{"id":8476,"date":"2024-09-06T15:07:10","date_gmt":"2024-09-06T13:07:10","guid":{"rendered":"https:\/\/shukalb.al\/?p=8476"},"modified":"2024-09-06T16:35:22","modified_gmt":"2024-09-06T14:35:22","slug":"reflections-on-a-lifetime-in-water-regulation-insights-from-a-pioneer-of-the-albanian-water-sector","status":"publish","type":"post","link":"https:\/\/shukalb.al\/?p=8476&lang=en","title":{"rendered":"Reflections on a Lifetime in the Albanian Water Sector: Insights from a Pioneer in the Field"},"content":{"rendered":"

Reflections on a Lifetime in the Albanian Water Sector: Insights from a Pioneer in the Field<\/strong><\/h1>\n

An Interview with Ndri\u00e7im Shani, Former Chairman of Albanian Water Regulatory Authority (WRA)<\/em><\/h3>\n

\"\"After 42 years in the water sector, what are some of the most significant changes you have witnessed in this sector in Albania, and can you share some of the challenges you faced and how you overcame them?<\/em><\/strong><\/p>\n

There have been two, possibly three, key moments of significant change and reform in the sector. The first occurred in 2000 with the enactment of the law “On the Organization and Functioning of Local Government,” which transferred responsibility for water supply and sewerage (WSS) services to local governments, marking the decentralization of these services. A second important development followed in 2007 with the decision “On the Transfer of Shares of WSS Companies to Local Government Units.”<\/p>\n

The next major reform came in 2016, focusing on the partial consolidation of existing WSS companies with rural areas. This reform also granted direct legal authority to mayors for managing WSS services within their administrative territories. The most recent reform, which is currently being implemented across the sector, involves the consolidation of 58 WSS companies into 15 regional companies. This reform applies the principle of economies of scale to the entire sector, with the central government holding a 51% share in these regional companies.<\/p>\n

Analyzing the challenges that the sector has faced during these reforms requires a lengthy and in-depth examination. However, we can briefly highlight some key considerations. Reforms aimed at improving sector performance are inherently complex and inevitably involve both advantages and disadvantages in terms of their design and implementation.<\/p>\n

In the initial decentralization reform, the goal was to bring services closer to consumers and place responsibility for these services in the hands of local governments. The central government provided financial support to WSS companies through subsidies, but consistently tolerated non-payment of electricity bills by WSS companies to the Electricity Distribution Operator (OSHEE), leading to significant debt accumulation. This policy created a situation where local governments did not fully assume responsibility for these services. The mayors lacked direct accountability, as responsibility lay with Municipal Councils through the Supervisory Councils of WSS companies, which were often composed of individuals without expertise in the field. This lack of oversight and accountability led to poor performance in the sector overall.<\/p>\n

The current reform has centralized the sector, with the central government taking direct responsibility for managing services. The application of economies of scale, along with the seriousness with which the reform is being implemented, seems to be yielding concrete results in improving sector performance. However, in light of the obligations under the “Acquis Communautaire,” challenges remain. These include enhancing the capacities of key staff in regional companies, meeting central government objectives, ensuring transparency and communication with the public, and securing the necessary funds for investments aimed at reducing physical losses and improving customer service quality.<\/p>\n

    \n
  • During your two mandates as Chairman of the Water Regulatory Authority of Albania (ERRU), what do you consider to be your most important achievements, and how your pragmatic approach and deep knowledge of the sector influenced your leadership process?<\/em><\/strong><\/li>\n<\/ul>\n

    During my 8-year tenure as head of ERRU, numerous documents and regulatory acts have been drafted or revised as essential tools in the regulatory process of the sector. The most notable of these is undoubtedly the new Methodology for the Approval of WSS Service Tariffs. Although it is impossible to list them all, some of the most prominent achievements include: the revision of the annual report format for presenting ERRU’s activity to the Assembly, the Performance Report of the WSS Sector, and the annual Water Balance report by WSS companies. Additionally, we developed an independent data reporting system and Key Performance Indicators (KPIs), introduced a new approach for analyzing tariff applications by ERRU, revised the Regulations for Public Hearings with WSS companies and consumer complaint management, and created a bilingual website in Albanian and English language with a high level of quality, among other accomplishments. These achievements reflect the collective efforts of all ERRU staff and the commission, and I firmly believe that today, ERRU stands as a leading regulator in the Balkans, and possibly beyond.<\/p>\n

    The development of these documents was supported by extensive experience and a deep understanding of both engineering and institutional frameworks within the WSS sector. This expertise has been shaped by academic roles, project management in the public sector, work as an independent expert, and close collaboration with Association of European Water Regulators (WAREG) and other regulators in the Balkans. Our objective in these partnerships has been to draw on the best practices from Europe and beyond, adapting them to our specific conditions, both for the current transition phase and the future of the WSS sector. The successful realization of these initiatives was made possible through the dedicated teamwork of all ERRU staff and the Commission, whose high level of expertise and strong commitment have contributed to the institution’s contemporary performance.<\/p>\n

      \n
    • What were<\/em><\/strong> the key considerations in developing the new Tariff Setting Methodology<\/em><\/strong>?<\/em><\/strong><\/li>\n<\/ul>\n

      The new tariff approval methodology is designed with flexibility to accommodate the current state of the sector and its future demands. It includes two key approaches: the “Cost Plus” methodology for companies that are unable to cover the direct costs of operations and maintenance (O&M), and the “Ceiling Price” approach for financially sustainable companies.<\/p>\n

      The Ceiling Price methodology is based on the rate of return on capital and requires companies to prepare a 5-year Business Plan. Implementing this method also necessitates access to economic and financial data on inflation and other indicators from institutions such as the Bank of Albania, INSTAT, and international organizations.<\/p>\n

      Some of the key changes in the new methodology include significant improvements in the procedures for setting fixed and volumetric tariffs, adjusting the cross-subsidy coefficient between different\u00a0consumer categories, revising amortization rates, revising the block tariff principle and affordability\u00a0criteria, ensuring data accuracy, and including two additional Key Performance Indicators (KPIs) for\u00a0consumer complaints and energy efficiency.<\/p>\n

        \n
      • The Database Platform for Data Collection by Utilities is a significant project. How did you ensure the accuracy and reliability of the data collected?<\/em><\/strong><\/li>\n<\/ul>\n

        Implementing an accurate and reliable data retention and reporting system by WSS companies is a complex and challenging process, even for countries with well-developed sectors. The project, in cooperation with AKUK, aims to establish a robust system that aligns with both the current state and future demands of the sector. ERRU has extensive experience in defining data requirements for evaluating and minimizing sector performance issues. The new tariff methodology addresses in detail the methods for verifying data at both central and local levels to ensure accuracy and reliability.<\/p>\n

          \n
        • What impact do you believe the Water Balance Report and the regulations on public hearing sessions and handling complaints have had on the sector?<\/em><\/strong><\/li>\n<\/ul>\n

          The Water Balance Report is a crucial tool for assessing water losses and meeting consumer water demand. It helps identify areas where loss reduction efforts should be focused and serves as an instrument for verifying that water demand is being met. Although current water sources may seem sufficient, the report also highlights the need for new sources in some specific water supply systems.<\/p>\n

          When water supply and sewerage companies propose new tariffs, WRA places significant importance on the public hearing process. The proposed tariffs must be transparent, well-argued, and easy to understand. The hearing sessions allow the public to express concerns about the company\u2019s performance and service quality while raising consumer awareness about their obligations and participation in the process.<\/p>\n

            \n
          • As Vice President of the Association of European Water Regulators (WAREG), what insights did you gain about the water sector on a European level which can be applied in Albania?<\/em><\/strong><\/li>\n<\/ul>\n

            During my tenure as Vice President of WAREG, ERRU representatives played an active role in drafting reports on Key Performance Indicators (KPIs), losses, affordability, investments, tariffs, and more. Specifically, ERRU participated in Task Forces focused on KPIs, Investments, and Affordability criteria. Engaging in these activities provided valuable insights for enhancing ERRU\u2019s regulatory instruments, leveraging advanced European practices. This experience also deepened our understanding of European water directives, which Albania, as an EU candidate country, is required to adhere to. Additionally, ERRU made a significant contribution to regional cooperation by initiating and promoting two EU-funded projects aimed at building regulatory capacity in the Western Balkans.<\/p>\n

              \n
            • What advice would you give to young water professionals entering the water sector today?<\/em><\/strong><\/li>\n<\/ul>\n

              Young water professionals should recognize that they are fortunate to work in one of the most vital fields for humanity, a field that is becoming increasingly important every day. Water management issues require their full commitment and contribution. The world\u2019s drinking water reserves are either constant or diminishing due to pollution, while the demand for water from the population and industry is only increasing.<\/p>\n

              Therefore, drinking water management should be the primary focus of their education and training at a contemporary level. Equally important is the complex field of wastewater treatment, which requires continuous knowledge updates, especially regarding European water directives, the circular economy, and zero CO2 emissions.<\/p>\n

              My advice is for them to love this profession and see their contribution as not only professional but also as citizens. They will find satisfaction in their work and the impact it has.<\/p>\n

                \n
              • In your opinion, what are the key areas that need focus to ensure sustainable performance in the water sector in Albania?<\/em><\/strong><\/li>\n<\/ul>\n

                To ensure sustainable performance in the water sector, it is essential to focus on key indicators that highlight areas of weakness. Two main areas require attention to improve both the financial performance of companies, and the quality of services provided to consumers.<\/p>\n

                Firstly, there is a need to reduce the level of Water Without Revenue (non-revenue water), which adversely impacts financial performance and compromises the ability to meet consumer demand for water. This can lead to reduced water supply schedules and potential public health risks from compromised tap water.<\/p>\n

                Secondly, financial performance is hindered by operating at relatively low tariff rates that do not align with the costs of operations and maintenance (O&M) and the overall expenses incurred by companies. The Revenue Rate indicator, which measures the financial efficiency of companies, is generally insufficient. Improving this requires not only increased effort from WSS company staff but also stronger support from the Central Government. The necessity of such support was clearly demonstrated in the energy sector.<\/p>\n

                  \n
                • How has your collaboration with SHUKALB influenced your work and the sector\u2019s progress, and what role do you see for SHUKALB in advancing professionalism and sustainable performance in the water sector?<\/em><\/strong><\/li>\n<\/ul>\n

                  I hold SHUKALB in high regard as an institution that has achieved parity with its counterparts in the most advanced Western countries. SHUKALB has been instrumental in promoting contemporary management practices within the water sector and has played a pivotal role in capacity building for both existing WSS staff and new water professionals. It is a key player in enhancing the performance of the WSS sector.<\/p>\n

                  SHUKALB has also been highly active on the international stage, earning significant recognition from organizations such as International Water Association (IWA) and International Association of Water Service Companies in the Danube River Catchment Area (IAWD), being represented in the boards of their highest management levels. Personally, I have been a consistent member, working closely with these organizations. My involvement has included serving as a speaker, delivering presentations at their Annual Conferences in Albania and Kosovo, and contributing to the Burimi E-newsletter. I look forward to continuing this collaboration in the future.<\/p>\n","protected":false},"excerpt":{"rendered":"

                  Reflections on a Lifetime in the Albanian Water Sector: Insights from a Pioneer in the Field An Interview with Ndri\u00e7im Shani, Former Chairman of Albanian Water Regulatory Authority (WRA) After<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[213],"tags":[],"class_list":["post-8476","post","type-post","status-publish","format-standard","hentry","category-newsletter"],"_links":{"self":[{"href":"https:\/\/shukalb.al\/index.php?rest_route=\/wp\/v2\/posts\/8476","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/shukalb.al\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/shukalb.al\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/shukalb.al\/index.php?rest_route=\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/shukalb.al\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=8476"}],"version-history":[{"count":0,"href":"https:\/\/shukalb.al\/index.php?rest_route=\/wp\/v2\/posts\/8476\/revisions"}],"wp:attachment":[{"href":"https:\/\/shukalb.al\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=8476"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/shukalb.al\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=8476"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/shukalb.al\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=8476"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}