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CHAPTER - 5 103 Table 5.2.1. Tajikistan – decade long water tariff reform Source: KMK As a result, tariffs remain largely de-linked from both consumer demand and the economic cost of service provision. Outside the urban areas where metering is being introduced, technical conditions of the water network, first and foremost current pricing structure and the lack of metering, are contributing to misaligned incentives in the sector. Chronic underfunding of public entities for utilities also plays a significant part as well as the failure of some larger water users to pay their bills. The recent World Bank poverty diagnostics in WSS sub-sector suggest that consumers are willing to pay as much as 25% on top of existing tariffs in order to get safe access to drinking water. This is especially relevant in rural area where households have limited access to water and spend as much as 4-6 hours a week getting water (costs). The absolute $/TJS amount of Water fees being collected is on the rise but still at the inadequate level preventing KMK from becoming financially sustainable. Water fees are an important component of WSS expenditures as KMK and non-KMK water utilities fund their recurrent and select capital investments. Water fees have grown substantially in the last 8 years and actually enjoyed almost a 6-fold increase during 2007-2015 from just over 10 million somoni to close to 60 million. It is important to mention that water fees also grew in US$, albeit at a slower rate reflective of weakening exchange rate. During the same period, water fees in US$ grew 4 fold from US $2.2 million to just under US$ 9.5 million. In fact, 2015 was the first year when dollar denominated water fees actually fell 10% partly mitigating almost 30% currency deprecation with a 12% growth rate in collection in somoni. Due to ongoing efforts with metering, billing and collection, overall water fees collection has experienced a healthy 20-25% annual growth. US$ denominated collection will continue to be important for the WSS sector as many capital investment project funded as loans by the development partners are denominated in dollars and will have a direct impact on the ability of the sector to service debts and undertake current/capital investments. The water sector (under KMK) is doing a very good job planning for and collecting water fees. KMK shows enviable consistency with planning for water fees and actual collection. During the last 8 years, KMK is only 3% off from the actual water fee collection compared to the planned. In the last 5 years (2010-2015), collection rate is near target, averaging 100.2 % and ranging between 98% - the lowest ratio (2013) and 103.8% - the highest rate registered in 2010 (figure 5.2.3). Incentives and disincentives for target collection rate. 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 IN TJS Public Sector 0.24 0.24 0.24 0.5 0.8 0.8 1.0 1.47 1.47 1.65 Individual consumers 0.24 0.24 0.24 0.4 0.6 0.6 0.7 0.8 0.8 0.88 Industry 0.24 0.24 0.24 0.7 1.5 1.5 2.0 2.48 2.48 2.75 exchange rate (average annual) 3.4 3.4 4.1 4.4 4.6 4.7 4.8 4.9 6.2 7.5 in US$ 0.071 0.071 0.059 0.114 0.174 0.170 0.210 0.298 0.239 0.220 CHAPTER - 5 104 Figure 5.2.3. Tajikistan: Water fees, planned and collected (2007-2015) Source: Data from KMK questionnaires analysed by authors Debts incurred in the drinking water supply are increasing. While overall debt ratio for population has been managed relatively well, payments from public sector and industry is a heavy burden for the system (Figure 5.2.4). Source: Data from KMK questionnaires analysed by authors The taxation regime for KMK impacts on its operational effectiveness. Despite being a state unitary enterprise, KMK is still subject to all applicable taxes similar to other private enterprises, i.e. 25% corporate tax. In addition, this rate is applied to overall water produced (not sold) multiplied by the costs. This alone causes the utility to incur significant debts (again considering over 20% losses) and penalties for not paying taxes on time. - 5 000 000,00 10 000 000,00 15 000 000,00 20 000 000,00 2011 2012 2013 2014 2015 Figure 5.2.4. Water bills issued and paid Billed Paid CHAPTER - 5 105 5.2.3. Q UALITY OF WATER Quality of water still remains a big issue. Less attention is naturally paid to this issue as overall access to water is more important in mind of the policy makers. National drinking water improvement Program is yet to be developed and adopted so as the Law on “the Right od population for clean water and communal services”. Out of 637 piped water supply networks, almost half or 290 do not meet sanitation requirements. For over 10% (26) of networks lack water pre-treatment facilities; almost 20% (or 116 networks) do not have sanitary protection zones an over a quarter of all networks (170) lack chlorination facilities. In rural water supply networks appropriate chlorination and water monitoring is note conducted at all. 105 Water quality tests results suggest significant shortcomings in water quality. Overall, according to data from 2013-2014, almost 1/3 of all water test failed the established water quality (1625 out 5825). Quality of centralized water is substantially better, as expected, as only 15% of water tests revealed quality mismatch. Communal water supply networks and communal water supply network that use open water reservoirs this percentage is substantially higher, 32 and 52% respectively. Microbiological tests around the country show a slightly better outcome as over 10% of test show that drinking water does not meet safety requirements. High microbiological contamination is especially prevalent in water supply systems in Kurgan-tube and districts of republican subordination. While instances of water-borne diseases seem to have subsided in recent years, the actual number of cases is most likely far larger due to wide spread misreporting and underreporting. While the number of acute water borne deceases decreased by almost 20% during 2010-2015, the numbers are still staggering with over 55,000 cases in 2015 including almost 100 cases of typhoid fever 900 cases of dysentery, 6000 cases of hepatitis A just to name a few. Figure 5.2.5 Disease of the population of the Republic of Tajikistan of separate infectious and parasitic illnesses Source:Tajik Statistics Agency 105 Update of KPIs in the content of water and health protocol in Tajikistan, May 2016 - 10 000 20 000 30 000 40 000 50 000 60 000 2000 2005 2007 2008 2009 2010 2011 2012 2013 2014 Disease of the population of the Republic of Tajikistan of separate infectious and parasitic illnesses Belly typhus and paratyphus A, B, C Malaria, for the first time the diagnosed Parasitic illnesses CHAPTER - 5 106 5.3. P ROCESS OF BUDGET ALLOCATION , EXECUTION CONTROL AND EVALUATION IN THE SUB SECTOR Budget planning in WSS sub-sector generally follows established budget processes (and timeframes outlined in Chapter 3) adjusted for ongoing institutional reforms in the sector. Bird’s eye view of key agencies and processes could be characterized by the following key features: The Ministry of Finance plays as key role in the overall budget planning in close coordination with the Ministry of Energy and Water Resources (MEWR) as far as all WSS sub-sector MABAs are concerned. This includes analysis/allocation of public expenditures (including water subsidies) and budgeting for upcoming years across all water sector related organizations; planning, budgeting and monitoring of capital expenditures financed through the SCIP and reporting on budget execution. The Ministry of Economic Development and Trade coordinates the Public Expenditure Program and, by extension, all investment projects in WSS and serves an important role of reporting on overall (high level) sector performance jointly with the MEWR within NDS and MTDP. The Ministry of Energy and Water Resources coordinates budget submissions and justification for budget allocations for WSSS for all MABAs and reports on the implementation of the water sector reforms/programs to the government. KMK serves as the main executing agency and service provider responsible for budget allocation execution and reporting within KMK system. Regional and local (municipal) authorities also submit their annual appropriations when it comes to WSS sector expenditures based on most pressing local requirements. Usually such budget appropriation covers ongoing maintenance/repair and rehabilitations projects. WSS related water sector management agencies that directly/indirectly negotiate with the Ministry of Finance their annual budget appropriations. WSS is characterized by a large number of MABAs that complicates the budget planning process and reporting. The WSS sub-sector can be notionally divided into three parts: KMK-related agencies, Non-KMK related agencies (service provision) and other WSS-management related agencies. The KMK related network alone consists of over 70 (KBOs) spread across the country, including 55 serving urban areas and 17 in rural. Non-KMK subordinated water utilities (7) include water service providers usually report to large city/town authorities (Dushanbe, Khujand, Rogun, Nurek, Varzob, Spitamen and Faizabad). Additionally, WSS water management agencies include over dozens of specialized agencies that also follow established budget planning protocols directly with the Ministry of Finance when it comes to annual budgeting. Such organizations include environmental protection committee, agency for geology, ministry of industry and technology, and many others. As of 2016, the Ministry of Energy and Water Resources has been identified as a lead agency for reporting on the progress under the new water reform program (2016-2025) setting a solid foundation for the effective introduction of MTEF in the sector. This is an important development that gives the Ministry all the legal support to engage all WSS sector player and coordinate policy development and corresponding reporting for the sector, including performance evaluation. At the same time, the Ministry of Finance remains the main reporting agency for all public expenditures in the sector. KMK, along with its regional subsidiaries (hubs) and local governments are responsible for implementation/budget execution in the WSS sub-sector. By virtue of having a direct mandate to deliver water supply and sanitation services, both KMK (which covers around 80% of the total water services) and local government are directly involved in public expenditure execution. Given accountability, procurement and fiduciary requirements for large scale investment projects, it is worth CHAPTER - 5 107 mentioning that such projects are managed separately by the Project Implementation Units (PIUs) that are usually attached to the relevant KMK. Similar to other sectors, a number of other agencies play an important role in public expenditure “control” in the WSS. Overall, the Ministry of Finance’s Treasury controls the level/composition of expenditures across the established economic classification. The state anti-corruption agency and Chamber of Account/External Auditor are directly involved in public expenditures across sectors, WSS including, especially when it comes to large investment projects but also as part of their routine “control”. Ultimately, the Parliament approves all budget allocation/execution based on Ministry of Finance reports, that get signed off by the President, as a chairman of the Government. The Parliament also reviews overall performance of the sector through quarterly and annual budget reports (committee for economy and finance and sectoral committees: agriculture for irrigation; and industry/infrastructure for drinking water) but rarely the Parliament provides substantiated feedback or challenges performance/outcomes given lack of internal analytical work and data to substantiate their position. An ongoing World Bank/DFID project aimed at strengthening the role of Parliament in budget processes aims to address this particular gap 106 . 5.4. A NALYSIS OF PUBLIC EXPENDITURES IN THE WSS SUB - SECTOR 5.4.1 H OUSING AND C OMMUNAL MANAGEMENT , ENVIRONMENT AND FORESTRY Despite apparent fiscal challenges faced by Tajikistan, the country has seen increased spending on public utilities/housing. Between 2007-2014, Tajikistan’s fiscal space (as defined by actual state budget spending) has almost quadrupled from just fewer than 3.5 billion somoni (US$ 1.02 billion) in 2007 to just over 13 billion (US$ 2.65 billion) in 2014. By 2014, the share of state expenditures of public utilities (housing and communal management) surpassed 10% mark for the first time since 2007. Specifically, total state budget spending rose from 216 million somoni (US$ 63,5 mln) in 2007 to over 1.3 billion somoni (US$ 265 mln) in 2014 or by a factor 6 registering 7th largest sector increase (out of 14 sectors). In absolute terms, however, public utilities/housing spending is the 4 th largest, surpassed only by social protection, education and energy spending both in absolute total somoni spent (1.3 billion) and absolute growth (over 1.1 billion somoni) during the last 8 years 107 . (Table 5.4.1) Table 5.4.1 Functional breakdown of the state budget and WSS (2007-2014, TJS, % share) Source: Ministry of Finance annual budget reports 106 http://www.pbo.tj/en/ - Secretariat under the Committee of Majlisi Namoyandagon Majlisi Oli of Republic of Tajikistan for economy and finance 107 Ministry of Finance annual budget reports Sector 2007 2014 % growth Absolute growth shsare share actual spending* actual spending 1 Fuel and energy complex 1.48% 11.3% 762.5% 9.8% 2 Transport and communications 2.70% 5.7% 212.1% 3.0% 3 Social insurance and social protection 10.17% 18.5% 182.1% 8.4% 4 Other economic works and services 0.16% 0.3% 178.7% 0.1% 5 Health 4.15% 7.4% 177.9% 3.2% 6 Cultural, public, religious and welness events 2.18% 3.6% 165.6% 1.4% 7 Public utilities and housing 6.20% 10.1% 162.9% 3.9% 8 Other sectors 2.95% 4.6% 156.1% 1.7% 9 Education 12.51% 17.8% 142.7% 5.3% 10 Production and processing of mining products, construction 0.79% 1.0% 128.7% 0.2% 11 Law enforcement authorities 4.52% 5.2% 115.5% 0.7% 12 Defense 3.73% 3.6% 96.4% -0.1% 13 Agriculture, forestry, hunting and fishery 2.20% 2.1% 94.4% -0.1% 14 Authorities and state administration 12.05% 8.2% 68.2% -3.8% TOTAL 65.79% 99.5% 151% 0.34 * - without chinese loans, loans/grants and specials funds CHAPTER - 5 108 Public expenditures in the water and waste water sector in Tajikistan is quite challenging to pin down given the high degree of fragmentation when it comes to public expenditures and budget classification/attribution of WSS sub-sector. It is worth mentioning that in order to arrive to some credible public expenditure one needs to account for the following key sources of expenditure data. Available sector spending (public utilities and housing) contain, inter alia, expenditures on actual WSS in addition to environmental protection, housing, ecology and forestry (albeit smaller than WSS). Figure 5.4.1 WSS: Sources of sub-sector funding The state budget is one of the main sources of public expenditures for public utilities/housing sector. By virtue of being split into two parts: (i) republic; and (ii) local budget, both levels of the budget contain WSS related public expenditures (figure 5.4.1). Of all public expenditures combined for this sector, local budget has historically represented between 75-80% of the total public expenditures (figure 5.4.2). This percentage drops substantially for WSS expenditures. Overall, expenditures coming from the Public Investment Program has been on the rise and represented between 10-13% of total expenditures. Total proceeds from the PIP has actually surpassed all total republican expenditures in 2010 and have consistently done so since. Figure 5.4.2: Tajikistan: Total spending in Sector 7, PIP and CSIP Source: Ministry of Finance, Aid Coordination Unit, Ministry of Economy and Trade Republican budget - Water subsidies for vulnerable groups - CSIP & PIP - Water fee allications for state agencies Local budget - Network maintenance & service delivery - special municipal projects - emergency repairs - water subsidies to vlunerable KMK & non-KMK utilities expenditures International donors - PIP (large investment projects) - smaller community based projects WSS expenditures 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% - 200 400 600 800 1 000 1 200 2010 2011 2012 2013 2014 M ill io n s TJ S Republican budget Local budget PIP CSIP Share of local budget Share of PIP CHAPTER - 5 109 Local budgets have borne the majority of the increased public expenditures in Communal/Housing sector given the mandates of the local governments in delivering these services. Since 2007, republican expenditures have increased by a factor of 3.5 from around 22.5 million somoni (US4 6.6 mln.) to around 80 million (US$ 16.32 mln.), while local expenditures increased by an impressive 0.93 billion during the same timeframe from 194 million (US$ 57 mln) to 1.1 billion (US$ 224 mln) or almost 6 fold (figure 5.4.3). Republican expenditures have experienced a smoother year-on-year increase, on average around 20% a year, while local expenditures grew with greater volatility but still on average by over 30% a year sometime even experiencing substantial cuts (i.e. in 2012) Figure 5.4.3. Tajikistan: Sector 7 – trends in republican and local budgeting (in TJS) Source: Ministry of Finance, Aid Coordination Unit, Ministry of Economy and Trade, authors calculations With the exception of 2013, when actual public expenditures in the sub-sector exceeded planned, overall, budget execution stand at around 90% with no particular obvious trends as to what drives it, especially given that other sub-sector experience less volatility (figure 5.4.4) Figure 5.4.4 Tajikistan: Sector 7 budget execution (for the sector, republican/local budget) Source: Ministry of Finance, Aid Coordination Unit, Ministry of Economy and Trade, authors calculations 0,0% 20,0% 40,0% 60,0% 80,0% 100,0% 120,0% 2007 2008 2009 2010 2011 2012 2013 2014 total Sector 7 budget exec total Sector 7 budget exec (R+L) CHAPTER - 5 110 5.4.2 W ATER SUPPLY AND S ANITATION (WSS) SUBSECTOR Tajikistan does not spend much on water. During 2007-2014, Tajikistan has been spending on average US$ 35 million of WSS or appx. TJS150 million (figure 5.4.5). This figure includes all projects (donor funded and government’s public spending). This equates to around 1.2 billion somoni (US$ 280 mln) spend to date, including slightly over 0.55 billion spent in a form of direct public expenditures and remaining amount funded by the donors. It is worth highlighting that public expenditures as a separate category (republican and local budget combined) have dropped from a high of U$ 41 million in 2009 to less than U$ 10 million in 2014. Download 0.75 Mb. Do'stlaringiz bilan baham: |
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