Speech of Prime Minister Edi Rama at the meeting with local leaders for the second phase of the reform in the water sector:
This meeting is of special importance because today the Albanian government, in cooperation with all the local leaders, starts the second phase of the National Water Reform. It is one of the major reforms that required a relatively long preparatory time chaired by the Minister of Transport and Infrastructure, with the support of the National Council and of the National Secretariat of Water, to enter this second phase, where it is imperative that we start implementing this reform together which, like some major reforms of our government, has been delayed for over 20 years.
I believe that in more than 2 years in government, we have managed to mark a turning point of transformation and tangible progress with regard to an increased and improved irrigation and drainage service for farmers, related to the structural change of service management, to increase efficiency and without a doubt, with the increased funding that has resulted in the expansion of the irrigated area and the greatest impact that this transformation has had on farmers.
The increase of direct investments by the government for the irrigation and drainage system in 2016 marked an important quantitative leap that we are convinced will bring a significant quality leap. Actually, the number of investments today is 8 times higher than the average of the last 20 years. There is also here a very serious legacy, because the irrigation and drainage infrastructure has degraded every year in the last 20 years, and consecutive interventions mentioned in the financial reports of different sources have resulted in the growth of irrigated land.
The irrigation area has increased by 42 thousand hectares throughout the 2 years of our government. Albania had approximately 117 thousand hectares of irrigated land, while we will have 160 thousand hectares by the end of 2016, with the target of increasing it to 200,000 hectares by the end of 2017, which means actually more or less doubling the irrigated land within a governing mandate.
On the other hand, the increase of investments and especially the increase of the irrigated area has a direct impact on production and the income of approximately 160 thousand farmers and farming families within this year.
This is the year of structural change in the management of irrigation and drainage service, which will go at the same pace with the territory reform and further decentralization to transfer more responsibilities to municipalities, accompanied by additional funding; to bring water and drainage services closer to the needs of farmers, in addition to directing irrigation and drainage infrastructure towards agricultural production centres; to increase the number of operators of irrigation and drainage infrastructure, not any longer in 13 regional boards, but only 4 of them and in 61 municipal units.
An important step that reinforces centralization on the one hand, and creates on the other hand the possibility for municipalities, starting from this year, to be responsible for the operation and maintenance of the irrigation schemes from the water source in the canals and the works of art, and of course also in irrigation just as in drainage.
The government support to municipalities has been the largest of these 25 years in terms of the financial package available for irrigation and drainage. 61 new excavators with the highest technical standards will be at your disposal very soon. This paves the way for a radical transformation of logistics, following the absolutely unacceptable legacy of totally amortized vehicles, with only one new vehicle in the last 15 years. The funding from the budget to increase the number of vehicles, which belong to the municipality, will not end there. This number will increase even further next year.
Whereas, for the day to day works we have made available for you a special funding to support the temporary renting of vehicles. We believe that only in 2016, the funding of services and investment projects for the rehabilitation of canals, which will increase the irrigated area by 35 thousand new hectares, is absolutely in the right direction to directly impact production and employment throughout the rural area of municipalities.
On the other hand, cooperation between us implies of course mutual obligations. We are aware of our obligations, we are aware that your needs are greater than our possibilities, but you must be aware of your obligations.
We want our target to be a shared target, and we will work with you as a team, regardless of party belonging or geographic collocation, to ensure the uniformity of this transformation in order to increase the irrigated area to 200,000 hectares, which represent all the areas with intensive agricultural production. What you are required is to focus on the areas with the most intensive agricultural production, and to devise and implement projects of maintenance and rehabilitation with government support, so that we can reach our common objective.
Just as, municipal units in charge of the water and drainage infrastructure, must be organized without any delay and be full efficient, depending of course on their specifications. On the other hand, the performance of municipalities on water and drainage indicators will be the starting point of the financial support for next year. Let’s be clear on this: we will not give next year any uniform support of any kind. The ground to obtain funding in the future will be the results delivered today. You have been elected directly by the people across your municipalities. You have made your promises. As far as the government is concerned, it will provide all the necessary support so that you can reach the shared objectives, but nobody should take for granted the financial support of the government. In this sector, the financial support will be conditioned by the results.
We are aware that what has happened with irrigation and drainage, but also with the water sector in general – I focused firstly on the big project of irrigation and drainage, but I will talk also about drinking water – is that the money invested in over 20 years would have sufficed not to restructure the inherited infrastructure of irrigation and drainage, but to make it from scratch, as if Albania didn’t have any canals.
The fact that that money did not serve even to complete reconstruction, is directly related to an unspeakable corruption in this sector and of course, also to the fact that there was no reliable system control. For this reason, we believe that giving competences to municipalities, thus ending the overlapping of water associations and other never-ending stories, is the first step.
On the other hand, whether in the water and drainage sector, or in the drinking water sector, these are enterprises and should operate as such, with the same criteria and the same efficiency. These are not cows to be milked by corruption. Companies are seeking qualified human resources, which require clear strategic plans, which require regular financial performance, and which will be assessed based on the results. Everybody must be convinced that our support will be unlimited and unconditional, I repeat, regardless of political colours and geographic position.
Next year, you will support your request for more support through your results. Those who have no results will not receive a penny from the government for this project, and will respond to the people who elected them for not delivering any results. This is how it works everywhere, and this is how it will work in Albania.
With regard to water and drainage, Albania is one of the richest countries with water resources in Europe per capita. The current capacity of water resources in Albania exceeds by many times Albania’s need for water. Even here, the legacy is extremely heavy and the water supply for citizens has still great problems, as you all are witnesses, although the water supply system produces 28% more water than the need for supply. Despite the need, this system produces today 28% more water than it is required for the population. Revenues are not collected for approximately 67% of water production in the country. This has resulted every year in an increasingly deteriorated financial condition due to losses. More than half of the losses are not technical, but are only the result of mismanagement and theft. Under these conditions, 20% of the total operating costs of the system are covered by the income generated today by the system.
We have invested in these two years approximately 160 million dollars in this sector, from Shkodra to Peshkopi, Elbasan, Berat, or in water processing plants used in Tirana, Shkodra, Durres, etc. Investments continue also this year. The water supply network has been expanded with 680 kilometres, in addition to the 160 kilometres for canalization. 50 thousand new connections have been made to the water network in the city, and approximately 7 thousand new connections in the countryside with 22 thousand new connections in the canalization network. In addition, 57 thousand consumption meters have been set.
But all these figures mean actually nothing, because at the end of the day all those kilometres of investment cannot be translated into a success story, if they are not administered. Above all, this sector cannot solve the problem of insolvency, if municipalities, which have now taken full responsibility, do not build efficient enterprises, if the administration system of water supply does not experience the same story occurred in the OSHEE, where the absurd partisan militancy was replaced by the daily effort to enhance professionalism and increase the human capital with valuable human resources.
It is a process that has not finished and which will still require several years to reach where it should, but obviously by immediately starting also in the water and drainage system. They must not be systems for the parasites of the parties, they must not be systems to formally employ people and to pay salaries to people who do not show up at work at all, or who have no connection at all with the work required by an enterprise so complex, such as that of water supply. Therefore, radical improvement of the management system is the first requirement. Investments should be built on a new model, based on performance, which should be also the axis on which to build improved management.
It is necessary to reach an agreement to implement an action plan where we will give all our support to thoroughly change the situation in the service management, to change the financial performance, to increase the duration and the quality of supply. There are models of success in Albania which are indicators that this is entirely possible. There is an excellent model in Korca, there is an excellent model in the area of Upper Shkodra, where the difference has been made only by the managerial capacity, as there are many others. These are the models on which to rely, to build the success stories.
The construction of the model of responsibility for management and service by the mayor is based on the principles of this reform. The mayor is directly responsible to ensure this vital service to citizens, and as such he is directly responsible for the quality of the organization, management and the service provided by the water supply enterprise.
The support for investments to municipalities in this sector will be based on the individual performance of water and sewerage companies for each municipality. Each municipality will compete to benefit from the grant of performance, which has a clear formula of distribution, on the basis of which there will be a performance contract on two levels, between the central government and the municipality, between the mayor and the director of the water and sewerage company, to be appointed according to specific requirements.
There will be a new approach to the support with subsidies for the companies of water and sewerage in the municipalities. Operating subsidies provided to cover operating costs, due to losses, mismanagement, etc., which are now free, therefore, they are given regardless of the fact that you manage it or not, if you bring water to the people or not, without taking any responsibility for increasing financial losses, but continue to receive subsidy… This story will end!
We will replace it only with social subsidy, not an additional penny. The only beneficiaries of the social subsidy will be citizens in need who should not suffer the lack of access to drinking water; citizens who have issues in paying for water, which will be paid on their behalf by the government. In this way, these people will be in the same regular situation like everyone else, and will not become a burden to municipal companies for water and sewerage management, but will neither have any excuse to not be included in the list of subscribers within the area where the service is provided.
I don’t believe that there are many areas in Albania that are going through the same hard times and are at the same level of poverty as the area of Upper Shkoder. I believe that nobody can say that people there are wealthy; on the contrary, but the management model applied there has guaranteed the largest increase in the number of subscribers, and the lowest number of losses nationwide in relation to all other enterprises of water supply and sewerage. This, because of a very simple reason that we have seen very clearly also in the battle to restore legality in the sector of electricity supply. It’s not ordinary people the problem. The problem is the incompetent and corrupt people leading totally primitive and unreformed structures. The problem is the resource of the management system. Change the system, which is something that this scheme envisages, put the right people in charge of the system, and be assured that success is guaranteed without any resistance, but on the contrary with the support and solidarity of the people, who the more they are ordinary people, the more they are willing and honest in relation to the government and the municipality. Be sure of that.
We will formalize the national program for capacity and staff certification, as well as the legal framework for it within this year. We will not allow that water supply companies become nests of parasites, thieves and people without the adequate training to work there. Therefore, we will make available to all municipalities this national program for capacity and staff certification, and will strongly support this process through the National Agency of Water Supply and Sewerage.
A thorough decentralization of the water supply fund will be done next year. This means that the government will actually increase funding directly, but will increase also control over the efficiency of this funding, and certainly will increase this funding based on performance. We will not support corrupt and not performing structures that create nothing but losses. On the contrary, we will take possession of them. Pursuant to the law and in the framework of this reform, the government has the right to take possession of an enterprise, if the municipality is not performing, because it is a vital service for which we cannot say “no problem, let us leave people without water”, on the grounds that there is a mayor who does not understand at all his responsibility, or is unable to stimulate the enterprise in the path of transformation and performance.
The scheme of this reform allows for the incorporation, therefore, successful water suppliers can take in less successful water suppliers. I am going back to the example of Upper Shkodra. I suggest you all to take people there, to go yourselves and see in reality how a situation that was completely hopeless, with all the problems that rural areas in Albania have, with informal constructions which have been demolished, is becoming a model of management. I won’t mention Korça because it has a more compact and a little more developed situation from a social point of view, but I am talking about a social situation that is very typical in Albania. If a water supply enterprise is performing, it has the right by law and under this reform to join other enterprises. The water supply of the Great Highland can join the water supply of Shkodra, can purchase shares of the water supply of Lezhe, etc. So, it can function in the market as companies across Europe do. If the water supply of Kavaja is performing, it can expand and take shares from others. This is how things can change, based on performance and on the legality of the functioning of enterprises. These are companies, these are not troops, and neither warehouses or charitable refuges for political benefits. Our goal is to turn them together with you into enterprises.
Municipalities should advance rapidly with the organization and aggregation, with incorporation under the new territorial division, where we decided to start from the principle of not prejudicing anyone.
There have been many discussions at this stage. We have consulted international expertise, we have seen all the previous discussions, we have seen all the previous studies, reports strategies, etc.
Certainly, 61 water supply enterprises for a country like Albania is an extremely high number. Take into account that water reform across Europe is still going on, and it does nothing but unites. As of today, Ireland has just one water supply enterprise for the whole of its territory, to increase efficiency, compatibility, and so on. The reason why we established this principle is to give every enterprise and every municipality the chance to perform and grow. There are many cases in Europe with very small municipalities where there is only one water supply company covering also large cities, and its profits are far greater than those of others because the municipality is the owner. The others take just the service, while the municipality takes the profits. So, it succeeds in turning a very small municipality into a regional company.
We believe that there are many experiences in the territory that can be very successful. We don’t have, for example, to tell the water supply company in the Great Highland that it is not going to exist any longer because the water supply company of Shkoder will provide water for the entire north. It could happen tomorrow, but it should occur as an incorporation of the strongest and the most performing with the most vulnerable and less performing, to enhance the quality of performance across the territory.
You need to prepare since today for the process of financial support, to receive financing from the support fund based on performance. The criteria are very clear. The General Directorate of Water Supply and Sewerage is willing to provide you the broad basis on which performance will be assessed. It will be an automatic assessment, not a subjective one according to which one may want to give more to Shkodra and less to Lezha. Absolutely not! Each company will receive financial support based on the performance.
Every municipality must start today to cooperate with the Ministry, the Directorate, to prepare the scheme of social subsidy that will be benefited directly from the citizens in need.
All this is related to illegal connections, but it will be you who design and implement the action plan on how you will deal with illegal connections to reduce losses, increase billing and collection, which are the connections to be “legalized”, or which one will be cut off.
This is a colossal work and you have our total support. This reform is our priority, and we will not be indifferent, but will interfere with the law whenever we see non performing companies, and we have the right to mediate in order to suggest to a successful municipality to take within its own company an unsuccessful enterprise. And we will do this, whether the mayor approves of it or not because it is a vital service. Those who want the water supply company should keep it and make it successful. This is the main common purpose, and I am convinced that each of you wants this, but the job is extremely complex and it really requires experts and a great determination.
