TIRANA, Feb. 16 – The 2015 local elections had a negative impact on the performance of the country’s water supply and sewerage companies managed by local government units, an annual report submitted to Parliament by the Water Regulatory Entity has shown.
“The main performance indicators in 2015 did not mark obvious progress. The companies did not make the due efforts to achieve targets. 2015 was an electoral year and the impact of political changes was reflected even on the management of water and sewerage companies,” says the regulator.
In 2015, Albania held local elections under a territorial reform that cut the number of local government units to 61 compared to a previous 384 municipalities and communes.
“Experience has shown that in election times, such as 2015, changes in the political situation have an impact on the management of water supply and sewerage services. The water supply and sewerage officials reduce efforts to keep the level of spending under control and increase revenues,” notes the water supply watchdog.
In general and local elections years during the past two decades of transition, Albania’s public finances have also traditionally faced sluggish performance due to poor collection rates and increased pre-electoral public investments.
The report shows losses in the dilapidated water distribution system remain alarming at 67 percent while average daily water supply has remained unchanged at 12 hours.
The report also expresses concern overstaffing in the water supply enterprises where the number of employees per 1000 connections is 9 compared to 4 to 5 in regional countries. The World Bank has earlier noted political patronage and the complexity of water supply systems are the main explanations to the situation.
“Staff costs account for the majority of spending. The improvement of human resources management, the reduction of excess staff and an in increase in work efficiency could translate into considerable saving,” says the regulator.
Albania will have to wait for a long time before it settles its long-standing water supply issue due to the huge investments needed in the dilapidated distribution system where around two-thirds of running water is lost.
Water Regulatory Entity director Avni Dervishi has earlier said Albania needs to invest a staggering 6.4 billion euros in order to provide uninterrupted water supply all over the country.
The amount which is around 64 percent of the country’s GDP and considerably bigger to Albania’s total annual public investments of around 5 percent of the GDP (at Euro 560 million for 2015) is completely unaffordable by the state budget and would take decades under current investment levels, experts say.
Losses of around two-thirds in the production, distribution and billing of tap water cause the Albanian state budget around $180 million in annual losses, Transport Ministry officials have said.
“The level of losses continues remaining one of the most serious issues in the water sector, with a negative impact in the financial sustainability of Albania but also the quality of water for public consumption,” says director Dervishi.
Only 60 percent consumers have water meters while the remaining part pays fixed rate.
With operating revenues covering only 68 percent of costs, water supply and sewerage companies definitely need to raise their drinking water prices to improve their efficiency, the World Bank says in report on Albania’s water sector.
The report notes that while Albania is better off in water resources than many developing countries, the water companies’ performance remains unsatisfactory, partly because of the complex drafting and implementation of the institutional framework managing the sector. Water companies fail to provide access to 10 percent of consumers in urban areas and 42 percent of consumers in rural areas with the average water access being 11 hours a day.
Widespread illegal connections to the water supply grid and lack of water meters for about half of the population also contribute to the low collection rate.
Water prices for household consumers in Tirana are currently at 45 lek (€0.32)/m3. State institutions pay 120 lek (€0.85)/m3, while private companies 135 lek (€1)/m3.
