German Financial Cooperation with
Albania in the Water Sector
By Ute Rodrian;
Director Regional KfW-Office Tirana, Kosovo, Macedonia
Tirana, September 2008
Content
1. FC with the Balkans in the Water Sector -
Portfolio and Objectives
2. FC Portfolio in Albania
3. Strategies for Water Supply (incl. examples)
4. Strategies for Sewage
5. Crucial Preconditions
Content
1. FC with the Balkans in the Water Sector -
Portfolio and Objectives
2. FC Portfolio in Albania
3. Strategies for Water Supply (incl. examples)
4. Strategies for Sewage
5. Crucial Preconditions
FC with the Balkans in the Water Sector
Portfolio
Current Project Volumes:

Albania
– EUR 127.1 million
Bosnia and Herzegovina
– EUR 22,3 million
Croatia
– EUR 50.3 million
Kosovo
– EUR 13.5 million
Macedonia – EUR 61.4 million
Montenegro – EUR 55.16 million
Serbia
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– EUR 25.1 million
FC with the Balkans in the Water Sector
General Objektives

Improvement of living, working
and health conditions

Environmental Protection

Financial and Institutional Sustainability

Progress towards achievement
of EU standards
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Goals

Water Supply:
 Hygienically acceptable water according to WHO-Standards in
sufficient quantity ( 80 - 120 Liter / Head / Day),
 Reliable provision of water (20 - 24 hrs / day; > 200 days / year)

Sewerage:


Adequate Quality of the discharged water (20 - 30 mg BSB5 /Liter)

Sufficient Connection Rata (65 - 95 %)
Technical and financial performance




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Financially and administrative independent water companies
cost recovery:
Water Supply:
total cost recovery incl. depreciation
Wastewater Disposal: at least operational cost recovery
Billing and collection rates > 90 %
Socially acceptable Tariffs (Tariffs < 5 % houshold income)
Content
1. FC with the Balkans in the Water Sector -
Portfolio and Objectives
2. FC Portfolio in Albania
3. Strategies for Water Supply (incl. examples)
4. Strategies for Sewage
5. Crucial Preconditions
Albania:
Project places
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FC in the Albanian Water Sector
Current Portfolio
1. Rural WS Kavaja: EUR 5.1 million,
Start of project 1997
2. SD Kavaja:
3. WS + SD Kruja:
EUR 12.5 million,
Start of project 1999
8. WS Central Albania I + II
(Berat & Kuçova, Lushnja)
EUR 9.0 million,
Start of project 1999
4. WS + SD Elbasan: EUR 12.8 million,
start of project 2001
5. WS + SD Korça:
7. WS Manskuria/Kavaja
incl. mgt. Contract EUR 3.5 million,
Start of project 2003
EUR 35.6 million,
co-financing with EIB
(EUR 14.5 million)
Start of project 1998
6. WS + SD Pogradec: EUR 20.8 million,
co-financing with CH
(EUR 6.46 million),
Start of project 2001
EUR 11.8 million,
Start of project 2003
9. WS/SD Shkodra / Environmental Protection:
EUR 7,5 millon,
Start of Project 2007
10. Rural WS Programme:
EUR 8,5 million,
Start of Project 2007
under preparation:

Solid Waste Programme
South-East Albania
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KfW´s Contribution
to the water sector in Albania
• Germany is largest donor regarding volume
• Support to sector reform and activities within the sector
• differentiated and adequate concepts
 Starting 1992 with „emergency measures“
 „Classical“ project financing since 1995
 Investment in PPP since 1999
 adequate Financing conditions (grants – soft loans)
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Content
1. FC with the Balkans in the Water Sector -
Portfolio and Objectives
2. Portfolio in Albania
3. Strategies for Water Supply (incl. examples)
4. Strategies for Sewage
5. Crucial Preconditions
Water supply Strategy Options
Different approaches
1) Staged implementation with institutional criteria to be met prior to
the next phase (e.g. billing and collection rate, tariff increase, etc.)
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Phased Water Programme
How does it work?
Creteria
met?
yes
Phase 1
small
immediate
measures
no
Management
Support
to achieve criteria
for phase 1
Criteria yes
met?
no
Management
Support
to achieve criteria
for phase 2
Excluding municipalities
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Phase 2
Bigger
investment
measures
Further
Management
Support
Water supply Strategy Options
Different approaches
1) Staged implementation with institutional criteria to be met prior to the
next phase (e.g. billing and collection rate, tariff increase, etc.)
2) Portfolio consisting of several projects (competition, also smaller
individual projects possible)
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Water supply Strategy Options
Different strategic approaches
1) Staged implementation with institutional criteria to be met prior to the next
phase (e.g. billing and collection rate, tariff increase, etc.)
2) Portfolio consisting of several projects (competition, also smaller individual
projects possible)
3) Concentration on hot spots
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Lake Ohrid and Lake Prespa Eco-Systems
KfW is financing Activities in:
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Water supply Strategy Options
Different strategic approaches
1) Staged implementation with institutional criteria to be met prior to the next
phase (e.g. billing and collection rate, tariff increase, etc.)
2) Portfolio consisting of several projects (competition, also smaller individual
projects possible)
3) Concentration on hot spots
4) Combined donors efforts
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Combine Donor´s activities
Example: Environmental Protection Lake Shkodra
 SD-WS-Project,
 German-Swiss-Austrian co-financing
 KfW mandated by SECO and ADA for implementation of the entire
project
 Goals: Efficiency gains, harmonisation between donors,
1 consultant for all measures, tailored to implementation capacity
of the project executing agency
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Water supply Strategy Options
Different strategic approaches
1) Staged implementation with institutional criteria to be met prior to the next
phase (e.g. billing and collection rate, tariff increase, etc.)
2) Portfolio consisting of several projects (competition, also smaller individual
projects possible)
3) Concentration on hot spots
4) Combined water/sewerage project (loan/grant)
5) Public Private Partnership
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PPP Experience

Consession Contract for Elbasan
(planned as 30 years / water supply and wastewater disposal consession
BOOT model

Management Contract for Kavaja
(Management on a 4 year term)
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Water supply Strategy Options
Different strategic approaches
1) Staged implementation with institutional criteria to be met prior to the
next phase (e.g. billing and collection rate, tariff increase, etc.)
2) Portfolio consisting of several projects (competition, also smaller
individual projects possible)
3) Concentration on hot spots
4) Combined water/sewerage project (loan/grant)
5) Public Private Partnership
21
Content
1. FC with the Balkans in the Water Sector -
Portfolio and Objectives
2. Portfolio in Albania
3. Strategies for Water Supply (incl. examples)
4. Strategies for Sewage
5. Crucial Preconditions
Sewerage
Strategy
Different strategic approaches
1) First water supply (to create cash cow) –
Than sewerage projects only with well performing utilities
2) Staged projects
(e.g. sewer network + primary treatment, later biological treatment)
– Achievement of EU guidelines at long term („less is more“)
3) Combined water supply/sewerage project (loan/grant)
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Content
1. FC with the Balkans in the Water Sector -
Portfolio and Objectives
2. Portfolio in Albania
3. Strategies for Water Supply (incl. examples)
4. Strategies for Sewage
5. Crucial preconditions
crucial preconditions (1)
Willingness and ability to substantially improve the
financial performance and to bear the resulting political costs
Instruments:
 Reduction of technical losses
 Metered consumption
 Increase of connection rates
 Reduction of operational cost
and administrative cost
 Increase of collection rates
 Increase of tariffs
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Donor Assistance
Utilities / Municipalities
Political Support
crucial preconditions (2)
1. Commitment of management and local authorities
2. Willingness and ability to deal with “hot potatoes”
3.
4.
5.
6.
7.
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(e.g. tariff adjustments, staffing, billing)
Sound regulatory framework and its implementation
Improvement of operational capacities
Sufficient operational capacities relevant level
(size matters)
Successful implementation of meter programmes
compliance with contractual and legal obligations
Careful decision if or how PPP should be considered.
Thank you
Faleminderit
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