Pure Water Federal Target Programme
One often speaks about water without thinking of what is water, and what is its importance for the life on Earth and our health. Let us remember the role of water in our life, even when discussing the most practical issues.
So, what was done and what is being done to provide Russians with high quality potable water and water discharge services?
For the first time the issue of the pure water was raised in the form of the Pure Water project of the leading political party United Russia in December 2006. Since then, a lot has been done. The party project transformed into a state one.
Decision on the Pure Water Programme development was made in 2008, at a meeting with the Prime Minister of the Russian Federation.
In December 2010, the Government of Russia approved the Pure Water Federal Target Programme through 2017. Now, the regions have got a real chance to solve water supply issues and improve its quality with the subsidies from the budget of the programme.
The main result of the programme shall be the access to the required amount of pure potable water for the entire community of the country. According to experts, this may improve the life expectancy in the country by 5-7 years.
The main features of the programme:
First of all, the topic of the programme concerns everyone, including the state, the business, and the community. It has really touched the entire society. I can't remember any other programme to arouse the same interest of the society.
Secondly, regions play the main role in implementation of the programme. The programme adoption actually initiated the work of the regions in these directions. While many regions already adopted their own programmes aimed at pure water provision to the community, approval of the FTP was a signal to intensify this work.
Almost all regions of the Russian Federation have submitted their water projects. We have received and examined about 2000 projects, the regional target programmes have been adopted in more than 40 RF regions, and the funds have been allocated for 17. 73 regions submitted to the Russian Water Association the details relevant to the preparation and implementation of the Pure Water long-term regional target programmes for 2009-2020.
A number of RF regions, such as the Republic of Bashkortostan, and Volgograd, Novgorod, Orenburg, Penza, and Yaroslavl regions have already started the implementation of the water projects on their own through attracting private investors and using the public-private partnership approach. The large-scale inter-regional projects have been launched, for example, the Clean Don project was launched together with Degremont (a French company) in Rostov-on-Don as a way to improve the quality of drinking water along with the environment of the Don River which is strategically important for the agriculture throughout the country.
Examples of regional programmes:
Khanty-Mansijsk Autonomous District. The Pure Water long-term targeted programme for 2010-2020 has been approved. The programme implementation is a guarantee of the quality water supply to 95 percent of the community and to reduce operating costs of the water utilities down to 170 liters per person per day comparative to the current 200 liters.
Republic of Karelia. The Drinking Water Supply to the Community long-term targeted programme has been developed for 2010-2020. The cumulative investment funds for the project amounts to almost 632 million rubles.
Omsk Region. To ensure quality water supply to the Irtysh region community the region plans to spend 2.8 billion rubles (70 million euros) by 2015 to implement the Pure Water regional target programme action plan.
Third, despite the complexity and diversity of the issue, the programme does not require large budgetary costs. The programme sets the task to arrange the effective business environment and conditions to attract the private sector investments into water supply and water discharge sector. Total funding of the programme exceeds 330 billion rubles (more than 8 billion euros) for the entire period; the share of the federal and regional budgets for the first three years amounts to 18 billion (450 million euros). The rest of the funds are investors’ ones to be attracted to specific projects.
The ratio of the federal and other funds, including private investments, for the entire area shall amount to at least 1:3.5 by 2011 and shall be increased in 2012 and 2013. This means that we shall attract strong investors for large projects.
Fourth, the programme is an innovative programme to be underpinned by introducing new technologies and innovations during project implementation.
Examples of the technologies:
- Production of light steel tubing with a warranty against corrosion for 100 years.
- Technology to repair pipelines with no excavations. Fast curing coatings are applied to the inner surface using a mobile unit moving along the pipe.
- Innovative wastewater treatment, which combines in one instrument the disinfectant effect of UV light and ultrasound.
- Using the heat of the waste water for space heating.
- Technologies relevant to water conservation and energy efficiency.
Russia is consistently implementing the principles of energy efficiency and energy saving into the production, adopting new legal regulations (the climate doctrine, the Law on Energy Conservation, energy policy, etc.). This allows us to set ambitious targets: to reduce the GDP energy intensity by 40% by 2020. In 2000-2008, the energy intensity of the RF GDP was annually decreasing by 5%, which is faster than in many countries.
As for the water saving, yesterday, we entered into an agreement with Mannesmann German Company. One of our cooperation goals is to reduce losses in the water supply systems. Mannesmann water supply technologies are already in use in Russia. There is a field for improvements. We have large water consumption per person per day and significant losses within the networks, which several times higher than European measures.
Fifth, the programme envisages fundamental changes in the water industry legal framework. The Federal Law on Water Supply and Sanitation establishing the core approaches to the water sector regulation has already drafted and submitted to the State Duma. The programme also sets the legal framework ensuring the government control over water quality and the water industry operations, including standards for water consumption, rates, and technical regulations. The current legislation (the Water Code, the law on concessions, etc.) is to be amended. The water supply and sanitation sector issues are not new. The fact that the sector lacks proper legal framework is also not a new one. In other words, the industry is regulated by dozens of laws often contradicting one to another. The situation had to be changed, and we started this work. The drafted Federal Law on Water Supply and Sanitation, firstly in the Russian history, introduces a clear regulation of the industry. This is a crucial step, finally, defining the rules, the government role, and conditions for attracting investment along with other issues driving the industry development.
One of the core approaches is the shift to the Polluter-Pays-Principle. Despite the fact that the discharge of the polluted wastewater in Russia last year fell by 8 percent, to improve the environmental status of water bodies the upgrade of treatment facilities is required.
Requirements to regional programmes
The regional programmes will be co-funded at the account of the federal programme. The most important selection criterion is the availability of an approved Pure Water regional programme. In addition, funding for this programme shall be included into the municipal and regional budgets.
The co-funding by the federal programme will cover settlements having poor condition of the surface sources and the population up to 100,000 people. The programmes shall involve using of innovative products.
Co-funding of regional programmes at the expense of private investors and improvements focused on the water sector management including the shift to long-term rates is of high importance. This is referred not only to Russian, but also to foreign investors who may enter Russian regions for the implementation of such projects. We have already had some examples. Remondis German Company operates in Nizhniy Novgorod region, and succeeds: the company together with local municipality acts as the operator of Arzamas Water Utility. RWA is negotiating with Remondis the expanding of its activity scope in Russia.
The FTP funds may be allocated for systems managing the water supply sector, for construction or reconstruction of water purification plants, installation and upgrading of electrical and mechanical equipment, and for a number of other lines. I would like to note that the action plan omits relaying networks.
Water Industry Investment Attractiveness
Conditions to attract private investments:
- The programme envisages a shift to long-term rate regulation. This will enable the investor to work on a long term basis. According to the plans of the Ministry of Economic Development of Russia the shift is scheduled to the beginning of 2012. The economic feasibility of starting rates to be used as the base for the calculation of long-term rates shall be examined.
- On March 29, 2011, the Russian Government approved the regulatory agreement template between the Government and an investor. In particular, the model concession agreements covering the utilities sector have been adopted. The model has been built up. The concession agreement allows pledging the agreement itself and mentioning rate formulas in the subject matters of the agreements, etc.
- Ministry of Economic Development of Russia is producing and will introduce before the end of the year a set of amendments for the legislation, in particular for the Law on Concessions which significantly protects investors’ interests. Regions shall have clear guidelines covering the transfer of approved facilities into the concession. The issue on lifting the restrictions prohibiting investing pension funds into the water industry is being discussed. The pension funds of Russia will amount to 2 trillion rubles (50 billion euros) in 2 years.
The Russian Water Association role with regard to the Pure Water programme
The Russian Water Association was involved in the development of the Pure Water federal target programme. The Association has been entrusted with an expert role during the Pure Water FTP implementation to be of assistance for the Ministry of Regional Development of Russia in terms of selecting regional programmes and projects and for the region in terms of producing, finalizing and implementation of the programmes and projects.
Russian Water Association is willing to be of assistance for the RF regions, municipalities, and investors in terms of expert support for the proposed projects to be implemented using the programme funds.