Water Regulatory Authority - ERRU (Albania)

REGULATION

Regulatory Model

Water Regulatory Authority (WRA) is a public and independent regulatory authority, responsible for regulating the sector of water supply and wastewater disposal and treatment in a Albania. WRA has been established and functions based on law no.8102, dated 28.03.1996, on the “Regulatory framework of the sector of water supply and wastewater disposal and treatment“, as amended. The WRA's mission is to ensure for all consumers in Albania, that water supply and sewerage service providers deliver the highest achievable quality at a fair price and in a financially sustainable manner. Water Regulatory Authority is headed by a five member National Regulatory Commission.The objectives of WRA are the following: Encouraging efficiency and efficient use of water, urging and supporting protection of environment and quality of water, protecting the consumer interests regarding tariffs and service conditions, quality, efficiency and continuity of the service for all consumers, guarantee the rights of complaint and standards of service, transparent activity and finding a fair balance between all actors in this sector, consumers, Government and the investors.
WRA is accountable to the Parliament and to the Council of Ministers of the Republic of Albania. Each year by January 31,  WRA releases its annual report on the activity of Water Regulatory Authority and the situation in the water supply and sewerage sector. WRA's financial audit is carried out by the Supreme State Audit Office of Albania.

Regulated sector

Activities encompass the water supply and wastewater disposal and treatment plants. The WSS services sector functions mainly through the operators organized as joint venture companies owned by the local government units. The companies operating in the sector are subject of license procedure and tariffs approval.
Up to January 2015, 57companies are active in the water supply and sewerage sector, which offer water supply service for 70% of the population, waste water collection for 43% of the population and waste water treatment for 9% of the population.
In the above percentages are not included a large number of very small local operators (131), operating directly under the authority of small LGUs (communes) in rural areas. These operators are not subject of the regulatory frame. In 2015, a very important reform will take place. The administrative territorial reform will decrease the number of local government units from 365 to 61 LGUs. Afterword, the WSS sector will be reorganized following the new territorial organization.

Main responsibilities

WRA's responsibilities are provided by Article 14of the Law. They are published at: http://www.erru.al/doc/Law_8102_Translation_January_2012_FINAL.pdf 
WRA  issues  its  own  procedures and  rules  to  guarantee  a  proper exercising  of  its  tasks,  as  assigned  by  this  Law.  Regulations,  procedures,  standards,  rules, proceedings  and  other  official  acts  of  the  Regulatory  Authority  are  either  published  at Official Paper, and  are accessible for the public.

Tariff Setting

Methodology for the calculation of tariffs for WSS services is developed and approved by WRA, and is adopted as a legal act. The water and sewage tariffs are calculated for each water company by analyzing cost components and profit realized by the company based on the business plans. Tariff approval is conditioned to performance KPIs achievement for each company.
As regard to the prices of WSS services: average price for WSS services 0.32 €/m3, where the average price for water delivery is 0.43 €/m3;
The regulator is actively involved in the process of tariff settings–the WSS operators has to apply to WRA for WSS tariffs. These applications are reviewed, analyzed and may change (based on analysis) by WRA, who by the end is the authority that approves them.

Quality of Service

With the view on the need to improve the financial stability of the sector, there is a frame of 10 key performance indicators (KPI), focusing on financial and management capacities, as well as performance areas where the impact is felt most directly by consumers. The individual utility performance is examined in three peer groups, according to utility size, to identify trends and highlight the best as well as particularly poor performers. The 10 KPIs are part of the business plans of WSS-operators. WRA receives annual reports on the implementation of the business plans of WSS-operators, including the PI and perform its own analyses. WRA publish the annual reports of performance.

The Regulator

Year of establishment: 1996
Characteristics:
IndependentRegulatory Authority;
Collective body;
Single-sector regulator
Legal basis:
Law no.8102, dated 28.03.1996, as amended
Number of employees: total 21, including 5 members of commission.
Budget300 000 Euros (2014).
Contacts:Enti Rregullator i Ujit, Blv: "Gjergj Fishta",
Godina Nr. 10, Kati IV,Tirana, Albania; 

Email: public@erru.al

Website: www.erru.al

Other relevant entities

Ministry of Transport and Infrastructure- it is responsible for the implementation of state policy on the sector, coordinates the investments' needs (http://www.transporti.gov.al/)
Ministry of Environment– it is responsible for the integrated water management in the public interest - water quantities, permits for water abstraction and  discharge, activity of waste-water treatment plants (mjedisi.gov.al/)
Ministry of Health - the protection of public health, monitor the quality of water. (http://www.moh.gov.al/)
Water Supply and Sewerage Association of Albania (SHUKALB) – non-government organization (www.shukalb.al)

SECTOR

Sector Description

WSS service sector functions mainly through by 57 utilities organized as joint-stock companies with local government as the owner, being responsible for the service in the administrative area they cover. Out of 57 utilities, 4 provide water supply, sewerage and wastewater treatment service, 28 provide both water supply and sewerage service, whereas 25 only the water supply service. The WSS (water supply and sanitation) service coverage of the population, within the administrative area they offer the service, is 81% for the water supply; 51% for the sewerage and 10% for the wastewater treatment. The water and sewerage service in the areas not covered by the utilities (30% of the total population for water and 57% for sewerage), is provided by local government units through sectors, part of the internal municipality structure.
Volume of activity for 2014: Abstracted water volume – 277.23 million m3/y; Filed water, total – 279.63 million m3/y; Delivered water to end users – 86.97 million m3 /y; Water losses – 188.47 million m3 /y (67.4 %); Sewage water – 51 million m3 /y; Average billed consumption – 126 l/p/d; Economic and financial data - Turnover – 44.7 million Euro (2014); Average WSS service price – 0.32 €/m3; Average annual invoice per customer( domestic) – 94 Euro, Employment – 5484 Employees.

Legal and institutional framework

The current legal framework in the water sector consists of: Law on regulatory frame, Law on functioning of local government, Law on integrated management of water resources,  hygiene norms, drinking water quality standards,  acts and decrees of the National Commission of Water Regulatory Authority.  The law on integrated management of water resources is in line with EU directives, while the act on water quality will be aligned with EU directive in 2015. The institutional framework is covering local municipalities, the Government, the WRA  consumers’ protection, health and sanitation agencies. Municipalities are responsible for public water services as stipulated in the  law on functioning of local government. The Ministry of Health is responsible for monitoring and controlling the quality of drinking water. The Ministry of Environment is responsible for the regulation and sustainability of water resources and the regulation of environmental pollution. The WSS utilities are obliged to obtain the license in order to perform the public service. The license has to be issued by WRA. WRA calculates and approves prices for WSS services. Water Regulatory Authority is a single-sector regulatory authority, accountable to both the Parliament of the Republic of Albania and to the Council of Ministers. WRA activities encompass  the water supply and wastewater disposal and treatment plants  regulation. The WRA's mission is to ensure for all consumers in Albania, that water supply and sewerage service providers deliver the highest achievable quality at a fair price and in a financially sustainable manner.

Market Structure

Currently there are 57 regulated public WSS operators, which cover 70% of the population. They are subject of regulation and tariff approval by the Regulator.

Ownership and management of services.

Ownership structure ( 57 companies in water and waste water sectors): public - 100%.

Country profile

Main indicators of the water sector

Volume of activity for 2014:

*Abstracted water volume – 277.23 million m3/y;
*Filed water, total – 279.63 million m3 /y;
*Delivered water to end users – 86.97 million m3 /y;
*Water losses – 188.47 million m3 /y (67.4%);
*Sewage water – 51 million m3 /y;
*Average consumption – 126 l/p/d;

Economic and financial data:

Turnover – 44.7 million Euro;
Average WSS service price – 0.32 €/m3;
Average annual invoice per customer (domestic)  94 Euro;
Employment – 5484 Employees.

Evolution

In June 2014 Albania has been recognized as an EU candidate country. Already at that time, the water management legislation was in place and was in line with the European Union directives (Acquis communautaire). By year 2000, following the Law on organization and functioning of local government", the process of decentralization took place. As a result, the function of WSS services passed to local government units. This process was finalized in 2007, when the shares of WSS companies was transferred to LGU's. In cases when the WSS company covered more than one local government unit, its shares were divided directly proportional to the number of population of the local unit to be covered by the WSS company.
However, due to problems associating this process, the effective transfer of all companies to the local units was extended in time. Amongst the problems, to mention is the lack of agreement with local units about the form and manner of the transfer of companies, the "en block" transfer of companies, without analyzing the situation of each company and failure of registration of assets.
Total number of population living in the jurisdictional area of companies is 3,217,023 inhabitants, from which for 81 % is offered the water supply service and 51 % the sewerage service, which continues to be behind the water supply service in many aspects. The population provided with the sewerage service mainly lives in urban areas of the country (approximately 98% of the serviced population), whereas the population in rural areas is almost left out of this service. Quality of sewerage services and protection of environment has been improved for 10% of the population in the companies’ jurisdictional area as a result of functioning of 5 wastewater treatment plants. Meanwhile, other plants are being constructed or designed. The service for population out of companies’ jurisdictional areas is provided by sectors functioning inside local government units, communes and municipalities which are self-regulated.
WSS service sector in Albania lacks a specific law. This vaccum has been filled time after time partially with normative acts from Council of Ministers, but this has been insufficient to give the WSS service sector a comprehensive and suitable legal framework. As consequence, several drawbacks have occurred in the activities in the sector, there is no determination of rights and duties of legal and physical persons, and the public administration involved in the sector, model of market, its functioning rules, etc.

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