Association of providers of communal services in Republic of Macedonia - ADKOM
Business planning in Macedonia – process starting
as a request of the Regulator
Danube Water Conference 2017, Vienna
Session on Business Planning, May 18
Mr. Jane Vrteski (ADKOM)
Organisation of services
 Local governments are providing water and
sanitation services through 68 public
municipal utilities. With an average population
served of 23,241, the market is more atomized
than the average in the region, and is
dominated by the Skopje Water company,
which serves about 25% of the population.
seven water-only utility companies serve an
additional 17% of the population, and 45% are
served by 60 smaller municipal multi-utility
companies. the rest of the population has
access to self-provision (12.5%).
The main sector challenges
a) SECURING A MULTIYEAR INVESTMENT BUDGET.
 Investment needs to be significantly increased in the water
sector. It is estimated that €20/capita/year in investments are
needed to meet EU acquis requirements.
 These investments will have to be financed by the public
sector and international sources. The significant amount of
these investments can be financed through international
loans or donations.
b) IMPROVING THE EFFICIENCY OF SERVICE PROVIDERS
 Reducing nonrevenue water and introducing the use of
contemporary information and communications technology
 Establishing an effective tariff system is key to ensuring the
sustainability of the sector
 Significant strengthening of administrative capacity, both at
central and local level
The Reform Playing Field
EU /
International
Financing
National
Policy
Makers
Regulatory
Commission
ADKOM
Municipality
Water
Economic
Operators
Source: Reform in the System for Water Supply, Collection and Treatment at Local Level
PUC
Customers
Law on Setting of Water Service Prices
Article 11 Setting of the Water Service Tariff
PROCEDURE FOR SETTING THE PRICES FOR WATER SERVICES
Setting of the Water Service Tariff
• The provider shall be obliged to prepare a request for setting of the water service tariff with
proposed tariffs and the same will be provided to the Regulatory Commission :
o draft Tariff Adjustment Plan, and
o data and reports of the Business Plan which are obligatory for the purposes of setting of the
water service tariffs
o All water service providers, providing water services on territories that are bigger than 10.000
equivalent inhabitants as well as that provide raw water for the supply systems, shall be obliged
to commence with the application of the water service tariffs in accordance with this Law by 1st
January 2018, at the latest
Purpose
• The Law on the Setting of Prices for Water Services, which has been adopted by the
Macedonian Parliament (15th January 2016), requires, inter alia, that PCEs prepare
Business Plans on a multi-annual basis and that these Plans form the basis of a Tariff
Adjustment System overseen by an independent regulator.
• PUCs has to submit a Tariff Application to the Regulatory Commission (RC)
• New tariff will be set for 1st regulatory period 2018-2020
• This brings the preparation of Business plans as a top priority for the PUCs providers
of water services in the country.
The Business Planning process
• Business Plan is a joint effort of PCUs and the Municipalities
• Business Planning Working Group (Task Force) was established in each PCU with
representatives from the PCU and LSGU
• Process is supported by:
•
•
•
•
Project Reform in the System for Water Supply, Collection and Treatment at Local Level
National Reform Project
Project National Water Study
IAWD/ADKOM Capacity development for Business Planning
ADKOM/IAWD - Business Planning
• The Managing board of ADKOM identifies as a high priority to organize capacity
building workshops on business planning for the utilities which are not included in the
projects.
• Project: Capacity development for Business Planning (supported by IAWD)
• Training in BP
• Assisting six PUCs in Development of a Draft Business Plans and Tariff Adjustment
Plans
Working methods
•
•
•
•
•
Regional Workshops
Home works
Meetings with the Working Groups
Direct assistance to PCUs in preparation of the TAP and BP
Consultative meetings among MoEPP, Local Reform Project, ERC/Central Reform
Project and ADKOM
Business Plan steps
1. Detailed
Assessment
2. Strategic priorities
and development
needs
8. Activity Plans
3. Objectives and
targets
9. Organization and
capacity
development Plan
4. Demand / Services
Forecast
10. Obtaining
approval
5. Investment
Programming
Implementation
6. Financial Forecast
Source: Reform in the System for Water Supply, Collection and Treatment at Local Level
7. Tariff Adjustment
Plan
Monitoring
performance
10 Strategic Priorities
and Development Needs
1) Widened scope of services: added wastewater treatment services
2) Measurement and control of water production and distribution, network
zoning, SCADA
3) Increased service areas: more rural settlements
4) Reduction of Non Revenue Water: real + commercial loss
5) Asset management: focus on asset mapping and registry, increased renewal
rate and Investment Planning
Source: Reform in the System for Water Supply, Collection and Treatment at Local Level
10 Strategic Priorities
and Development Needs
6)
7)
8)
9)
10)
Reading, Billing and Collection: focus on customer databases, customer
contracts, information and communication, reading and collection practices,
enforcement
Start Cost and Profit Centre Accounting
Need for Financial Restructuring to resolve debt situation
Improving the Information Management Systems
Reorganization, restructuring and commercialization
Source: Reform in the System for Water Supply, Collection and Treatment at Local Level
Business planning in Macedonia –
process starting as a request of the Regulator
Thank you!
Association of providers of communal services in
the Republic of Macedonia – ADKOM