Water Export Dag 26 juni 2009 Florentina Nanu Romanian Water Sector

ROMANIAN WATER SECTOR

Waterexportdag, Amsterdam

June 26th , 2009

Business Development Group

presents

Introducing Business Development Group

• management consultancy COMPANY with over 10 years experience in business development in Romania and Bulgaria

• rooted in the first PROJECT implemented in Romania within The Dutch Ministry of Economic Affairs Program for Co-operation with Emerging Markets

• an enthusiastic TEAM of Romanian consultants educated in the Dutch spirit and business culture

• a dedicated PROMOTER of Dutch knowledge, experience and approach

Today’s presentation

• Background info

• Water resources

• Legislation

• Main Stakeholders

• Water supply & treatment

• River basin management

• Integrated Water Resources Management

• Coastal management

• Ground water management

• Financing Opportunities

• Conclusions

Background Info - Romania

• Located in SE Europe, just north of the Balkan Peninsula

• Area: 237,391 km2• Second largest country in Central and Eastern

Europe• Population: over 21.7million inhabitants• GDP 2008: 123 billion EUR• Great variety of water resources • Almost entirely situated within the Danube Basin

(97.8%) • 38% of the Danube’s length flows Southern

Romania, • Black Sea coast in Romania: 244 km

Water Resources

• Surface water � 46% of total water resources

• Underground waters �10% of total water resources

• Danube River� 44% of total water resources

• Inland river network - 78,905 km

• 129 bodies of ground water (19 cross-border)

• Natural lakes – 117 lakes with a surface larger than 0.5 km2, 52% of which are in the Danube Delta

• Barrier lakes – 255 lakes with a surface larger than 0.5 km2

• One of the relatively poor countries in water sources with 2,660 m3 water/inhabitant/year, comparatively with European average of 4,000 m3 water/inhabitant/year

Legislation

• The legal framework is complex and complicated, currently under a process of simplification

• Water Management in Romania is regulated by Water Law 107/1996

• National water legislation has been adjusted to EU legislation

• European Water Framework Directive 2000/60/EC was transposed into national legislation through Law 310/2004 (modifying Law 107/1996)

Main Stakeholders

MINISTRY OF ENVIRONMENT (ME)

• Strategic implementation of the Water Framework Directive

• Elaborates environmental and water management policies and strategies

• The Water Department within ME implements governmental programs in the water sector

• Coordinates the National Administration ‘Apele Romane’ (NAAR)

• Has under authority• National Meteorological Administration

• Administration of the ‘Danube Delta” Reservation

• National Environmental Protection Agency

• Environmental Fund Administration

• National Environmental Guard

• Cooperates with other ministries for an integrated approach to water issues in Romania (i.e. the Ministry of Economy, Ministry of Development, Ministry of Administration and Internal Affairs, etc)

• Managing Authority for SOP Environment

Main Stakeholders

NATIONAL ADMINISTRATION ‘APELE ROMANE’ (NAAR)

• Administrator of public waters:• 78,905 km of water flows

• 122 natural lakes

• 295.6 thousand hectares of wetland

• 270 reservoirs with a total volume of 14.5 billion cubic meters

• 7,100 km of protection embankments

• 59 pumping stations with a flow capacity of 237 cm/s

• Implementation of the national strategies and policies in the water sector

• Maintenance and operation works of water management of the public domain

• 11 local directorates organized per river basin

• Direct beneficiary of Priority Axis 5 of SOP Environment(Implementation of adequate infrastructure of natural risk prevention in most vulnerable areas)

Water Supply & Treatment

WATER DEMAND

• The total gross water consumption reached 6.98 billion m3 in 2007:

– industry 4.84 billion m3 (leader: 78% of national water resources)

– population 1.05 billion m3

– agriculture 1.09 billion m3 (main reduction)

• Dramatic decrease � 1990: 20.4 billion

• Main water usage sectors: food & beverages, chemical, textile

• Government measures to increase water efficiency:

– Increasing the tariff for industrial water

– Restricting ground water usage for industrial processes

– Upgrade production technologies and water treatment plants


CURRENT SITUATION

• Population benefiting of both services – 52%;• Population benefiting of sewerage system –

• 90% of the total urban population • 10% of the total rural population

• Population benefiting neither of water supply nor sewerage system –32%

• Water supply in a centralized system covers:– 87.6% of urban areas– 15.1% of rural areas (most households obtain water from

individual wells � intensely-polluted water table• Infrastructure is still outdated and poorly-equipped for exploitation


Transitional periods agreed with EU

• for compliance with the acquis for wastewater collection, treatment and discharge - by 2015 for a number of 263 agglomerations of more than 10,000 population equivalent (p.e.) and by 2018 in 2,346 agglomerations of between 2,000 and 10,000 p.e

• for compliance with Directive No 98/83/EC on drinking water quality for various parameters, in phases by 2015 (for 1774 agglomerations of less than 10,000 p.e. and for 134 agglomerations of more than 10,000 p.e.),

Most of the interim deadlines are before 2013!


• Water supply has been the focus of more investments and

significantly improved through pre-accession programs (ISPA, SAPARD, PHARE) + SAMTID

• Current programs approach water supply and water treatment as a package

• Regionalization of public utilities IN PROGRESS

– Regional Operating Companies created in agglomerations (over 10,000

inhabitants) �per river basin or administrative region

– Can hold a monopoly over a region or can focus on a smaller area,

even a punctual location

– Some communities (rural) will not be covered by the ROC in their region

(too small, poor infrastructure, etc.)


REGIONALIZATION OF PUBLIC UTILITIES

Local Councils•local strategies

•investment plans

•approval of regulations and specifications of the service

•approval of service performance indicators

Intercommunity Development Associations •cooperation structures, legal personality, public utility

•jointly accomplish certain development projects of zonal or regional interest or jointly provide certain public services

Regional Operating Companies (Roc)•replace the existing smaller operators and autonomous regia’s

•more effective in operating the services

•able to acquire sufficient managerial and financial credibility to apply for and obtain EU Cohesion Fund financing.



NATIONAL REGULATING AUTHORITY FOR LOCAL PUBLIC SERVICES

(ANRSC)

– Subordinated to the Ministry of Administration and Internal Affairs

– Grants functioning permits to operators

– Endorses water tariffs proposed by operators prior to approval by local

authorities

– Issues frame-regulations and specifications for local authorities in

managing public services

– Can inflict penalties

– Monitors the fulfillment of performance indicators


WATER MARKET

• Raw water is administrated by NAAR � monopoly over raw water trade

• Water operators (WO; majority ROCs) buy raw water from NAAR and sell it to the public

• WOs must obtain a license to operate a water & sewage system from ANRSC � both services are usually provided by the same WO

• Economic mechanism in the water sector (payments, bonuses, penalties) � finances NAAR and the development of the sector

• Water management costs must be recovered � government-regulated tariffs are paid by WOs and industrial/agricultural users

• WOs set the price for the final consumer (population)

• WO prices are approved by LCs and ANRSC


WATER MARKET

• Over 120 companies (including ROCs) hold licenses to operate a water & sewerage system

• Water and sewerage infrastructure remain public property (except concession to Apa Nova for 25 yrs, in Bucharest and Ploiesti)

• Sector most poorly covered in the market � waste water treatment

• Market for technologies, equipment and consultancy services �high demand for upgrade

• Local operators and installers need partners to provide advanced knowledge and technology

• Technical assistance and expertise needed by relevant public authorities

River Basin Management

• By 2009, National Management Plans will be completed ��implemented by River Basin Committees

• Surface water has been carefully monitored since 2007– national water monitoring system implemented at basin level

• Flood management: �The European Flood Directive not fully transposed into national

legislation� Implemented

• Integrated Weather System (SIMIN), Destructive Water Abatement and Control (DESWAT),Informational System for Integrated Water Management (WATMAN)

• Hazard Risk Mitigation and Emergency Preparedness (World Bank)

�Flood Risk Management Plans are under development for each riverbasin

• Drought management:• Regulations regarding the management of the emergency situations

• Plans for restrictions and water usage in deficit periods

• Methodology for exploitation of dykes, artificial lakes, water inlets

River Basin Management

Integrated Water Resources Management (IWRM)

• IWRM is a Romanian government policy objective � fundamental principle to be applied in water management.

• 2002 � GLOBAL WATER PARTNERSHIP ASSOCIATION ROMANIA (GWP-RO)

– good relations with ME, NAAR, other relevant ministries & government

institutions, universities and NGOs

– active participation in the IWRM process

– facilitates cross-sectorial public involvement and public participation.

– technical informative books, workshops, seminars, meetings

• IWRM results so far in Romania:

– increased understanding and planning efforts

– basis for River Basins Management Plans

– basis for Romanian National Report required by UN

– Cooperation in the area of IWRM with the Netherlands and

Germany

– ME released the Guide for promotion of the research in the

domain of IWRM

Coastal Management

• High degree of coastal erosion and pollution

• National Committee for the Costal Area � integrated management of the coastal area

• Japanese Agency for International Cooperation � Study on the Protection and Rehabilitation of the Southern Sector of the Romanian Black Sea Shoreline

• Dutch Government � Implementing the Framework Directive for Water and the Integrated Management of the Coastal Area, in the Transition and Coastal Waters of Romania

• Short and medium term strategy based on an analysis of the use and exploitation of Black Sea beaches

Ground Water Management

• Drillings monitored

• 20 bodies of water presented qualitative risk

• Water table is in a critical qualitative and quantitative state � slow rate of self-purification

• Major pollutants:

– Oil products

– Fertilizers

– Industrial by-products

– Radioactive debris

– Animal waste

– Household waste

– Heavy metals

Vulnerable areas

for nitrate pollution

Financing Opportunities

• Necessary investments in the water sector = 12 billion EUR (2007-2013)

about €5.4 billion foreseen from the EU funds

• Main priorities

Wastewater collection and treatment

– about 9.5 billion EUR needed out of which 4.8 billion EUR estimated in the

period 2007-2013.

Drinking water

– about €5.6 billion needed out of which 3.8 billion EUR estimated in the

period 2007-2013.

Anti-flooding measures

– 237 mil EUR foreseen European support


MAIN FINANCING SOURCES

• Pre-accession European Funds (mainly ISPA)

• Post-accession European Funds• Sector Operational Program Environment (PA1, PA5)

• Regional Operational Program (PA1, PA2, PA4, PA5)

• National Rural Development Program (PA 3)

• National funds– Government programs implemented by the Ministry of Regional

Development and Housing

• Supplying villages with water, according to GD 577/1997

• Supplying villages with water, approved through GD 687/1997

• Integrated system for the rehabilitation of water supply and sewerage systems, of drinking water treatment stations, of wastewater purification stations in communities with under 50,000 inhabitants

– Environmental Fund


OTHER FINANCING SOURCES• EU Cross border programs• International financing institutions (World Bank, EBRD, EIB, CEBD)• Foreign government donors• Public Private Partnership

PUBLIC PROCUREMENT• In compliance with EU legislation � GO 34/2006

• All tendering notices published on www.e-licitatie.ro � ElectronicSystem for Public Procurement (SEAP)

• Also published in the National Monitor and in the EU Official Journal (over certain amounts)

• “Romania Water Projects Bulletin" issued weekly byRoyal Embassy of the Kingdom of the Netherlands in Bucharest in partnership with EVD and NWP�

Public Procurement• The Romanian Government is attempting to make the process of public

acquisitions more accessible and in line with EU regulations(2 modifications of the public acquisitions law, EGO 34/2006, in 2009):

– Offers analyzed in no more than 20 days

– Tenders organized in less than 30 days

– Public authorities can opt for direct acquisitions or request for offers, within

certain thresholds

– Maximum 50 days to resolve contestations

– Following pressure from EC, elimination of latest contestation tax (2% of

total project value) � will be replaced with a more fair tax

Threshold amounts under which tenders are not necessary

100,000 EUR750,000 EUR100,000 EURRequest for

offers

15,000 EUR15,000 EUR15,000 EURDirect

acquisitions

ServicesWorksGoods

Conclusions• Pre-accession period �� major efforts to upgrade technology,

infrastructure and framework (legal & institutional)

• Long term efforts needed to comply with EU aquis

• Additional financing needed �� joint national and European sources lower than the needs

• Integrated approach for water management �� water governance and sustainable use of water resources

• Support openly sought for institutional capacity building for • long term implementation structure for planned investments under

SOP Environment

• adequate management capability for operation of existing and future facilities

• High demand for turn key solutions �� integrating technology and consultancy �� cooperation with local installers and system integrators

ACTIVE DUTCH PRESENCE ON THE MARKET

• Dutch equipment and expertise are already well-known and well-trusted by both public and private sectors �� 20 million EUR in Dutch government support for 140 water projects in Romania

STRONG BASIS FOR FURTHER

BUSINESS DEVELOPMENT!

DANK U WEL

FLORENTINA NANU

Managing Partner

BUSINESS DEVELOPMENT GROUP

Phone: 0040 21 317 98 70

Fax: 0040 21 317 98 71

Email: [email protected]

Website: www.bdgroup.ro

Water Export Dag 26 juni 2009 Florentina Nanu Romanian Water Sector

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