Environment in emerging and transition economies

Financial Planning Tool for Water Utilities (FPTWU)

 

The purpose of the tool is to help water utilities in the EECCA region reach operational and financial sustainability, by providing them with the opportunity to:

  • (i) rationalise the way their capital expenditure programme is established;
  • (ii) determine the conditions for the balancing of their sources and uses of funds;
  • (iii) to improve the monitoring of their overall performance by analysing performance indicators output by the tool and;
  • (iv) in the long run eventually raise finance on their own books. To achieve this the EAP Task Force has developed a financial planning tool which is being tested and fine-tuned in the framework of a couple of pilot projects.

The FPTWU’s specific objectives are listed below: 

  • assist water utilities in improving their financial status through the implementation of sound medium term financial planning;
  • improve their investment decision making process by enabling them to assess the relative merits of each proposed investment or project using a number of criteria (operational, financial, environmental, social, level of customer service, etc.);
  • contribute to the improvement of their operational performance through (i) a systematic tracking down of potential sources of savings (for instance more energy efficient equipment), (ii) a more realistic assessment of the water demand (anticipated growth of the customer base, water consumption forecast based on the number of meters in operation, leak reduction target through planned investments/repairs etc.) and (iii) a better understanding of collection rate levels;
  • enhance - and contribute to a more systematized - communication between water utilities and municipalities through the use of the tool’s outputs to help establish (i) medium-term capital expenditure and maintenance and repair programmes, most often to be financed by the municipality (ii) tariff levels over a short- to medium-term period, (iii) the level of operational subsidies (aimed for instance at compensating water utilities for financially adverse decisions imposed by municipalities) and (iv) the amount of finance to be raised from municipalities based on the capital expenditure programme under discussion.