The Institute for Urban Economics Trends in the Performance Indicators of the WSS Utilities in the Russian Federation Dmitriy Khomchenko The Institute for Urban Economics Helsinki, Finland, 24-25 May 2007

Objectives of Work Carried Out: Collection and processing of technical and financial data on performance of the WSS utilities in the RF in 2000-2005 Capacity building in the collection of technical and financial data by transferring the World Bank methodology (IBNET) Information Sources: Sample of 48 WSS utilities in Perm and Krasnodar Krays of the RF Official statistics (forms 1-water supply, 1-sanitation and 22-housing and community amenities (consolidated))

Analysis of WSS Utilities’ Operational and Technical Indicators (1) Out of total water sales, more than 60 percent is supplied by municipal utilities; about 25 percent, by state-owned utilities; and the rest, by private utilities and those with mixed ownership Average water production and consumption in Russia reduced by almost one third to 402 l/day and 328 lcd, respectively, in 2000-2005 In 2005, useful life of 35 percent of the water networks and 29 percent of the sanitation networks was over and they had to be replaced; in the capital cities of the Russian regions, 41 percent of the water networks had to be replaced.

Water Service Coverage 72% 76% 73% 75% 84% 74% 78% 91% 79% 80% 81% 93% 0% 10% 20% 30% 40% 50% 60% 70% 90% 100% Russia Krasnodar Kray Perm Kray 2000 2001 2002 2003 2004 2005 [sample] 98% 83% 22% 99% 93% 28% 29% 94% 100% 97% 38% 0% 20% 40% 60% 80% 120% Cities Urban villages Rural localities 1995 2000 2001 2002 2003 2005 [statements]

Non-Revenue Water: Share in Total Water Supply to the Network [Sample] 29% 30% 27% 28% 31% 25% 33% 24% 32% 23% 37% 0% 5% 10% 15% 20% 35% 40% Entire sample Krasnodar Kray Perm Kray 2001 2002 2003 2004 2005 15.3% 20.5% 7.6% 16.1% 22.2% 7.3% 16.7% 23.0% 13.6% 17.7% 26.5% 18.1% 18.4% 27.5% 19.8% 18.5% 28.3% 19.7% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% Russia Krasnodar Kray Perm Kray 2000 2001 2002 2003 2004 2005 Non-Revenue Water [Statistical Statements]

Analysis of WSS Utilities’ Operational and Technical Indicators (2) Water losses in the water supply networks went up from 15.3 percent to 18.5 percent of the total water supply to the network in 2000-2005 High accident rate Prevalence of water meters increased (61 percent of connections)

Share of Networks in Need of Replacement in Total Length of Water Lines and Street Water Supply Networks [Statements] 29% 33% 28% 31% 35% 34% 32% 38% 40% 47% 0% 10% 20% 30% 50% Russia Krasnodar Kray Perm Kray 2001 2002 2003 2004 2005

Analysis of Financial Indicators (1) While in 2000 average household tariff in Russia accounted for more than 50 percent of the economically sound tariff (EST), in 2005 the household tariff went up to 87 percent of the EST Commercial-user-tariff-to-household-tariff-ratio went down from 3.9 to 1.7 WSS utilities’ costs increased 3-fold from $0.16 to $0.44 per cub. m of water sold and from $0.11 to $0.32 per cub. m of water produced in 2000-2005

Average Water Tariff in Russia [Statements] 0.26 0.19 0.14 0.10 0.07 0.05 0.29 0.24 0.15 0.11 0.09 0.41 0.38 0.34 0.31 0.23 0.18 0.00 0.20 0.25 0.30 0.35 0.40 0.45 2000 2001 2002 2003 2004 2005 Household tariff Economically justified tariff Tariff for other consumers

Analysis of Financial Indicators (2) Length of collection of payments for provided services in Russia as a whole went down from 151 days in 2000 to 89 days in 2005 Collection rate in the Perm and Krasnodar Krays has steadily accounted for 97-98 percent of the bills issued over the past three years.

Conclusions During the analyzed period both negative and positive developments were identified in the WSS in Russia, including: Degradation of fixed assets, network deterioration, chronic lack of investment Stabilization of utilities’ financial position, improved payment discipline