Helping Authorities Explain the Real Cost of H2O

water tanks on top of a building in Tirana
Water tanks in a building in Tirana. Credit: UNDP Albania

Once a month, Fatjon and his wife Vjollca, drive ten kilometers from their home in Tirana to a spring on the slopes of Mount Dajti, near the capital’s aqueduct. Although the mountain and its pine forest designated as a national park are renowned for their vistas of the city, the couple is in no mood for a picnic.

Indeed, the quality of the water supply they receive at home is so poor that every month they have to pack up their old Mercedes family car with plastic bottles and go in search of potable water.“The tap water in our home is undrinkable,” Fatjon says, while he and Vjollca go through the routine of filling up the empty bottles and loading them into their car.

Many residents of Tirana—Albania’s largest city—face the same predicament, because of the poor state of the city’s aqueduct.

With the assistance of international partners, the Government of Albania has drafted a strategy to improve the quality of the water supply. The strategy finds that about 20 percent of the population of the country is not serviced by water utility companies, while in rural areas, 43 percent of the population are not connected to a main supply. A UNDP commissioned survey on citizens’ perception on the water supply service sheds light, the connectivity of customers to the sewerage system is at an average of 84%, however in rural and suburban areas only 35% of population have such access.

Albania is a water abundant country with renewable resources estimated at 8,600 cubic meters per capita. The low level of penetration of water services is mostly the result of deficient investments. The new water strategy calls for 800 million euro in investments to improve the aqueducts and piping system, dilapidated by years of neglect and the raw urban development that many Albanian cities have experienced in the last two decades.

The programme Economic Governance, Regulatory Reform and Pro-Poor Development in Albania (EG), implemented by UNDP and the World Bank, worked to build the necessary capacities in the regulatory agencies to better monitor and disseminate the provision and quality of the services delivered, to strengthen the customer protection bodies and to ensure access to water and electricity services for the vulnerable and the poorest consumers, including those living in informal settlements.

The programme has assisted the Water Regulatory Entity and government institutions to upgrade the public-owned utilities, to transform inadequately governed corporations and build up supervisory authorities and protect customers. The energy and water utilities are the main sectors where the programme has contributed.

A national survey of the country’s 56 water utilities was conducted with the aim of assessing the level of customer services provided when compared to international good practices. The survey report provides advice, recommendations and actions that need to be taken to improve customer services in Albania’s water utilities.

Highlights

  • Building capacities for electricity sector performance monitoring and water and sewerage sector management
  • Building an online complaints management system to protect customers
  • Increasing awareness of customer rights

Meanwhile, the programme has assisted the development of a water model contract that has been introduced in the 56 water utilities. The programme works to achieve the Millennium Development Goals, especially MDG 7—Improve Environmental Sustainability. This worldwide goal aims to halve by 2015 the proportion of the population without sustainable access to safe drinking water and basic sanitation and to achieve significant improvement in the lives of 100 million slum dwellers.

Albania has experienced massive internal migration in the last two decades and informal settlements have sprung up in several areas inside and outside large cities. Basic services such as water supply, sewerage and electricity are in short supply in these areas and require massive investments to be brought up to standard. The programme has assisted the authorities to effectively monitor and regulate the energy and water markets and provided useful tools to collect and elaborate complaints from consumers.

According to Avni Dervishi, head of the Water and Sewage Regulatory Authority, the main problem stems from the fact that most of the water utilities are unable to cover their costs and central government has to step in and subsidize them from the state budget.

“There has been an improvement over the last few years but we still lag behind some standards,” Dervishi says. “At the national level more than half of the water that circulates in the pipes never gets paid for,” he adds.

Experts from development partners agree that the current water tariffs cannot meet operating costs and that price adjustment is one possible measure required to balance the budget, as well as to secure resources for other investments.

The Water and Sewerage Regulatory Authority with the assistance of the UNDP drafted a standard contract for water and sewage companies. The authority is now supervising contract implementation on a national scale. An in-depth analysis, carried out by Value Add Management Services highlighted that the centralized and computerized databases of customers were at an early stage of development, and there were no integrated structures for customer relations, and no standard complaint forms.

The programme assisted the national Consumer Protection Commission build an online complaints management system. Anila Jani, chair of the commission, says that the programme helped develop the capacity of the commission staff through bringing international expertise to provide training on the implementation of EU directives. “The programme contributed to raising awareness of consumer rights through several communication tools and channels such as information products, TV shows and spots,” she says.

Analysis conducted by the World Bank and the programme finds that Albania faces serious challenges in improving its water supply systems, particularly in rural areas, where the country’s most economically vulnerable population is concentrated.

Given the prevalence of poverty in rural areas the affordability of service tariffs is a concern. The water tariff is currently 30 lek/m3 (about 0.3 USD). A considerable price hike would make it unaffordable for the twelve percent of Albanian families who fall below the poverty line of an income of $2 per day.

In order to reduce the social gap that exists between rich and poor, government plans to move from the current inefficient system of subsidizing companies to implementing targeted programmes that provide subsidies to poor individuals and households in both urban and rural areas. In order to achieve this goal government is working with the World Bank to create a better system of social welfare. Despite the challenges that lie ahead, the programme maintains a position that the foundations to overcoming this situation have been laid.

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