Financial hardship makes Chisinau water utility cut working week and salaries

Apa-Canal Chisinau (ACC) is facing a severe financial crisis, which had emerged long time before the world economic recession of 2008-2009 came up, Info-Prim Neo reports. According to the company’s director, Constantin Becciev, the crisis situation has been conditioned by the local public authorities’ populist decisions or lack of decisions concerning the tariffs for the public services provided by ACC, as well as the inconsistent legal framework, according to which the supplier has certain legal obligations which are not calculated by the National Agency for Energy Regulation (ANRE) and, therefore, covered financially. The tariffs for water and sewerage applied by the supplier today are at least 2 times smaller compared to other Moldovan towns. In compliance with the legislative amendments, in 2008, Apa-Canal Chisinau had to pay a 13 million lei tax for water while the tariff provided coverage only for 1 million. At the same time, while the tariff covers a planned price of only 0.96 lei/kWh for electrics, the company pays a tariff of 1.10 lei/kWh +VAT, succeeding though to maintain the functionality of and renovate its fixed assets with a balance value of over 900 million lei, used in advance. The tariff coverage for these purposes, calculated by ANRE, constitutes only 44% of the necessary amount. Also in 2008, ACC has paid over 5 million lei interests to the European Bank for Reconstruction and Development, these expenses not being covered by the tariff, Constantin Becciev said. According to ACC, the 30 million lei penalties and risk fund of the Ministry of Finances for the unrealized guarantee of the central public authorities to EBRD are also to be paid by the water supplier. At the same time, the annual interests of more than 15 million lei, which are transferred to the banks for the credits taken to pay the current obligations to the suppliers, budgets, employees and even for returning the EBRD loan, have practically emptied the company’s budget. The ACC’s director says that the insufficiency of finances is also caused by the fact that a part of the VAT, paid for the purchased goods and services, is included in the ACC’s expenses. “Only in 2008 these expenses amounted over 16 million lei, and it is forecasted that they will increase up to 25 million lei, affecting thus the company’s liquidities”, Constantin Becciev stated. The decrease in the amount of water provided to the economic entities, which were also affected by the crisis, and the bigger amount of water delivered to the population, with tariffs two or three times smaller – created losses of about 4.2 million lei. Calculated for the last 5 years, these losses constitute more than 80 million lei. As consequence of the adoption of several laws and by-laws, the amounts of water supplied to economic entities is decreasing constantly. On the other hand, the exploitation of artesian wells in the ACC’s area of activity caused, only in 2008, 20 million lei. Yet another important problem is the huge amounts of water which are not calculated by the administrators of the buildings, which equal the difference between the water meters. These losses exceed 200 million lei. Even though the debts of the ACC exceed its revenues, the company has a serious list of debtors among the industrial enterprises. On January 1 2009, the Chisinau-based heat and power plants owed ACC 71.7 million lei. The debt of Moldcarton for ACC is 22.8 million lei. “In order to ameliorate the situation as well as reduce the risks and improve the quality of the services provided, ACC’s management implemented a range of competent measures, including the substantial decrease of water losses and power consumption, implementation of new technologies and cutting jobs. However, these actions are far from covering the enormous losses of the enterprise”, Constantin Becciev added. Given the situation, Apa-Canal Chisinau had announced that it can no longer fulfill their obligations to the power supplier. In consequence, RED Union Fenosa repeatedly cut off the power of several water-pumping stations and even the Water-treatment station, which ensures the supply of drinking water to the consumers in Chisinau. The gas supplier Chisinau Gaz is also constantly disconnecting the heat plants of the enterprise, reconnecting them only after substantial payments of the debt. At the same time the State Guard Division has recently warned the enterprise that it would cease its services, which would endanger the entire sanitary security of the capital city. The penalties for the delay of payment are substantial, reaching tens millions lei. Given these conditions, the company’s management had to start implementing some drastic measures, by modifying the weekly work program, excluding Friday from the schedule, at the same time reducing the wages of the employees. The money saved as the results of these managerial operations will be transferred for the payment of electric power and reimbursement of credits. “The company had to announce suspending activity of the employees who are not properly equipped for the production process”, Constantin Becciev concludes.