PreFS Report With Cover_FINAL_June 2007

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Pilot Water and Sanitation Project, Moldova

Feasibility Studies for Selected Towns for Second SmallTown Water Supply and Sanitation Project

PRE-FEASIBILITY STUDY REPORT

FINAL REPORTStockholm June 12

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P:\ 1080\01 Uppdrag\1989161000 FS 15 Towns Moldova

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SWECO INTERNATIONAL

Water Supply and Sanitation Project

Implementation Unit

FEASIBILITY STUDIES FOR SELECTEDTOWNS FOR SECOND SMALL TOWNWATER SUPPLY AND SANITATIONPROJECT IN MOLDOVA


FINAL

Stockholm 12 June 2007SWECO International ABWater and Environment

Project No. 1989 161 000


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Water Supply and SanitationImplementation Unit12 June 2007 FINAL

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Table of Content

Abbreviations and Acronyms X

PRE-FEASIBILITY STUDY REPORT 1

1 Introduction 11.1 Background 11.2 Project Objectives 21.2.1 Overall Project Objectives 21.2.2 Target Towns 21.3 Consultants Time Schedule 4

2 Bli 52.1 General 52.2 Institutional Aspects 62.2.1 History 62.2.2 The Owner. How the Owner Governs the utility 62.2.3 Legal Aspects 72.2.4 Organization and Management 72.2.5 Staff. Efficiency and training needs 92.2.6 Estimation of Consumption. Billing and Collection 102.2.7 Relations to customers and other stakeholders 112.2.8 Consultants Comments 112.3

Socio-economic Aspects 12

2.3.1 Social Environment in Moldova 122.3.2 Estimation of Household Average Revenues 132.3.3 Economic environment in Moldova 132.3.4 Special Economic Conditions 152.3.5 Social environment in Bli Municipality 152.3.6 Economic environment in Bli Municipality 172.4 Financial Aspects 192.4.1 Introduction 192.4.2 Analysis of the historical financial performances 202.4.3 Financial Selection Criteria 272.5 Technical Aspects 29

2.5.1 Specific Objectives Related to technical Analysis 292.5.2 Water supply and sewerage in Bli 292.5.3 Water Supply System 302.5.4 Sewerage System 352.5.5 Prioritizing of needed Investments for years 20092013 40

3 Cahul 433.1 General 433.2 Institutional Aspects 443.2.1 History 443.2.2 The Owner. How the Owner Governs Apa-Canal 44


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3.2.3 Legal Aspects 453.2.4 Organization and Management 453.2.5 Staff. Efficiency and training needs 463.2.6 Estimation of Consumption. Billing and Collection 473.2.7 Relations to customers and other stakeholders 473.2.8 Consultants Comments 473.3 Socio-economic Aspects 483.3.1 Social environment in Cahul 483.3.2 Economic environment in Cahul 493.4 Financial Aspects 513.4.1 Introduction 513.4.2 Analysis of the historical financial performances 523.4.3 Financial Selection Criteria 59

3.5 Technical Aspects 603.5.1 Specific Task Objectives Related to technical Analysis 603.5.2 Water supply and sewerage in Cahul 603.5.3 Water Supply System 623.5.4 Sewerage System 683.5.5 Prioritising of needed Investments for years 20092013 71

4 Clrai 754.1 General 754.2 Institutional Aspects 764.2.1 History 764.2.2 The Owner. How the Owner Governs Apa-Canal 76

4.2.3 Legal Aspects 764.2.4 Organization and Management 764.2.5 Staff. Efficiency and training needs 784.2.6 Estimation of Consumption. Billing and Collection 784.2.7 Relations to customers and other stakeholders 784.2.8 Consultants Comments 784.3 Socio-economic Aspects 794.3.1 Social environment in Clrai 794.3.2 Economic environment in Clrai 804.4 Financial Aspects 834.4.1 Introduction 834.4.2 Analysis of the historical financial performances 83

4.4.3 Financial Selection Criteria 914.5 Technical Aspects 924.5.1 Specific Task Objectives Related to Technical Analysis 924.5.2 Water supply and sewerage in Clrai 934.5.3 Water Supply System 944.5.4 Sewerage System 984.5.5 Prioritising of needed Investments for years 20092013 101

5 Cueni 1055.1 General 105


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5.2 Institutional Aspects 1065.2.1 History 1065.2.2 The Owner. How the Owner Governs Apa-Canal 1075.2.3 Legal Aspects 1075.2.4 Organization and Management 1075.2.5 Staff. Efficiency and training needs 1095.2.6 Estimation of Consumption. Billing and Collection 1105.2.7 Relations to customers and other stakeholders 1105.2.8 Consultants Comments 1115.3 Socio-economic Aspects 1115.3.1 Social environment in Cueni 1115.3.2 Economic environment in Cueni 1125.4 Financial Aspects 115

5.4.1 Introduction 1155.4.2 Analysis of the historical financial performances 1155.4.3 Financial Selection Criteria 1235.5 Technical Aspects 1245.5.1 Specific Task Objectives related to Technical Analysis 1245.5.2 Water supply and sewerage in Cueni 1245.5.3 Water Supply System 1255.5.4 Sewerage System 1285.5.5 Prioritising of needed Investments for years 20092013 131

6 Drochia 1356.1 General 135

6.2 Institutional Aspects 1366.2.1 History 1366.2.2 The Owner. How the Owner Governs Apa-Canal 1366.2.3 Legal Aspects 1376.2.4 Organization and Management 1376.2.5 Staff. Efficiency and training needs 1396.2.6 Estimation of Consumption. Billing and Collection 1406.2.7 Relations to customers and other stakeholders 1406.2.8 Consultants Comments 1406.3 Socio-economic Aspects 1416.3.1 Social environment in Drochia 1416.3.2 Economic environment in Drochia 142

6.4 Financial Aspects 1456.4.1 Introduction 1456.4.2 Analysis of the historical financial performances 1456.4.3 Financial Selection Criteria 1536.5 Technical Aspects 1556.5.1 Specific Task Objectives Related to technical Analysis 1556.5.2 Water supply and sewerage in Drochia 1556.5.3 Water Supply System 1566.5.4 Sewerage System 1616.5.5 Prioritising of needed Investments for years 20092013 164


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7 Fleti 1697.1 General 1697.2 Institutional Aspects 1707.2.1 History 1707.2.2 The Owner. How the Owner Governs Apa-Canal 1707.2.3 Legal Aspects 1717.2.4 Organization and Management 1717.2.5 Staff. Efficiency and training needs 1737.2.6 Estimation of Consumption. Billing and Collection 1737.2.7 Relations to customers and other stakeholders 1747.2.8 Consultants Comments 1747.3 Socio-economic Aspects 1757.3.1 Social environment in Fleti 175

7.3.2 Economic environment in Fleti 1767.4 Financial Aspects 1787.4.1 Introduction 1787.4.2 Analysis of the historical financial performances 1787.4.3 Financial Selection Criteria 1887.5 Technical Aspects 1897.5.1 Specific Task Objectives related to technical Analysis 1897.5.2 Water supply and sewerage in 1897.5.3 Water Supply System 1907.5.4 Sewerage System 1957.5.5 Prioritising of needed Investments for years 20092013 199

8 Floreti 2038.1 General 2038.2 Institutional Aspects 2048.2.1 History 2048.2.2 The Owner. How the Owner Governs the utility 2058.2.3 Legal Aspects 2068.2.4 Organization and Management 2068.2.5 Staff. Efficiency and training needs 2098.2.6 Estimation of Consumption. Billing and Collection 2108.2.7 Relations to customers and other stakeholders 2118.2.8 Consultants Comments 2118.3 Socio-economic Aspects 212

8.3.1 Social environment in Floreti 2128.3.2 Economic environment in Floreti 2148.4 Financial Aspects 2168.4.1 Introduction 2168.4.2 Analysis of the historical financial performances 2168.4.3 Financial Selection Criteria 2258.5 Technical Aspects 2268.5.1 Specific Task Objectives Related to Technical Analysis 2268.5.2 Water supply and sewerage in Floresti 2268.5.3 Water Supply System 228


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8.5.4 Sewerage System 2348.5.5 Prioritising of needed Investments for years 20092013 238

9 Leova 2429.1 General 2429.2 Institutional Aspects 2439.2.1 History 2439.2.2 The Owner. How the Owner Governs the Utility 2439.2.3 Legal Aspects 2439.2.4 Organization and Management 2449.2.5 Staff. Efficiency and training needs 2459.2.6 Estimation of Consumption. Billing and Collection 2469.2.7 Relations to customers and other stakeholders 246

9.2.8 Consultants Comments 2469.3 Socio-economic Aspects 2479.3.1 Social environment in Leova 2479.3.2 Economic environment in Leova 2489.4 Financial Aspects 2509.4.1 Introduction 2509.4.2 Analysis of the historical financial performances 2519.4.3 Financial Selection Criteria 2589.5 Technical Aspects 2599.5.1 Specific Task Objectives Related to Technical Analysis 2599.5.2 Water supply and sewerage in Leova 2609.5.3 Water Supply System 261

9.5.4 Sewerage System 2669.5.5 Prioritising of needed Investments for years 20092013 269

10 Orhei 27310.1 General 27310.2 Institutional Aspects 27410.2.1 History 27410.2.2 The Owner. How the Owner Governs the utility 27410.2.3 Legal Aspects 27410.2.4 Organization and Management 27510.2.5 Staff. Efficiency and training needs 27810.2.6 Estimation of Consumption. Billing and Collection 27910.2.7 Relations to customers and other stakeholders 27910.2.8 Consultants Comments 28010.3 Socio-economic Aspects 28010.3.1 Social environment in Orhei 28010.3.2 Economic environment in Orhei 28110.4 Financial Aspects 28310.4.1 Introduction 28310.4.2 Analysis of the historical financial performances 28310.4.3 Financial Selection Criteria 29110.5 Technical Aspects 292


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10.5.1 Specific Task Objectives Related to technical Analysis 29210.5.2 Water supply and sewerage in Orhei 29210.5.3 Water Supply System 29410.5.4 Sewerage System 30110.5.5 Prioritising of needed Investments for years 20092013 305

11 Rcani 30911.1 General 30911.2 Institutional Aspects 31011.2.1 History 31011.2.2 The Owner. How the Owner Governs the utility 31011.2.3 Legal Aspects 31011.2.4 Organization and Management 311

11.2.5 Staff. Efficiency and training needs 31211.2.6 Estimation of Consumption. Billing and Collection 31311.2.7 Relations to customers and other stakeholders 31411.2.8 Consultants Comments 31411.3 Socio-economic Aspects 31511.3.1 Social environment in Rcani 31511.3.2 Economic environment in Rcani 31611.4 Financial Aspects 31811.4.1 Introduction 31811.4.2 Analysis of the historical financial performances 31811.4.3 Financial Selection Criteria 32611.5 Technical Aspects 327

11.5.1 Specific Task Objectives Related to Technical Analysis 32711.5.2 Water supply and sewerage in 32811.5.3 Water Supply System 32911.5.4 Sewerage System 33311.5.5 Prioritising of needed Investments for years 20092013 337

12 Singerei 34112.1 General 34112.2 Institutional Aspects 34212.2.1 History 34212.2.2 The owner and how the owner governs Apa-Canal 34212.2.3 Legal Aspects 34312.2.4 Organization and Management 34312.2.5 Staff. Efficiency and training needs 34412.2.6 Estimation of Consumption. Billing and Collection 34512.2.7 Relations to customers and other stakeholders 34512.2.8 Consultants Comments 34512.3 Socio-economic Aspects 34612.3.1 Social environment in Singerei 34612.3.2 Economic environment in Singerei 34712.4 Financial Aspects 34912.4.1 Introduction 349


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12.4.2 Analysis of the historical financial performances 34912.4.3 Financial Selection Criteria 35912.5 Technical Aspects 36012.5.1 Specific Task Objectives Related to technical Analysis 36012.5.2 Water supply and sewerage in Singerei 36112.5.3 Water Supply System 36212.5.4 Sewerage System 36612.5.5 Prioritising of needed Investments for years 20092013 368

13 Teleneti 37213.1 General 37213.2 Institutional Aspects 37313.2.1 History 373

13.2.2 The owner and how the owner governs Apa-Canal 37313.2.3 Legal Aspects 37413.2.4 Organization and Management 37413.2.5 Staff. Efficiency and training needs 37513.2.6 Estimation of Consumption. Billing and Collection 37613.2.7 Relations to customers and other stakeholders 37613.2.8 Consultants Comments 37613.3 Socio-economic Aspects 37613.3.1 Social environment in Teleneti 37713.3.2 Economic environment in Teleneti 37813.4 Financial Aspects 38013.4.1 Introduction 380

13.4.2 Analysis of the historical financial performances 38013.4.3 Financial Selection Criteria 38813.5 Technical Aspects 38913.5.1 Specific Task Objectives Related to Technical Analysis 38913.5.2 Water supply and sewerage in 39013.5.3 Water Supply System 39113.5.4 Sewerage System 39613.5.5 Prioritising of needed Investments for years 20092013 399

14 Ungheni 40314.1 General 40314.2 Institutional Aspects 40414.2.1 History 40414.2.2 The Owner. How the Owner Governs Apa-Canal 40514.2.3 Legal Aspects 40514.2.4 Organization and Management 40614.2.5 Staff. Efficiency and training needs 40814.2.6 Estimation of Consumption. Billing and Collection 40814.2.7 Relations to customers and other stakeholders 40914.2.8 Consultants Comments 40914.3 Socio-economic Aspects 41014.3.1 Social environment in Ungheni 410


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14.3.2 Economic environment in Ungheni 41114.4 Financial Aspects 41314.4.1 Introduction 41314.4.2 Analysis of the historical financial performances 41314.4.3 Financial Selection Criteria 42214.5 Technical Aspects 42314.5.1 Specific Task Objectives Related to Technical Analysis 42314.5.2 Water supply and sewerage in Ungheni 42314.5.3 Water Supply System 42414.5.4 Sewerage System 43114.5.5 Prioritising of needed Investments for years 20092013 435

15 Recommended Towns for Preparation of Feasibility

Studies 43815.1 Scoring of the towns 43815.1.1 Institutional Aspect 43815.1.2 Socio-Economic Aspect 44115.1.3 Financial Aspect 44215.2 Conclusion and Recommendation 44515.3 Summary of preliminary investment cost 446

Appendix 1 448

Appendix 1 Sources of information for the Institutional Aspect


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Abbreviations and Acronyms

BOD Biological Oxygen Demand

GIS Geographical Information System

GDP Gross Development Product

Ha hectare

IAS International Accounting Standard

km kilometre

kWh kilo Watt hour

l/cap/d litre/capita/day

MDL the currency in Moldova, Moldavian lei

MIS Management Information System

m2 square metrem3 cubic metre

n/a not available

p person

PS pumping station

UNDP United Nations Development Programme

USD US dollar

WB World Bank

WWPS Wastewater Pumping Station

WTP Water Treatment Plant

WWTP Wastewater Treatment Plant


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Pre-Feasibility Study Report1


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Feasibility Studies for Selected Towns forSecond Small Town Water Supply andSanitation Project in Moldova


1 Introduction

1.1 Background

The Republic of Moldova has prepared a Plan up to year 2015 for

water supply and sewerage. The Plan is a part of a complex of

processes for rehabilitation of water supply sources and for

increasing of the technical and sanitary condition of the water supply

and sewerage systems, stipulated in the National Action Plan for

health in relation to environment, approved by Government Decree

no.487 dated June 19, 2001.

The main scope of the Plan is solution of a set of problems, with

organizational, technical, economical and legal character. Solving

these will assure stable and continuous operation of centralized and

decentralized water supply and sewerage systems.

The scopes of the Plan are the following:

Contribution to wealth increase and health protection of the

population;

Rational use of water

Protection of environment;

Protection against pollution and depletion of sources of water

supply;

Reasonable management of capital investments.

Rehabilitation of the quality of services provided to consumers


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Increase of economic efficiency of water supply and sewage

collection utilities operation

Reducing by 50% of the number of population (about 1 million.

inhabitants) which have not access to safe water supply.

1.2 Project Objectives

1.2.1 Overall Project Objectives

The ultimate objective of this project, the second small town water

supply and sanitation project in Moldova, is to enable Apa-canals in

selected towns to supply the population with continuous, efficient and

sustainable water and wastewater services over time. The project isdivided into two main phases one pre-feasibility phase and one

feasibility phase.

The purpose of the pre-feasibility phase is to select 10 towns for

preparation of feasibility studies during the next phase. The purpose

of the coming feasibility studies is to propose investments financed by

a credit from the World Bank.

This document contains the Pre-feasibility study.

1.2.2 Target Towns

According to the Terms of Reference for the project the Consultant

should analyse the following fifteen towns from four aspects and

select the ten best towns for preparation of feasibility studies:

Bli, Cahul, Clrai, Cueni, Drochia, Fleti, Floreti Leova,Nisporeni, Orhei, Rcani, Singerei, Soroca, Teleneti and Ungheni.

See location in figure 1.2.1.

The four aspects analysed for selecting the ten towns are theinstitutional, the socio-economic, the financial and the technical

aspects. Of these the three first aspects are, according to the

contract, the most important ones. All four aspects, especially the

technical one, will be further developed in the feasibility studies

prepared during the next phase of the project.

Each Consultant for the four Aspects visited most of the towns and

collected both written and oral information. Before the visits most of

the towns had already answered at least partly a questioner prepared


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by the World Bank financed unit in Chiinu, Water Supply andSanitation Project, and sent to all the towns. Before the visits the

Consultant also sent a separate list of questions more specific for the

Institutional Aspects of the study.

Figure 1.2.1 Map over Moldova

Based of the collected information the Consultant prepared this study

and recommended 10 towns for continued participation in the project.

Soroca, already participating in a project financed by the World Bank,

informed during the work that they for the moment cannot afford any


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more projects financed by credits. Also Nisporeni informed that they

can not participate in the project. The Consultant therefore visited the

thirteen remaining towns for collection of data. Nisporeni decided later

to participate anyway and sent some information to the Consultant

but too late and too poor to be used for any qualified analysis.

1.3 Consultants Time Schedule

Figure 1.3.1 presents a simplified time schedule for the whole project

period including Pre-Feasibility Phase and Feasibility Phase. The

time needed for the Clients comments is not exactly specified in the

contract and therefore only roughly indicated in the time schedule.

Month Apr May June July Aug Sept Oct Nov Dec

Activity

Project start

Pre-feasibility study

Draft feasibility study for 2 towns

Draft feasibility study for 8 towns

Client's comments (assumed time)

Final feasibility study for 10 towns

2 weeks after Client's coments.

Figure 1.3.1 Simplified time schedule for the project period.


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2 Bli

2.1 General

Bli is the largest town in the north part of the republic, being locatedat distance of 138 km from Chiinu.

Figure 2.1.1 Location of Bli

The official number of inhabitants is approximately 142000.

Considering both emigration to other countries and not registered

immigration to Bli from the surrounding smaller towns and rural


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areas, the real number is might be different according to assumptions

made by people met.

Water is now supplied 24 hours per day.

Bli is one of five so called Municipalities in Moldova. According tothe Law on administrative-territorial organization of the Republic of

Moldova no.764 dated 27 December 2001 the municipality is a urban

settlement with a special role in the economic, social, cultural,

scientific, politic and administrative life of the country, with important

industrial and commercial facilities and education, health and culture

institutions. This status is granted to Chiinu, Bli, Bender, Comrat

and Tiraspol according to the same law. However, there are nospecific legal rights granted to the localities with the status of the

municipality in comparison with the towns.

2.2 Institutional Aspects

2.2.1 History

The first water and wastewater services in Bli date back to year

1944. The water and wastewater services as well as all other

technical municipal services were then operating as a section under

the local authorities. The present Municipal Enterprise Regia Ap-

Canal-Bli was established in year 2000. During the Soviet timecities as Bli got state subsidies for the water and sewage services.The company cannot see any other advantages or disadvantages

with the change to a municipal enterprise.

2.2.2 The Owner. How the Owner Governs the utility

The Town is the only owner of the service utility. The utility consists of

one of the departments of the Town Administration.

The Town Council appoints the Director of the utility. There is no

board, steering committee or similar between the company and its

owner. The Director therefore reports to the Deputy Mayor

responsible for technical questions. Beside this he also reports twice

per year to the Town Council. Tariffs and consumption norms are

approved by the Town Council.

The Town has no service agreement with Apa-Canal describing for

instance the level of service to the customers.


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2.2.3 Legal Aspects

The enterprise has its own statutes.

The Municipality is the owner of all the assets including both water

and wastewater facilities. The enterprise operates these facilities.

Beside the national legislation Bli has local rules for metering,wastewater discharge from enterprises to the municipal system and

regulations on payment for being a client according to a decision of

the local town council On regulation of the wastewater discharged by

the industrial enterprises into the municipal network and functioning of

the wastewater treatment plant. Apa-Canal has written agreements

with all its customers.

2.2.4 Organization and Management

The organization chart for the enterprise is presented below.

The Director has worked in his present position since 1997.

The utility has no formal management team, but the Director has a

meeting with the heads of departments each week. He has also daily

meetings with the chief engineer and others when they go through thedaily operation questions. The secretary attends the meetings and

takes notes. The minutes are not digitalized and open. There is no

fixed agenda for the meetings.

For the daily operation of the utility the Director has a meeting every

day with the head of production and other heads of departments.

These meetings are an important part of the internal information in

the utility.

Apa-Canal has approximately 20 computers for accounting, billing,salaries and technical purposes. The Director has one of the

computers. The software is 1C. The system is integrated and

functions as a management information system. Expressions such as

performance indicators and financial ratios are rather unknown. The

utility started some 10 years ago to introduce GIS, and the system

covers now approximately half the town.


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Figure 2.2.1 Organization of Regia Ap-Canal-Bli

There are thus technical tools for good internal information, but there

seems to be a need for training in improved understanding of the

possibilities to use the system for efficient information, how to involve

the personnel in the utilities business and development, how

information should be efficiently used in the company.

Apa-Canal has prepared a development plan. The company has an

ongoing project financed through a credit plus the local budget, and

the development plan was prepared before taking the credit and

Town Council

Municipalservice de t.

Balti Apa-Canal Director

Planningdep

t2p

Securityservice

Customerdept

39p

Chiefengineer

1p

Computerce

ntre

4p

HRdept2

p

Chiefaccoun

tant

1p

Others4p

DeputyDirector

1p

Guards33p

Civilprotection

engineer1p

Techninspectors

dept7.5p

Waternetwork

44p

Sewerage

network13p

WWTP71p

PS56.5p

Repairstation

12p

Energyservice

17p

Safetyservice

1p

Dispatcher

service13p

Production&

engineering4p

Laboratorycentre

13p

B

ookkeeping5p

Garage65.5p

Goodsstorage

1p

Constr.&repair

dept10p


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starting the project. They have also a number of action plans, for

instance one for reduced leakages and improved operation until

2010.

Principles of accountable management or management by objective

helping to engage the personnel in the utilities business and

improvement are not known. There is rather much top down

management and management by order. The heads of departments

have to follow a given budget but have no formal rights and tools

supporting their work and to great extent no incentives.

Bonuses exist for one group of the personnel, those collecting money

from the customers. If the collection department can collect more than100% of current debts, the collectors will get 4% of the amount

exceeding the current debt. No others have any bonuses or other

incentives. The company signed a week before the Consultants data

collection visit a collective agreement with the union, and there are

some bonuses mentioned in that agreement, but in reality it will

according to the director be difficult to follow this agreement due to

the financial situation in the utility.

2.2.5 Staff. Efficiency and training needs

The total number of personnel in the enterprise is now 356.

(According to norms there should be 420.) The number of inhabitants

connected to the water services and sewage system is constantly

increasing, but is now 103100. The productivity in the water services

is therefore around 290 consumers per employee.

The number of customers connected to the water system is 36261

resulting in 102 customers per employee. The number of customers

connected to the sewerage system is 30380 resulting in 85 customers

per employee.

The number of connections to the water system is approximately

8000 individual houses and 3100 apartment buildings plus

approximately 900 companies and budget organizations, thus in total

around 12000 connections resulting in a productivity of 34

connections per employee.

Most of the heads of departments, engineers and specialists have an

education in the right area for their work, often university degree. Low

qualified people get on-the-job training in the company. People


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working with computers have participated in relevant training and

have also on-line support available from an IT-company.

According to the Director there is presently no need for any training.

The company has recently employed a few young persons graduated

from the university 2006. The utility is interested in supporting training

of the personnel but has no plan for training.

Presently there is no need to employ any new persons beside two

excavator operators.

The average age of the personnel is some 45-46 years.

The average salary in 2006 was 1566 leis per month. This causes

difficulties to attract and keep qualified persons, and the personnel

turnover is round 11%.

As Ap-Canal-Bli is participating in World Bank financed project,they have experience from organizing and managing Mayor

investment projects.

2.2.6 Estimation of Consumption. Billing and Collection

The rate of population (private sector) with meters was in year 200654.45% (6884 meters). The rate of meters is increasing and was 49.6

in 2004 and 52.4 in 2005. The rate in condominiums is 100%. In the

public sector the rate in 2006 was 91.3% (30519 meters). Also here

the rate is increasing and was in 2004 88.0% and in 2005 90.0%. The

customers buy and repair the meters on their own account.

Consumption norms are used for customers without meters.

The customers are to great extent reading their meters themselves.

Apa-Canal has also 30 meter readers distributing bills and doing

random checking of the meters. Metering and billing is monthly. The

bills are distributed the 8th

of each month, and should be paid beforethe end of the month. The customers can pay in banks and post

offices.


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The collection rate has developed as below:

YearCategory

2004%

2005%

2006%

Population 101,1 99,5 97,6

Budgetinstitution 99,6 97,6 99,2

Otherconsumers 108,5 97,8 100,7

Total 104,0 98,6 99,1

Two explanations were given for collection rates higher than 100%.

The accounting considers cash flow rather than transferring incomes

and costs to the right period and sometimes payment of old debts

influences the figures. This is the same for all utilities visited.

2.2.7 Relations to customers and other stakeholders

Apa-Canal has a homepage for external information.

Apa-Canal is also informing the customers through TV every third

month, when customers also may have direct contact with per

telephone or fax. The company uses also newspapers for information.

There are also preliminary ideas to invite for instance school classes

for information.

There is no internal or external quality programme defining for

instance issues such as quality of water and sewage service, quality

of public relations, water demand management and environmental

questions.

2.2.8 Consultants Comments

The company has an integrated MIS. There is also a GIS. Both can

be further developed.

The rate of population (private sector) with meters was in year 2006

54.45%, which is low.

Collection rate is good.

The staff efficiency for water supply is 290 persons served

(consumers) per employee, 102 customers per employee and 34


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connections per employee. Although the number of employees is

decreasing form year to year, this is still high and may be improved.

Relations to customers and society may also be improved.

The company has, as most of the utilities visited, close, maybe too

close contacts with its owner. The roles of the owner and operator

can probably be better defined and more separated for better use of

each partys capacity. The personnel at all levels of the company

could also be more efficiently used through introduction of principles

of accountable management or management by objective.

The utility is already participating in World Bank financed project.They have therefore experience from organizing and managing major

investment projects.

Although there are opportunities for further improvements of the

institutional situation in Ap-Canal-Bli, the company is frominstitutional point of view qualified for continued participation in the

project.

Further comments, see section 15.

2.3 Socio-economic Aspects

2.3.1 Social Environment in Moldova

In order to present a clear picture of the socio-economic situation of

cities and raions and to allow the reader to understand the local

particularities in the national context, the socio-economic analysis

also contains a brief description of the socio-economic situation at

national level.

Number of population in Republic of Moldova as at 01.01.2007represented 3581.1 thousands persons, including urban population -

1478,0 and rural population -2103, 1 thousands persons.

According to the inquiry performed on the labour market in the third

trimester of 2006, the active population in Republic of Moldova

economy represents more than 1484 thousand persons, registering a

growth of approximately 1.65 %, when compared to the third trimester

in 2005.


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The unemployment rate (the percentage of unemployed persons per

total active persons) registered a value of 5.4% at national level, less

with 1.2 % than the third trimester in 2005. For men, the

unemployment rate was 6.7% and for women 4.1%. The significant

disparity between the urban unemployment rate (8.3%) and rural

unemployment rate (3.3 %) is still maintaining.

Table 2.3.1 Evolution of Nominal Wages

Social indicators 2000 2003 2004 2005 2006

Nominal wage MDL 407.9 890.8 1103.1 1318.7 1695.4

-annual nominal growth rate % 133.9 128.8 123.8 119.5 128.6

-annual real growth rate % 102.2 115.4 110.1 106.8 114.1Source: National Institute for Statistics

Regarding the nominal wage, it has increased 4.15 times during the

period.

Population revenues are mostly cash revenues, the average cash

revenues representing 80.7% from the total available revenues, and

19.3% are represented by revenues in kind. For urban areas, cash

revenues are representing 94.6%, compared to 68.1% in the rural

area.

2.3.2 Estimation of Household Average Revenues

The calculation of the household monthly revenue at local level is

difficult to accomplish in most Eastern European Countries. The

situation is similar in Moldova. Usually the National Commission for

Statistics (or similar entity) calculates the average household

revenues at national level without giving any values for county or local

level. But, what can be identified at local level, in most of the cases,

are the average salaries from different industries. Using these figures

the level of household revenues can be approximated by adjusting

the national average level with the ratio between the average salaries

at local level and the average salaries at national level.

Using the approach presented above, the estimation of average

household revenues at local level was performed. The results of the

analysis are presented in the one table for each town.

2.3.3 Economic environment in Moldova

The macroeconomic indicators for period 2000-2006, for Republic of

Moldova are presented in Table 2.3.2.


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An important growth was recorded for GDP in the analyzed period,

GDP in 2006 being 2.75 larger than the GDP recorded in 2006.

Same situation was recorded also for GDP per capita, an increase of

2.79 being recorded, the population decreased during the period.

In terms of real GDP, the real GDP is 3.11 larger than the real GDP

recorded in 2000.

Industrial output in 2006 is 2.72 larger than the one registered in

2000.

Table 2.3.2: Macroeconomic indicators evolution

Real sector Unit 2000 2004 2005 2006

Gross Domestic Product MDL mil. 16019.6 32031.8 37651.9 44068.8

-Annual growth rate % 102.1 107.4 107.5 104

-GDP per capita MDL 4402.2 8889.6 10474.7 12291.9

-GDP per capita USD 354.1 721.1 831.3 936

-Real GDP MDL mil. 12580.3 29662.7 34434.6 39143.2

-Deflator % 127.3 108 109.3 112.6

Industrial output MDL mil. 8167.7 17591.1 20770.2 22243

-Annual growth rate % 107.7 108.2 107 93.1

Agricultural output MDL mil. 8268 11819 12688 13695-Annual growth rate % 96.7 120.8 100.8 95.4

Capital investments MDL mil. 1759.3 5140 7189.1 9580.4

-Annual growth rate % 85 108 112 117

Retail sales MDL mil. 6012 16575 19487.7 23361

-Annual growth rate % 104 105.6 105.3 106.9

Services rendered topopulation MDL mil. 2599.6 6970.4 8209.5 9567

-Annual growth rate % 100.1 105.3 109.2 101.6

Exchange rate

Exchange rate(annual average) MDL/USD 12.4333 12.3283 12.6003 13.1320

Exchange rate(end of the period) MDL/USD 12.3833 12.4600 12.8320 12.9050

Source: National Bank of Moldova

Agricultural output did not record the same evolution; only a 1.65

increase was registered.

Retail sales increased significantly during the 2000-2006 period, for

approximately 3.88 times.


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Services rendered to population increased considerably during this

period, for 3.68. The National currency recorded a slight depreciation

against the USD in the last years.

2.3.4 Special Economic Conditions

To have a better view of the impact of water and wastewater service

on all categories of inhabitants, the ideal case would be to identify

more categories of consumers or at least to separate from the

average of socially vulnerable cases. In this case, an affordability

analysis of the social vulnerable cases is performed by considering

the pensioners. In estimating the level of revenues for different

categories of inhabitants a special attention was paid to the revenuesfrom foreign countries. In most of the town of Moldova, an important

segment of the inhabitants are working in foreign countries. These

inhabitants are sending on regularly basis (monthly, quarterly, etc)

money to their families from Moldova and these amounts have a

significant impact on the household revenues.

These amounts are difficult to identify. One possible solution would

be to get statistical data from the local banks about the level of

foreign currency sent in the region by the inhabitants working abroad

(services like Western Union or similar). However, for the pre-

feasibility stage the Consultant did not succeeded to obtain such data

in due time. Considering this lack of information, the consultant

decided to use for the affordability analysis a conservative approach

and not include these additional household revenues.

2.3.5 Social environment in Bli Municipality

2.3.5.1 Population

Number of population for Bli town as at 1st of January 2007 is the

following:

Table 2.3.3 Population

Population (Thou.)

Total 142.2

Urban 142.2

Rural -

Average number of population for 2006 142.7Source: National Institute for Statistics


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2.3.5.2 Education

Town educational system is formed of preschooler institutions,schools and a university. There are 36 preschooler institutions, out of

which 5 special institutions. 5000 kids are prepared in these

institutions.

General medium education is performed by 23 schools, including 2

primary schools, 2 gymnasiums, 18 medium schools, in which a total

number of 7,200 pupils are studying.

In Bli town are located 7 schools of technical-professionalorientation, medicine college, musical-pedagogical schools, technical

and Alecu Russo university.

2.3.5.3 Estimation of Household Average Revenues

Table 2.3.4: Estimation of household revenues

BliEstimation of Household Revenues

2004 2005Average nominal monthly salary - National level Lei 1,103.1 1,318.7

Average nominal monthly salary BliMunicipality

Lei 1,302.7 1,501.4

Disposable household income (national average perhousehold member)

Lei 491.4 568.6

Average monthly pension (national level) Lei 325.3 383.4

Average household disposable income in thecounty (per member)

Lei 580.3 647.4

Average monthly pension at county level Lei 384.2 436.5

Number of persons in household

Average household (no of persons) No. 3.0 3.0Pensioner household (no of persons) No. 1.8 1.8

Average household disposable income in thecounty (per household)

Lei 1,740.9 1,942.1

Average monthly pensioner household revenuesat county level (per household) Lei 691.5 785.7


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2.3.6 Economic environment in Bli Municipality

2.3.6.1 Natural resources

Total surface of Bli Raion is 7,800 ha, including town Bli -4,142ha, Sadovoe village -2,677 ha and Elizavetovca village -981 ha.

2.3.6.2 Local infrastructure

Total road length of the town has 220.7 km with a surface of 1,478.5

square meters. Most part of the roads is covered with rigid surface,

out of which 105.3 km are asphalted.

The town has 1,562 houses (26,918 apartments), out of which 1,003

houses are single levelled. Rest of the house are structured as

following: five levels- 242 houses, two levels -162 houses, nine levels

-70 houses and 85 houses with different levels, including a house

with 16 levels. More than 85% from the apartments are privatized.

In present, 26,479 apartments are connected to the gas network

(100%). Total length of gas pipes is 144.27 km.

2.3.6.3 EconomyBli economy consists in 7,600 economic agents with differentorganizational-legal structure. More than 90 % are small business.

2.3.6.4 Industry

Main industrial branch is represented by the alimentary industry. Light

industry, heavy industry, energy industry have a relatively equal

contribution. Other industrial branches are insignificant.

Volume of industrial production in Bli Municipality compared to thetotal industrial production in Republic of Moldova is presented in the

following table:


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Table 2.3.5: Volume of Industrial Production Evolution Bli Municipality

2004 2005 2006Volume ofindustrial

production in2006

Currentprices(mil.lei)

Comparedto

previousyear (%)


Comparedto

previousyear (%)


Comparedto

previousyear (%)

Total 17533 106.9 21123.5 106.3 22243.2 93.1

out of whichBli 1799.9 108.9 2049.6 101.5 2293.6 99.8

Source: National Institute for Statistics

Total production on Republic of Moldova increased with 26% during

the 2004-2006 periods. For Bli Municipality, the production

increased with 14% in 2005 and with 12% in 2006, as the localeconomy improved.

2.3.6.5 Financial Performances

Financial situation of Commercial Companies in Bli Municipality,

compared to the total financial situation of Republic of Moldova, is

presented in Table 2.3.6.

Table 2.3.6: Financial Status of Commercial Companies

Financial status Jan.-Sept. 2004 Jan.-Sept. 2005 Jan.-Sept. 2006

Total Bli Total Bli Total Bli

Number of reportingenterprises, out of which

29423 1092 31870 1252 34700 1492

Profitable enterprises 11289 561 12380 647 13155 716

Enterprises with loss 13906 475 14893 528 16532 681

Average Number ofemployees

572786 31891 570143 32694 569698 33255

Financial result beforetax (profit/loss) -mil. Lei

2790 151.9 3424 199.1 3689 205.5

Sales revenues-mil. Lei 53031 3130.4 66870 3772.3 79052 4241.7

Receivables related tocommercial invoices and

budget compensation -total, mil. Lei

19140 722.4 22717 876 26867 1037.4

Debts -mil. Lei 61291 2216 68420 2467.6 81804 2948.9Source: National Institute for Statistics

As can be observed from the table above, the number of profitable

enterprises at national level increased, but the percentage of

profitable enterprises in total reporting enterprises remains

approximately the same (46%). For Bli Municipality, the same


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situation was recorded, the percentage of profitable enterprises being

approximately 51%.

Average number of employees at national level kept a stable trend. In

Bli Municipality, during the analyzed period, the average number of

increased with 4%

Financial result before tax recorded positive value in period analyzed

and registered a considerably growth of 35%.

Sales revenues increased in 2005 (20% compared to 2004) and in

2006 also (12% compared to 2004).

Receivables related to commercial invoices and budget

compensation recorded a stable growth of approximately 20% each

year.

During the analyzed period, debts recorded an increase of 33% in

2006, compared to 2004.

2.4 Financial Aspects

2.4.1 Introduction

The scope of this study is to assess the financial status of the Water

Operator in order to see if it can be included in the list of cities that

will receive financing from the World Bank loan for infrastructure

investments.

The information on historical financial statements, management

accounting costs and revenues, tariff evolutions and financial

management procedures were obtained from the utility directly or via

the World Bank Project Implementation Unit. Extensive discussions

with all involved stakeholders were conducted during the analysisprocess as follows:

Answers to the questionnaire prepared by the WB PIU;

Discussions with the management team and specialists from

the financial department;

Discussions with the representatives of the local authorities;


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Statistical data from the National Institute for Statistics for the

period 2002-2006;

A set of ratios is calculated for the decision process of selection of the

10 towns for the feasibility study out of the pool of 15 towns subject of

analysis. The comparison of ratios and the decision process is

performed in the final section of the report (Recommended Towns for

Preparation of Feasibility Studies).

2.4.2 Analysis of the historical financial performances

In order to obtain a clear picture of the financial status of the

company, we have briefly analyzed the financial statements for the

years ended at December 31, 2004, December 31, 2005 and

December 31, 2006.

2.4.2.1 Analysis of the operating activity

The operational performance of the utility for the last three years

reflects both evolutions of physical production and tariff adjustments.

A detailed situation of the operating results is shown in the Table

2.4.1.

Table 2.4.1: Operating result evolution BliOperating result for the year 2004 2005 2006

Amounts in thou. USD

Operating revenues 2,941.8 2,693.4 2,642.3Sales 2,730.5 2,450.6 2,421.3

Revenues from services - - -Other revenues 211.3 242.8 221.0

Operating costs 3,109.2 3,117.9 2,739.0Material expenses 990.0 868.4 586.2

Third parties services 149.8 106.0 140.0Personnel expenses 527.6 546.4 633.6

Salaries 404.3 423.7 495.4Social insurance taxes 123.2 122.7 138.2

Other costs for water and sewerage 141.0 356.1 232.3

Depreciation 300.6 268.9 242.0Energy cost 1,000.3 972.0 904.9Costs related to other activities - - -

Operating result (167.4) (424.5) (96.7)Source: Water Utility from Bli


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In 2006, approximately 70% of the operating revenues result from

water supply and 30% from wastewater operations. The total

operating result is negative for the entire period of analysis with an

improvement tendency in 2006.

The evolution of the structure of operating revenues is presented in

Figure 2.4.1. As can be observed, in 2006, revenues from water are

double, when compared to revenues from wastewater services.

The level of non-revenue water is important and the utility will try to

decrease the losses in the following years. One of the main purposes

of the investment promoted with financial resources from The World

Bank loan is to decrease the water losses.

Figure 2.4.1.: Structure of Sales - BliStructure of Sales

-

200.0

400.0

600.0

800.0

1,000.0

1,200.0

1,400.0

1,600.0

1,800.0

2006

ThousandUSD/yea

Water

Wastew ater

Source: Water Utility from Bli

The evolution of invoiced quantities is presented in the following

table:

Table2.4.2 The Evolution of Invoiced quantity 2004-2006 Bli

Evolution of invoicedquantity

2004 2005 2006

Th. m3 Th. m3 % Th. m3 %

Water 3,533.7 3,454.5 -2.2% 3,323.1 -3.8%

Inhabitants 2,117.0 2,193.7 3.6% 2,176.0 -0.8%

Private companies andinstitutions

1,416.7 1,260.8 -11.0% 1,147.1 -9.0%

Waste water 3,250.6 3,264.0 0.4% 3,239.1 -0.8%

Inhabitants 1,867.6 1,951.0 4.5% 1,995.7 2.3%

Private companies andinstitutions

1,383.0 1,313.0 -5.1% 1,243.4 -5.3%


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The water consumption slightly decreased in the last years mainly as

result of decrease of water delivered to companies and institutions.

In the last years, the evolution of water production delivered to

companies and institutions of is the result of the poor economic

situation of companies and public institutions. The weight of water

delivered to companies and institutions is low (represents only 34% in

total invoiced water).

The level of tariff for companies and institutions is the same as for

domestic customers.

The delayed adjustment of tariff compared with the cost increases

had a negative impact on the performances of the water utility. The

water utility can not control the tariff adjustment process, which is the

prerogative of the Local Council. The water utility can propose tariff

increases based on cost increase but the final decision is taken by

Local Council.

The evolution of the structure of total operating costs is presented in

Figure 2.4.2:

Figure2.4.2: The Structure of Operating Costs - Bli

Structure of operating costs

33.0%

23.1%8.8%

35.0%Energy

Personnel

(salaries and

related taxes)

Depreciation

Other costs


The most important cost elements are other costs, which represents

36% of operating expenditures in 2006 and personnel costs (wages,

salaries and related taxes), which represents about 33% of operating

expenditure in 2006. The weight of energy costs was relatively

constant in the last years.


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The salaries have increased in nominal terms every year. The

increase of salaries has to be performed based on premises

stipulated in the law regarding evolution of salaries in the public

sector. The number of personnel has slowly increased during this

period.

The evolution of operating costs is presented in Figure 2.4.3.

The evolution of operating costs highlights the prudent policy

regarding expenditures in the last years due to lack of financial

resources.

Only personnel costs have increased during the period underanalysis. Energy costs and other costs decreased.

Figure 2.4.3: Evolution of operating costs - Bli

Evolution of operating costs

-

200.0

400.0

600.0

800.0

1,000.0

1,200.0

1,400.0

Energy Personnel (salaries and related

taxes)

Other costs

Th

ousandUSD/y

2004

2005

2006


2.4.2.2 Analysis of balance sheet items

A breakdown of the account receivables is shown in the following

table:

Table 2.4.3: The Level of Account Receivables as at December 31, 2006 - Bli

Account Receivables 31.12.2006

USD %

1Year 435,509 66.6%

Total 654,235 100.0%Source: Water Utility from Bli


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The management of the company needs to have among its priorities

the increasing of the collection level. In the current conditions, it is

important to maintain the level of the outstanding debt at low levels

(at least to maintain this level constant) to be able to generate

sufficient cash to pay the current obligations. This is essential for a

sound development. The level of short term liabilities kept a stable

evolution. However, level of short term liabilities is relatively high,

when compared to the level of account receivables. A breakdown of

the short-term liabilities is presented in the following table:

Table 2.4.4: Evolution of short-term liabilities (amounts in Thousand USD) - Bli

Evolution of liabilities 2004 2005 2006

Short-term liabilities 2,014.4 2,075.7 2,030.8Account payables 1,940.6 1,982.3 1,930.8Personnel 58.4 55.8 49.6Social Insurance Taxes 6.8 7.7 14.6

Liabilities to the budget 7.3 27.7 32.8Other liabilities 1.2 2.2 3.0


Table 2.4.5: Aging of account payables - Bli

Account Payables 31.12.2006USD %

1Year 835,492 43.5%

Total 1,922,583 100.0%Source: Water Utility from Bli

The Operator has important historical liabilities to the electricity

company and the former operator of the Soroca Bli Aqueduct. TheCompany hopes that these historical liabilities will be written off by a

Governmental Decision. The aging of the liabilities to the social fund

is presented in the following table:

Table 2.4.6: Aging of liabilities to social fund - Bli

Account Payables 31.12.2006

USD %

1Year - 0.0%



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The aging of the liabilities to the state and local budgets is presented

in the following table:

Table 2.4.7: Aging of liabilities to state and local budgets - Bli

Account Payables 31.12.2006

USD USD

1Year - 0.0%


2.4.2.3 Tariff analysis

Historically, tariff levels have been effectively imposes by the Ministry

of Communal Services and Territorial Development. Because of the

institutional restructuring and decentralization, the utility may increase

the tariffs without the approval of the central authorities but with the

approval of the local authorities (municipality) and ANRE.

The domestic tariff level is calculated based on the total cost per

cubic meter plus a profit allowance (between 5-10%). Changes would

be applied following significant increases in costs, mainly electricity.

The evolution of invoiced quantity, the increase of prices for energy

and the increase of salaries should have been the main factors

affecting the evolution of tariffs.

The tariff evolution of the water tariffs for the last years is presented in

the following chart:

Figure2.4.4: Water Tariff Evolution - Bli

Water a verage tariff evolution

0.45 0.440.450.45 0.44

0.450.45 0.440.45

-

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

0.45

0.50

2004 2005 2006

USD/m3

Domestic

customers

Instutions

Commercial

customers



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Tariffs for domestic customers are the same used for institutions and

domestic companies. The tariffs remained the same during the period

under analysis

The tariff evolution of the wastewater tariffs for the last years is

presented in Figure 2.4.5.

Tariffs for domestic customers are the same used for institutions and

domestic companies. The tariffs remained the same during the period

under analysis in nominal terms, the chart showing a decrease to the

fact that the local currency has depreciated.

Figure2.4.5: Sewerage Tariff Evolution Bli

Sewerage average tariff evolution

0.05 0.05

0.10

0.76

0.63

0.57

0.76

0.63

0.57

-

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

2004 2005 2006

USD/

Domestic

customers

Public

Institutions

Commercial

customers


For the future the utility should consider the possibility and to take all

the necessary actions to adjust the tariff more often to avoid the

negative effects of the cost increases due to the inflation. In the future

the water utility will have to cover also the possible debt service

related to the loan from the World Bank.

Briefly, the methodology for approving tariffs consists of the followingsteps:

- The utility specialists are preparing a study for tariff adjustment

- The study is sent to the Local Council and ANRE for approval.

According to the management team of the utility, the level of

approved tariff is usually lower than their request.


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The management team considers that a tariff increase will solve most

of the financial problems of the utility.

2.4.2.4 Financial management

Financial management is still far from the requirements of a modern

utility. A lack of skills and human resources leads to limitations in the

activities performed by the Finance Department.

The financial management is limited to good management of

payments, and is unable to give effective support to the overall

management decision-making process, particularly the good

management of the growth potential.

Without minimizing the technical and implementation problems that

the utility has to face in the near future, the financial planning area is

most in need of enhancement and restructuring efforts.

We recommend the introduction of cost accounting by creating cost

centres for the main activities (water and sewerage). There is

important to find out the performances of each sector.

We recommend the extensive use of computer for financial

management. Accounting, billing and collection, financial forecast are

just a few items which can be performed more efficient by using a

computer. Even if the utility has only one computer, its degree of

usage is still very low.

The process of financial planning does not include all the parties that

should be involved with financial planning matters and has not the

necessary prediction-correction role.

The management team of the utility has to prepare a long-term

strategy to assure the sustainable development. This analysis can beused as a starting point in preparing this strategy. Without a clear

strategy for sustainable development of the activity, the utility

continue to survive but with very limited potential and lower and lower

performance.

2.4.3 Financial Selection Criteria

In order to have a clear selection mechanism of the cities that will

receive financing, the Consultant identified 4 selection criteria:


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Level of historical liabilities to suppliers, social fund, state andlocal budget. The ratio represents the weight of historical liabilitiesin total operating revenues.

Tariff adjustments. The Consultant identified 2 sub-criteria:

o The date of last tariff increase;

o The frequencies of tariff increase;

Level of operating ratio calculated as operating revenues dividedby operating costs.

Level of collection period calculated as account receivablesdivided by sales x 365 days.

The detailed scoring mechanism for each selected criteria ispresented in details in chapter Recommended Towns for Preparation

of Feasibility Studies.

By applying the criteria mentioned above, the scores obtained by the

water Operator from Bli are presented in the following Table:

Table 2.4.8: Scores for the Water Utility from Bli

2006Historical liabilities

USD

Liabilities to Suppliers, Social Fund and Stateof Local Budgets 2,030,756

Total Operating revenues 2,642,350

Weight of Liabilities in Total Revenues 76.9%

Number of points 2

Tariff adjustment Points

Last tariff adjustment was in January 2006 4

In the period 2004-2007 there was only 1tariff adjustment 1

Total 5

2006Operating ratio

USD

Operating revenues 2,642,350

Operating profit 2,739,004

Operating revenues/operating costs 0.96

Points 4

2006Account receivables collection period

MDL

Trade receivables(A) 8,443


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2006Historical liabilities

USD

Sales (B) 31,797

(A/B)*365- days 97

Points 6

Total points 17

The results are analyzed in the final conclusions chapter where the

decision regarding the introduction of Bli in the 10 list towns isanalyzed.

2.5 Technical Aspects

2.5.1 Specific Objectives Related to technical Analysis

The specific tasks related to technical analysis for the Pre-Feasibility

Phase were clarified together with the Client in the beginning of the

assignment. The tasks agreed were as follows:

To prepare water and wastewater balances for 15 target towns todescribe the present situation and water and wastewaterprojections for the year 2013;

to assess the present status and condition of present watersupply and sanitation facilities in 15 target towns in order toevaluate the need for replacements and/or needed rehabilitationon short-term basis; and

to prepare preliminary short-term investment program for years20092013 for the 15 target towns in order to improve addevelop the present functional level of their water supply andsewerage services.

2.5.2 Water supply and sewerage in Bli

Water supply network is divided into two (2) separate networks. Some

103,000 inhabitants out of 142,200 inhabitants are connected to the

water supply network while more than 39,000 inhabitants are

dependable on private wells.

Water is supplied to Bli from water treatment plant (WTP) from townof Soroca via 70 km long pressure pipeline. Water source for Soroca


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WTP is surface water from River Dniester water intake being situated

some 5 km upstream from the town of Soroca. WTP and 70 km long

pipeline between Soroca and Bli are not property of Bli Apa-Canalbut are owned and operated by the state owned enterprise Acva-

Nord.

There are totally 60 deep wells with total capacity of 38,640 m3/day

situated within town area. Deep wells are used as reserve source for

water intake in case if water supply from Soroca WTP is somehow

stopped.

Water is chlorinated at underground tanks (situated in town centre of

Bli) which are used to storage and buffer the water flow deliveredfrom Soroca. In total the water supply system has 19 underground

tanks with total capacity of 40,300 m3 and 21 pumping stations for

maintaining the necessary pressure in network.

The total length of main sewerage network is some 138 km.

Sewerage network has six (6) pumping stations. According to Apa-

Canal some 103,000 inhabitants out of 142,200 are connected to

sewerage network while rest is using septic tank system or dry

lavatories. However, the number of septic tank users is not known.

The wastewater treatment plant (WWTP) represents complete

biological treatment process. At present the treatment plant is in use

and is working satisfactory.

In the following sections the water and wastewater balances and the

technical status of water supply and sanitation facilities as well

needed investments on preliminary level have been described in

detail.

2.5.3 Water Supply System

2.5.3.1 Present System

Water is supplied via 70 km long pressure pipeline (two (2) parallel

steel pipelines with size of DN1000-DN1200) to Bli from WTPlocated in town of Soroca. Source of used water for WTP is surface

water from River Dniester water intake being situated some 5.0 km

upstream from the town of Soroca.


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In Bli, water is first received into two (2) separate water reservoirs(6,000 m3 each, 12,000 m3 in total) which are placed in the town

centre of Bli. From reservoirs water is pumped to distributionnetwork.

60 existing deep wells (capacity of 38,640 m3/day in total) are used

as reserve to be taken into operation in case if water delivery from

WTP in Soroca will somehow be stopped. However, still until 2006

the water was supplied only from deep wells and from beginning of

year 2007, the water has been supplied from Soroca WTP.

Approximately 103,000 inhabitants are currently connected to the

water supply network while more than 39,000 inhabitants aredependable on private wells. The water supply system has 19

underground water tanks with total capacity of 40,000 m3 and 31

pumping stations for maintaining the necessary pressure in the

network out of which 25 are in use. Nine (9) pumping stations have

been renovated in 2006-2007 (two (2) more will be renovated until

end of year 2007) and are equipped with new WILO pumps as

follows:

- PS Copaceanca, WILO NP, 4 units of 200 m3/h;

- PS Str Gagarin, WILO, 1 unit, 25 m3/h;

- PS Psychon.hospital, WILO COR, 1 unit, 16 m3/h;

- PS str.Veteranilor, WILO COR, 1 unit, 16 m3/h;

- PS str.Suceava, WILO COR, 1 unit, 16 m3/h;

- PS str.Konev, WILO, 1 unit, 30 m3/h;

- PS str.Bulgar, WILO COR, 1 unit, 33 m3/h;- PS str.Decebal, WILO MVI, 1 unit, 8 m3/h; and

- PS str.Konev, WILO MVI, 1 unit, 32 m3/h.

16 pumping station have old Moldavian or Russian made pumps andhave not been renovated for more than 30 year.

The water in Bli is treated with chlorine at the chlorination plantsituated by the main reservoirs (2 x 6,000 m3). Dilution and dosage ofchlorine solution is made by two Moskva-type equipment. Theaverage quantity of chlorine used for treatment is 50 kg/day. Inaddition to that there is chlorination of water in use at pumping stationBaltul Nou in where dilution and dosage of chlorine solution is mademanually to reservoir of pumping station. Used amount of chlorinehas been 15 kg/day on average.


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At present, the quality of water delivered from Soroca treatment plant

correspond to Moldovan Normative on Potable Water (see 2.5.1).

Table 2.5.1: Analysed water quality. Data is provided by town of Bli.

Parameter Unit Requirement Actual

Colour grade 20 14.3

Turbidity mg/l 1.5 0.8

Door grade 2 2

Taste grade 2 2

pH - 6.5-8.5 7.8

Hardness Mol/l 7 5

Dry residuals mg/l 1,000 318

Nitrites mg/l 45 0Chlorides mg/l 350 30

Sulphates mg/l 500 105

Fe mg/l 0.3 0.3

Ammonia mg/l 2.0 0

Coli form bact/l 3


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KmDN < 10

years10-20years

20-30years

30-40years

< 40years

TOTAL

800 4.6 4.6

Sub-Total 4.6 4.6

Polyethylene

100-200 2.0 1.5 3.5

Sub-Total 2.0 1.5 3.5

TOTAL 6.0 18.6 56.4 89.6 66.2 235.8

2.5.3.2 Conditional Analysis of Water Supply System

In 2006, Bli Apa-Canal received a credit from the World Bank (3.5million USD) which will be used to renovate 10 pumping stations (old

pumps and valves and pipelines at pumping stations will be replaced

with new centrifugal pumps (manufacturer; Wilo) and supporting

systems, eight (8) pumping stations already renovated in 1006-2007)

and 22 km of main water distribution pipelines (11 km of main

pipelines renovated already in 2006-2007). Renovation works are still

ongoing and will be finished by the end of year 2007.

In General, within pumping stations which are not renovated in 2006-

2007 most of centrifugal pumps and other mechanical equipment are

in a very poor condition. Most of the mechanical parts are worn out

and old pumps are working at a decreased efficiency rate.

Existing chlorination plant is in a poor condition and used machinery

for chlorination is worn out.

Regarding the condition of existing network has Bli Apa-Canalreported several problems with old pipes. Reported problems have

been presented in the Table 2.5.3.

Table 2.5.3: Reported problems within Bli water distribution network.

Water pipes ValvesDN

Bursts Fissures Spills At flanges At sealing ringsTotal

50-100 1,470 430 80 94 157 2,230

150-300 1,000 230 74 161 1,465

400-600 260 20 7 14 301

Total 2,730 680 80 175 332 4,000


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Reported (by Apa-Canal) unaccounted water losses in 2006 were

3,600,000 m3 (52% from the water volume pumped to the

distribution). Still, according to the study elaborated by Technical

University of Moldova in 2005, the total amount of unaccounted water

within service area of Bli Apa-Canal is only 33 %.

The main cause of water losses are often bursts in water network due

to wear of the pipes. Most of the bursts appear in the network of the

consumers (up to the metering devices), and the water losses are

attributed to Apa-Canal. These happen due to the fact that most of

consumers are connected to the network without installation of the

chambers for the metering devices at the connection point and

without installation of the closing valves.

Together with renovation of the existing network the main focus shall

be paid in extension of network in order to provide water supply for

more inhabitants.

2.5.3.3 Operational Analysis of Water Supply System

The town of Bli is supplied with water 24 hours per day.

The average quantity of chlorine used for treatment is 65 kg/day

including 15 kg/day used at pumping station Baltul Nou.

All pumping stations work in automatic mode; most of PSs are

operated permanently to maintain the needed pressure in the

network. Currently the water supply network is divided into two (2)

pressure zones as follows:

- New Bli currently supplied from several deep wells, but willbe connected in 2007 to water pipeline from town of Soroca;

and

- Town of Bli supplied from the reservoirs of water receivedfrom town of Soroca.

Apa-Canal has plans to renovate existing network so that it will be

divided into several different pressure zones. However, there are no

decisions made regarding needed investments to divide the network

into several pressure zones. Currently the pressure in town water

supply network has been between 2-6 bars.


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Beginning of year 2007 there were 6,884 household-meters installed

for private houses, and 30,519 in budget institutions and business

entities. The rate of metering is presented in Table 2.5.4.

Table 2.5.4: Metering rate in Bli.

Rate of population metered, % 2004 2005 2006

Private Sector 49.6 52.4 54.45

Public Sector 88.0 90.0 91.3

Associations of householders 100.0 100.0 100.0

All private apartment meters are size of DN 15 while size of meters

installed at institutions and organizations vary from DN 15 to DN 50depending on connection diameter.

The Table 2.5.5 shows the energy consumption of water supply

system in 2006.

Table 2.5.5: Energy consumption of water supply system in Bli, year 2006.

Energy consumption, KWh 2004 2005 2006

Artesian wells 7,262,800 7,048,000 6,699,300

Pumping stations level II 4,554,700 4,919,500 5,078,100

Pumping stations level III 987,850 1,053,500 1,085,500

2.5.4 Sewerage System

2.5.4.1 Present System

The main sewerage network have the length of some 130 km and

consist six (6) pumping stations out of which one (1) is the inlet

pumping station for the WWTP. WWTP is located some 2 km south

from the town centre.

Approximately 103,000 inhabitants out of 142,200 are currently

connected to sewerage network while rest is using septic tank system

or dry lavatories. However, the number of septic tank users is not

known.

WWTP, constructed in 1971, has a design capacity of 60,000m3/day

and consists the following treatment units:


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- Horizontal grit chambers with mechanical screens;

- Primary sedimentation tanks;

- Aeration tanks;

- Sludge fermentation tanks;

- Secondary sedimentation tanks;

- Sludge pumping stations;

- Sludge disposal site;

- Chlorination plant; and

- Contact stabilization tanks.

The wastewater treatment plant represents complete biological

treatment process. At present the treatment plant is in use and quality

of discharged wastewater is reasonably good.

2.5.4.2 Conditional Analysis of Sewerage System

The main sewerage network is from the years 1960-1970s and has

not been renovated during past 30 years. The main materials used

are asbestos, ceramics, cast iron and reinforced concrete.

Description of the sewerage network has been presented in the Table

2.5.6.

Total length of sewerage network is 138 km, including pressure

pipelines of 8.0 km.

Table 2.5.6: Description of the Sewerage network.

kmMaterial

DN40years TOTAL

100-200 0.9 6.9 6.9 8.3 16.8 39.8

250-500 3.2 3.5 5.2 7.0 18.9

Ceramics

Sub-total 0.9 10.1 10.4 13.5 23.8 58.7

80-200 0.7 2.4 2.5 4.8 1.7 12.1

250-300 0.2 0.2

600 0.1 0.1 0.2

Cast iron

Sub-total 0.7 2.7 1.5 4.9 1.7 11.5

100-200 0.6 2.7 2.0 0.7 2.0 8.0

250-400 1.4 5.5 9.7 16.6

500-600 0.8 1.0 1.3 3.1

Asbestos

Sub-total 0.6 4.9 2.0 7.2 13.0 27.7

500-600 1.4 2.3 2.6 2.4 8.7

800-1000 0.1 3.9 7.1 11.1

1500-1600 0.9 3.5 4.4

Reinforced concrete

Sub-total 2.4 5.8 6.5 9.5 24.2


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kmMaterial

DN40years TOTAL

80 0.1 0.1

200-300 0.1 0.3 0.4

500-600 3.7 0.9 0.2 4.8

1200 0.3 0.3

Steel

Sub-total 3.7 1.0 0.6 0.3 5.6

200-400 5.2 5.2

1000 0.7 0.7

Pressure, Steel

Sub-total 5.9 5.9

150-200 1.0 1.0Pressure, Cast iron

Sub-total 1.0 1.0

1000 0.5 0.5Pressure,Reinforced concrete Sub-total 0.5 0.5

200 0.6 0.6Pressure,Polyethylene Sub-total 0.6 0.6

The existing sewerage network (excluding pumping stations) could be

considered to be in reasonable good condition. However, within this

study any conditional analysis has not been carried out and it could

only be estimated that at least proper flushing of pipelines and

emptying of manholes will be needed. Still, the sewerage network

doesnt cover the whole town and only some 72 % of inhabitants arecurrently connected to the sewerage system. In order to provide

proper sanitation services the first priority regarding sewerage system

would be enlargement of the network to cover more water

consumers.

In General, all mechanical equipment within six (6) existing sewerage

pumping stations are in a very poor condition. Most of the mechanical

parts are worn out and old pumps, valves and pipelines are at the end

of their operational lifetime. In addition to that there is no adequate

monitoring for operation.

The inlet pumping station of WWTP is also in a poor condition. Works

to construct the new inlet pumping stations have been started in

1980s but were newer finished. The unfinished building (only

structures) is located at WTP near the existing inlet pumping st

PreFS Report With Cover_FINAL_June 2007

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