OECD-EAP Task Force - Report on Developing and Implementing a Financial Strategy for Urban Water Supply and Sanitation in Georgia and Carrying out the Feasibility Analysis
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Publication Title | SUPPORT TO THE GEORGIAN GOVERNMENT IN DEVELOPING AND IMPLEMENTING A FINANCIAL STRATEGY FOR URBAN WATER SUPPLY AND SANITATION IN GEORGIA AND CARRYING OUT THE FEASIBILITY ANALYSIS |
Publication Type | Status Report (prepared for joint EUWI/EAP TF Meeting, Almaty 26-28 Apr 06)
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Author(s) | OECD - EAP Task Force
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Publication Date | 2006
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ISBN-ISSN-EAN | |
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Contents |
Summary
This report is about the project, in which the OECD/EAP Task Force secretariat cooperated with the Georgian Government to assess the financial implications of achieving the Millennium Development Goals (MDGs); to help the Government of Georgia to set realistic targets for the rehabilitation and development of urban water supply and sanitation infrastructure and services; and to identify options to bridge the finan-cial gap between the expenditure needed for achieving policy objectives and the financing available. The analysis was conducted using FEASIBLE, a model developed to elaborate alternative financing scenarios, and only addresses urban infrastructure, (in Georgia 50% of the population live in rural areas wher the challenges will be similar, if not more serious).
Since 2000, when a similar study has been conducted, and in spite of a significant economic recovery, the situation of the water supply and sanitation sector in Georgia remains critical. Both infrastructure condition (over 60% is depreciated) and service quality are worrying. The financial situation of the utilities is both a cause and a consequence of these devel-opments; tariff policy for households is inadequate and the collection rate of user charges is low.
The report claims an urgent need for action and suggests possible measures to close the current financing gap, and to address the affordability issue. Scenarios for Georgia to achive the MDGs and the associated costs are discussed.
Main recommendations:
The report recommends the following set of policy measures to address the situation in the urban water sector:
- To set (and to implement) priorities for the water supply and sanitation sector, at na-tional level – politicians should seriously consider introducing an appropriate combina-tion of in-house tap and stand-pipe technologies to achieve water-related MDGs
- To allocate more public money to the WSS sector, and to monitor its use in accordance with set priorities; the outcome of the financial strategy should be integrated into me-dium-term expenditure programmes and annual public budgets, at both national and local levels
- To increase the collection rate, and to review the tariff policy, taking affordability con-straints in the population into account; experience from Armenia has shown that this is feasible and can yield significant and rapid improvements; a well-planned public awareness campaign should accompany these measures
- To mitigate the leaks in the network and to decrease the unaccounted for water; incen-tives should be designed to reward leak detection, disruption of illegal connections, the introduction of water meters and to promote a more rational use of water resources.
This package can only be implemented if:
- The sector’s governance structure is reformed; experience in Armenia and the Ukraine is relevant in this regard
- Human and institutional capacities are significantly strengthened in municipalities and water utilities; incentives and performance based rewards are designed and built into the contracts between municipalities and utilities
- An effective social protection mechanism is implemented, in order to mitigate the so-cial consequences of greater cost recovery through increased user charges.
