tariffs decreases. When cost
recovery is required (B2 and B3), the fixed tariffs increase for all SUs in absolute terms as well, except
for industry. When short term priority investments are carried out (B4P, B5P), fixed costs will further
increase. The increase is, obviously, larger in scenario B5P, in which grants do not support the
investments. Operating costs and tariffs in B4P and B5P, however, decline, as the investments provide
efficiency gains in operation and reduced leakage. For households, however, operating costs are still
higher than they were originally in B1, as cross-subsidization ceased.
Going on to sustainable scenarios fixed tariffs will further grow, while variable tariffs will slightly
decrease. The overall burden (measured here as average price of a m3 of water) does not change much
between B4P and S1, and between B5P and S2; increased fixed tariffs are counterbalanced by a
decline in variable tariffs. S2 imposes a larger burden on consumers than S1, due to lack of investment
grants. The average price of water in S2 is 60-160% higher for different groups of SUs, than in S1.
Progressing from sustainable to upgrade scenarios will result in an increase of 5-36% of the average
price of water, depending on the exact scenario and the SU group. This increase is entirely due to
higher fixed tariffs associated with upgrade investments.
Without presenting detailed results, we would like to mention that as variations of S2 and U2, we also
ran two scenarios in which the fixed tariffs were held constant (same level as in B1) and cost recovery
was achieved through changing the variable tariff only. The average price of water in these scenarios,
let's call them S2* and U2*, was 50-70% higher than in their "peer" scenarios. The main reason for
the large difference is that due to high variable tariffs, consumers will cut back on their consumption.
As a result fixed costs will need to be distributed among less cubic meter of consumption, which will
further increase prices. This spiral, eventually, results in low levels of consumption, loss of some of
the economies of scale, and high unit prices. Cost recovery should, therefore, be achieved through
40
UNDP/GEF Danube Regional Project
increase of both fixed and variable tariffs, at least as long as there is no shortage of water supply,
capacity constraints of water infrastructure, or significant external costs associated with use of water.
At the same time, while a two-part tariff is more efficient than a single variable tariff, some
consumers, especially those which consume low volumes of water, will be worse off with the two part
tariff, since they also have to pay the fixed charge despite their low consumption level. The two part
tariff, like any other major change, should therefore be introduced with appropriate caution. Particular
attention should be paid to the possibility of increased non-payment of tariffs.
Lastly, increase of tariffs may lower consumption more dramatically in multi-family buildings than
what is indicated by the model at present, as these households may now have a stronger incentive to
install individual meters.
Ramiza Alic, Bosnia and Herzegovina
A Case Study of Municipal Water System Management and the Impacts of Tariff and Effluent Charges:
41
Doboj, Bosnia and Herzegovina
Table 20 Fixed Water Tariffs by Scenario (KM/account/year)
Service Users
B1
B2
B3
B4P
B5P
S1
S2
U1
U2
Individual houses with sewage
14
70
86
100
146
119
233
118
257
Individual houses without sewage
14
58
71
83
121
102
198
112
245
Multi-family buildings
14
123
136
151
219
171
335
191
421
Industry with sewage
198
127
127
193
462
295
983
388
1482
Industry without sewage
198
127
127
193
462
295
983
388
1482
Small private shops with sewage
40
62
74
88
142
107
239
113
269
Small private shops w|o sewage
40
55
66
78
127
99
220
113
269
SFOR
-
22,153 22,153 34,427 82,135 54,880 181,741 77,135 291,277
Public institutions
600
2,965
2,965
3,784
7,092
4,941 12,985
5,237 14,515
Figures in the table are rounded to integer.
Table 21 Variable Water Tariffs by Scenario (KM/m3)
Service Users
B1
B2
B3
B4P
B5P
S1
S2
U1
U2
Individual houses with sewage
0.29 0.49 0.70 0.56 0.56 0.43 0.43 0.42 0.42
Individual houses without sewage
0.29 0.55 0.79 0.62 0.62 0.46 0.46 0.42 0.42
Multi-family buildings
0.29
0.47
0.51 0.42 0.42 0.34 0.34 0.31 0.31
Industry with sewage
1.07
0.33
0.33 0.26 0.26 0.19 0.19 0.16 0.16
Industry without sewage
1.07
0.33 0.33 0.26 0.26 0.19 0.19 0.16 0.16
Small private shops with sewage
1.07 0.35 0.44 0.36 0.36 0.30 0.30 0.31 0.31
Small private shops w|o sewage
1.07
0.38 0.48 0.39 0.39 0.31 0.31 0.31 0.31
SFOR
2.12 0.18 0.18 0.13 0.13 0.08 0.08 0.06 0.06
Public institutions
1.07
0.31
0.31 0.26 0.26 0.21 0.21 0.22 0.22
Table 22 Average Water Price by Scenario (KM/m3)
Service Users
B1
B2
B3
B4P
B5P
S1
S2
U1
U2
Individual houses with sewage
0.37
0.90 1.27 1.18 1.46 1.12 1.79 1.26 2.25
Individual houses without sewage
0.38 0.96 1.36 1.24 1.52 1.16 1.82 1.26 2.25
Multi-family buildings
0.34
0.89
0.97 0.92 1.15 0.90 1.43 0.97 1.77
Industry with sewage
1.32
0.44
0.44 0.41 0.63 0.41 0.91 0.43 1.18
Industry without sewage
1.32
0.44 0.44 0.41 0.63 0.41 0.91 0.43 1.18
Small private shops with sewage
1.36 0.64 0.80 0.77 1.03 0.78 1.38 0.95 1.85
Small private shops w|o sewage
1.36
0.67 0.84 0.80 1.06 0.79 1.39 0.96 1.86
SFOR
2.12 0.29 0.29 0.28 0.50 0.30 0.80 0.33 1.08
Public institutions
1.14
0.52
0.52 0.50 0.72 0.52 1.02 0.64 1.39
42
UNDP/GEF Danube Regional Project
7.1.2 Wastewater Tariffs
Wastewater tariffs for each scenario are presented in , Table 23 and , Table 24, while the average price
of wastewater service per cubic meter is in Table 25. Wastewater tariffs at present (scenario B1) are
much lower than water tariffs: there is not a fixed wastewater tariff, while there is a fixed water tariff
("water meter charge"), and the variable wastewater tariff is lower for each SU than the respective
variable water tariff. Even with these low tariffs, however, more wastewater revenue is collected than
what is justified by present expenditures. Expenditures are low, because the infrastructure costs are
sunk, there is not any repayment obligation of past wastewater investments, and operation of the
sewage system is cheap, as not much is spent on network maintenance and the collected wastewater is
not treated.
"Excess" wastewater revenues could be well used for building up a reserve for future wastewater
infrastructure investments. Most of these tariffs, however, benefit the municipality and not the
MWWU, since the municipality owns 95% of the wastewater network, and the utility owns only 5% of
it. The municipality, on the other hand, under tight budgets, does not consider the option of saving
wastewater revenues for future investments.
Since present wastewater tariffs are higher than expenditures, cost recovering baseline scenarios (B2,
B3) actually lead to lower tariffs than current baseline (B1). The same is true for scenarios B4P and
B5P, as priority investments are used solely for the water infrastructure, they do not increase the costs,
and thus tariffs, of wastewater services. While households pay only 0.12 KM/m3 more than the
expenditures associated with their wastewater discharge, the same figure is 0.45 KM/m3 for legal
entities.
Within the sustainable scenarios there are wastewater investment costs related to network
maintenance, rehabilitation and extension. As a result a considerable fixed tariff is introduced in
scenarios S1 and S2, for some SUs reaching the level of the fixed water charge of the same scenario.
The variable wastewater tariff also increases, although only by 0.02-0.04 KM/m3, primarily due to
operating costs related to network cleaning and maintenance after the investments are carried out.
In the upgrade scenarios two major changes can be observed. Wastewater service costs and tariffs
escalate, and due to new connections formerly unconnected SUs will now have access to wastewater
service, on top of their existing water connections. If all investments are carried out from commercial
loan, then SUs need to pay a variable tariff of 0.36-0.47 KM/m3 for wastewater, more than for a cubic
meter of water. Moreover, fixed tariffs place an even greater burden on consumers. If fixed tariffs are
divided for every cubic meter of consumption (and consumers are likely to carry out this simple
calculation), then especially those consumers face very high tariffs, which consume low volumes. For
the average household variable tariff payments make up only about 20% of all wastewater payments,
and fixed tariffs seem to be prohibitively expensive. If 80% of investment costs are financed from
grants, then a corresponding decrease in fixed tariffs takes place, and since fixed tariffs make up the
bulk of the wastewater payments, this difference is imperative for SUs.
Similarly to water tariffs, two specific scenarios, S2* and U2*, were examined with constantly held
fixed wastewater tariffs (i.e. zero fixed tariffs) and rising variable wastewater tariffs to achieve cost
recovery. The average price of wastewater is more than 60% higher in S2* than in S2 (which does
have a fixed and a variable tariff), while the difference between U2* and U2 is about 40%. Our main
conclusions, with regards to the different results of a two part tariff and a single variable tariff, are the
same as for water services in section 7.1.1 above.
From the perspective of wastewater services, cost recovering tariffs only make sense if the costs and
revenues occur within the same accounting unit or cost center. At present, wastewater service costs are
paid by MWWU Doboj, while revenues are collected for the municipality of Doboj. Outstanding
questions of ownership and operation should certainly be resolved before a tariff reform is introduced.
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Doboj, Bosnia and Herzegovina
Table 23 Fixed Wastewater Tariffs by Scenario (KM/account/year)
Service Users
B1
B2
B3
B4P
B5P
S1
S2
U1
U2
Individual houses with sewage
2.7
3.3
3.4
3.4
31
141
49
250
Individual houses without sewage
47
238
Multi-family buildings
4.6
5.0
4.9
4.9
43
197
75
396
Industry with sewage
13.1
13.1
13.1
13.1
231
1 099
210 1 116
Industry without sewage
210 1 116
Small private shops with sewage
3.9
4.6
4.6
4.6
36
160
54
273
Small private shops w|o sewage
54
273
SFOR
Public institutions
142
142
142
142
1975
9440
2917 15722
Table 24 Variable Wastewater Tariffs by Scenario (KM/m3)
Service Users
B1
B2
B3
B4P
B5P
S1
S2
U1
U2
Individual houses with sewage
0.13 0.01 0.01 0.01 0.01 0.04 0.04 0.47 0.47
Individual houses without sewage
0.47
0.47
Multi-family buildings
0.13
0.01
0.01 0.01 0.01 0.03 0.03 0.38 0.38
Industry with sewage
0.46
0.01
0.01 0.01 0.01 0.03 0.03 0.36 0.36
Industry
without
sewage
0.36
0.36
Small private shops with sewage
0.46 0.01 0.02 0.02 0.02 0.04 0.04 0.44 0.44
Small private shops w|o sewage
0.44
0.44
SFOR
Public institutions
0.46
0.01
0.01 0.01 0.01 0.03 0.03 0.36 0.36
Table 25 Average Wastewater Price by Scenario (KM/m3)
Service Users
B1
B2
B3
B4P
B5P
S1
S2
U1
U2
Individual houses with sewage
0.13 0.02 0.03 0.03 0.03 0.22 0.86 0.82 2.25
Individual houses without sewage
0.82
2.25
Multi-family buildings
0.13 0.02 0.03 0.03 0.03 0.18 0.70 0.65 1.81
Industry with sewage
0.46 0.01 0.01 0.01 0.01 0.16 0.65 0.61 1.70
Industry without sewage
0.61
1.70
Small private shops with sewage
0.46 0.03 0.04 0.04 0.04 0.21 0.79 0.75 2.05
Small private shops w|o sewage
0.75
2.05
SFOR
Public institutions
0.46 0.02 0.02 0.02 0.02 0.16 0.65 0.60 1.69
44
UNDP/GEF Danube Regional Project
7.2 Current Accounts
Table 25 depicts current accounts according to 2002 books and under different scenarios. The reported
loss of MWWU Doboj in 2002 was 136 thousand KM, equivalent to 6% of revenues. Since past
investment costs are sunk, no loan repayment is connected with them, and no major new investments
are carried out, there are not any annual expenditures related to amortization. Therefore the balance
computed without the consideration of amortization is also worth looking at. According to this balance
the company is well in the positive, in fact, it collects revenues from which investments can be carried
out. If wastewater tariffs were received by MWWU Doboj, and not the Municipality, then the current
account balance would be even better.
According to our simulations, the balance of water and wastewater related expenditures and revenues
in Scenario B1 is negative, at about 7% of revenues, without taking into account any amortization. The
balance would be even worse in Scenario B2, in which case the tariffs should recover costs for each
account, but non-payment reduces revenues. The main reason for this is that as cost recovery is
required, the tariffs are restructured across SUs, and higher tariffs are set for households, which are
bad payers, while lower tariffs are set for good payers (especially industry, SFOR, and public
institutions). Small shops, which are also behind in payment, see lower tariffs, but this does not
influence the overall financial balance very much.
In all the rest of the modeled scenarios complete cost recovery is required (even after consideration of
non-payment), therefore the MWWU accounts are in balance.
Table 26 Current Account Balance
Year
2002,
Year 2002,
Scenario B1 # Scenario
B2
# All
other
without Costs
with Costs of
scenarios #
of
Amortization *
Amortization *
Absolute value
-136 464 -124 -202 0
(1000 KM/year)
As percent of
-6% 20.4% -6.8% -11.5% 0
revenues
* Excluding revenues from wastewater services, which are received by the municipality.
# Including revenues from wastewater services.
The financial balance of 124 thousand KM of Scenario B1 is presented in Table 27 by SU categories
and services. Besides a negative overall balance, there is also cross financing between services and
SUs. Cross financing benefits household consumers of water, in essence they pay much less than the
level of their costs. All SUs pay more for wastewater service than the present low costs of the service.
Even with overpayment for wastewater services, households still pay much less than the true costs for
the two services together; annually on average they receive a subsidy of about 110 KM per household
through lower than necessary tariffs. If the data used for modelling and the method of allocating costs
among SUs is correct (but there are reservations about this), then the single biggest unjustified
payment is made by SFOR, over 150 thousand KM/year more than actual costs behind the water they
receive.
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Doboj, Bosnia and Herzegovina
Table 27 Cross financing paid (+) or received (-) by SUs (KM/year) in Scenario B1
Both
Both
Water, by
Water, all Wastewater, Wastewater, services, by services, all
account on
accounts
by account all accounts account on accounts
average
together
on average
together
average
together
(KM/year)
(KM/year) (KM/year) (KM/year)
Average price of water
(KM/year) (KM/year)
Individual houses with
-102
-159 413
13
21 117
-88
-138 296
sewage
Individual houses
-96 -220
889
0
0
-96 -220
889
without sewage
Multi-family buildings
-163
-514 618
29
92 258
-134
-422 360
Industry with sewage
570
127 768
337
75 469
907
203 237
Industry without sewage
570 35
935
0
0
570 35
935
Small private shops with
31
22 447
47
33 528
78
55 975
sewage
Small private shops w|o
31 4
395
0
0
31 4
395
sewage
SFOR
151 088
151 088
0
0
151 088
151 088
Public institutions
3 309
95 971
3815
110 627
7 124
206 598
Total
-457 316
332 999
-124 318
46
UNDP/GEF Danube Regional Project
8 Burden Indices
Before elaborating on the burden of increasing water and wastewater tariffs for households, let's
observe the change in the average price of water and wastewater services in Table 28. Any of the
modeled scenarios lead to increased tariffs for households, while most reforms lead to lower tariffs for
industrial users, small shops, and public institutions. The only scenario in which all SUs (except for
SFOR) must pay more on average for a cubic meter of water is U2, in which the service is not only
sustainable, but also upgraded to a higher standard, and no grants support the related investments.
Table 28 Combined Average Price of Water and Wastewater Services by Scenario
(KM/m3)
Average price of water and
B1 B2 B3 B4P
B5P S1 S2 U1 U2
wastewater together
Individual houses with sewage
0.50 0.93 1.30 1.21 1.49 1.34 2.65 2.08 4.51
Individual houses without sewage
0.38 0.96 1.36 1.24 1.52 1.16 1.82 2.08 4.51
Multi-family buildings
0.47 0.91 0.99 0.95 1.18 1.08 2.13 1.62 3.58
Industry with sewage
1.78 0.45 0.45 0.43 0.64 0.57 1.56 1.04 2.88
Industry without sewage
1.32 0.44 0.44 0.41 0.63 0.41 0.91 1.04 2.88
Small private shops with sewage
1.82 0.67 0.84 0.81 1.07 0.99 2.17 1.71 3.90
Small private shops w|o sewage
1.36 0.67 0.84 0.80 1.06 0.79 1.39 1.71 3.90
SFOR
2.12 0.29 0.29 0.28 0.50 0.30 0.80 0.33 1.08
Public institutions
1.60 0.54 0.54 0.52 0.73 0.67 1.66 1.25 3.09
In 2000 in Doboj the average net salary was about 300 KM/person/month, while the minimal wage
was about 100 KM/person/month. Considering the increase in salary between 2000 and 2003 in FBiH
(for which there is statistics), the average salary in Doboj in 2004 must be around 400
KM/person/month, while the minimum salary must be about 120-130 KM/person/month. Statistics on
household income, as opposed to personal income, is not available. Due to a high rate of
unemployment (about 40% officially) we assume that the average household has 1.2 persons with
regular income. "Low income households" therefore have a disposable income of 150 KM/month, or
1800 KM/year, while "average income households" have a disposable income of 480 KM/month, or
5760 KM/year. Water and wastewater expenditure has been computed for every household type and
scenario by multiplying the level of consumption with the variable tariff and adding the fixed tariff to
the product. The ratio of W&WW expenditure and household income is the burden index displayed in
Table 29.
Low income households need to devote a large portion, between 3.5% and 7.8% of their income to pay
the water and wastewater bill even in B1. Some of these households may actually have lower
consumption than the average household, and therefore face a lower bill, but we do not know the
prevalence of this. Other low income households probably have average or above average
consumption, while they do not pay their bills. In fact, it is suspected that a fairly high share of non-
paid household bills belong to low income households.
The burden that low income households experience heavily grows in all other, cost recovering
scenarios. Since fixed tariffs make up more than 40%, for sustainable and upgrade scenarios even
50%-80% of all tariff payment, the scope of these households to reduce payment through lower
Ramiza Alic, Bosnia and Herzegovina
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Doboj, Bosnia and Herzegovina
consumption is limited. Non-payment by these households will very likely increase if tariffs steeply
rise.
At present average income households pay between 1.1% and 2.4% of their income for water and
wastewater services. While the increase in tariff payments is substantial as we progress through
scenarios, with the exception of S2, U1, and U2, most average income households would probably still
be able and willing to pay their bills. Covering the full cost of upgraded water and wastewater services
is clearly not affordable for the households of Doboj, and even with large investment grants the new
tariffs would be on the brink of affordability for many households, due to a large increase in operating
costs and obligation to repay some of the loans.
Table 29 Ratio of Water and Wastewater Expenditure and Household Income
B1 B2 B3 B4P
B5P S1 S2 U1 U2
Low income households
Individual houses with sewage
4.9%
8.6% 10.9% 10.8% 13.4% 12.8% 25.2% 16.3% 35.2%
Individual houses without
sewage
3.5% 7.4%
9.4%
9.2% 11.3%
9.4% 14.8% 15.5% 33.5%
Multi-family buildings
7.8% 15.0% 16.3% 15.8% 19.6% 18.1% 35.7% 25.5% 56.1%
Average income households
Individual houses with sewage
1.5%
2.7%
3.4%
3.4%
4.2%
4.0%
7.9%
5.1% 11.0%
Individual houses without
sewage
1.1% 2.3%
2.9%
2.9%
3.5%
2.9%
4.6% 4.8% 10.5%
Multi-family buildings
2.4%
4.7%
5.1%
4.9%
6.1%
5.7% 11.2% 8.0% 17.5%
48
UNDP/GEF Danube Regional Project
9 Recommendations
In this chapter those recommendations will be detailed, which are especially relevant for MWWU
Doboj. More detail on some of the case study recommendations and additional recommendations,
which are more general to the water and wastewater sector in Bosnia, are described in the National
Profile document.
Recommendations are grouped in a number of themes under the following headings. Most
recommendations are, however, closely related to each other, reinforce one another, introducing them
in a "bundle", together makes them more effective. Improved accounting information, for instance, is
needed as a basis for setting cost recovering tariffs. Increased autonomy from municipal decision
makers is also a necessary prerequisite for effective tariff reforms.
9.1 Accounting and Financial Analysis
MWWU Doboj, like most other water utilities in Bosnia, have a poor accounting system, which is not
capable of supplying good quality and appropriately structured information for financial analysis. It
has been difficult for us to acquire suitable financial data for modelling purposes, and data we received
from the MWWU was often not coherent. Previous studies blamed the accounting regulations for such
problems, and suggested that a change in the Accounting Law is needed, in order to provide more
flexibility in setting up accounts, and producing real time financial data. While we share the view that
the national accounting regulations need to be changed, and we include this recommendation in the
National Profile of our project, we also recommend that even without a change in the accounting
regulations, MWWU Doboj should improve its accounting system, by introducing a second, parallel
system. The first accounting system would basically satisfy regulatory requirements, while the second
system would produce useful data for financial analysis and management decisions. The parallel
system should be structured around "cost centers", and include enough detail so that financial reports
can be structured to accommodate the data needs of the management for tariff setting, investment
decisions, etc.
9.2 Autonomy and Ownership
The management at MWWU Doboj is appointed by the Municipality, and management decisions are
partly guided by the goals and interests of municipal decision makers, which are not necessarily in the
best interest of the MWWU itself. Some of the otherwise desirable decisions that may be hindered
because of municipal influence are the following:
- A change in the level and design of tariffs, especially household tariffs;
- Laying off some of the redundant employees in order to save costs;
- Channeling wastewater revenues towards future wastewater investments, as opposed to the
general municipal budget.
In our view only through providing autonomy to the MWWU can real reforms be expected to take
place. But why would the municipality grant autonomy to the MWWU, of which the municipality is
the majority owner (although, as stated in section 2.3, the level of the state which has ownership in
MWWU Doboj is not clearly defined)? There are at least two main reasons for this:
- Reforms will lead to better performance, and service users, the constituency of the Municipal
Board, will be satisfied.
- A well performing utility may be sold at an attractive price, resulting in revenues of
privatization (as long as the Municipality receives those revenues, and not the central
government)
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Doboj, Bosnia and Herzegovina
Autonomy can take several forms, from legal stipulation, through contractual guarantees to
privatization. Involvement of a carefully selected private partner, either for operation, or as an
investor, accompanied with proper incentives for improved operations, and guarantees for autonomous
decision making seems like a wise alternative. The company in its present condition is probably not an
attractive target for private partners, however, therefore implementation of the most fundamental
reforms may be needed first.
Another related issue that needs to be resolved is ownership and operation of the wastewater
infrastructure. At present 95% of the infrastructure is owned by the municipality, and 5% is owned by
MWWU Doboj. Neither of them wants to take responsibility for maintaining and developing the
wastewater network and the future WWTP, and it is unlikely that any major reform can be introduced
for wastewater services before outstanding questions of ownership and operation are resolved.
9.3 Management Reform
Based on existing information there seems to be plenty of opportunity to improve the performance of
MWWU Doboj, both financially and with regards to service level. Personnel costs make up 57% of
all O&M costs while there is a claim that many of the employees are redundant and under trained. A
reduced and partly replaced workforce would result in lower personnel costs and more effective
operations. There are numerous other opportunities, including some investments, which will result in
net cost savings at the company, or effective strategies to improve collection rates. Setting priorities
among such cost-saving measures, carefully implementing them, and coordinating them with other
issues, such as tariff reforms, is a challenging, but potentially greatly rewarding exercise for the
company leadership. Starting with measures that stabilize the operations of the utility, e.g. besides
ensuring improved or sustainable service, also reduce costs, seems to be a logical way to proceed.
The prerequisites for such a management reform include autonomy and proper accounting, and
financial information, as discussed above, but also certain management and financial skills, which may
not be readily available within the company. Such skills, however, can be imported into the company,
either through a private partner, hiring a capable management, or through consultants.
9.4 Tariff Reform
MWWU Doboj seems to be financially viable in the short run, i.e. present revenues are more or less
adequate to pay current expenses. There are no resources, however, for systematic maintenance, only
emergency repairs are addressed, and the quality of the infrastructure deteriorates year after year. In
order to stabilize the operations of the company, costs need to be cut (as described in the section above
on management reform) and/or more revenues from tariffs need to be collected. Sustainable and
upgrade investments will only be possible through substantially increased tariffs, especially from
households consumers, even if the operations of the company are streamlined in order to take
advantage of all reasonable cost saving possibilities. Our main conclusions regarding tariff changes
are the following:
- Any tariff reform should be based on good accounting information and proper financial
analysis, and accompanied with an explanation of the use of the revenues;
- In order to attain a fair and efficient tariff design, the tariffs of households will need to
increase at a higher rate, than the tariffs of other consumer groups. In fact, the tariffs of some
of the other SUs may stay constant or may even be reduced;
- Keeping a two part tariff, and increasing both the fixed and the variable component will result
in an economically more efficient tariff regime, than if only the variable component was
increased to cost recovering levels;
- A high fixed tariff (i.e. fixed tariff equaling fixed costs) in the sustainable and upgrade
scenarios, however, may cause payment problems, increasing the level of outstanding bills.
50
UNDP/GEF Danube Regional Project
Graduality is therefore important, and the role of investment grants is crucial for large
developments, such as the WWTP.
- Wastewater tariffs at present are higher than needed to cover costs. Instead of lowering these
tariffs, it is advisable to start creating a fund that will be used for future wastewater
investments. This, nonetheless, is a sensitive issue, since wastewater revenues benefit the
municipal budget under current arrangements, diverting them into a reserve or fund will be
opposed by the Municipality.
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Doboj, Bosnia and Herzegovina
10 References
WATER SECTOR INSTITUTION STRENGTHENING REPUBLIC OF SRPSKA -, Final Report,
February 2000, Plancenter Ltd in association with ODP Zavod za Vodoprivredu Srpsko Sarajevo,
Republic of Srpska.
WATER SECTOR INSTITUTION STRENGTHENING REPUBLIC OF SRPSKA PILOT
COMPONENT, Final Report, February 2000, Plancenter Ltd in association with ODP Zavod za
Vodoprivredu Srpsko Sarajevo, Republic of Srpska.
FINANCIAL STATEMENTS of MWWU UTILITY DOBOJ
PLAN OF INSTITUTIONAL STRENGTHENING 10 PILOT WATER UTILITIES, Final Report,
October 1999, CDM USA and Hydro Engineering Institute Sarajevo