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Figure 5.4.5 Total WSS spending (in US$ and TJS, 2007-2014, including PIP)
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Figure 5.4.5 Total WSS spending (in US$ and TJS, 2007-2014, including PIP) Source: Ministry of Finance, Aid Coordination Unit, Ministry of Economy and Trade, authors’ calculations The nature of the public expenditures in WSS is different compared to irrigation/drainage. Now, this is partly explained by the nature how the state is involved in the WSS sector, i.e. Water Utility (KMK and non-KMK water utilities) de-facto act as private enterprises and public expenditures are limited to payments for water subsidies to the most vulnerable, covering water bills for budgetary organizations, undertaking select capital investments (through CSIP), and guaranteeing for major investment (donor-driven) infrastructure projects. Public expenditures in WSS do not include personnel costs (staff cost) and recurrent expenditures (for repairs, maintenance, O&M etc.) as these costs are mainly born by the water utilities themselves and are not covered by the republican or local budgets. Nonetheless, public expenditures in WSS have shown a steady but very uneven growth since 2010. During 2007-2009, total public expenditures averaged a respectable 130 million somoni driven by major capital investment programs or around US$ 36 million. However, Ministry of Finance data shows a clear drop in public expenditures since 2010, to the tune of only 10% of the prior amounts (figure 5.4.6). This could be explained by both cuts in funding for capital investments in WSS, public expenditures restructuring within Sector 7 with less focus on WSS more focus on other “communal” expenditures [since overall funding of the Sector has actually increased between 2009 and 2010]. Another explanation could be that the actual water expenditures were wrongly coded in the budget given initial treasury and accounting reforms. Since 2010, public expenditures have rebounded and showed consistent growth, on average 30% annually, and almost tripled in absolute terms from around 16 million somoni to nearly 50 million. However, this amount still barely represents a third of average public expenditures during 2007-2009 or just under US$ 10 million or around 47 million somoni; and growth rates ranging from 51% in 2011 and 15% in 2014 suggest there is very little concerted effort to plan WSS expenditures given ongoing needs of the sectors. CHAPTER - 5 111 Figure 5.4.6 Tajikistan: General WSS public expenditure trends Source: Ministry of Finance, Aid Coordination Unit, Ministry of Economy and Trade, authors’ calculations Despite major policy reforms and capital investments in WSS, public expenditures in drinking water as budget spending category do not reflect stated sense of priority. Before 2010, WSS expenditures represent roughly 50% of the total expenditures within Sector 7 (communal management/utilities) of the total expenditures in this Sector along with housing/environmental protection/forestry and other costs related to “communal” management. This roughly translated to an average 3.0 of the total public expenditures during 2007-2009. This trend has substantially changed since 2010. During the last 5 years, total WSS expenditures have both decreased as a share of total Sector 7 and total state expenditures to under 5% and 0.3% respectively (figure 5.4.7). Again, this trend is taking place against healthy increases in public expenditures during 2010-2015. Including PIP, these share increase but still represent a modest 20% and 1.4% respectively. Figure 5.4.7 Share of WSS expenditures in total budget and Sector 7 budget Source: Ministry of Finance, authors’ calculations CHAPTER - 5 112 Local budgets dominated public expenditures in WSS prior to 2010. Republican budget took over since then. The share of local budget in total public expenditures on WSS averaged 90% during 2007-2009. Since 2010, against the drop in capital investment expenditures (that were mainly channelled through local governments), these roles have completed changed. Republican budget expenditures have continued to grow, primarily driven by increasing water subsidy payments and recurrent expenditures (figure 5.4.8). In fact, opposite to local budget expenditures, republican expenditures have consistently been increasing, averaging 20% per annum. Adjusted for inflation, however, this growth is way more modest. 108 Figure 5.4.8 WSS public expenditures: republican vs local budgets (TJS, % share) Source: Ministry of Finance, authors’ calculations Donors have dramatically increased support to the WSS sector since 2009 and now account for the major part of total public expenditures in WSS. Republican budget also grows in importance. Data for 2007-2014 clearly suggests diminishing role of the centralized state investment expenditures and growing share of donor support to the sector. Share of donor driven funding grew from around 10% in 2007 to over 70% by 2014 (figure 5.4.9). This translates into an increase in actual disbursement from around U$5 million in 2007 to over US$ 26 million in 2014. Still, it is worth mentioning that during the last 5 years, donors have provided, on average 3.5 time more annually than the whole budget (republican and local) combined (see Box 3 for an example of the donor-supported and government endorsed projects). Figure 5.4.9 WSS expenditures in Tajikistan: state & donors Source: Ministry of Finance, Aid Coordination Unit, Ministry of Economy and Trade, authors calculations 108 Ministry of Finance, authors’ calculations 0% 20% 40% 60% 80% 100% 0 50 100 150 200 2007 2008 2009 2010 2011 2012 2013 2014 M ill io n T JS total PIP (in TJS) total WSS Public spending share of PIP CHAPTER - 5 113 Capital expenditures represent on average 85% of the total WSS expenditures but have not led to substantial improvement in access to water beyond Dushanbe and Khujand. An impressive over 1 billion somoni out of 1.2 (US$ 240 mln out of US$ 280 mln) has been spent on WSS-related capital expenditures during the period under consideration. While donor income has shown relative consistency during 2007-2014, recording negative growth rates only in 2012 and 2014, centralized state investment program (CSIP) enjoyed less predictability (figure 5.4.10). CSIP funding (all local) has seen a substantial drop in 2010 and never really recovered in both the amounts and relative terms. Interestingly, republican budget has been a flat capital budget for WSS-related capital expenditures (planned and executed) at 6 million somoni during 2007-2012 before seeing Box. 3: From the state of despair to a regional success story: 10- year water project supported by the EBRD brings tangible, cost-efficient improvements in water services The situation in WSS around cities and towns in Tajikistan is very similar to that of Khujand: Deep- rooted problems with its municipal water supply and sewage scheme related to access, quality of water and service, old infrastructure, huge inefficiencies and no funding – all need to be addressed urgently. IN addition, social costs are huge as bad water quality is adversely impacting the health of residents and worn-out pumping equipment and distribution network are causing frequent supply interruptions. The sewage treatment plant is completely out of order and the untreated wastewater runs in the river. Similar to the project in Dushanbe, supported by the World Bank and select bilateral donors, EBRD took a long-term view and engaged in the project along with the Governments of Switzerland and Norway. Three (3) phases of the project later and a total of 11,2 US$ mln. (4.9 U$ mln + 1.5 U$ mln + 4.8 U$ mln). For third phase, the project has become a showcase for a number of regional water utilities. Most of these funds are concessional (up to 75%) while the remaining part is a loan extended for 15 years at 3-5% interest rate. Given extensive needs, detailed feasibility studies (including environmental studies, stakeholder analysis, capacity to pay etc) were part of the broad water supply improvement program that included the following 3 components: Major Infrastructure rehabilitation, including improvement of the Khodija Bakirgan water wells feeding the city, replacement transmission and connection mains; refurbishment of a portion of the municipal distribution network; installation of water meters; purchase of workshop equipment installation of reserve wastewater pumps Financial and operational improvement of the Water Utility, including adoption of the water consumption, billing and collection systems Provision of a Stakeholder Participation Programme to encourage greater public participation in the delivery of water services, ensure poverty and subsistence issues are reflected in tariff reforms, and promotion of water conservation Notable operational and performance improvements have led to many tangible results both for the utility and the customers and ambitious plans to expand water coverage around satellite cities and new developments, including plans for PPP in Saykhun, including: Access to safe drinking water has increased from 75% to 100%; Water is supplied 24 hours a day compared to 8-12 hours before the projects; Per capita use water consumption decreased from 680 liters/day to 410; Water losses reduced from 52% to 26% Water supply system reliability increased from 60% to 85% (reduction in service breakdowns); Water fee collection rate increased from 70% to near 100% Average salary for utility staff member increased from U$30 per month to US$ 132. CHAPTER - 5 114 first increases in 2013 and 2014 (and most likely in 2015-2016), essentially tripling in size to 20 million somoni (US$ 4.16 mln), suggesting a potential moving away from the mechanical budgeting of capital expenditures on water and increasing attention to the sector again primarily driven by commitments to provide government counterpart funds to the ongoing investment projects. Figure 5.4.10. WSS public expenditures: recurrent vs capital expenditures (TJS, % share) Source: Ministry of Finance, authors’ calculations Despite being relatively small in overall size to start with, WSS is always slightly underfunded as a sub-sector but actual overall budget execution rate is really impressive. Significant expenditure execution differences are evident for republican and local budget, especially in recent years. During 2007-2014, only ones in 2014 did the actual expenditures exceeded that of planned by almost 10%. Overall, the trend is that WSS is being underfunded year after year, on average between 5-6% 109 with 2009 being the worst year in terms of execution of WSS expenditures when WSS was funded at the level of appx. 87%. However, overall WSS public expenditures have shown remarkable consistency in terms of actual vs. planned expenditures standing at an average of around 96% (figure 5.4.11). Overall, republican budget is being almost universally under executed while local budgets, on average, are over executed (especially during the last few years), standing at 93% and 119% respectively. Figure 5.4.11 Execution of WSS Public expenditures (in TJS, and % execution rep vs. local) 109 Ministry of Finance, authors’ calculations 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 0 5 10 15 20 25 30 35 40 45 2007 2008 2009 2010 2011 2012 2013 2014 M ill io n total PIP (in US$) total WSS public spending in US$ share of PIP CHAPTER - 5 115 Source: Ministry of Finance, authors calculations There is room to increase WSS spending, even within the existing public expenditure envelope for the sector. Apart from ongoing donor supported projects in WSS, it is clear that the sub-sector has been receiving a very small amount of funding in the last 5 years. Despite more than doubling in amount from around US$ 3.7 million in 2010 to over US$ 9.5 million in 2014, this amount represents less than half of one percent (0.4) of the total budget expenditures. Further, capital expenditures represent on average only 0.1-0.2 of the total expenditures. This is taking place against the background of increasing budget allocations for the Sector in general (Sector 7) – Utility management/Housing – that stands on average at 7% of the total budget expenditures. While this sector is very demanding in terms of public expenditures, there is clearly a scope for better prioritization of expenditures within this sector to really focus on WSS related capital expenditures. CHAPTER - 5 116 Water subsidies are an important component of public expenditures in WSS with a complicated governance system behind them. The state budget, specifically local budgets, serve an important purpose of providing subsidies to the population who fall under vulnerable groups and are impacted by the increasing tariffs the most. Simplified process is depicted in Figure 5.4.12. As far as public expenditures are concerned, Vodokanals (KMK and non-KMK) receive payments directly from the budgets (mainly local) for services they provide (at a predetermined tariff and water consumption use limits). Subsidies also form part of Vodokanals revenues. Box 4.: Implementation of the Drinking water improvement program (2007-2020) The Drinking Water Improvement Program adopted on December 2, 2006 by the Government of Tajikistan was set to serve as the Government’s main vehicle for improving access to drinking water for the population. Taking stock slightly after the mid-point of the program implementation, important trends emerge. Overall, the program significantly lags behind in terms of implementation. As of the end 2014, only 46% of planned expenditures have been disbursed. In fiscal terms, even without accounting for inflation and exchange rate fluctuations, of the total TJS 1.6 bln scheduled to be spent during 2007-2014, only TJS 0.75 bln have been disbursed. Expenditures from the republican budget, while clearly closer to plan, still average slightly over 40% in terms of disbursements, to date, and total over TJK 100 million during 2007-2014. At the same time, as a source of funding for the program, on average the republican budget provides around 14% of the total expenditures, slightly below the 14% mark. Yet, almost 0.4 bln somoni is yet to be provided through the republican budget. This requires an annual 5-fold increase in actual funding over average annual resources provided to date, i.e. a jump from TJS 13 million to over 65 million per year. The local budget is substantially behind target and has provided a mere 2.5% of the total expenditures compared with the planned 10%. As a result, the local budget has been providing only around 10% of the planned expenditures during 2007-2014 to the tune of 18 million TJS compared with the 160 million planned. Local budgets will need to provide almost 3 times the planned expenditures, or 23 times more than average amount provided during 2007-2014 or over 52 million somoni a year. Donor funding has been the driving force behind Program implementation, providing 2/3 of the total actual funding received or around 450 million TJS or 55 million a year. However, this still represent only an average 40% execution rate (planned vs. actual). Donors are to provide 1.8 million TJS or well over 300 million a year or double the planned expenditures during 2015-2020 in order to reach program objectives. In order to do this, donors would need to provide 5 time the average annual amount provided to date. Own contributions by the Water Utilities (KMK and non-KMK), is the only area of funding of the Program that has actually met and exceeded its commitments. Of the 166 million in total commitments during 2007-2020, water utilities have already provided over 175 million somoni, mainly due to almost double the amount provided on average during 2007-2014 or almost 22 million somoni vs 10 million in planned expenditures. In fact, water utilities is the second largest source of program funding, with almost 23% of all funding vs. 5 % planned under the Program. CHAPTER - 5 117 Figure 5.4.12. Water subsidies planning and allocation process However, subsidies represent only a small fraction of the total public expenditure. Subsidies within KMK system (without Dushanbe, Khujand and 5 other vodokanals), have grown from just under 300,000 somoni (US$ 88 thousands) to almost 2.5 million (US$ 510 thousands) ultimately representing around 5% of the total public expenditures in water sector (figure 5.4.13). It is also clear that Khatlon is the largest recipient of water subsidies given its size and poverty rates, followed by Sughd, RRS and GBAO. No data is available for non-KMK vodokanals but expert opinions suggest roughly similar amounts paid to non-KMK water utilities. Figure 5.4.13 Water subsidies paid through KMK – regional breakdown and share in WSS expenditures Source: KMK and authors calculations Budgeting for water subsidies is generally delinked from tariff increases and usually comes with a lag. Quick analysis also shows that the amount of subsidies being received by KMK is a mechanical exercise as subsidy allocations are being increased by the same percentage across regions without accounting for increasing/decreasing poverty levels within regions and/or tariffs (or at least with a certain lag) as figure 5.4.14 suggests. It is only 2015 data shows that actual budgeting across provinces may have taken actual poverty (eligibility) into account as within regional breakdowns follow different trends. CHAPTER - 5 118 Figure 5.4.14 Tajikistan: Water tariff increases and growth in water subsidies Source: KMK and authors calculations More importantly, the state budget consistently under-provides for subsidies to be paid to KMK, pushing KMK to still provide services and settle with the state in the form of tax deductions. During 2007-2015, the state budget has generally budgeted on average 45% less than actual amounts of subsidies for water being provided by KMK. As a result, KMK accumulates arrears and amounted to close to 16 million somoni during 2007-2014 or over US$3 million (figure 5.4.15). This annual gap is usually offset via reduced taxes imposed on KMK, a process that has plenty of room for improvement. Figure 5.4.15. Payment/non-payment of water subsidies to KMK through the state budget Source: KMK and authors calculations 2008 2009 2010 2011 2012 2013 2014 % tarif increase 0% 0% 67% 50% 0% 17% 14% % increase in subsidies (provinces) 77% 33% 7% 8% 160% 0% 10% 0% 10% 20% 30% 40% 50% 60% 70% 80% - 1 2 3 4 5 6 7 8 2007 2008 2009 2010 2011 2012 2013 2014 2015 М и л л и о н ы Tajikistan: Subsidies to KMK - paid and unpaid (in TJS, and % paid) Subsidies paid to KMK Subsidies not paid to KMK % paid CHAPTER - 5 119 Water bills paid by government organizations to the Water Utilities is another important component of the public expenditures. Overall, payment for water by the budget organizations (state) is generally under budgeted, but tend to follow tariff increase. The amount included in the state budget has increased during the last 5 years from under TJS 8 mln. to almost TJS 14 million but again exhibit chronic underfunding in the range between 10-15% of the total water actually billed, reflecting both poor expenditure planning/budgeting of water bills to be paid by the budget organizations (figure 5.4.16) Figure 5.4.16: Payment for water supplied by the budget organizations Source: KMK and authors calculations 5.5 S UB - SECTOR FINDINGS AND FINANCIAL SUSTAINABILITY General sub-sector findings could be presented along the following key groups Key sector financing Tajikistan spends less than 0.5% of the total budget expenditures on WSS Tajikistan spends only around 1% of the total centralized state investment program on WSS Public expenditures on WSS are dominated by the republican budget with local budgets accounting for less than 10% of the total expenditures despite being “closest” to the “client” Most public expenditures are limited to waste subsidies to the poor, water bills for the budget organizations and some funding for repairs and maintenance WSS relies quite heavily on donor funding creating dependency syndrome and overreliance on external funding with an average of 75% of all funding to the sector Water utilities own funding of capital expenditures is the second largest sources of funding despite very complex and sensitive governance in the sector. Overall budget execution in WSS is strong and stands at over 90% suggesting that despite being underfunded, there is a degree of predictability in public funding for the sector. Download 0.75 Mb. Do'stlaringiz bilan baham: 
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