Challenges

Institutional and Financial

Technical

Key Issues/ Concerns

- Less developed framework for regulation of public or privately owned monopolies;

- Current tariff procedures (and levels) not adequate;

- Complex – confusing and possibly legal questionable present organization of KVK (comprising of 17 departments/ enterprises;

- Lack of any real long term forward planning or cost effective investments, selection and implementation; most activities are concentrated on solving day-to-day problems;

- Diffused responsibility of management and a reluctance to delegate the required authority to managers at each level of command;

- Lack of fast, meaningful, Management Information and control systems;

- Low operational staff productivity, typically 5-15 times lower than international water utilities;

- Excessive energy costs;

- High staffing levels (>6,600) and low salaries (average 40 USD/month);

- Serious financial situation deteriorating over past four years. In 1999 KVK experienced an operating loss of 31 million UAH (corresponding to 15% of sales);

- Profitability and liquidity seriously deteriorated over past four years;

- Collection rate for domestic consumers expected to be about 80%; and

- Not sufficient expenditures on maintenance (presumably about 0.4%-0.6% of the estimated replacement value).

- Large domestic unit water demands (347 lcd; more than 2 times typical average Western and Eastern European figures);

- Large unaccounted-for-water, hereunder lack of pressure zoning;

- Some water quality problems (seasonal content of organic matter, and coliform bacteria present in many samples (but only very few samples above the norm));

- Treatment problems (process problems at coagulation) at Desna and Dnipro surface water treatment plants;

- Large infiltration in the wastewater collectors;

- Large retention time in wastewater collectors creating a high degree of corrosion;

- Poor energy performance of major wastewater pumping stations;

- General lack of automation of Bortnicheskaya WWTP;

- Lack of adequate sludge disposal facilities;

- Dilapidated equipment and facilities, notably at the Dnipro WTP, the distribution network, the wastewater collectors (and expectantly in the foreseeable future, also pumping stations and rising mains), and Bortnicheskaya WWTP Line 1;

- Lack of individual metering of water;

- Lack of detailed knowledge of water and wastewater systems (lack of GIS and hydraulic models;

- Present organization with many “independent” enterprises makes overall planning difficult; and

- Lack of adequate maintenance of assets.