A single price charge for all categories of consumers could be a solution to ACC’s problems, Mihai Roscovan says

If a single price water and sewer charge for all the categories of consumers, including the population and the budgetary sector, is approved, S.A. “Apa-Canal Chisinau” (ACC) could solve all its current problems, considers Mihai Roscovan, a former city councillor and doctor of economics. The single price charge would bring additional incomes of about 100 million lei to ACC, including a profit of 67 million lei, which can be used for the company’s investment necessities. At the same time, the municipal budget would save 15 million lei a year if the charge for economic entities is reduced, Mihai Roscovan says in the article “Cost of Water and Heat: between populism and pragmatism” published in the last number of the paper “Capitala”. He says that the advantages of such a version are: the economic entities will increase consumption, the number of thefts will decrease, the quality and reliability of the services will improve, the production costs of water and the price of goods and services, including the water and heat supply services, will be reduced and others. But the most convincing strong points of a single price charge are the considerable reduction in budgetary expenses for the ACC services and the financial recovery of this company, Mihai Roscovan says, cited by Info-Prim Neo. The economical-financial situation of the municipal water supplier worsens year by year. Since 1990, the volume of sold water fell threefold. Mihai Roscovan says that such a tendency was generated by the structural changes in Chisinau’s economy and by the fall in the population’s consumption after the introduction of metres as well as by the existent system of differentiated tariffs according to which the charges for economic entities and budgetary institutions are over fivefold higher than the charges for the population. The population’s consumption, which makes up over 70% of the total volume of water sold, covers only 25% of the company’s total income. Some 75% of the income is obtained from economic and budgetary entities, which consume less than 35% of the total volume. This affects the activity of the economic entities, especially the Small and Medium-Sized Enterprises, and the municipal budget that finances the budgetary institutions, the cited source said. When the volume of sold water decreased considerably, the losses and the consumption of non-metered water increased, though volumetrically they decreased from 49 million to 32 million m3 during 2000-2005. In 2002, the financial situation of ACC worsened as it had to service a credit of over 22 million USD provided by the EBRD in 1997, a loan imposed by the Government. Even if the company sustains losses of 30-50 million lei yearly, it has to pay an additional sum of over 2 million USD each year until 2014. The former municipal councillor Mihai Roscovan proposes two solutions for covering the accumulated losses and fulfilling the assumed commitments, not taking into account a possible public-private partnership: to adjust the charges to the costs of services or to subsidise the company directly from the municipal budget. The direct effects of the populism promoted by the Chisinau Municipal Council cost the municipality over 80 million lei in the past two years alone, Roscovan says. A 200 kilometre-long network of water and sewer pipelines could be constructed or reconstructed from this money each year. If such a sum is allocated yearly for repairing the Wastewater Treatment Station, which is the most serious and shameful problem of the capital, this problem could be solved in three-five years, the doctor of economics says.