80MVK16 Market survey Romania and Bulgaria - The Water Sector

Transcription

1 80MVK16 Market survey Romania and Bulgaria - The Water Sector This Market survey is carried out by BDG by order of EVD and in cooperation with the Dutch embassy of Bucharest and Sofia. EVD November 2008 Nadere informatie: EVD Landenmedewerkers Annemarieke Roelfzema, Isabel Fortunato Telefoon: Romania , Bulgaria roemenie@info.evd.nl, bulgarije@info.evd.nl 1

2 November 2008 The ministry of Economic Affairs, EVD EVD supplies this information for free. The content needs to be available for free for our clients, Dutch companies. It is not allowed to multiply or publish anything out of this edition by photocopy, microfilm or on any other possible way, without previous notice of the publisher. In spite of all the care that is taken over this edition, the Ministry of Economic Affairs cannot be held legally liable for possible inaccuracy. 2

3 CONTENT A Executive Summary; Main Conclusions 6 B Romania 7 List of Abbreviations 7 1. Brief Overview of the Romanian Water Sector General Information Organization of the Water sector in Romania Brief History Present Situation Legal framework including adherence to Framework Water 12 Directive Authorities and Responsibilities Overview of Latest Policy Documents and National 16 Development Plans Surface Water and Groundwater Quality Including 16 Management of River Basins Flood Risk Management (including adherence to EU 16 Flood Directive) Coastal Protection and Quality of Coastal Waters Water Management, Municipal and Rural Wastewater 19 Treatment Drinking Water Cross border and International Partnerships Market Insight Water Supply and Sewerage Applicable Regulations, Standards, Government Policies Infrastructure Status and Applicable Technologies Specifics in Urban and Rural Areas Water Companies Operational, Technical and Financial 24 Management 2.2. Water Quality National Monitoring System for Water Quality (observations, 27 operational, investigation) Certification (including potential for private water certification) Research and Development Waste Water Treatment in Urban and Rural Areas Including Sanitation Market Innovation and Compliance with Regulation in Industries with a 30 High Water Usage 2.5. River Basin Management National Management Plans Including Implementation Stages Surface Waters Categories and Risk Bodies of Surface Water Flood and Drought Prevention and Monitoring Systems (early 33 warning systems) 2.6. Coastal Management and Protection Erosion Protection Integrated Management of Coastal Areas Groundwater / Soil Pollution Major National and International Companies Active in the Water 41 Sector 3. Overview of Funding Available for the Water Sector National Funds Pre-Accession European Funds Post-Accession Funds Development of Alternative Financing Schemes in the Water Sector 60 (including PPP) 4. Tendering procedures 70 3

4 C Bulgaria 72 List of Abbreviations Brief Overview of the Bulgarian Water Sector General Information Organization of the Water Sector in Bulgaria Brief History Present Situation Legal framework Including Adherence to Water Framework 75 Directive Authorities and Responsibilities Overview of Latest Policy Documents and National 78 Development Plans Surface Water and Ground Water Quality Including 78 Management of River Basins Flood Risk Management (including adherence to EU 78 Flood Directive) Coastal Protection and Quality of Coastal Waters Water Management, Municipal and Rural Wastewater 79 Treatment Drinking Water Cross-border and International Partnerships Market Insight Water Supply and Sewerage Applicable Regulations, Standards, Government Policies Infrastructure Status and Applicable Technologies Specifics in Urban and Rural Areas Water Companies-Operational, Technical and Financial 82 Management 2.2. Water Quality National Monitoring System for Water Quality (observation, 82 operational, investigation) Certification (including potential for private water certification) Research and Development Waste Water Treatment in Urban and Rural Areas Including Sanitation Market, Innovation, and (compliance with) Regulation in Industries 85 with a High Water Usage 2.5. River Basin Management National Management Plans Including Implementation Stages Surface Waters Categories and Risk Bodies of Surface Water Flood and Drought Prevention and Monitoring Systems (early 87 warning systems) 2.6. Coastal Management and Protection Erosion Protection Integrated Management of Coastal Areas Ground Water / Soil Pollution Major National and International Companies Active in the Water 92 Sector 3. Overview of Funding Available for the Water Sector National Funds Pre-Accession European Funds Post-Accession European Funds Development of Alternative Financing Schemes in the Water Sector 96 (including PPP) 4. Tendering Procedures 101 D Joint SWOT Analysis of the Sector in Romania and Bulgaria 103 4

5 Annexes Annex 1 RO National Legislation Transposing EU Directives in the Water Sector 104 Annex 2 RO ISPA Projects 110 Annex 3 RO Romania-National and European Funds Available for the Water Sector 116 Annex 4 RO Upcoming Project Ideas in the Water Sector 117 Annex 5 Key Contacts Romania 119 Annex 6 References Romania 122 Annex 7 BG National Legislation Transposing EU Directives in the water Sector 123 Annex 8 BG ISPA Projects 124 Annex 9 BG Upcoming Project ideas in the Water Sector 126 Annex 10 Key Contacts Bulgaria 127 Annex 11 References Bulgaria 129 Tables Table 1 RO Implementation Stages River Basin Management Plan 17 Table 2 Romanian Hydrographic Network 31 Table 3 RO Implementation Phases Protection Plan Costal Area Erosion 38 Table 4 RO Selection Water Projects financed form Environmental Fund 48 Table 5 RO Overall financing plan of SOP ENV 53 Table 6 RO Financing Plan for SOP ENV per Priority Axis 53 Table 7 RO Desired SOP ENV results for Priority Axis 1 54 Table 8 RO Current Status of SOP ENV Water Projects Priority Axis 1 55 Table 9 RO Desired SOP ENV results for Priority Axis 5 56 Table 10 RO ROP PA 1 Allocations per Development Regions 58 Table 11 RO The funding scheme for ROP Priority Axis 1 58 Table 12 RO Other water projects financed by EBRD 63 Table 13 RO Water Sector Projects Financed By EEA Grants 66 Table 14 BG Water Sources 81 Table 15 BG Categories of Surface Water Bodies 87 Table 16 BG Ground Water Bodies 90 Table 17 BG Overall Financing Sources OP Environment 96 Table 18 BG Main EBRD financed projects in water sector 98 Table 19 BG World Bank Projects in the Water Sector 99 Table 20 BG Key Institutions OP Environment and OP Regional Development 101 Charts Chart 1 RO Institutions under MESD coordination and authority 14 Chart 2 RO Governmental authorities cooperating in the water sector 16 Maps Map 1 Hydrological Map of Romania 9 Map 2 Regional Operators Romania 26 Map 3 RO Vulnerable areas for nitrits pollution 40 Map 4 River Basins Bulgaria 73 5

6 A Executive Summary - Main Conclusions Business Development Group SRL was commissioned by the Agency for International Business and Cooperation (EVD) Netherlands to carry out a survey study regarding the water sector in Romania and Bulgaria, in order to provide the Dutch companies and organisations in the field with a more detailed insight into different aspects of the Romanian and Bulgarian water sector, and in order to strengthen their strategic position on these markets. The executor of this report based its methodology on providing valuable local information in cooperation with our Bulgarian business partners Ecorys South East Europe, in Sofia. The report is constructed in 2 main parts, one per each country, providing an overview of key stakeholders and a summary of policy documents, development plans and current status of implementation of EU directives related to surface and ground waters management, flood and drought, coastal protection and quality of coastal waters, water management, and municipal as well as rural wastewater treatment and drinking water including overall compliance with the Framework Water Directive. The report also provides an outline of market developments driven by the need for implementing new, higher standards as well as comprehensive data bases of major players in the sector. Even though major efforts were made in the pre-accession period for upgrading standards, approach and infrastructure levels in the water sector, long term efforts are needed in the next period in both countries for reducing disparities and complying with the EU acquis. Basic infrastructures and services will need to be created, upgraded and expanded in order to open up regional and local economies, set up an effective business support framework and exploit opportunities offered by the European Market. To this end high level financing is planned in both countries from joint national and European sources but also with the contribution of international financing organizations and other donors. The report provides a review of available financial opportunities as well as the corresponding tendering procedures. At the same, the SWOT analysis in section D, aims to aggregate main characteristics of the water sector in both countries, giving a general guideline for further strategy development for Dutch companies interested in making use of the local and regional opportunities. Even with a somewhat different density and profile of the hydrological network, Romania and Bulgaria share not only two major water resources (Danube and Black Sea) but also a lot of the past history in the development and management of their national water infrastructure. Both countries will fulfill their environmental commitments for EU membership in close bilateral cooperation, and are facing nowadays more or less similar challenges in creating viable systems for water management. The implementation of national strategies in the water sector already generates a wide number of projects tendered on increased fairness and transparency, based on EU rules and adjusted national legislations. Dutch equipment and expertise are already well-known in Romania and Bulgaria due to the high number of projects carried out with Dutch governmental and European support. Dutch brands are well-trusted by both public and private sectors and considered to be synonymous with high efficiency, reliability and profitability. These are already creating good prerequisites for further commercial success on both markets provided they are adequately valued. A list of potential project ideas, as made public by various authorities in both countries, is provided in Annex 4 (Romania) and respectively Annex 9 (Bulgaria). The competitive advantage of Dutch Water Sector can be further consolidated by offering turn key solutions by integrating technology and consultancy based on consortium partnerships to include cooperation with local partners (not only a condition for accessing most of EU or national financed projects but also for successful projects implementation). The prospect of complete solutions will be appealing to local authorities (public utilities) and private market (industrial facilities, real estate developers, etc.) for water supply, industrial use, waste water treatment and sanitation services. At governmental level, support is openly sought for institutional capacity building (administrative, legislative and managerial), training, education and knowledge exchange in view of development of plans for river basins management, surface and ground waters monitoring and rehabilitation, flood prevention and protection. Moreover, the long term Dutch experience regarding control and protection of all types of water systems, as well as the lessons learned in applying the integrated approach for water management- water governance and sustainable use of water resources-, are perceived by both Romania and Bulgaria as an important support for bilateral cooperation, not only during the current accession phase but also for further joint action within the European Union. 6

7 B Romania List of Abbreviations Romania AFM Environmental Fund Administration ANRSC National Authority for Regulating Public Utilities Community Services ARA Romanian Water Association ASRO Romanian Standards Association BCR Romanian Commercial Bank BDG Business Development Group BOT Build-Operate-Transfer CCEG Eco-Counselling Centre Galati CEDB Council of Europe Development Bank CF Cohesion Fund CWP Country Water Partnerships DDBR Danube Delta Biosphere Reserve DESWAT Destructive Water Abatement and Control EAFRD European Agricultural Fond for Rural Development EBRD European Bank for Reconstruction and Development EC European Commission EF Environmental Fund EIB European Investment Bank ERDF European Regional Development Plan EU European Union EUR Euro FEDR European Fund for Regional Development GD Governmental Decision GEF Global Environment Facility GIS Geographical Information System GO Government Ordinance GWP Global Water Partnership HA Hectare HDPE High Density Polyethylene IDA Intercommunity Development Association IB Intermediate Bodies IBRD International Bank for Reconstruction and Development ICIM National Institute for Research and Development for Environment Protection ICPDR International Commission for the Protection of the Danube River IDA Intercommunity Development Association INSSE National Institute of Statistics IPPC Integrated Pollution Prevention and Control ISPA Instrument for Structural Policies for Pre-Accession ISPB Public Health Institute in Bucharest ISPIF Land Improvement design and studies institute IWRM Integrated Water Resources Management JICA Japanese Agency for International Cooperation MA Managing Authority MARD Ministry of Agriculture and Rural Development MDPWH Ministry of Development, Public Works and Housing MENER National Programme for Research, Development and Innovation MESD Ministry of Environment and Sustainable Development MIL Million MIRA Ministry of Interior and Administrative Reform MPH Ministry of Public Health NAAR National Administration Apele Romane NARMPP National Authority for Regulating and Monitoring Public Procurement 7

8 NEPA NCCA NIHWM NMA NRDP PA POS PPP RBDP RBMP RENAR ROC SA SAMTID SAPARD SEAP SIMIN SMIAR SOP SOP ENV SRAC SRL TAC UNDP UNEP-Ch UNESCO UNO USAID USD USTDA WATMAN WB WFD WMS WWTP National Environmental Protection Agency National Committee for the Coastal Area National Institute of Hydrology and Water Management National Meteorological Administration National Rural Development Program Priority Axis Operative Sectorial Programme Public-Private Partnership River Basin Development Plan River Basin Management Plan Romanian Accreditation Association Regional Operating Company Joint Stock Company Infrastructure Development Programme for Small and Medium Urban Communities Special Pre-Accesion Programme for Agriculture and Rural Development Electronic System for Public Procurement Meteorological Integrated Informational System Romanian Waters Integrated Monitoring Sistem Sectorial Operational Programme Sectorial Operational Programme for Environmental Infrastructure Management Systems Certification Organization Limited Liability Company Technical Advisory Committee United Nations Plan for Development United Nations Environment Programme Chemicals Division United Nations Educational, Scientific and Cultural Organization United Nations Organization United States Agency for International Development United States Dollars United States Trade and Development Agency Informational System for Integrated Water Management World Bank Water Framework Directive Water Management System Waste Water Treatment Plant 8

9 1 Brief Overview of the Romanian Water Sector Map 1: Hydrological Map of Romania Source: NIHWM 1.1 General Information Romania is a country of 237,391 km2 and over 21.7million inhabitants with a relief split threefold: 31% mountainous, 36% hills/plateaus, 33% plains arranged in a ring and amphitheatre structure. The mountains of the Carpathian ring, along with the Transylvanian Depression which skirts it, represent the high relief of m. Beyond this, between 200m 1000m are hills, tablelands and the Dobrogea Plateau, plus the plains of the Lower Danube (Romanian Plain) and Banat Crisana, an expansion of the Tisa Plain. Romania s territory has a complex geological structure of orogenic, foreland and inter Carpathian units. Key elements are the alpine folded belt of the Carpathians and the North Dobrogean Mountains. The Carpathian foreland includes platforms (Moldovian, Scythian, Moesian) and the intercarpathic areas of Transylvanian and Pannonia Depressions. Part of the Alpine chain, the Carpathians are connected to the Alps in the west and the Balkans in the south and are divided into three main areas: Eastern Carpathians, Southern Carpathians and Apuseni Mountains. The plateau areas are built up by successions of varying geological history. The alpine North Dobrogean range has a peculiar, intracratonic position within the foreland. The Transylvanian Depression (central Romania) is a Neocene molasses basin. The Middle-Upper Miocene and Pliocene succession of the basin fill includes important Early Badenian salt deposits and several levels of volcanic tuffs. The easternmost part of the Pannonia Depression (also a Neocene molasses basin) is represented in the western part of the country by Neocene deposits. Romania has a mild, temperate-continental climate with four distinct seasons, most precipitation in the warm season and some Mediterranean influence to the south. Average annual temperatures are 8-11 C in the agricultural area and -2 C on the Carpathian summits. Similarly, frost-free periods exist for and days and average annual precipitation is 400-9

10 800mm (potential evapo-transpiration: mm) and over 1200mm (potential evapo-transpiration: less than 500mm) respectively. Precipitation has an uneven distribution and severe drought occurs every years. With territory extending over almost 5 in latitude, significant temperature variations exist between the south and north (average annual temperature is 3 C lower in the north at similar altitude). Temperature variations between west and east are less marked (10 degrees Celsius higher in east) with precipitation variations being more significant (700mm in the west less than 400mm in the east). Due to its geographical position, Romania has a great variety of water resources consisting in surface water (inland rivers, natural and entropic lakes) that account for 46% of the total resources, the Danube River 44% and underground waters 10%. In spite of the geographical diversity Romania is poor in water resources as reported to the country s current population. The specific usable resource in natural regime is of about 2,660 m3/inhabitant/year, (considering also the Danube s contribution), while the theoretic specific resource is of about 1,770 m3/inhabitant/year (considering only the contribution of the inland rivers). Romania is almost entirely situated within the Danube Basin (97.8%). The Romanian section represents 29% of the surface area of the whole Basin, with 37.7% of the river flowing through its territory. The Romanian (and also Ukrainian) Danube is the end carrier of all wastewater discharges from upstream countries to the Black Sea. The Danube the second-sized river in Europe (2,850 km long) flows 1073 km in Romania and has an average stock of m3 at the entrance on the Romanian territory. Romanian Black Sea Coast is of 244 km representing 7.65% of country borders. The inland river network comprises 78,905 km. Main characteristics of this category of resource are a very large variability in space (a half of the water volume is in the mountainous area; the specific mean flow ranges within 1 l/s and km2 in the lower areas, up to 40 l/s and km2 in the high areas), and very high variability in time so that significant floods happen in spring, followed by long drought periods. The underground water resources consist of the water deposits existing in the phreatic aquifers - bearing and very deep layers. The distribution of the underground leaking way varies on the large tectonic units all over the country in the following way: l/s and km2 in Northern Dobrogea; l/s and km2 in Moldavian Plateau; l/s and km2 in Transylvanian Depression and the Pannonia Depression; l/s and km2 in Northern Dobrogea and the Danube Platform; 5-20 l/s and km2 in Carpathians area, especially in the Meridional Carpathians and the alpine zones in the Jiu and Cerna basins. The total gross water samplings reached 6.98 billion m3 in 2007, out of which: population 1.05 billion m3, industry 4.84 billion m3, agriculture 1.09 billion m3. The water sampling decrease from 20.4 billion m3 in 1990 is mainly determined by the: reduction of the economic activity; reduction of water consumption reduction in technological processes; reduction of losses; enforcement of the economic gear in the water management. Regarding only those sites where the status of the water resource is a key factor, 6.1% of Romania (14,437.3 km2) has been designated for the protection of habitats/species (216 sites). 1.2 Organization of the Water sector in Romania Brief History First trials towards putting together a national water management plan in Romania were started at the end of the 19 th century by individual efforts of major Romanian engineers (such as Anghel Saligny) and were mainly connected with hydro technical works for Danube embankment and building of an irrigation channel for Baragan plains. Plan général d aménagement des forces hydrauliques de Roumanie ( General Development 10

11 Plan for hydraulic forces in Romania ) ellaborated in 1934 by eng. Dorin Pavel is considered to be the first evaluation at national level even it was taking into account exclusively the hydro energetic potential without considering other water usages. After second world war the former Communist Party gave a major importance to country electrification. The national electrification plan approved in 1950 was relying heavily on the hydrologic potential but at the same time was referring to other usages of water such as irrigation especially for South Romania. During the same period (1949) the construction of the Danube Black Sea channel was initiated. Immediately after the approval of the National Electrification Plan, the Institute for the Integrated Plans for Water Courses Development (IPWCD) was created within the Ministry of Naval and Air Transports. In 1956 the State Committee for Waters was created as first institution to coordinate water issues at national level, this institution being at the origin of the ellaboration of first national waters cadastre. During IPWCD ellaborated the development plans for river basins and the national plan for water management in Romania. For the first time the plan was underlining that Romania is one of the poorest countries in Europe in terms of water resources in contradiction with the general perception until that moment. The resources that add in the water courses on country s teritorry (the endogene resources) were evaluated at 1894 m³/year/inhabitant while the surface waters corresponded to 0.18m water layer. Considering also the exogene resources (contribution of rivers formed on other countries territory)- in case of Romania the Danube and Siret-, the resources increase to 212 km³/year which demonstrates a high dependency on water resources coming from countries upstream. Based on these conclusions the plan was focused on maximizing the utilization of the Danube resources as well as several water management measures mainly for creating reservoir lakes (for re-distributing water resources in time) and water course deviations (to transfer water discharges towards areas with less natural resources). The measures were also including floods protection (dams and artificial lakes or deviations to collect heavy water flows) water quality (creation of water treatment plants and location of production units so water resources can be used succesivly) and land management works (forestation, rationalization of agriculture). In 1967 the State Committee for Waters was dissolved and its responsibilities were transferred to the Department for Land Management within Ministry of Agriculture, a mistake that was corrected only after the heavy floods Romania confronted with in During the Romanian government received support from United Nations Program for Development (UNDP) financing a multisectorial management plan for upper Mures basin that facilitated access to up-to-date knowledge for Romanian specialists. Towards 1989 the relatively comprehensive and realistic plans were abandoned under the pressure of the high political involvement and the dictatorial approach of the communist regime. Major negative consequences reflected in the tremendous increase of water consumption and the impact on water quality (rapid industrial development without any policy on protection agains pollution). After 1989 the water sector coordination was transferred to the Ministry of Waters, Forests and Environment Protection. From 2001 the Forestry Department was transferred to the Ministry of Agriculture and the Ministry became the Ministry of Waters and Environment Protection until 2005 when the social-democrat government initiated a new reorganisation cumulationg two ministries and creating the Ministry of Agriculture, Forests, Water and Environment protection. The initiative proved extremely damaging and after few months the previous structure was reinstated by establishing the Ministry of Environment and Water Management but the negative impact on activities and data management could not be avoided. The ministry was again reorgansied in the current structure to include not only the water management but also the new concept of sustainable development in April 2007, following accession to EU. If at the institutional level the needed steps forward were made in the pre-accession period including elaboration of strategies and management plans, at the implementation level the constant lack of organisation and shift of authority determined major consequences visible mainly during periods with extreme weather phenomena (flood in 2005, 2007 and 2008, drought during spring 2007, etc) Present situation According with the latest statistics 35% of Romania s population have no access to public supply system for the drinking water and approx. 43% do not have access to collection and purification services for waste water. In approx. 21 % of urban areas drinking water is distributed with large, 8 h period disruptions, a fact which affects 12.5% of all urban population. National Institute of Statistics (INSSE) data shows that in 2007, 309 municipalities and 426 communes benefited from waste water collection and purification services. The total length of Romania s sewage network at the end of 2007 was 19,355 km, the largest part (17,549 km) belonging to urban communities. In 11

12 comparison to the previous year, in 2007 the sewage network was extended by km in urban areas and 365 km in rural areas (total: km). Consequently, 9.2 mil inhabitants (42.6% of Romania s total population) had access to sewage systems. The regions most affected by the unavailability/insufficiency of sewage networks are: the South Region (71.7% of population not connected), the North East region (69.3% of population not connected) and South West (68.7% not connected). Around 6.1 mil inhabitants (28.4% of total population) are accessing sewage systems that include purification stations. In 2007 approximately 4% of all waterways fell under the IV and V quality categories (poor and bad ecological state) and, in many areas of the country, the ground water have a high content of nitrates as result of the longterm pollution with agricultural fertilizers. Around large cities fountain water is polluted by organic substances. In early 2008 statistics show that 47 cities in Romania, including Bucharest discharge waste water in rivers and that, out of 1,310 water purification stations currently existing in Romania, only approx. 63% function properly Legal framework including adherence to Framework Water Directive The European Water Framework Directive (WFD) 2000/60/EC establishing a framework for Community action in the field of water policy, amended by Directive 2008/32/EC is totally transposed into national legislation through Law no. 310/2004 that modified and completed the Water Law no. 107/1996. The number of subsequent government ordinances and decisions for transposing and implementation of the daughter directives is quite high making the utilization of the law extremely difficult (see Annex 1). The MESD plans an integration of all legal provisions in one unitary law to be republished beginning of next year. Under Chapter 22 (Environmental Protection), 2 implementation stages were developed for the 12 directives. With regards to water management, the first stage included Directive 91/676/EEC concerning the protection of waters against pollution caused by nitrates from agricultural sources and Directive 76/464/EEC with its corresponding secondary directives regarding water pollution by discharges of certain dangerous substances. Stage 2 included Directive 98/83/EC regarding the quality of water for human consumption and Directive 91/271/EEC concerning urban waste-water treatment, modified by Directive 98/15/EC. Romania obtained significant transition periods and derogations from the application of community norms on many chapters relating to the environmental sector, due to the proven difficulties in application of the acquis communautaire at the date of accession. Transition periods for the water sector are detailed further in the report Authorities and responsibilities The Romanian (1) Ministry of Environment and Sustainable Development (MESD) is the national competent authority for strategic implementation of Water Framework Directive by elaborating environmental and water management policies and with major responsibilities in complying with the acquis communautaire in the field of drinking water, waste waters, biodiversity, monitoring and diminishing the climate change risks, risk management and prevention of the flood-associated disasters, ecological rehabilitation of the historically polluted areas or coastal erosion. The water sector is coordinated by a (2) Water Department within the Ministry managed by a state secretary responsible for the implementation of governmental program in the water sector and the implementation of Romania s commitments under chapter 22 (Environment) of the Accession Treaty to EU. The Water Department is organised in 6 directorates: Water Resources Management (WRMD), Emergency Situation Management, River Basins Management, Preparation, Promotion and Supervising of Investment Projects, State Water Inspection, Nature Protection, Biodiversity and Biosecurity. The Water Department also coordinates the activity of following advisory bodies: 1. The (3) National Commission for Dam Safety and Hydrotechnical Works (CONSIB) coordinates, guides and monitors the surveillance of dams, barrier lakes and other hydrotechnical works, in order to ensure their safe exploitation. 2. The (4) National Committee for the Costal Area (NCCA) coordinates the integrated management plans of the costal area, the urban and regional development plans for communities neighboring the Black Sea as well as environmental impact assessment for any major activity and approval of development projects for protection of natural habitats in the costal area. 12

13 3. The (5) Ministerial Committee for Emergency Situations is responsible with technical coordination at national level for prevention and protection against floods, dangerous meteorological phenomena, accidents at hydro-technical structures or interventions in case of accidental pollution. The (6) National Committee for International Hydrological Program- functioning within National Institute of Hydrology and Water Management is UNESCO s intergovernmental scientific program in water resources MESD has under its direct authority respectively under its coordination 2 national administrations with responsibilities in the water sector: 1. (7) National Administration Apele Romane (NAAR) was initially reorganized in 1991 as Regia Autonoma Apele Romane and subsequently included in 1997 under the law for the transformation of autonomous directorates into commercial companies thus creating inadequate prospects for privatization of national waters against their status of strategic resources and public property. The mistake was corrected in 2002 by reorganization of the National Company Apele Romane SA as national administration in line with European legislation and to ensure sustainable management of water resources. NAAR is responsible for the quantitative and qualitative administration of public waters, the operation of water management works as well as the implementation of the national strategies and policies in the water sector. The NAAR and its 11 local directorates organized per river basins act as sole operator for natural or artificial surface water resources, as well as for ground water resources. NAAR is the only legal body entitled to apply the contributions, payments, tariffs, discounts and penalties system towards any water management entity, no matter the ownership including ground waters with the exception of those categories subject of special legislation. Specific responsibilities of NAAR are: the integrated, sustainable management of surface and ground water resources and their protection against over-utilization and contamination; administration and maintenance of the National Water Management System infrastructure; management, operation and maintenance of the National Hydrological and Hydro-geological Monitoring System infrastructure; management, operation and maintenance of the Water Quality Monitoring System, management, operation and maintenance of the minor river beds, lakes and ponds (natural or artificial), coastline and beaches, wetlands and protected areas as well as granting the right of use of water resources according to water legislation and development of management schemes for river basins. NAAR has under direct administration: 78,905 km of water flows thousand hectares of wetland 270 reservoirs with a total volume of 14.5 billion cubic meters, from which 114 are temporary reservoirs 7,100 km of protection embankments along cities and agricultural fields 6,600 km of stream regularization and 1320 km of shoreline protecting and strengthening operations 157 channels of catchment totalizing 1100 km 59 pumping stations with a flow capacity of 237 cm/s 49 water intakes and hydro-technical knots with a total flow capacity of 249 cm/s 178 other hydro-technical operations 122 natural lakes. An European Integration Department function at NAAR headquarter as well as EU Directives implementing bureaus at level of its territorial branches As a result of the 2002 reorganization, the hydrologic and water management components were integrated in an independent institution named National Institute of Hydrology and Water Management (8) (NIHWM) under the authority of NAAR. The NIHWM is the only specialized national institute representing Romania in the field of hydrology, hydro-geology and water management at a national as well as international level. The institute is responsible for research and development, international programs and agreements Romania is part of (WMO, IHP UNESCO, UE, etc.), data exchange, information and hydrological forecasts at international level, 13

14 implementation of specific products in the water management activity, dissemination of specific information, contributing to the protection of life and goods in case of dangerous hydrological phenomena (floods, droughts, frost) and drafting and updating the National Fund of Hydrological and Hydro-Geological Data. 2. The (9) National Meteorological Administration (NMA) was established in 1970 and reorganised in 1998 as the national company Institute of Meteorology and Hydrology. In 2002 hydrology department is moved to NIHWM and in 2004 the institute is reorganised as national administration and sole operator of the national network of meteorological measurements. NMA has 7 regional centres and performs observations and measurements on weather conditions and evolution ensuring the elaboration of the prognosis and warnings regarding the dangerous meteorological phenomena. Other relevant institutions with responsibilities in the water sector under MESD authority are: The (10) Administration of the Danube Delta Reservation The (11) National Environmental Protection Agency (NEPA) The (12) Environmental Fund Administration (AFM) The (13) National Environmental Guard (NEG) Chart 1 RO Institutions under MESD coordination and authority Source: Business Development Group (based on MESD information). Involvement of bodies under authority of other ministries The (14) National Authority for Regulating Public Utilities Community Services (ANRSC) was established in 2002 as a public institution under the direct authority of the prime minister working in cooperation with the Ministry of Internal Affairs and Administrative Reform (MIRA). ANRSC main responsibilities for the water sector are the regulating, monitoring and controlling public utilities at the central level in the field of water supply, waste water sewage and treatment, collection, sewage and disposal of rain water. ANRSC issues licenses for public utilities operators, elaborates methodologies and framework-regulations for the field of 14

15 public utilities and for the specific market and monitors the implementation of corresponding legislation. It also organizes annual seminaries for public service operators and publishes brochures that detail legislative modifications. ANRSC is based in Bucharest and has 7 territorial agencies. The Ministry of Public Health (MPH) is the governmental authority in charge with transposition of EU Directive 98/83/EC on the quality of water intended for human consumption with responsibilities regarding promoting legislative measures for public health protection, establishing the requirements for drinking water, inspection of the drinking water supply systems, surveillance and monitoring of the drinking water quality, public advising and dissemination of information, reporting. MPH cooperates for MPH controls the quality of water used in the food industry, the quality of bottled water; approves, from a sanitary point of view, the products and materials coming in contact with water, ensures the audit monitoring, information and reporting on implementation to the European Commission. The (15) Public Health Institute in Bucharest (ISPB) is a specialized unit of the Ministry of Public Health which coordinates water quality control at national level through the National Reference Laboratory for Monitoring Water Quality. The water laboratory is responsible with monitoring the quality of drinking water, monitoring the risks regarding bathing water quality, monitoring water epidemics and evaluating cases of infant methemglobinemy caused by fountain water. Monitoring activities are performed through county Public Health Authorities. The Ministry of Agriculture and Rural Development (MARD) has specific responsibilities regarding drought management, wastewater from agriculture and food industry as well as defense against floods for embanked enclosures, maintenance of drain and hydro ameliorative systems. The Ministry of Development, Public Works and Housing (MDPWH) manages the plans and financing instruments for the development of water infrastructure as part of local and regional development plans. In 2005 National Committee for Emergency Situations was set as part of the National System for the Management of the Emergency Situations under MIRA and direct coordination of the prime minister gathering decision makers, experts and specialists with responsibilities in ensuring the protection of people and cultural and material values during emergency situations as well as rapid return to normality. In 2007, the Inter- Ministerial Council of Waters was also created with the aim to coordinate and approve the water management strategies and policies in order to facilitate an integrated and durable approach. So far the council (that involves besides the ministries already mentioned above the Ministry of Foreign Affairs, Internal Affairs, Defense, Transport, Economy and Finance, Education and Research, etc) is not fully functional but represents an alternative for coordinated decisions in case of emergency situations generated by waters at national level. Romanian Water Association (ARA) is an autonomous association of employers and professionals established in 1995 under the name National Committee of Romanian Water Producers and Distributers. The initial name was changed to ARA in 1999 and from 2003, beside the professional attributes ARA represents, promotes, protects and sustains the professional and labor interests of its members. ARA s members are water supply and sewerage system operators, administrators of water management infrastructure, representative of syndicates in the water sector and different experts in the water field. ARA s is organized in 6 territorial committees with the goal is to sustain the interests of the public utilities operators in their relations with the authorities and the negations of the collective labor contract in the water sector as well as professional development of its members. ARA supports applied research in the water sector and periodically organizes meetings and seminars, publishes different studies and research results in the water sector. Last year ARA was the host of international symposium organized by the Water Loss Task Force (WLTF) and in July this year ARA organized in Constanta the seminar Slam Management in collaboration with USTDA. 15

16 Chart 2 RO Governmental authorities cooperating in the water sector Source: Business Development Group (based on official sources) Overview of latest policy documents and national development plans Surface water and groundwater quality including management of river basins The improvement of the quality of the surface and ground waters in Romania is a specific objective of the National Strategy for Water Management. Romania is a contracting party of the International Commission for the Protection of the Danube River (ICPDR) the transnational body in charge with the implementation of the Danube River Protection Convention. The ICPDR states agreed to contribute to the development of the Management Plan of the Danube Hydrographic District as main implementation instrument of the WFD (according with art 13 and annex VII) To this end, partners in the ICPDR agreed to create a Management Plan in 2 parts: Part A - The General Plan concerning overall basin aspects with cross border impact referring to: main water streams for rivers with hydrographical basins > 4000 km2 lakes > 100 km2 main channels cross-border aquifers > 4000 km2 Danube, Delta and coastal waters Part B - National Management Plans of Danube countries The General Plan was already developed and approved by Commission members in The report is the first comprehensive characterization and analysis for the entire Danube River Basin, in which all 13 Danube countries have participated reflecting the level of preparation of a harmonized and integrated river basin 16

17 management analysis at the date of drafting. All countries of the Danube basin committed themselves to further develop jointly a Danube River Basin Management Plan by the end of As regards the National Water Management Plan, according with Romanian legislation will be developed under the authority of MESD and NAAR, and will compile the 11 Basin Management Plans targeting the achievement the good status of national waters by The development of the river basin management plans are guided by the HG 1309 / Realization of National Program for prevention, protection and mitigation of flood s effect and the Minister Order for the approval of Methodology and Technical Instruction for elaboration of the planning framework. Development schedule is detailed in the table below: Table 1 Actions RO Implementation Stages River basin Management Plan Framework Directive 2000/60/EC article Legislative framework - adopting legal provisions - identifying the competent authority - notifying the European Commission Characterizing the river basin - analyzing the basin characteristics - documenting protected areas - evaluating significant factors and their impact - economic analysis of water utilization - reviewing and analyzing Monitoring programs - establishing monitoring networks and implementing monitoring systems Informing and consulting the public - publishing the calendar and working schedule (2) - publishing the basin s most important management issues (1) - publishing the Management Plan draft (1) Management Plan - elaborating and publishing the management plan - revising the management plan Reaching environmental objectives - good state of surface waters - good state of ground waters - protected areas 24 3 (7) 3 (8) 5 (1) 6 (1) 5 (1) 5 (1) 5 (2) Negotiated deadlines December 2003 December 2003 June 2004 December 2004 December 2004 December 2004 December 2004 Dec. 2013/ Dec December (1a) 14 (1b) 14 (1c) 13 (6) 13 (7) 4 (1a) 4 (1b) 4 (1c) - derogations to reach objectives 4 (4) Recovering water services costs 9 (1) 2010 Source: MESD December 2006 December 2007 December 2008 December 2009 December 2015 December 2015 December 2015 December 2015 December obligation to implement measures according to provisions of the Framework Directive 2000/60/EEC. In some cases, deadlines can be further restricted in order to finalize plans at sub-basin levels. Terms for reporting to the European Commission are delayed 3 months after the implementation deadlines. 2 every 6 years The planning frameworks are used as basic planning structures for establishing the development directions of each river basin and ensure the sustainable management of water resources, aquatic ecosystems and protection of the wetlands in accordance with individual hydro-morphological profile. A planning framework is composed of: River Basin Development Plan (RBDP) focused on the quantitative water management component and aims to: achieve and maintain the balance between water demand and available source supply; diminish the negative effects of natural phenomena (flood, drought, etc.); utilize water potential (hydro-mechanic and hydroelectric energy production, etc.); determine environmental water demands. It also includes the action plan for flood protection. 17

18 River Basin Management Plan (RBMP)) focused on the qualitative water management component aiming to: achieve and maintain good water status; identify the pressure points and impact of human activity on surface waters; limit pollution sources and diminish negative effects; determine water quality demands. Starting 2005, NAAR established working groups for each basin and planned in cooperation with NIHWM the development of each framework component in order to synchronize the development of all individual basin plans. The development of the plans effectively started in 2006 by contracting (public tendering) studies for substantiation of the plans for prevention, protection and reduction of flood effects (GIS, water cadastre and digital mapping) in the following basins: Somes-Tisa, Olt and Banat awarded to a consortium led by Aquaproiect S.A; Buzau-Ialomita (only for Buzau river), Crisuri and Mures - awarded to a consortium led by BloomInfo - Geonet SRL; Jiu - awarded to a consortium led by Geodis, Brno; Siret - awarded to a consortium led by Halcrow Romania. Even announced for beginning of 2008, the contracting of consultancy services for the rest of the other 3 directorates and Ialomita river is still in progress because lack of financing (budgets underestimated and new allocations not approved). At the end of October 2008 the Prut Directorate launched the call for projects for the development in the plan for Prut Barlad river basin (financed by state budget), while the Arges Vedea directorate published only the letter of intention, actual call for projects being expected beginning of 2009 (financing by EU sources). Dobrogea-Litoral is still waiting for government decision on financial allocation probably in the beginning of In 2007 MESD and NAAR elaborated the Management Plans of the River Basins in Romania- Major Problems in Water Management - as part of the National Water Management Plan. By the end of 2008 MESD plans to review characteristics of the River Basin District including significant pressures and their impact assessment on water resources, integrated water monitoring, setting the preliminary register of protected areas; economic analysis of water use and water users; developing the environment objectives; preliminary program of measures and setting up the draft of River Basin Management Plan. These steps will be followed in 2009 by public information and consultation (for a period of 6 months), finalization of RBMP, including case by case the observations and recommendations of stakeholders Flood risk management (including adherence to EU Flood directive) Directive 2007/60/EC on the assessment and management of flood risks entered into force on 26 November 2007 and is not transposed as such in the Romanian legislation. Floods occurred on an extended scale in Romania in 2005, affecting more than 1,5 million people, houses, 590 social facilities and buildings, bridges and km of roads. Immediately after the three big flood events which had disastrous consequences, the Romanian the Government adopted the Short Term National Strategy for Flood Risk Management (GD 1854/2005). The purpose of the strategy is to reduce flooding impact on people and property, and also to define the specific regulation and operation responsibilities for central and local administration authorities, for the population and economic agents. A large part of the Strategy is dedicated to educating the public with regard to appropriate behavior before, during and after floods, and to the importance of flood management (including issuing warnings). The Strategy also approaches issues regarding the legal provisions that regulate flood management and regulations for occupying hydrological areas targeted for controlled flooding and protection works, provides procedures and practices for identification, analysis, assessment, monitoring and administration of the flood risks. It also includes the main actions for the risk floods management prevention (prevention and protection), effective management (during floods phenomena occurring) and actions taken after floods generation. Another important document is the GD 1307/2005 establishing the program for the implementation of the National Plan for Prevention, Protection and Mitigation of Flood Risk including stages, costs and allocation of resources. The process for elaboration of the Medium and Long Term National Strategy for Flood Risk Management was initiated in 2006 under PHARE financed project 2005/ Contribution to the development of the flood risk management strategy. The National Strategy and Action Plan on medium term ( ) defined the actors that must take action in case of flood and set specific targets to be reached by the end of 2009 in the following fields of action: the rehabilitation of the internal rivers, the management plans of the river basin at high risk for population and environment, rehabilitation of the Danube river and the maintenance of the infrastructure for floods defense. The river basins management plans that will be finalized by the end of

19 will be subsequently integrated in the Long term National Plan for flood risk management focused on prevention, protection and preparedness. The Sectorial Operational Program Environment has also specific objectives for financing projects for the development of the infrastructure for flood prevention and reduction of the destructive consequences of floods, development of hazard and flood risk prevention maps, plans and measures, including public information and training in reducing risks. Following the floods in summer 2008 the Chamber of Deputies initiated debates on the necessity to speed up the implementation of the EU Flood Directive especially as regards flood risk maps (NAAR recently declared they will be finalized by 2011). The drought management policies in Romania are within responsibility of MARD. A national strategy on reducing drought consequences, preventing and control of soil degradation and desertification was adopted in 2000 but never implemented due on one side to the lack of political decision of subsequent governments and on the other side to the fact that planned actions such as rehabilitation and extension of the irrigation systems or land management measures on degraded soil were included without a financial substantiation and feasibility analysis. As a result budget resources were allocated for agriculture sectors with more urgent needs and potential higher efficiency. EU accession starting 2007, the most sever drought in the last 60 years that registered in Romania in the same year as well as climate change prognosis on long term, imposed an updating of the strategy from crisis management to risk management based approach. Last update was done in April 2008 but is given still very low chances for success in terms of practical implementation Coastal protection and quality of coastal waters According with obligations under chapter 22 of the EU Accession Treaty, Romania set as priority the elaboration and implementation of the National Plan for Protection and Rehabilitation against erosion of the Romanian Black Sea Coast as well as promoting integrated management of the costal area according with EU recommendations in the field. National legislation is law 310/2004 and Law 280/2003 for integrated management of costal area and the statute of National Committee of Costal Area. The Sectorial Operational Program Environment includes specific targets for rehabilitation of Black Sea shore affected by erosion. The latest legislative proposal of MMDD is to modify HG 632/2007 which regulates the rental regime for public domain under NAAR administration. Up to now only the river beds, the shores, the beaches and the barrier basin were subject of rental to third parties. Through this proposal MMDD would like to enable the rental of territorial marine waters as an economic opportunity to attract future investments and the development of the marine aquaculture industry Water management, municipal and rural wastewater treatment Directive 91/271/EEC regarding urban waste water treatment and the 2 other EU Directives directly related to it respectively Directive 91/676/EEC regarding the protection of waters against pollution caused by nitrates from agricultural sources and Directive 2006/11/EC (replacing Directive 76/464/EEC) and daughters directives regarding water pollution by discharges of certain dangerous substances into the aquatic environment of the community are fully transposed in the national legislation as detailed in Annex 1. Other Directives that control the disposal of the sewage sludge produced as a result of the implementation of urban waste water treatment directive are: Directive 86/278/EEC on the protection of the environment, and in particular of the soil, when the sewage sludge is used in the agriculture was transposed in Romanian legislation by MESD & MADR order 708/2004 for the approval of Technical Norms for the protection of environment and, especially, of soils when sewage sludge is used in agriculture. Directive 99/31/EC on the landfill of waste is transposed in the environment legislation by GD 349/2005 regarding the landfill waste, MESD order 1274/2005 regarding the environmental permit at the closing of landfill, respectively storage and incineration of waste, MESD order 757/2004 for approval of the technical normative regarding the waste storage amended by the MESD order 1230/2005 MESD order 775/2006 for approval of the list of isolated localities that can store municipal waste in the existing places 19

20 Main policy documents in this field are the Implementation Plans elaborated in 2004 to include approach, objectives, transition periods and costs. Transition periods for implementation are set for the end of 2021 for Directive 91/271/EEC (by 2018 for localities with equivalent population and by 2015 for localities with more than equivalent population) and for the end of 2013 for Directive 91/676/EEC. Transition period for implementation of Directive 76/464/EEC is set by the end of 2014.The established targets are sustained for implementation by subsequent legislation aiming investments in the infrastructure development such as the GO 7/2006 for the Development Plan for Rural Infrastructure development. Total costs for implementation are evaluated at 9.5 billion EURO. Subsequent policy documents of importance are: the MESD Order 31/2006 to approve the Manual to modernize and develop the Integrated Romanian Water Monitoring System (SMIAR), which establishes the List of dangerous substances to be subject to an annual minimum monitoring, as well as the basic List of dangerous substances to be subject to extended periodic monitoring every 6 years; the action plans regarding integrated pollution prevention and control (IPPC) by technological renewal, reorganization and financial evaluation were developed in cooperation with industrial players subject to Directive 76/464/CEE. Out of the 719 units under analysis, only the industrial units that surpassed GD 351/2005 emission limits were included in the development of technological renewal plans. An inventory was made of pollution sources included in List I. Metals included in List II were monitored at industrial discharge sites, and the quality of surface waters from List I was monitored. As regards the implementation of the landfill Directive 99/31/EC, at present the existing landfills both of municipal and industrial waste are identified, inventoried and classified. Also the planning for closing the existing waste landfills and the construction of the new ecological ones was developed including responsibilities of the public administration institutions. As regards bathing water Directive 2006/7/EC, the Romanian government has recently passed a Decision regulating the quality management of bathing water taking into consideration both environmental and human health protection The decision completes the existing legislation (GD 88/2004, GD 459/2002) and sets the legal framework for the monitoring and classification of the quality of bathing water, as well as for the public dissemination of information regarding bathing water. The authorities responsible for protecting users from unsafe bathing water are County Health Authorities and River Basin Directorates. These authorities monitor bathing facilities according to a pre-established schedule and, if necessary, issue safety warnings. Starting with 2008, the Bucharest Public Health Institute and NAAR must draft a list of bathing waters by 15.05, each year, and submit this list to MDPWH by Results of the monitoring process are issued each year by (at the end of the bathing season). Based on yearly monitoring, a classification of bathing waters is targeted by the end of 2015, with the following categories: unsatisfactory, satisfactory, good, excellent. The methodology of monitoring and evaluating bathing areas is pending approval through an Order of the Ministry of Public health. Main governmental programs setting priority investments for reaching the objectives for the development of municipal water and environmental infrastructure are: National Strategic Reference Framework ; National Rural Development Program ; National Strategy for Water Management; National Strategy For Sustainable Development Of Public Services for Water and Wastewater Infrastructure Systems ( ); Sectorial Operational Program for Environment (Priority Axis 1 Extension and modernization of water and wastewater systems) Drinking water Directive 98/83/EC on the quality of water intended for human consumption, amended by Regulation (EC) No. 1882/2003 is totally transposed in national legislation by Law 311/2004 (amending Law 458/2002). The Law 311 stipulates in the annexes 1 and 3 the quality parameters for the drinking water, the values and maximum concentration for the qualitative parameters as well as specifications for the qualitative parameters analysis. Both are to be updated periodically through governmental decisions. Transition period for implementation was set for 2015 and is carried out based on the Implementation Plan developed by Romanian Government in October Total costs for implementation are evaluated at

21 billion EURO and Article 13 of the Directive imposes the obligation of the Member States to ensure that information on the quality of water and on the measures taken for the implementation of the Directive is available to consumers. Information on all domestic water supply systems exceeding m3 per day as an average or serving more than persons must be included in reports to be published every three years and submitted to the Commission. The first report shall cover the years 2005, 2006 and 2007 and is due for end of Relevant policy documents issued after 2004 are: GD 662/2005 to approve quality Norms for surface water used for human consumption, and norms for methods of measurement and the frequency of sampling and analyzing surface drinking water (amending GD 100/2002). In turn, GD 100/2002 was amended by GD 567/2006 regarding the modification of quality norms of NTPA-013 surface drinking water. GD 930/2005 approving special Norms regarding the characteristics and size of the sanitary and hydrological protection areas, amending GD 101/2002. Ministry of Health Order 1276/2005 regarding the modification of Ministry of Health Order 764/2005 to approve the registry with the Ministry of Health of laboratories which monitor the quality of drinking water within the official drinking water inspection process. Cooperation Protocol between the authorities involved in implementing drinking and bathing water directives: Ministry of Health, MESD, MIRA, ANRSC, Ministry of Transports, MDPWH Crossborder and international partnerships Romania plays an active role in fostering cross border partnership and international cooperation in the water sector. Most recently (beginning October 2008) Romania hosted the International Conference on the implementation of the European Water Framework Directive, gathering 195 participants from basin organizations and national administrations as well as representatives of NGOs and private companies representing 29 countries. Romania signed and is part of wide number of crossborder and international partnership as mentioned bellow: Convention regarding the Black sea protection against pollution, signed in Bucharest on 21 of April Law 98 / ; Convention regarding the cooperation for protection and durable use of Danube River signed in Sofia on 29 of June Law 14 / ; Convention regarding the protection and use of cross borders water corps and of the international lakes, signed in Helsinki in Law 30 / Agreement between Romanian Government and Ukraine Government regarding the cooperation in border water, Galati, 30 of September Law 16 / The Water and Health Protocol at the Convention regarding the protection and use of the cross borders water corps and international lakes, London 17 of June Law 228 / Memorandum of cooperation in the area of water management between MMDD, Ministry of Environment and Water Management and Ministry of Durable Development from France, signed on 18 of October 2001 Initiative from Budapest (adopted at prime-minister level) regarding the strengthening of international cooperation for durable management of flood, signed in Budapest on 1st of December 2002 Agreement between Romanian Government and Hungarian Government regarding the collaboration for protection and durable use of the cross border waters, Budapest 15 of September HG 577 / Memorandum of Understanding between MMDD and Ministry of Transport, Public Works and Water Management from Nederland regarding the cooperation in the area of integrated water management, Bucharest, 14 of April HG 1105 / Memorandum of Understanding between MMDD and the National Meteorological Service Oceanic and Atmospheric Administration of USA regarding the technical cooperation in the areas of hydrology and meteorology signed in Bucharest on 21 of September HG 2422 / It was signed also a Memorandum of Understanding with the Engineers Body from the USA army regarding the cooperation in the area of water management. Agreement between MMDD and Ministry of Water end Environment from Bulgaria regarding the cooperation in the area of water management, signed in Bucharest on 12 of November HG 2419 /

22 Declaration between MMDD and Ministry of Environment from Bulgaria, Ministry of Environment from Moldavia, Ministry of Environment and Natural Resources from Ukraine regarding the cooperation for creation of the Green Corridor in the Inferior Danube signed in Bucharest in 5 of June 2000 Declaration of collaboration in the area of water management between MMDD and Ministry of Environment, Health and Consumer Protection from Bavaria, signed in Munich on 25 of April 2005 Protocols between MMDD and Ministry of Water Resources Management and Development from Kenya, Ministry of Environment and Nature Protection from Senegal, Ministry of Water Management from China Republic MESD also signed Memoranda of Understanding (MoU) in the field of environmental protection, with the Ministry of Housing, Spatial Planning and Environment of the Netherlands. The current MoU is in force until September 2009 and is aiming, among other wider objectives, at strengthening the bilateral cooperation in the framework of the Environment for Europe process. The Dutch Union of Waterboards has also signed a MoU with its Romanian counterpart NAAR. Also 6 of the Dutch waterboards (Rivierenland, Rijn en Ijssel, Groot Salland, Regge en Dinkel, Reest en Wieden and, since August 2007, also Velt en Vecht) are actively involved in water projects in the county of Teleorman, at the initiative of the twin Dutch Province of Overijssel. MDPWH is also playing an important role as the implementing authority of European territorial cooperation programs, some of which include water management actions (see details in chapter 4). 22

23 2 Market Insight 2.1 Water Supply & Sewage Applicable regulations, standards, government policies The general regime of the water supply in Romania is defined by the Law 107/1996 with subsequent amendments. The water supply and sewerage services are organized in accordance with the Law 241/2006. The regionalization of public utilities has proven essential for Romania, as the former public utilities system did not facilitate the maintenance and operation of public utilities networks, and could not support investments in the rehabilitation/expansion of water/waste water infrastructure. In many localities, public utilities are a department of the local council and, as a consequence, they depend on the local budget. In small and medium towns in particular, no major investments were made after 1990 to maintain and develop the essential infrastructure, resulting in a poor status of the public utilities networks. Rural communities at a greater distance from urban centers, unable to associate will not be able to benefit from SOP ENV projects. For this reason, the government has allocated state budget funds, through MDPWH, to ensure that villages are equipped with water infrastructure. Depending on the budgetary financial support, the multiannual program is estimated to be continued until centralized water supply systems are provided to all Romanian villages (see details on available programs, application procedures and eligibility criteria in chapter 4) Infrastructure status and applicable technologies In 2007 Romania, water supply in a centralized system is made available to 87.6% of urban areas and 15.1% of rural areas. Currently, in Romania, 1,888 communities (268 urban and 1,620 rural) benefit from centralized water distribution systems. Drinking water distribution networks have a length of 47,780 km, covering 70% of total urban street length and ensuring water supply for 92% of the urban population. In rural areas, 80% of communes with over 10,000 inhabitants have a water distribution network, as do 60% of communes with 5,000-10,000 inhabitants. However, only 20% of communes with fewer than 10,000 inhabitants benefit from these utilities. The current centralized water supply systems have a capacity of 120 m3/s, 48 m3/s from ground sources and 72 m3/s from surface sources (including the Danube). The traditional water distribution system uses steel (seldom galvanized) pipes to transport water often corroded and causing infiltration of impurities in the drinking water. Metallic pipes also generate significant losses in the distribution network (up to 50%), which are subsequently reflected in the price paid by the consumer. New supply networks use copper, pexal piping system 1 or polypropylene pipes. Current drinking water standards prioritize drinking water sources according to the following hierarchy 1/artesian pressure fountains, 2/non-pressure sources (including springs), 3/ground water sources, 4/surface water sources. In practice, surface waters are the source of most drinking waters. For example in Bucharest, only 10% of water resources are obtained from ground water, the remaining 90% being sourced from the Arges River. Surface drinking water is usually purified in a treatment station (water plant) while ground drinking water is simply treated with chlorine. The status of water supply has been significantly improved through pre-accession programs. After 1990, and especially during the pre-accession period , Romania benefited from several EU financing programs (ISPA, SAPARD, PHARE) that ensured the execution of infrastructure works in the field of water supply, waste water purification and transportation, especially in large urban areas (over 150,000 inhabitants). ISPA was the main instrument for financing environmental infrastructure projects before Romania s EU accession focused on large urban agglomerations (list of main ISPA projects relevant Annex 2). SAPARD was implemented by MARD and aimed to support accession efforts and to prepare Romania s participation to the 1 a multi-layer pipe connected with brass fittings 23

24 Common Agricultural Policy. SAPARD also funded water and sewage projects in the rural area. Both programs ceased in 2007 but have ongoing projects until Small communities fewer than 150,000 inhabitants benefited of SAMTID (the Infrastructure Development Program for small and medium urban communities) launched in The program was co-financed by PHARE grants, EIB and EBRD loans as well as direct contribution of state budget. The pilot was designed in 3 phases: pilot phase, expansion phase and consolidation phase. The pilot phase included 6 counties (Alba, Botosani, Calarasi, Hunedoara, Cluj-Salaj), and the expansion phase comprised 9 counties. This program was also the first to impose the regionalization of public utilities at county level by setting up a regional operator. SAMTID projects are scheduled for finalization in Despite the implementation of pre-accession projects in the field of drinking water treatment and distribution systems (modernization/expansions), which mainly benefited large urban agglomerations, most of the existing drinking water supply infrastructure is outdated and poorly-equipped for exploitation. According to current legislation the pipes used for water supply must hold an Aviz Sanitar (Sanitary Permit) issued by MPH and a Technical Agreement issued by State Inspectorate in Constructions. The sanitary permit can be obtained from the regional public health offices (Directii de Sanatate Publica) according with the conditions specified in the MPH Minister Order 117/2005. The Romanian market offers a wide choice of water supply and sewerage systems made out from a wide range of materials from PVC to High Density Polyethylene (HDPE). Pipes for water supply must be licensed according with quality management standard SR EN ISO 9001: Pipes are produced according to the regulations NFT , ISO :2007 and DIN The size varies from 20 mm to 400 mm Specifics in urban and rural areas All urban agglomerations operate centralized drinking water distribution systems. However, some areas in these agglomerations (such as for example districts within city of Bucharest) are not connected to the centralized system. In residential areas (usually built outside the centralized network) drinking water is usually obtained from individual wells ( m deep). Many towns are also faced with disruptions of the distribution of drinking water, due to limited water resources. Most rural areas do not operate centralized water distribution systems. Household water is obtained from individual wells that only reach the intensely-polluted water table, greatly endangering the health of the population. Local environmental agencies and local public health directorates are obligated to inspect all wells in the rural area, and issue warnings with regard to water quality. In the few rural areas where a centralized drinking water distribution system has been set up, households are not individually connected (street distribution system) which makes cost recovery extremely difficult The rural population usually refuses individual connection to a centralized water system, due to the high costs of connection works and the high price of water. Current legislation also discourages individual connection to the water system households that are directly connected must also set up their own sewer/treatment system, while street distribution only involves manhole evacuation and the sequential construction of a common sewerage/treatment system Water companies operational, technical and financial management Before 1989, 42 utility (water/sewerage) operators used to function as public services departments within local councils. Following a reorganization process in the 1990, these operators became Regie Autonome, subordinated to the local councils and the water and sewerage infrastructure was defined as public patrimony belonging to the local authorities. This resulted in increase up to 400 operators in In order to reach EU standards in water management, Romanian government (with EU financial and technical support), subsequently adjusted legislation in order to encourage local authorities in setting up viable operators in the water sector. In order to facilitate their development on commercial basis the autonomous companies were reorganized into commercial companies, also subordinated to the local councils. Subsequently, based on geographical, technical and economic criteria, communities began to form associations and concentrate in single regional water operators. The regionalization opens possibility for larger investments, better operational management, decrease of water losses, energy costs savings including unified tariffs for a larger area. 24

25 In 2007, MESD underwent important steps for the modification and completion of Romanian public services legislation, in order to better reflect the strategic approach promoted through SOP ENV. The main purpose of these modifications was to ensure conformity with EU in-house rules for attributing water and sewage services commissioning contracts. Negotiations were finalized with the approval of GO 13/2008 to modify Law 51/2006 regarding public utilities services and Law 241/2006 regarding water supply and sewerage services. At present In Romania 107 companies hold licenses to operate a water & sewerage system (both services are usually provided by the same operator). Licenses are issued by ANRSC based on quality service standard categories and are valid for a limited period of time within maximum 5 years. Romanian legislation incorporates the concept introduced by the WFD that water is not a trading product, but it produces an economic value as well as the principles of the economic mechanism in the water field by which the user pays, the polluter pays, the quantitative and qualitative water management costs must be recovered, beneficiaries should be stimulated to protect the water resources. For the rational management of water resources and for water resources protection against exhaustion and pollution, in connection with the water management and sustainable development principles, Water Law no. 107/1996 (amended by Law no. 310/2004) introduces the obligation of water user to request and obtain a water management permit, starting with the designing stage. The permit regulates the regime of the works carried out on water or related to water and the social-economical activities, with potential negative effects on the environment. The putting into operation or the operation of these works is made only on the basis of a water management licence granted by NAAR through its specialized departments organized for this purpose both at central and local level, on each River Basin Water Directorate. The license guarantees that the economic agent is able to carry out production activities and services that do not endanger the waters quality at the source, but does not give the right to further use services for ensuring the raw water at the source and other specific joint water management services rendered by NAAR without a subsequent commercial contract signed with the latter. The water management permits and licences also refer to sludge land-filling or use that should reduce to minimum the negative impact to environment. In Romania, the economic mechanism specific to the waters quantitative and qualitative management includes the payment, bonuses and penalties system, that ensures partly the financing of the development of the water sector and guarantees NAAR is functioning based on economic principles. At the same time the tariffs are diferentiated in order to support the preservation, reuse and saving of the water as well as protecting its quality and quantity into: source categories, user categories and categories of discharged wastewater pollutants. Payments are on monthly basis and discounts up to 10% of yearly value of tariffs can be applied for users that prove a high concern for rational use and protecting water quality. The structure and levels of applicable tariffs is still subject of debate mainly as regards keeping the balance between the need to improve infrastructure and social affordability. Basically the system takes into consideration operational costs (raw water and materials, energy and fuel, spare parts, salaries, third party services, financial expenses, income tax, repair and maintenance) depreciation and provisions for replacement of assets as well as profit (for loans repayments and development). The price of raw water supplied by or discharged to NAAR is regulated by the government and is differentiated for regional operators and industrial/agricultural users. Regional operators are the ones setting the prices to be paid by the final consumer for drinking water and sewerage, with the approval of ANRSC. Their prices are differentiated regionally and per category of consumers (population or industrial). As indication presently private consumers pay drinking water from highest 2.63 lei /mc (Oradea, Bihor county) up to lower 2.09 lei/mc (Neamt). In Bucharest current price is of 2.45 lei/mc. The regionalization strategy aims to concentrate public services on geographical basis either per river basin or within administrative borders and to increase the efficiency of water/sewerage services, while maintaining acceptable prices, and make this type of services more attractive to investors (forming PPPs). Regionalization is achieved by re-organization of local pubic services based on 3 main elements: the Intercommunity Development Association (IDA)- is and association of counties and/or municipalities with the purpose of managing local public utilities; the Regional Operating Company (ROC)- commercial companies owned by all or some of the IDA member communities, self-sustainable by implementing efficiency and cost recovery principles in their operations; a Services Management Commissioning Contract by which administrative units transfer duties, responsibilities and management with regard to public water supply and water sewerage systems to ROC 25

26 IDA s coordinate ROCs and act in the common interest of its member communities with regard to water and sewer services general strategy, investments, pricing. This measure has been proven to be essential in Romania, especially for small and medium towns and for the rural area. The purpose of regionalization is meeting the performance objectives established in SOP ENV, by It is envisaged that 50 regional operators will be set up and developed by merging local utilities companies into a ROC. The set up of the regional operators for water supply and waste water management took place in almost all counties as shown in the map bellow (data from May 2008). In all counties at least one IDA is formed even if not totally functional. There are also situations where the ROC is formed officially but did not take over the other public utilities in the region. Most of the IDA s started with the unification of the county council and the county residence council so most of the ROC s will be created on region basis. There are also some exceptions for example Apa Somes from Cluj is operating both in Cluj and Salaj. In Ialomita county, where the program SAMTID failed to create the IDA the local council of the city Urziceni decided to join the ROC in the county Calarasi- Ecoaqua Calarasi (an IDA was formed eventually in Ialomita in October 2008). Map 2: Regional Operators in Romania Source: County Councils websites Water and sewerage infrastructure (supply networks, purification stations, with all installations, buildings, etc) remain public property and as a result existing infrastructure and all investments performed during the period of contract validity remain in the property of public authorities. There are only 2 exceptions from the above format in Bucharest and Ploiesti, Prahova county where from 2000, the municipal water services are subject to concession contracts to private company Apa Nova for a period of 25 years. In 2007, MESD took important steps for the modification and completion of Romanian public services legislation, in order to better reflect the strategic approach promoted through SOP ENV. The main purpose of these modifications was to ensure conformity with EU in-house rules for attributing water and sewage services commissioning contracts. Negotiations were finalized with the approval of GO 13/2008 to modify Law 51/2006 regarding public utilities services and Law 241/2006 regarding water supply and sewerage services. The SOP 26

27 ENV aims as main objectives to improve the quality and access to water and wastewater infrastructure, by providing water supply and wastewater services in most urban areas by 2015 and by setting efficient regional water and wastewater; consequently the government regionalization program aims to create approx. 50 strong regional operators. 2.2 Water Quality One way to improve the quality of waters and the physical aspect of rivers is to promote and active river rehabilitation program. The ecological rehabilitation of rivers is an essential part of water management. Ecological rehabilitation targets both the water ways and its neighboring areas (banks, flood areas, etc.), which play an important role in the development of the flora and fauna. This rehabilitation is planned at basin level, from upstream to downstream. The new river management concept, More space for rivers, involves balancing social, economic and ecological needs. For this purpose, the National River Rehabilitation Center was set up, in order to facilitate the exchange of information in the field and to promote the issue of ecological rehabilitation in Romania. In 2006, MESD adopted the Norms for classification of the surface waters quality for establishing ecological status of body waters that approves the biological, hydro-morphological, chemical and physical-chemical quality elements in view of assessment of ecological status for continental aquatic ecosystems rivers, lakes natural, artificial or irreversible modified National monitoring system for water quality (observation, operational, investigation) Water quality monitoring is within responsibility of NAAR and is performed through the national water monitoring system implemented at basin level (via the 11 water directorates) based on 3 types of monitoring: Surveillance monitoring with the role of evaluating the status of all water bodies Operational monitoring for bodies of water that are at risk of not meeting the water protection objectives Investigation monitoring- for identification of causes for not meeting quality standards, for bodies of water that cannot achieve environmental objectives or for the impact assessment for accidental pollution The water quality monitoring system is divided into 7 sub-systems: rivers, lakes, ground water, protected areas, coastal waters, transitory waters, used waters. Each directorate must monitor all 7 sub-systems, or the sub-systems that are geographically available. The monitoring network for surface waters combines: The daily and weekly rapid flow monitoring network The base monitoring network (for those sites with less than 10% human influence) The drinking water capture points monitoring network The border rivers monitoring network The surveillance monitoring network (each trimester) The operational monitoring network (each month) The used water sub-system also monitors pollution sources with direct evacuation in natural receivers. The monitored indicators are: evacuated volumes, dangerous quantities, the operational status of purification stations, etc. In order to monitor ground waters, several categories of hydro-geologic stations were set up: Order I in main river valleys and around lakes; monitoring the connection between ground and surface waters Order II in plains, on rivers; monitoring the effect of climate factors on ground water Stations in main aquifer caption areas following the effects of exploitation on ground waters 27

28 Experimental stations researching ground water from the point of view of pollution, etc. Stations set up around important industrial sites The monitoring system is only partially covering the standards requested by EU legislation and mainly as regards the surveillance monitoring. NAAR further plans to optimize its activity by adjusting approach, improve expertise and technical endowment for increasing the capacity to monitor new biological components/elements in expanded research environments. The Ministry of Health is responsible for monitoring the quality of the drinking water supply through county Public Health Authorities Certification (including potential for private water certification) According to current legislation, all public utilities operators must obtain and Operating License from the National Authority for Regulating Public Utilities Community Services (ANRSC). ANRSC issues operating licenses structured in 3 classes, and with different valid periods, depending on the class. The ANRSC license is mandatory for companies involved in capturing, treating, transporting and distributing drinking and waste water, as well as in collecting and treating waste water. Public utilities operators as well as consultancy companies that implement water projects in Romania must also be certified for quality and environmental management, according to SR EN 9001:2000 and SR EN 14001:2004. More and more operators attempt OHSAS certifications, for workplace health and safety management. The most recent certification available for drinking water suppliers is ISO 22000:2005 concerning food safety. Certifications obtained from accredited EU companies are available in Romania, alternatively organizations in Romania such as RENAR, ASRO, SRAC, SIMTEXETC, etc., can also perform accreditation procedures. The certification of drinking and waste water is performed according to enforced standards, in laboratories with a SR EN ISO CEI 17025:2005 certification and according with the Framework Rules for the organization and operation of the public services for drinking water supply and sewerage approved by MIAR order 140/ that regulates licenses and permits for the community public services sector. According to MPH Order 764/2005, all laboratories that monitor drinking water quality must register at the National Reference Laboratory for the Monitoring of Water Quality, part of Public Health Inspectorate Bucharest. This mandatory registration confirms the competency of laboratories to perform physical, chemical and bacteriological analyses of drinking water. Waste water purification stations/equipment must be certified according to SR EN Inspection authorities in the fields of drinking water, waste water, surface water, water supply installation, sewages and pre-purification installations must be certified according to SR EN 45004:1997. Consultancy companies that implement water projects in Romania are certified ISO 9001, ISO and OHSAS Research and development Research activity related directly to water resources management is done by The National Institute of Hydrology and Water Management (NIHWM) which is the only specialized national institute representing Romania in the field of hydrology, hydro-geology and water management at a national as well as international level. Research on water quality, water supply systems, waste water treatment technologies or the fluids mechanics is done within the National Institute for Research and Development for Environment Protection - I.C.I.M. Bucharest. They run different research programs based on national (CEEX, MENER, BIOTECH, CALIST etc) or international funds (USAID, PHARE, ISPA, MATRA, etc). In the water sector some of their most important finalized programs are: Interactions between river-sediment, soil-groundwater as a support in the water corps management and the integrated model at real scale for substantiation of decision in water and environment management for river Tisa, and Sorting method for information and data that support the implementation of the WFD. ICIM is also Experimental Unit AEWS-Danube, National focal point EUROWATERNET, national counterpart for UNEP-Ch.-I.R.P.T.C., Haskoning and Senter Nederland for various projects. 28

29 Research on environment pollution and environment technologies (including water) is done also within the National Institute for Research and Development for Industrial Ecology ECOIND based in Bucharest with 2 subsidiaries (in Timisoara and Ramnicu Valcea). Ecoind is running different research programs as PHARE, Cost, Unido, Ispa, Leonardo da Vinci, Eureka, projects in Environmental Programmes of the Balkan Environmental Association (B.EN.A) and different bilateral projects with other research institutes and universities. Danube Delta National Institute for Research and Development located in Tulcea- carries out basic and applied research to scientifically support the management in the DDBR and other wetlands of national and international importance for the biodiversity conservation and sustainable development. The research of the institute is focused on: structure, evolution and function of wetland, monitoring of the environmental factors, modeling the processes that are the basis of ecosystem functioning, ecological restoration and ecological rehabilitation of threatened species and also consultancy for harmonizing the Romania s legislation with the E.U. policy in the environmental area. The institute also carries out studies for environmental strategies, remote-detection techniques for processing satellite images impact and environmental balance studies, software for land use and hydraulic/hydro chemical modeling, data base/gis applications, thematic maps soil, vegetation, ecosystems, bird colonies, ecotourism. 2.3 Waste water treatment in urban and rural areas including sanitation Implementing the used water purification Directive 91/72/EC is a complex and costly issue for Romania, since only 52% of the population is connected to both the water supply network and the sewage network, and over 71% of waste water is untreated or insufficiently treated. The main projects completed or initialized in the pre-accession period were: Modernizing the water and waste water infrastructure in the Cris basin (6 municipalities and there adjacent areas), in Vaslui county (4 municipalities) and in Ploiesti 73 ISPA projects in municipalities with over 150,000 inhabitants MDPWH s program focused on supplying water to villages and rehabilitating water and sewage systems and purification stations in communities with under 50,000 inhabitants (SAPARD funding) Rehabilitating the water/used water infrastructure in Arad and Bucharest 164 projects for building purification and sewage networks in the rural area The program for developing rural infrastructure in 452 communes (state budget, approved through Ordinance 7/2006) World Bank (WB) funded project through which 14 localities in Arges counties benefit from water/waste water infrastructure investments Projects for 15 counties prepared through ISPA technical assistance (actual works began in 2008, and are estimated to be finalized in 2012) The government strategy specifies that, by the end of 2013, all urban communities with over 10,000 inhabitants should be connected to waste water systems, while the remaining urban communities (2,000 10,000 inhabitants) are scheduled for connection no later than Currently, out of the 2,346 localities with 2,000 10,000 inhabitants, only 269 are connected to sewage networks. At the end of 2018, 2,600 communities should meet European standards for the collection, treatment and redirection of waste water. The first actions taken to implement the Directive were the completion and review of internal legislation, and the completion and consolidation of the institutional framework. In order to promote investments in wastewater infrastructure, several central governmental institutions became involved: MESD, the Ministry of Internal Affairs and Administrative Reform (MIRA), the Ministry of Development, Public Works and Housing (MDPWH) and MARD. Through Law 310/2004, the Inter-ministry Water Committee was set up in order to increase the efficiency of governmental water intervention. 29

30 2.4 Market innovation and compliance with regulation in industries with a high water usage The main categories of water consumers in Romania are the population, the industry, agriculture and tourism. While at a global level agriculture is the main water consumer, using 80% of water resources, in Romania the industrial sector is the leader in the water consumption hierarchy, with 78% of national water resources used. Industrial agents are also the main polluters in Romania, despite all regulations aiming to reduce water pollution from industrial sources. Between 1990 and 2007, water consumption in Romania decreased dramatically, from 20.4 billion m3 to 6.08 billion m3. The main reduction was registered in the agriculture sector, where an initial water demand of 9 billion m3 decreased to 0.5 billion m3. A large part of irrigation systems were destroyed and most of the remaining systems are out of use, resulting in a 0.5 mil ha irrigated surface in 2007, out of an initial 3 mil ha. In order to increase the efficiency of irrigation in Romania, while maintaining water resource utilization at a low level, the Romanian government approved funding for 140 deep-drilling in areas where ground water could be a viable solution for agriculture. Another option currently under consideration is investing in modern technology that can help reduce loss in the irrigation system, thus decreasing water resource consumption. The government strategy for water usage in agriculture also includes financial support for farmers that build their own irrigation system or create new water accumulation points on rivers. While water usage in the agriculture sector is at a low, Romania s industry is still depleting the national water resources. The Romanian government is currently considering solutions to limit industrial water usage and increase the water-efficiency of industrial processes: Increasing the tariff for industrial water, in order to discourage the use of water in processes that do not necessitate drinking-quality water Implementing the specifications of article 4, paragraph 1 of Water Law 107/1996 regarding: o o o o Surface and ground water usage regulation, based on the specifics of this usage (the processes for which the water is used) Restricting ground water usage for industrial processes Monitoring ground water capture volumes and intensifying inspections in order to determine the actual use of water by economic agents (purpose, authorizations, subscriptions to water supply, etc.) Closing capture drills that are out of use Encouraging industrial agents to: o o o o o o o o set up their own water sources (wells, own installations for water transport from dams/rivers); optimize water usage processed implement automatic systems for monitoring of abstracted water flow build separation systems for collecting/treatment improve of pre-treatment plant for waste water from technologic processes upgrade/rehabilitate of water treatment plants; implement an automatic systems for monitoring of waste waters discharged into water resources upgrade production technologies (for example in the oil industry: using oil-drill technology to exploit ground water sources at a greater depth than currently accessible, Rompetrol is one company currently engaging in such an effort at its oil-drill site in Zegujani). All current government strategies are generally applicable, with no specific provisions for each industry sector (with the exception of the oil sector). It is expected that these strategies will be further elaborated in order to provide detailed measures for the main water usage sectors of Romania s industry: food & beverages, chemical, textile, thermal power, pulp and paper, building materials, iron & steel. 30

31 2.5 River Basin Management Romania has a hydrographic network totaling 78,905 km, divided into 11 river basins / hydrographic areas: Table 2 No. RO hydrographic network River basin / Hydrographic area Area (km2) % 1 Somes Tisa 22, Crisuri 14, Mures 28, Banat 18, Jiu 16, Olt 24, Arges Vedea 21, Ialomita Buzau 23, Siret 28, Prut 20, Danube, Danube Delta, Dobrogea + costal waters 18, , TOTAL Romania + coastal waters 237, , Source: NAAR Main actions taken by the Romanian government with regards of the improvement of water surface quality and implementation of the river basin management plan are: the development of the methodology for the elaboration of the river basin management schemes as well as the analysis of river basins characteristics and the assessment of the human pressures on surface and groundwater resources the identification, classification and mapping of the protected areas (elaboration of Protected Areas Register) the economic analysis of water utilization and assessment of actual level for cost recuperation for those services for 2 river basins Somes Tisa and Arges (pilot project financed by EU PHARE program implemented by an international consortium managed by Arcadis Euroconsult); 6 international projects were initiated for the implementation of the WFD ( contributions of The Netherlands, UNDP, GEF) together with WATFRAME project in Siret basin and other PHARE projects in Ialomita-Buzau basin including the modernization of informational system in the water sector elaboration of the Handbook for modernization and development of integrated monitoring system of Romanian Waters establishing monitoring programs, investigation sections and the need for endowment of regional basin laboratories. A PHARE program is also in progress for evaluation and need of endowment of NAAR laboratories for determination of priority/dangerous substances. elaboration of the Implementation Plan for EU Directive on Nitrates, the action plans for risk areas and the Best Agriculture Practices Code. In Calarasi county it was implemented a pilot project on pollution control for nitrates of agricultural sources by setting up pilot management platforms for manure and forestation of risk areas. Based on project success the pilot will be extended at national level. for implementation of EU directive on urban waste waters treatment, projects proposals for the modernization of water infrastructure and waste water treatment were prepared and submitted for financing in Bucharest, Arad, Cris basin, Bârlad, Husi, Negresti, and Ploiesti). Under POS Environment major projects proposal are under development for building and rehabilitation of municipal water sewage/treatment and supply of drinking water to be submitted for financing from European sources. 31

32 2.5.1 National Management Plans including implementation stages Management plans for Romania s river basins are the main tool of implementing Framework Directive 2000/60/EC and of reaching water quality objectives by 2015, according to accession objectives. The development of the national integrated management plans depends on the cooperation and partnerships at all levels based on raising social awareness on the need for securing and sustained management of water resources. On this basis, River Basin Committees (RBC) were set up in 2005 combining governmental and local authorities and representatives non-governmental organizations. RBCs must collaborate with NAAR for the implementation of national water management strategies and policies, having as main responsibilities: approving directive schemes and management plans approving accidental pollution prevention plans proposing revisions of norms and standards in water management establishing special norms for the evacuation of waste water approving the inclusion of waterways in certain quality categories recommending financing priorities for water works approving the list of protected areas and the necessary works for ecological rehabilitation informing the public of all changes in the status of Romanian waters The Netherlands government provided an important support for the development of the national strategy and capacity building of various governmental institutions by bilateral projects such as for Siret and upper Bistrita basins (PSO/PSO+), Teleorman county (PvW) or Timis river basin (Matra) Surface waters categories and risk bodies of surface water Water resources from internal rivers are the equivalent of 20% of the Danube s resources. The Danube flows across Romanian territory for 37.7% of its total length, and it collects and transports (to the Black Sea) the discharges of all countries along its course. This affects the waters of the Danube Delta and of the Black Sea coastal area. Within the Danube River Basin Management Plan, a Danube Hydrographic District was defined, which also includes Romania s coastal waters (1 nautical mile from the shore line) and the basins of rivers tributary to the Black Sea (total area: approx. 5,198 km2). Following field evaluations and the mutual decision of several specialized institutions, Romania s surface waters were divided into the following categories: Permanent rivers 55,535 km = 70% of all waterways Non-permanent rivers 23,370 km = 30% of all waterways Natural lakes 117 lakes with a surface larger than 0.5 km2, 52% of which are in the Danube Delta Barrier lakes 255 lakes with a surface larger than 0.5 km2 Transitory waters 174 km (river waters 46 km; sea waters 128 km) Coastal waters 116 km The monitoring of the rivers was organized in 2007 mainly on the medium and small rivers (monitoring length km out of the total length of km). These sectors were chosen due to the higher human impact on the environment in these areas. Measurements were taken also in the upper part of the rivers were the human impact is minimal. Elaboration of the synthesis for surface water quality was based on the primary data regarding the physical - chemical analysis of the water obtained in over 824 monitoring sectors while the biological analysis of the water quality in the 11 river basins was done by monitoring elements as: macro invertebrates, micro phytobenthos, phyto-plankton, macrophage aquatics and fishes in a total of 778 sectors. Based on the 824 monitoring sectors the global quality of the surface water was: class I km; class a II-a km, class a III-a km, class IV km, class a V-a 953 km. Based on biological quality monitored in the 778 sectors the global quality of the surface water was: class I km, class II km, class III km, class IV km and class V km. 32

33 The lakes water quality was established in the 11 rivers basins based on the trophic category and the level of pollution with nitrates from agriculture sources. A total of 100 lakes were monitored and at the end the collected data showed that out the 100 lakes the situation was as follow: as regard the nutrients (total mineral nitrogen and total phosphor )- 4 lakes were ultraoligotroph, 2 lakes were oligotroph-mesotroph, 17 lakes were mesotroph, 14 lakes mesoeutroph, 30 lakes eutroph, 11 lakes eutroph-hypertroph and 22 lakes were hypertroph. as regard the biomass, out of the 100 lakes 24 lakes were ultra oligotroph, 25 lakes oligotroph, 15 lakes mesotroph, 4 lakes meso-eutroph, 16 lakes eutroph, 1 lake eutroph-hyper troph and 15 lakes hyper troph. Water quality in the Danube River was monitored in 2007 in 30 control sections place both on the Danube River and the Danube arms- Tulcea, Chilia, Sulina and Sf. Gheorghe. Out of the total 1075 km monitored, 280 were in the class I, 787 km in class II and 8 km in class III. As regard the pollution with priority dangerous substances the water quality in the monitored section was inadequate - Cu and Se were found in all sections while other as Cr, Pb and Cd were present but more rarely. From biological point of view, out of the 1075 km monitored 153 km are in a critical situation that needs improvement. The 153 km are in the section Chiciu- Cernavoda -72 km and in the section Giurgeni-junction with Siret-81 km Flood and drought prevention and monitoring systems (early warning systems) Key causes of flooding in Romania include: heavy localized rainfall (c l/m2), increased urban land use, ad hoc development in floodplains; reduced river bed capacity due to embankments and non-rational deforestation of large areas. In Romania there are at present 2050 localities expose to the risk of flooding. Out of these 1298 are protected in different degree with defense works while 752 have no artificial protection. Measures of diminishing the risk of flooding have been implemented regularly in Romania, given the fact that Romanian rivers are prone to flooding. The current national infrastructure for flood prevention include as of 2007: 9,920 km dykes, 6,300 km river basin control structures, 217 temporary barrier lakes with 893 mil m3 capacity of flooding intake and 1,232 permanent barrier lakes with 2,017 mil m3 capacity of flooding intake. Structural flood mitigation measures in Romania include: river regulation works; building of reservoirs, polders and local embankments; wet zones conservation; development of high flood mitigation schemes in high-risk areas; measures for torrent control, reforestation and protective forest belts; soil erosion schemes and removal of some houses from high risk zones. Non-structural mitigation measures include: ensuring river basin management schemes are updated; reviewing watercourse schemes; mapping high risk zones and measures to prevent development in these areas; promotion of home and assets insurance for flood damage; development of early flood warning systems; local community involvement in river conservation actions and education campaigns on dealing with flood crisis situations. Despite all these measures, intense and repeating flooding are still an essential characteristic of Romanian waterways. Though most of these phenomena are caused by climate factors, the flooding of recent years has pointed out the contribution of human factors to their occurrence: Intensified use of land in danger areas Deficient design and construction of protection structures Negligence in the use of protection structures The repeated floods that occurred during , revealed the weakness of protection techniques and the community response capacity at risk situations for facing the floods effects as well as recovery capacity post event. The program for the implementation of the National Plan for Prevention, Protection and Mitigation of Flood Risk is in progress. MESD has implemented several other projects that focus on weather forecasting, hydrological warnings and data processing: 1. One of the first projects, finalized in 2007 was the Integrated Weather System (SIMIN). Weather stations were positioned in a geographical pattern that ensured the relevance of collected meteorological data. SIMIN 33

34 benefits from meteorological radar infrastructure, air observatories, weather forecast centers, rain stations, data collection and processing centers, lightning detection centers and a meteorological products dissemination system. Via its internal and international communication system (satellite, mobile telephony, electronic mail, classic telephony), SIMIN provides information to over 100 strategic beneficiaries: the president s office, the government, ministries, county halls, civil protection institutions, the army, public and national safety institutions. 2. The Destructive Water Abatement and Control (DESWAT) project will be finalized in Its purpose is to develop an integrated hydrologic information system at national level, in order to prevent and reduce flooding, damages to hydro-technical works and water pollution. The main project objectives are improving the capacity, precision and speed of forecasting and evaluating flooding damages. DESWAT will use the SIMIN facilities: the radar and communication systems. Automated monitoring stations are set up along the main rivers, equipped with water level measurement sensors, sensors for monitoring precipitations, air/water temperature and the main water quality parameters. The data collected through these stations are processed by means of different forecasting models (Vidra, Consul, Unda) and will result in medium- and long-term hydrological forecasts (the latter type of forecast will consider different evolution scenarios). Once DESWAT is finalized, a 4-level technical and functional unit will function within NAAR: Level I national level: MESD, NAAR, NIHWM o National database and decision support system for critical hydrological thresholds o Implementing a modern national flood forecasting system on rivers and interconnecting users and national decision-makers o Rapid communication system with Level II Level II basin level o Database for the hydrographic basin and the basin forecast system o Close connections to regional users o Rapid communications system with Level I and III Level III hydrological stations + the Water Management System (WMS) o The local database and collection/processing/validation system for hydrological data o Close connections to local users o Rapid communication system with Level II and IV o Verifying the quality of data from Level IV and the proper operation of the Level IV sensor system Level IV monitoring system = direct data acquisition Measuring, collecting and transmitting data, in real time, to superior levels 3. The WATMAN project (Informational System for Integrated Water Management) is one of the manifestations of National Strategy for Flood Risk Management. It aims to implement an emergency situations system for waters: preparation (sirens and communication), intervention (rapid intervention centers) and rehabilitation (of intervention instruments). An efficient WATMAN system implies a rehabilitation of the Romanian water management system from the perspective of the EU Framework Directive for the water sector and of the National Program for Protection against Disasters. The project s main works will be those to modernize the water monitoring network and the monitoring-warning systems for 96 NAAR dams, to modernize the NAAR communication system and to build 41 rapid intervention centers. WATMAN aims to implement an integrate water management system, with specific applications at all the above-mentioned decision levels, as well as to integrate the monitoring, warning, intervention and communication systems. So far, the feasibility study has been performed and 2 pilot-projects were implemented (Arges-Vedea basin and Somes-Tisa basin). Also, flooding intervention equipment has been purchased. 4. The Hazard Risk Mitigation and Emergency Preparedness flood and landslide risk reduction is a project aimed to support the risk mitigation measures and developed with the support of World Bank and the Global Facility for Disaster Reduction and Recovery. The overall project is at a large scale in the Danube Basin and Black Sea. The objective of the project is to assist the government in reducing the environmental, social and economic vulnerability to natural disasters, to catastrophic mining accidental spills of pollutants. With respect to water issue the project aim to strengthen the institutional and technical capacity for disaster management and emergency response, to implement specific risk reduction investments for floods, landslides and earthquakes, to improve the safety of water-retention dams. The project has more components that will: strengthen and enhance the capacity of Romanian authorities to better prepare, respond and recover from natural or man-made disasters, through modernization of information technology and communications systems, public awareness and preparedness, technical feasibility work and institutional framework for launching of the Romanian Catastrophe Insurance Program; 34

35 reduce the seismic vulnerability of priority technical and social infrastructure, through the retrofitting of key structures, and institutional strengthening; reduce flood risk and vulnerability in critical areas in Romania, improve safety of large and small dams, to map and model the risk of landslides, to reduce losses, providing better land use planning tools; reduce the risk of water and soil contamination, and loss of human and aquatic life from catastrophic accidental spills of pollutants in the mining sector. MESD also prepared the Prefect and Mayor Manuals for administration of emergency situations as informative guidelines and setting the responsibilities regarding intervention measures, population warnings, remediation measures, endowment with materials and equipment, etc. As of 2005, Romania has been rebuilding the water infrastructure affected by extreme weather. Over , the Romanian Government financed the reconstruction of dams, dredging, consolidation of embankments, restoration of river beds, artificial accumulations, etc. A budget of 5.7mil EUR was allocated for such works, from the Environmental Fund. In 2007, NAAR implemented 240 investment projects for the upgrading of the flood infrastructure as follows: Continuing works on investments from previous years o o o o o o o The Runcu barrier lake (Maramures county) Raising the Sacele barrier lake (Brasov county) Protection works on Techirghiol lake (Constanta county) Consolidating the Jijia river in order to combat flooding (Botosani and Iasi counties) Works to prevent natural disasters along the Barcau river (Bihor and Salaj counties) Works to combat flooding along Raul Negru and Olt river (Harghita, Covasna and Brasov counties) Consolidating the Arges river to prevent flooding and to facilitate irrigation (Giurgiu, Calarasi and Ilfov counties) Initiating procedures for the acquisition goods, services and works, based on objectives co-financed by the Council of Europe Development Bank (CEDB) through the Banat projects Defense against flooding in the South West of Romania ; continuing work on the other 2 CEDB projects Rebuilding hydro-technical flooding defense works and basin consolidation works. Funding for these investments is sourced from CEBD and the European Investment Bank (EIB) Future planned actions include: The development of the Flood Risk Management Plan per river basin and a floodability map of Romania. The latter will be finalized by 2011 and will indicate the expansion of floodable areas and the variations in water depths when flush-flooded, taking into account different overflowing probabilities River basins, county, municipal and communal flooding defense plans (to be integrated into the Strategy as Operational Intervention Plans) The National Program for the Prevention, Protection and Mitigation of Flooding Effects Drought management From total 14.7 million ha agricultural land (out of which 9.4 million ha arable land) 48% are affected by drought on long periods and consecutive years. At the same time 80% of the arable surface is affected by restrictions determined by natural (climate, relief, etc) or human (agriculture and industrial activities) factors. Romania has also about 6.37 million ha of forestry vegetation unevenly distributed. The drought is affecting mostly the forests from hill and mountain areas with a increased sensitivity of artificial regeneration plantations depending on manual watering. Drought influence on water resources was extremely severe from 1990 to 2007 the real river debits being 56% of the average multiannual debit main influence being observed on the level of groundwater mainly in Moldova plateau, Campia Romana and Dobrogea. (Someş, Jiu, Olt, Cibin, Buzău, Prahova, Siret, Prut, Mureş rivers). At the same time the existing deficiencies in the water supply system and insufficient capacity of the distribution systems are increased during drought periods. 35

36 The hydro-ameliorative systems with Danube as tapping source started during and continued up until 1989 when Romania had a total irrigated surface of 2.2 million ha plus another 0.8 million works in progress. After 1989 the structural changes in agriculture sector as well as the low profitability in exploitation due to network losses and high energetic consumptions (even with subsidized costs) determined a drastic decrease of the irrigated areas in comparison with the existing potential. At present the National Agency for Land Management has under direct administration: irrigation infrastructure million ha, draining infrastructure million ha (out of which: gravitational million ha, pumping million ha, pumping with draining pieces), drainage channels ha, infrastructure against soil erosion 2.2 million ha and infrastructure for flood defense of agriculture land (dikes on Danube and interior rivers ha, control dams for flood outrush ha). A detailed analysis of the consequences of agricultural and industrial practices as well as other aspects of rural and urban development was not done yet but the reciprocal determination between desertification and economic development was recently acknowledged through the concept of sustainable development. The national strategy on drought management was revised by MARD in early 2008, but implementation is still difficult, mainly due to the large number of institutions that need to cooperate (over 20), as well as the absence of a detailed action plan for each sector and of a clear budget resources to be allocated. Moreover, the National Agency for Land management (ANIF), the administrator of the national irrigation system under authority of MARD, was subject of many debates following a reorganisation in 2005, a bankruptcy status in 2006 and a failed privatisation attempt in As a consequence of the 2007 drought, a set of procedures for the management of emergency situations determined by drought: was developed by Romanian government in 2008: Procedures I Are established by Regulations regarding the management of the emergency situations generated by floods, dangerous meteorological phenomena, accidents at hydro technical constructions and accidental pollutions approved by MESD + MIRA Minister Order 638/420/ The document provides in case of emergency situations the obligation to fill in daily Operative Reports to include: the area where the restrictions are applied, the hydro meteorological situations that determined the restrictions and the rationalization of the water according to the local situations. Procedures II Each river basin has developed Plans for restrictions and water usage in deficit periods, plans revised in These plans comprise mainly information about the decisional-informational system and the population and other socio-economical units warning system, water sources and the normal used debits and the minimum needed and the sector that should be controlled. Procedures III Consist of the methodological norms for elaboration of the governing rules for exploitation of dikes, artificial lakes and water inlets. The norms (approved by MESD Order 76/2006) contain mainly: technical data of the construction, the dispatcher graphic of the construction, technical instructions for manipulations of the dikes in the conditions of low water level, the hydro -meteorological, decisional and informational flow. 2.6 Coastal management and protection Erosion protection The length of the Romanian coastline is 244 km, divided into 2 main sectors: The northern sector (approx. 164 km) lies between Musura Bay and Cape Midia, and it includes the Danube Delta Biosphere Reservation and the Razim-Sinoe laguna complex The southern sector (approx. 80 km) lies between Cape Midia and Vama Veche The coastal area includes coastal surface and ground waters, seashore, adjacent terrains (with their respective surface and ground waters), islands and salt lakes, wetlands in contact with the sea, the beach and the sea-front (embankment). Due to its economic significance and to its geographical position, to its role a main transport corridor on Europe s eastern border, and to the large protected areas, the coastal area requires integrated protection and management measures in view of sustainable development. 36

37 The National Committee for the Costal Area (NCCA) coordinates Working Groups that offer specialty consultancy services in the field of adequate strategy implementation in the coastal area. These Working Groups are responsible for: Demarcating the coastal area Elaborating technical and juridical documents for the coastal area Elaborating policies, strategies and action plans Implementing integrated control and monitoring of the coastal area Informing and communicating relevant information to the public and government institutions The integrated management of the coastal area is one of the priorities of the government program, as studies performed over the years have shown a high degree of coastal erosion and pollution, due to environmental factors but mainly to human activities. This degradation makes rehabilitating and protecting the coastal area is a priority issue for Romania, the main factors of degradation being: The expansion of dykes in the Sulina branch of the Danube Delta into the sea this caused the deviation of sediments from the Chilia branch and a their settlement in the sea area Expansion and modernization works in the Midia, Constanta and Mangalia harbor these caused an out to sea deviation of seashore currents, which ensure the supply of sand to southern beaches A reduction on the mollusk population by 50%, causing a fall in the level of biogenic sand The rising tendency of the sea level, by an average of mm/year, which causes a withdrawing of the shore line Under these circumstances, MESD accepted the collaboration proposal of the Japanese Agency for International Cooperation (JICA), and initiated the Study on the Protection and Rehabilitation of the Southern Sector of the Romanian Black Sea Shoreline. This study s main objectives are: Elaborating a protection plan for Romania s southern coast (Midia-Vama Veche) Performing preliminary actions to promote preliminary projects Transferring knowledge and technology in the field of coastal protection and management to the Romanian side The study is financed by the Japanese Government at the request of the Romanian Government, and JICA is responsible for implementing the technical cooperation program. Several stages of this project have been completed. In 2005, the on-site situation was evaluated and 2 priority areas (Eforie Nord and Mamaia Sud) were selected for rehabilitation and for performing anti-erosion works, including supplying sand. In 2006, an environmental report for the project was published and, in 2007, the project was subject to public debate, resulting in the selection of final protection options for the coastal area. The Japanese team performed the feasibility studies for the two priority areas out of their own sources of financing, and the Romanian government must pay for the subsequent feasibility studies (remaining areas). The Japanese side of the project will continue to provide the necessary technical assistance. 37

38 The implementation plan for protecting the coastal area against erosion is divided into 2 stages. So far, only the phases of stage 1 have been defined: Table 3 RO Implementation Phases Protection Plan Costal Area Erosion Phase Timeframe Included areas I Mamaia, Eforie Nord (partially) II Mamaia Center (partially), Tomis Nord, Eforie Center III Mamaia Center (partially), Tomis Center, Eforie Nord (partially), Eforie Sud (partially) Total Stage Mamaia to Eforie Sud (partially) Source: Business Development Group (based on MESD information) Protection works will include the rehabilitation of dykes, creating artificial reefs, supplying sand and demolishing existing works in the area. MESD is also considering European funds in order to rehabilitate the Black Sea coastal area, such as those for combating coastal erosion. Priority Axis 5 out of Sector Operational Program for Environmental Infrastructure (SOP ENV) is reserved for Flood protection and the reduction of coastal erosion, with a total budget of 134 mil EUR. The first project proposal will be submitted to the European Commission in the second half of The sole beneficiary of these funds will be NAAR, and project will be implemented between 2009 and Integrated management of coastal areas In order to ensure an integrated management of the coastal area, NCCA collaborates with several research institutes, public administrations, EPAs, etc. In order to protect and rehabilitate the coastal area, MESD has been promoting international projects that support solving priority issues regarding the Black Sea coast, the most important being: Implementing the Framework Directive for Water and the Integrated Management of the Coastal Area, in the Transition and Coastal Waters of Romania financed by the Dutch Government finalized Study on the Protection and Rehabilitation of the Southern Sector of the Romanian Black Sea Shoreline financed by the Japanese Government through JICA ongoing Local budgets also financed several projects during Complex Development for Stopping Flooding and Rehabilitating the Beach and Sea-line in Costinesti Stopping Erosion in the Jupiter-Venus Area Works to unclog the Tuzla pond Works to consolidate the seashore in the North Midia sector (stage 1) Other MESD international projects focused on coastal erosion, besides the one in partnership with JICA are: SeaDataNet ( Pan-European infrastructure for managing data regarding the sea and ocean environment. This 5 year project ( ) involves 49 partners in 35 countries, and is coordinated by Ifremer (France) and Maris (Marine Information Services BV) (Holland). The purpose of the project is to build a standard data management system, for data collected by research ships and new automated observation systems. Black Sea SCENE ( A projects that will be finalized in November 2008 (initiated in 2005) and was aimed at creating a Black Sea science network. Benefiting from EU financing, the project has 25 partners from countries neighboring the Black Sea. The purpose of the project is to create a network of environmental and socio-economic research institutes, universities and NGOs, and developing the essential data and information infrastructure that will improve the identification, access, exchange, quality and utilization of Black Sea data. 38

39 The Convention for the Protection of the Black Sea Against Pollution was signed in Bucharest in 1992 by representatives of all Black Sea neighboring countries: Romania, Bulgaria, Georgia, Russian Federation, Turkey, and Ukraine. The Bucharest Convention provides the legal framework for cooperation and for taking action to protect the Black Sea against pollutions. The Convention has 3 main protocols: Protocol on protecting the sea environment against pollution from land sources Protocol on cooperating to combat pollution of the sea environment with oil and other damaging substances Protocol on protecting the sea environment against spill pollution In order to implement the Convention, in 1996, the partner countries signed the Strategic Action Plan for Rehabilitating and Protecting the Black Sea. Based on this plan, Romania elaborated the National Strategic Action Plan for the Black Sea. Romania has also managed to apply EU recommendations on integrated coastal management, by implementing the necessary legislation: The most important national projects targeting integrated coastal management are: Analyzing and reconsidering the land pollution sources in the Black Sea coastal area, according to EU demands ( ) This project will be finalized in 2008 and is aimed at identifying, monitoring and evaluating the impact of ground pollution sources on the sea environment, in the area between Vadu Sinoe and Vama Veche. Evaluating the current status of transition coastal and sea waters, a priority component of the community environmental strategy ( ) This project aims a complex approach of the degradation of sea waters in order to supply the necessary data for diagnosing the Black Sea ecosystem. It is also a measure taken to give scientific ground to measures of protecting the coastal and transition sea waters and to align national investigation methods to EU standards. MESD has also elaborated a short and medium term strategy based on an analysis of the use and exploitation of Black Sea beaches. The strategy was elaborated in collaboration with NAAR the Direction of Dobrogea-Seashore Waters, which administers the beaches. The main objective was the one-sided exploitation of all beaches and the possibility of transferring all non-water-management works to that operator. In the short term, MESD envisions achieving European standard tourism on the Romanian seashore. In the long term, the purpose is ensuring better protection for beaches by regulating the type of acceptable beach constructions. USTDA granted MMDD a not reimbursable loan for technical assistance for a project concerning the erosion reduction in the North part of Black Sea Coast. The total amount granted is USD. During the north part of the seashore will be analyzed in order to identify the reason of erosion and the areas most exposed to erosion and the project will also propose possible solution to stop the erosion. The project is similar with JICA for the south part. 2.7 Ground water / soil pollution Inventory of risk bodies of groundwater In order to fulfill its accession negotiation commitments, Romania sent the European Commission a National Report, according to article 5 of the Framework Directive, which identifies and demarcates bodies of ground water based on their geological and hydrological characteristics. The final estimates were 129 bodies of ground water, 19 of which were cross-border. These bodies of water were assigned to the River Basin Directorates. An initial risk analysis showed that 20 bodies of water presented qualitative risk. Further information evaluation led to the conclusion that the water table is in a critical qualitative and quantitative state. An overall evaluation of information collected from all the river basins points out the critical situation of the ground water bodies in many areas of Romania. Even though human impact on the ground water bodies has decreased over the last few years (a decrease in industrial production and animal breeding has drastically reduced the quantity of pollutants spilled in natural receivers), and waste water purification methods are being implemented, the quality of ground water is still below acceptable standards, due to the slow rate of selfpurification. 39

40 In drillings were monitored out of which 1687 are part of the national hydro-geological network including 28 water springs and 252 monitoring drillings are in the proximity of big industrial centers. Via MPH 129 private fountains with non drinkable water due to exceeding levels of ammonium, nitrites and bacteriological infestation were also monitored. Data collected showed that 32% were exceeding the organic substances level and 28% were exceeding the ammonium level (both on an increase trend compared with previous year), 12% of the drillings were exceeding nitrates level and 8% were exceeding the phosphates level. Map 3 RO Vulnerable areas for nitrits pollution Source: MESD The major pollutants affecting the quality of ground water are: Oil products: o Prahova-Teleajen region: Petro-Brazi, Astra and Petrotel Ploiesti refineries o Baia-Mare region: fuel storage facilities, Petrom gas stations o Bega-Timis river basin: Solventul Marginea factory o Siret river basin: RAFO Onesti rafinery o Accross Romania: oil pipes Fertilisers: o Around producers: Azomures (Mures county), Doljchim (Dolj county), Oltchim (Olt county), Agrofertil (Prahova county), Archim (Arad county) o In agricultural areas Industrial by-products: Around large industrial platforms Radioactive substances: thermal power plant ash from lignite combustion (Isalnita area, Erghevita area) Animal breeding products and household waste: around animal breeding complexes and large urban agglomerations Heavy metals: o From human activity: mining sites, ore processing plants, etc o From natural sources: areas with high iron and manganese concentrations (Siret, Olt, Jiu, Buzau, Bega-Timis river basins) 40

41 2.8 Major national and international companies active in the water sector The market for technologies, equipment and consultancy services evolved in accordance with high demands for upgrade in various areas of the water sector as presented in previous chapters. The Dutch presence on the market remains one of the most active by involvement of experts, institutions and companies playing major roles in the development of the sector from governmental capacity building to knowledge transfer on up-to-date knowledge transfer. According with the brochure edited in 2007by the Royal Netherland Embassy in Bucharest over 140 projects were carried out last year in Romanian water sector totalling over 20 million Euro support of the Dutch government. As follows a brief selection of representative companies supplying Romanian market: Romanian International ACK ( designer and producer of installations for water meters control and supplier for water meters for cold and hot water and equipments for waste water treatment plants Alp ( supplier of products for drinking water management, water transportation, waste water evacuation systems, complete sewage systems Apasco (no website)- founded in 1992 is a large company in the hydrotechnic construction field Apa Nova Bucuresti & Apa Nova Ploiesti ( the concessionary of the public water supply and sewage network for Bucharest and Ploiesti Aqua Biotec ( is specialized in the treatment and evacuation of waste water and rain water in the areas where there is no sewage system Aquaproiect ( - design institute in the field of water management and environment engineering, including design of: water constructional works (dams and storage reservoirs, extensions and adductions including hidromechanical equipment), etc Altenburg & Wymenga ( Sustainable Development, Biodiversity Conservation and Ecosystem Restoration, Consultancy services in the field of Ecology and related issues such as Integrated Water Resource Management, Protected Area Management, Nature Conservation and Capacity Building. In Romania: project to develop a modeling methodology for the establishment of an ecological network in the Carpathians (also follow-up project in the Ukrainian Carpathians). Bamag ( water, waste water, sludge treatment and Incineration, engineering company in the fields of water Ekowark ( won the public tendering for the Arad sewage network, in a consortium together with JV Confort&Amarad ERM ( - environmental consultancy Grontmij / Carl Bro ( provides consultancy services within all significant areas of water resources, supply technology, wastewater and the aquatic environment Haskoning Romania ( - water treatment, environmental policy & risk management, river & coastal management, spatial development & water management 41

42 Argif Proiect ( accredited for civil and industrial constructions, hydrotechnical constructions, land development and environmental engineering. Develops on site studies (hydro, geo, hydrogeo and topo) and environmental impact evaluations (impact studies and environmental balances) for all designed works. Ascomi ( supplier of water treatment equipments and installations Asio ( - development, engineering, production and installation for the purification of waste water and water treatment Atlas GIP ( drilling, geophysical research, thru-tubing perforation or directly thrucasing in static or flowing wells Auditeco ( ) environmental consultancy: water supply, technical assistance for water treatment BDO ( - consultancy services for utilities' operators and public authorities, policy makers or regulatory bodies C&V Water ( supplier of drinking water treatment equipments, waste water treatment equipments, systems for water supply Consir (no website)- founded in 1991, one of the large companies in hydrotechnical construction field Constructii Hidrothenice ( ) - founded 1991, main activity is hydrotechnic constructions (dikes, water supply, reinforrcment of rivers' banks, etc.) Danex Group ( recognized by ARA as "The best general supplier of turn-key solutions for water infrastructures in 2007 is involved in projects like: water supply network, drinking water treatment, sewerage network, waste water treatment, pumping stations for drainage and irrigation Derco Metal Construct ( ) deep and shallow well drilling Hyder Consultin ( - consultancy services in the water and environmental area Iberinsa Romania ( -engineering company, construction and water management International Water Enterprise ( works for connecting to the urban sewage system / water supply, wastewater treatment stations, purification stations Lockheed Martin ( - global security systems; implemented SIMIN and DESWAT programs Louis Berger ( waste water treatment, engineering Mivan Kier Joint Venture Limited ( - represents an association of two construction companies from Great Britain - "Mivan Limited" and "Kier International". On the Romanian market the group is developing projects on the design and execution of water supply system as well as social housing. The infrastructure development schemes will result in supplying drinking water to 30 localities in the rural area of 6 counties. Mott MacDonald Romania ( consultancy company in the area of water and wastewater public services, environment, education, energy, management and transport Peri Romania ( - water retaining structures, scaffold bridges and walkways, shoring for bridge work, etc Solel Boneh International Tahal J.V ( ; ) - the two companies are partners in a Joint Venture that won a tender for the design and construction of Water Supply Schemes in villages in 22 counties. Financing for the Contract was also arranged by the SBI-TAHAL Joint Venture Spaans Babcock ( is active in designing and building water and waste water treatment equipment; specialized in all applications of water and waste water treatment with screw pumps, aerators and fine screens; by the end of 2008 will deliver a turnkey project in WWTP in Targu Mures Tahal Romania ( part of Tahal Group- international consultancy and engineering concern, MESD partner for a large no of projects in the water infrastructure 42

43 DFR Systems ( ) supplier of water purification and treatment stations Dy Angello Constructii ( ) is a designer and constructor of sewage and urban water supply networks Tebodin B.V. ( engineering and consultancy company also active in the field of water supply and sewage system. Trapec ( ) - part of Tractebel Engineering Suez- consultancy company - water and land use, environment, mobility, regional economy Ecomaster ( ) is part of the Rompetrol Group and deals with activities like waste collection and waste water purification Edas Exim ( distributor of TKA Watersystempurification (Germany) systems for water purification and water treatment Elkana ( ) deep and shallow well drilling, horizontal drilling Euro Partener Instal ( design and construction of water supply networks and sewage systems Veolia Water ( Veolia Water Solutions and Technologies is the world leader in engineering, design, project management and execution of construction projects for turnkey facilities and water treatment plants. Wavin ( ; ) leading supplier of plastic pipe systems, ground solutions for hot & cold tap water, surface heating and cooling, soil and waste, rainwater management Witteveen+Bos ( consultancy and engineering services for projects in the following areas: water, infrastructure, environment and economics Zabrak ( drilling works, ground water pollution analysis Foretis ( drilling works for deep and shallow wells Formin ( ) drilling works for deep and shallow wells, mainly in the West side of the country Geo Aqua Consult ( consultancy: feasibility studies for wells, well design Geoscan ( ) geotechnical studies and investigations, consultancy services Gepaco ( drilling works for deep and shallow wells (up to 350m) Grup Romet ( - the biggest Romanian suppliers for water industry (water treatment equipment, waste water equipment, hydrants, pumps, valves, dismantling joints, couplings, pipes) for agriculture (complete irrigation solutions: sprinkler irrigation equipment, hose reel travelers, center pivots and lateral move machines, drip irrigation equipment) H2O International ( ) water treatment and filtrations systems Hidroconstructia ( ) - founded in main activity hydrotechnic construction both above and underground 43

44 Hidrotica ( ) supplier of pumps and hydrophores Hydrotech ( drainage and water supply technology Ingo Prod ( ) representing ECP International LLC in Europe, which is the world leader in electrolytic treatment of industrial, agricultural, freshwater aquaculture, and municipal wastewaters Iridex ( construction company including hydrotehnic construction Kemorad Grup ( ) water treatment systems supplier Purator ( full range supplier of products and system solutions for water supply, sewage treatment and waste water Rehau ( supplier of water transportation systems Repcon ( offices in Oradea, Sibiu, Suceava- hydrotechnic construction, rivers regulations Romstal ( one of the biggest suppliers of water transportation systems Ronoaqua( ta-in-constructii.htm ) consultancy for projects concerning the construction of sewage system, water supply network, project development Sibarex ( years of experience in the construction field, main certified activity hydro-technical constructions such as: river control, river side protection, irrigation channels, water supplying etc Socot (no website)- founded in 1979-one of the largest companies in the hydrotechnic construction field Ugo Trading ( supplier of equipments for water filtration and treatment 44

45 3 Overview of funding available for the water sector The total required environmental investments between 2007 and 2013 are estimated at about 18 billion EUR, out of which 6.4 billion EUR will be sourced from EU funds. The total estimated cost for complying with environmental EU Directives is about 29.3 billion EUR up to 2018, out of which: 5.4 billion EUR state budget and local budget (18%) 9.9 billion EUR EU funds (34%) 7.8 billion EUR private sector (27%) 6.2 billion EUR - other sources (Environmental Fund, international projects (other than those financed with EU support, foreign loans, etc.) (21%) However, the highest investment pressure is foreseen for the next 7 years, based on the fact that many of the transition periods for various EU directives are agreed up to 2013 and minimum investments are needed as a first phase of long term investment plans in the water and waste sectors as to ensure sustainable development. In the water sector the necessary investments are estimated at about 12 billion EUR in the period (for the whole sector), with about 5.4 billion foreseen to be allocated from the EU funds. The division of funds based on addressing key water issues is: Waste water treatment about 9.5 billion EUR needed for wastewater collection and treatment, out of which 4.8 billion EUR estimated in the period o o o 71% of waste water is untreated or insufficiently treated, and flows directly into natural receivers only 52% of Romania s population is connected both to water and sewage services all of Romania s territory has been declared a sensitive area ; advanced treatment (more expensive) is required for agglomerations larger than 10,000 inhabitants. Drinking water about 5.6 billion EUR needed for drinking water, out of which 3.8 billion EUR estimated in the period o only 65% of the population of Romania benefits from drinking water supply and indoor plumbing Investments are also required for anti-flooding measures about 237 mil EUR foreseen EU support. The major projects are currently prepared with ISPA support and external loans. They will be integrated water/wastewater projects (groups of projects), each covering several agglomerations in a county/river basin area, aiming to optimize the investment and operational costs and to significantly contribute to compliance with EU directives (in line with commitments under Chapter 22- Environment). All major projects are linked to a condition of reorganization of water services in the project area, aiming to ensure a good quality of services, at affordable tariffs, and an efficient operation of facilities to be built within the SOP framework. ISPA and PHARE technical assistance is currently available in 35 of the 42 counties of Romania, with the view to increase the performance of the regional water companies that will implement EU co-financed measures. The investments in water and wastewater infrastructure are based on the Regional Master Plans. These Master Plans are planning documents for water and wastewater infrastructure, developed at regional / county level, which identify the geographic area (usually, at county level) where the management of water resources and wastewater would be better performed within a regional project (through the regionalization of water services, in order to improve their quality and cost-efficiency). This area, which will be covered by a regional project, includes all agglomerations above 10,000 inhabitants (mainly urban localities), but may also include some rural agglomerations between 2,000 and 10,000 inhabitants, where these investments are well justified from the environmental, technical and economic point of view. The large-scale regional integrated projects as they were identified in the Regional Master Plans are financed through SOP ENV, under Priority Axis 1, Extension and modernization of water and wastewater systems. The needs of investment in water and wastewater infrastructure in the localities which are not included in the regional project (usually, rural localities) are also identified within the Regional Master Plan and will be addressed through the National Rural Development Program (NRDP), from the European Agricultural Fund for Rural Development (EAFRD), or through other financing sources. In order to ensure that the two programs are complementary, an agreement has been reached by the two Managing Authorities, establishing the 45

46 coordination system of projects. Investments in the water sector are based on agglomerations as defined under EC Directive No 91/271 on urban wastewater treatment, and the urban and rural localities are defined according to the Romanian Law No 351/2001 on spatial planning. An overview of available national and European funding available for the water sector is provided in Annex 3 and detailed as follows: 3.1 National funds National investments in the water sector are planned from the following sources: National Rural Development Program co-financed by the EU in the period and coordinated by the Ministry of Agriculture and Rural Development (MARD), will include investments in the water infrastructure in rural areas; Governmental Programs for the development of infrastructure in urban and rural areas with provisions for investments in water and wastewater infrastructure; The Environmental Fund provides co-financing of limited investments in the water sector; The rural areas will continue to receive Governmental support from local budgets and a considerable contribution is expected under the framework of NRDP , financed from EAFRD. In order to ensure co-financing from the state budget for EU funded projects, the multi-annual budgetary programming is in place, and budgetary flexibility has been included in the State Budget Law for As for the contribution of local budgets to the projects co-financed by EU Funds, many municipalities are in a disproportion to the outstanding investment needs. Accordingly, the national authority intends to limit the cofinancing rate of the local budgets to a minimum level (between 2 and 5% of the eligible costs of a project) that still can assure some incentives for sound implementation. The ineligible costs will be covered by the beneficiaries. National Rural Development Program (NRDP) Through the National Rural Development Program, Romanian authorities aim to reach several objectives: Increasing the competitiveness of the agro-food and forestry sectors Improving the environment and the countryside Improving the quality of life in rural areas, Diversifying the rural economy Managing local development initiatives. These objectives are covered through the 3 Axes of the Program, and through the implementation of the Measures foreseen for each axis. Within NRDP, water projects are covered under Axis 3 The quality of life in rural areas and the diversification of the rural economy, Measure 2 Measure to improve the quality of life in rural areas. The overall objective of this measure is the improvement of living conditions for the rural population, ensuring access to basic services and preserving the local cultural and natural heritage of the rural area in order to achieve a sustainable development. The specific objective aims to increase the number of inhabitants from rural area which benefit from improved services. Sustainable economic and social development of the rural areas is critically dependent on improving the existing rural infrastructure and basic services. Currently, access to the public water supply network among the rural population is limited to 1/3, while access to the sewerage system is even more problematic (only 10% of the inhabitants benefit from a public sewage system). All these issues are urgent and will be approached through the specific activities included in the 3 components of Measure 2: Improving and creating the physical basic infrastructure (especially the road, water supply and waste water infrastructure) Improving and creating the basic public services 46

47 Improving and creating the physical basic infrastructure implies: Construction of new roads, extension and improvement of the local roads network (commune roads, vicinity roads, and streets within communes), which belong to the public propriety of the administrative territorial unit (the commune) in which they are located Set-up, extension and modernization of the water infrastructure (collection, treatment stations, water supply) for the rural settlements with less than 10,000 inhabitants Set-up, expansion and improvement of the waste water network (sewage, waste water cleaning stations) for rural settlements of less than 10,000 inhabitants Set-up and extension of the low tension electrical energy distribution network and public lighting network with high energetic efficiency Set-up and extension of the public gas distribution network towards other rural towns and villages or towards other rural areas which are not linked to the network Investments in transfer stations for waste and purchase of related equipment for waste management Beneficiaries of NRDP are: Communes, through their legal representatives Local authorities (communes) or intercommunity development associations, through regional operators, for investments in water/wastewater infrastructure Intercommunity development associations, composed of two or several communes NGOs, cultural establishments and religious institutions Natural persons/legal entities that own or manage cultural/ natural patrimony objects of local interest The public support (community and national) granted within this measure shall be: a) Up to 100% of the total eligible expenditure, for the non-profit exclusively public projects, but the total eligible cost of the project will not exceed: 1 million EUR/individual project for an investment project in basic infrastructure, if the beneficiary is a local council 3 million EUR/project for an individual investment project on basic infrastructure, whose beneficiary is an intercommunity development association 2.5 million EUR/project for an integrated project, if the beneficiary is a local council 6 million EUR/project for an integrated project if beneficiary is an intercommunity development association 500,000 EUR/individual project, for other types of actions provided under this measure, other than the ones mentioned above. b) Up to 70% of total eligible expenditure for the profit-generating projects. The support volume can not exceed 200,000 EUR/beneficiary over a period of three fiscal years. The selection criteria for water projects are: Communes that have not received any previous Community support for a similar investment Rural areas in poor regions Projects that fit into a local or county development strategy Integrated investment projects Investment projects on water/wastewater infrastructure in rural localities with 2,000 10,000 inhabitants, identified under the Regional Master Plans, but that are not financed under SOP ENV Infrastructure projects for water supply infrastructure in areas where water is insufficient or that are often affected by drought Investments projects in water/used water infrastructure for areas where water presents a high level of pollution, or in the areas where the water table presents a high concentration of nitrates affecting the health of the population. Under the NRDP (EAFRD), projects that will be financed will be the ones relating to water/waste water infrastructure in rural localities, with under 10,000 inhabitants, save for the ones included in the Regional Projects that will be funded under SOP ENV, and the ones on water/waste water infrastructure in spa resorts in the rural area, which will be supported through ROP. The financial allocation of Measure 2 for the programming period is 1,579,217,870 EUR, with 1,546,087,425 EUR contributed from national resources. In this period, 200 communes will benefit from water/waste water projects under NDRP, and 6,317 km of water supply pipelines and 5,053 km of sewage pipelines will be built. 47

48 The Managing Authority (MA), represented by MARD, through its General Directorate for Rural Development (GDRD) is responsible with the implementation and management of NRDP. In order to facilitate direct contact with potential beneficiaries, GDRD has set up within the Directorates for Agriculture and Rural Development (county offices of MARD) a rural development department, which will carry out, locally, the tasks corresponding to the MA implementation tasks. The accredited Paying Agency, represented by the Paying Agency for Rural Development and Fishery (PARDF) is responsible with making payments. Measure 2 benefits from 618,434,970 EUR in These funds are granted during 7 sessions of project proposals, 6 monthly sessions starting with March and a 7 th at the end of 2008, used for allocating any remaining funds. The project proposal must contain the request for finance and the technical and administrative annexes (provided in the Applicant s Guide), and must be elaborated in Romanian. A printed copy and a digital copy must then be submitted to the corresponding County Payment Office for Rural Development and Fishing. The priority of projects are water infrastructure, road infrastructure, electrical supply, others. The maximum project implementation deadline is 3 years for building/set-up projects, and 2 years for simple acquisition projects. A 2% penalty will be applied if this deadline is not met. Environmental Fund The Environmental Fund (EF) operates according to the European principles Polluter pays and Producer s responsibility, in order to implement the environmental protection legislation, harmonized with acquis communautaire provisions. EF is regulated by Government Emergency Ordinance 196/2005, modified and completed by Law 105/2006 and Law 292/2007. Managing the EF falls under the responsibility of the Environmental Fund Administration (AFM), a public institution coordinated by MESD, and financed exclusively from its own sources of funding. EF revenues are obtained from public income and represent taxes and contributions according to the juridical regime of taxes, contributions and other payments to the general budget, according to GO 92/2003. AFM is responsible for establishing, monitoring and collecting the EF taxes and contributions, including, if necessary, through legal procedures. In 2007, 135,990 environmental tax payers were registered with AFM, contributing 52,060,923 EUR to the AFM budget. Beneficiaries of EF financing are: economic agents, local public authorities, NGOs, education institutions EF funding upholds state aid legislation, and must be authorized by the European Commission. EF nonrefundable financing can not be granted if, cumulated with other forms of state aid or other European/national funds, it surpasses the maximum amount prescribed by European Commission Regulation. For 2008, 1.4 billion EUR are available through EF for the protection of water sources and for building/rehabilitating treatment and purification stations in local communities. Another 112 mil EUR is reserved for preventing or diminishing the effects of dangerous weather phenomenon on water management works, and 4.1 billion EUR for reducing the impact on the atmosphere, water and soil. For private economic agents, EF offers 50% nonrefundable financing (40% for the Bucharest-Ilfov Region), public authorities are covered in a proportion of 60% and NGOs can receive 90% of necessary funds. Refundable financing is available only for economic agents, with up to 75% of financial needs covered. The maximum finalization period for any project funded through EF must be 24 months. A selection of water projects finalized financed from EF nonrefundable resources is available below: Table 4 RO Selection Water Projects financed form Environmental Fund No. No./Date of contract Beneficiary Location Actions Duration (months) Value (EUR) 1. 1/M/ Purification station for waste S.C. Lacto Saveni water resulting from dairy Salomonescu SRL (Botosani county) processing , /N/ Turceni Local Turceni Expanding and modernizing Council (Gorj county) the sewerage network , /N/I/ S.C. Industralizarea Pascani Rehabilitating the prepurification station + network Carnii KOSAROM (Suceava county) S.A. Pascani 8 104, /N/ S.C. "AVICOLA" Waste water station for a Buzau S.A.Buzau poultry slaughter house 6 136,693 48

49 5. 104/N/ /N/ /N/ S.C. SUBEX S.A. Bacau Saru Dornei Local Council Targu Neamt Local Council 8. 18/N/ R.A.J.A.C. Iasi /N/ S.C."VIM SPECTRUM" S.R.L /N/ SC Agro Nutrisco Source: Environmental Fund Administration (AFM) Modernizing the prepurification station Bacau Saru Dornei Modernizing the Neagra (Suceava county) Sarului purification station Renewing the technology in Tg. Neamt the Targu Neamt purification (Neamt county) station Corunca (Mures county) Mihailesti (Giurgiu county) Renewing the technology and modernizing the Targu Frumos purification station Installing a waste water purification station Waste water purification station 9 88, , , , , ,322 Government programs for the development of rural infrastructure The government programs implemented by MDPWH are in line with Romania s development priorities and the government s concern with reaching European living standards. These programs mainly target: supplying villages with water, through a centralized system building sewerage and purification systems treating waste water building/modernizing waste management structures improving rural roads through stoning, rehabilitating, asphalting building, expanding or modernizing bridges developing sports infrastructure The main programs currently implemented by MDPWH 1. Supplying villages with water, according to GD 577/1997, commenced in 1997, is meant to equip communes and villages with the necessary water infrastructure in order to meet European development demands. The main categories of communities targeted for the program are: Villages connected to urban areas Semi-urban areas Communes with economic and touristic potential Poor communities Funds for this program are allocated fro the state budget and are managed by MDPWH. In 2007, alternative financing solutions were used to complete these funds, such as allowances from the local budget (480,000 EUR, across 10 counties) and external refundable credits (30 mil EUR, according to GD 1853/2006). Between 2007 and 2009, a further 90 mil EUR will be contracted in external refundable credit. The subprogram aims to introduce water systems worth 935 mil EUR, in approx. 9,000 villages. Throughout 2007, 470 villages were included in the program and, by July 2007, centralized water supply systems had been introduced in 345 villages, with 110 already operational. Local councils are the contract beneficiaries for these works, and the systems are under their administration. The concrete objective of the subprogram is supplying 2.5 mil inhabitants, in approx 30% of Romania s villages, with drinking water, in order to improve living standards and revitalize unprivileged areas. The work portfolio is elaborated annually and is completed/modified, if necessary, according to local council nominations. Tenders for works under this program are organized according with legal provisions for public tendering: calls for projects are published in the electronic system for public acquisitions (SEAP), tenders are organized by local councils as contracting parties and are open to any company meeting the requested criteria. 49

50 2. Government program of supplying villages with water, approved through GD 687/1997 began in 2000 and will be completed in 2009, and is structured in 3 financing stages, from external credit: Stage I 186 mil EUR financing, obtained in 2000, for water supply systems for villages (project ongoing) Stage II 60 mil EUR financing, obtained in 2004, for water supply systems for villages (project ongoing) Stage III 53 mil EUR financing; 6.6 mil EUR obtained in 2007; 46.4 mil EUR reserved for The program is currently being implemented by Mivan Kier Joint Venture Limited and Solel Boneh International Tahal J.V as winner contractors of the 1997auction. By July 2007, 407 water systems had been introduced in 697 villages, and a further 290 villages are included in the program. County and local councils are the beneficiaries and administrators of the water systems. The concrete objective of the project is providing 1.7 mil inhabitants, in 894 villages with centralized water supply systems. The external credit is completed yearly, from the state budget, with the amount of 2.8 mil EUR. The total value of the program is 340 mil EUR. 3. Integrated system for the rehabilitation of water supply and sewerage systems, of drinking water treatment stations, of waste water purification stations in communities with under 50,000 inhabitants is implemented by MDPWH and the National Investment Company (CNI). The project approaches significant areas in Romania, and it targets localities with fewer than 50,000 inhabitants. The counties where the project is currently implemented are: Bihor, Bistrita Nasaud, Calarasi, Constanta, Dambovita, Gorj, Harghita, Mures, Tulcea and Vaslui). The project objectives are: Combating cross-border pollution by developing environmental infrastructure (waste water purification stations and sewerage systems) in the Crisuri, Somes-Tisa, Mures, Olt, Prut, Siret, Jiu, Arges-Vedea, Buzau and Ialomita river basins., as well as the Danube and Dobrogea river basins Improving drinking water supply to communities Ensuring constant quality drinking water supply Diminishing network water loss, energy use and use of chemical water purifying agents Reducing ground water and surface water pollution The project will be implemented and finalized in 2 stages, the first stage being scheduled for implementation between 2007 and The 59 communities in the first phase of the project will benefit from financing for the following activities: Rehabilitating, expanding or creating new drinking water distribution networks Rehabilitating drinking water treatment stations or drinking water sources Rehabilitating, expanding or creating new sewerage networks Rehabilitating waste water purification stations The total value of the project is 510 mil EUR, 208 mil EUR being reserved for the first stage. In the first stage, 182 mil EUR are allocated for rehabilitation works and equipment, while the remaining amount is reserved for technical assistance, feasibility studies, technical projects, environmental impact studies, auction documentation, evaluation and supervision of works. Financing was obtained from the following sources: 77% from CEDB, 19.2% from local budgets, 3.8% from the state budget. 3.2 Pre-accession European Funds ISPA (Pre-Accession Structural Instrument) is the main EU program, started in 2000, that focuses on developing transport infrastructure and environmental protection in EU candidate countries. ISPA support aims to improve the above-mentioned sectors transport and environment and to ensure that they reach EU standards. Also, by using ISPA facilities, candidate countries become familiar with EU procedures regarding the efficient and transparent management of Structural Funds and the Cohesion Fund, available post-accession. Starting with 2007, ISPA financial assistance has been replaced by the Cohesion Funds, substantially increasing the available funding. Even though no funding applications for ISPA are currently received, most ISPA projects (including those for the water sector) are still ongoing. 50

51 ISPA environment finances investments which support Romania s implementation of EU environmental Directives regarding water, waste and air. For the environmental sector, ISPA covers activities that target the following issues: Drinking water supply Waste water treatment Managing solid and dangerous waste Air pollution Eligible projects must enforce environmental principles and policies, and contribute to the gradual accomplishment of Romania s economic and social cohesion with the EU. ISPA projects must actively contribute to environmental protection, to include measures of combating source pollution and to facilitate the implementation of the polluter pays principle. Projects that benefit from ISPA funding can imply: Water supply and sewerage works Waste water purification stations Waste management systems Air quality improvement works in urban areas Priority was given to projects that targeted communities with over 50,000 inhabitants and that could ensure at least 25% of co-financing (ISPA covers a maximum of 75% of necessary funding). The main categories of beneficiaries are local and central authorities (ministries, county councils, city halls, etc.), autonomous directorates and national companies. A list of finalized and ongoing ISPA projects are provided in the Annex 2. On , the first ISPA project was officially finalized and approved by MESD. The 37.3 mil EUR project in Satu Mare targets the water sector (drinking and waste water), and is financed from ISPA preaccession funds (26.5 mil EUR) and an EIB loan (10.8 mil EUR) contracted by the Satu Mare municipality. Improving Satu Mare's drinking water system implied: installing 6 km of new pipes, replacing existing pipes and rehabilitating pumps and electrical installations, rehabilitating 15 wells, rehabilitating the drinking water treatment station (in order to reduce the concentration of manganese and iron in the drinking water). Several improvements were made in the waste water sector: rehabilitating the purification station, installing an ultraviolet purification installation, before the waste water reaches the Somes River, installing an energy cogeneration station, rehabilitating 13 km of sewerages, rehabilitating 7 pumping stations. 3.3 Post-accession European Funds All EU funding programs cover Technical Assistance. EU funds mainly benefit public authorities, including NAAR and other water-related agencies. Axis 1 from SOP ENV is reserved for Regional Operators. Axis 5 from SOP ENV is mainly directed at NAAR. Other funding programs generally target public authorities, such as county and local councils. All in all, EU funds are mainly reserved for public authorities. EU Programs managed by MESD- Sectorial Operational Programme Environment The Sectorial Operational Program Environment (SOP ENV) is closely linked to the national objectives of the strategy laid down in the National Development Plan (NDP) and National Strategic Reference Framework (NSRF), which takes into consideration the European Union s supporting objectives, principles and practices. SOP ENV is fully based on the goals and priorities of the EU s environment and infrastructure policies, and reflects Romania s international obligations as well as its specific national interests. The aim is to reduce the environment infrastructure gap that exists between the European Union and Romania both in terms of quantity and quality. This should result in more effective and efficient services, while taking fully into account sustainable development and the polluter pays principle. The specific objectives of SOP ENV are: Improving the quality and access to water and wastewater infrastructure, by providing water supply and wastewater services in most urban areas by 2015, and by setting efficient regional water and wastewater management structures Developing sustainable waste management systems, by improving waste management and reducing the number of historically contaminated sites in at least 30 counties by

52 Reducing the negative environmental impact of climate change, caused by urban heating plants in the most polluted localities by 2015 Protecting and improving biodiversity and natural heritage by supporting the management of protected areas, including NATURA 2000 implementation Reducing the incidence of natural disasters which affect the population, by implementing preventive measures in the most vulnerable areas by 2015 In order to achieve these objectives, the following priority axes have been set: Priority Axis 1 Extension and modernization of water and wastewater systems ; Priority Axis 2 Development of integrated waste management systems and rehabilitation of historically contaminated sites ; Priority Axis 3 Reduction of pollution and mitigation of climate change by restructuring and renovating urban heating systems towards energy efficiency targets in the identified local environmental hotspots ; Priority Axis 4 Implementation of adequate management systems for nature protection ; Priority Axis 5 Implementation of adequate infrastructure of natural risk prevention in the most vulnerable areas ; Priority Axis 6 Technical Assistance. The program covers the period , but its objectives also look forward to Romania s development needs beyond 2013, by laying the foundations for sustainable economic development. SOP s total budget for the programming period amounts to approx. 5.6 billion EUR. Out of this, about 4.5 billion EUR is represented EU support, which represents about 23.5% of the financial envelope of the NSRF, and about 1.1 billion EUR comes from national contribution. The Community sources that will support SOP ENV implementation are the Cohesion Fund (CF) and the European Regional Development Fund (ERDF). The implementation of the program is the responsibility of the Managing Authority (MA) for SOP ENV, which is the General Directorate for the Management of Structural Instruments in MESD. In order to support the MA in delivering the program more efficiently, 8 Intermediate Bodies (IB) for SOP ENV are set up as distinctive bodies at the level of each Development Region of Romania, within the structure of MESD (according to GD 497/2004 and GD 368/2007). The MA for SOP ENV will act as an overall policy planner, financial manager and process leader. MA has a particular role in ensuring strategic overview of SOP. The IBs will play an important role in SOP ENV implementation at regional level, acting as interface between MA and beneficiaries. Their main responsibilities will be related to programming, monitoring, controlling and reporting activities. They have also been involved in the monitoring of ISPA projects in their region and in the development of grant schemes of environmental projects run under PHARE. The IB is organized per each of the 8 Development Region, as a specific body coordinated by an Executive Director and reports directly to the Managing Authority for SOP ENV. The beneficiaries will play the main role in the management and implementation of the interventions approved under SOP ENV. They will also be responsible for the tendering and contracting of services and works related to their projects. Most of the beneficiaries of the SOP ENV are local public authorities, but also state organizations or NGOs. Support will be provided for less experienced partners that benefit from SOP ENV, by making use of the technical assistance budget. SOP ENV is mainly oriented towards the development of management systems for environmental infrastructure, according to the national strategies in the relevant environmental sectors. These systems are designed to provide population with public services at European standards or to ensure them protection against natural risks. Therefore, the beneficiaries of SOP ENV are public authorities, at local or central level, or entities providing services of general economic interest (such as providers of public services or NGOs) or acting in market failure conditions. Communities in clearly defined geographical areas (i.e. by river basin) are encouraged to group together and to develop a joint long-term investment program for water sector development (Master Plans for Water and Wastewater). Priority investments at regional level aim to provide the population with adequate water and wastewater utilities, at the required quality and at acceptable tariffs. Regional projects will firstly address the water sector needs in urban agglomerations, where the environmental impact is usually higher and the beneficiary population is also more numerous. Some of the rural areas may also be integrated in the regional project if a significant environmental impact can be justified and/or cost-efficient components improve the sustainability of the overall investment. Prioritization of investments in the project area will also take into account the commitments assumed by Romania during the negotiation of Chapter 22-Environment from the Accession Treaty. 52

53 The implementation and financing mechanism for each approved project under SOP ENV will be governed by a Financing Agreement signed by the MESD. Table 5 RO Overall financing plan of SOP ENV Structural Funding (ERDF) Cohesion Fund Total ,580, ,792, ,372, ,985, ,317, ,302, ,019, ,487, ,507, ,694, ,656, ,350, ,330, ,815, ,146, ,439, ,374, ,813, ,602, ,374, ,977,111 Grand Total ,236,652,195 3,275,817,943 4,512,470,138 Source: MESD, SOP ENV The contribution of Structural Instruments is calculated on the basis of the following considerations: For projects financed from ERDF, for Priority Axes 2 and 4, the maximum rate for financing is 80%, and for Priority Axis 6 the maximum rate for financing is 75%; For projects financed from CF, for Priority Axis 1, the maximum rate for EU financing is 85%, for Priority Axis 3 the maximum rate for EU financing is 50% and for Priority Axis 5 the maximum rate for EU financing is 82%. Overall, the Community co-financing represents about 80.4% of the total allocation for SOP ENV. Table 6 Financing Plan for SOP ENV per Priority Axis Community Funding (EUR) National counterpart (EUR) Total funding (EUR) Co-financing rate* Priority Axis 1 2,776,532, ,976,263 3,266,508, % CF Priority Axis 2 934,223, ,555,770 1,167,778, % ERDF Priority Axis 3 229,268, ,268, ,537, % CF Priority Axis 4 171,988,693 42,997, ,985, % ERDF Priority Axis 5 270,017,139 59,128, ,145, % CF Priority Axis 6 130,440,423 43,480, ,920, % ERDF Total 4,512,470,138 1,098,406,807 5,610,876, % Note: The co-financing rates were calculated on the basis of public eligible costs. Source: MESD, SOP ENV Operations supported under Priority Axes 1 and 2 generate revenues through charges paid by households, businesses and industry for the services provided. With the application of polluter pays principle and cost recovery principle, as required by the law, the tariff levels will have to increase over the SOP ENV implementation period. However, an appropriate tariff adjustment policy will be closely observed to ensure that tariffs remain within affordable limits and that the operations are sustainable over their economic lifetime, this being the minimum requirement. 53

54 The relevant Priority Axes for the water sector are Priority Axis 1 Extension and modernization of water and wastewater systems and Priority Axis 5 Implementation of adequate infrastructure of natural risk prevention in the most vulnerable areas (which deals with flooding and coastal protection). Priority Axis 1 Extension and modernization of water and wastewater systems : The beneficiaries of Priority Axis 1 operations are Regional Operators. The main beneficiary of Priority Axis 5 projects is NAAR. Project proposals must be submitted to the Management Authority within MESD during All eligible projects must be finalized no later than The financing application must be accompanied by: Natura 2000 permit Economic analysis Master plan Feasibility study Institutional analysis Environmental impact evaluation Other permits/authorizations/agreements/certificates Objectives: Provide adequate water and sewerage services, at accessible tariffs Provide adequate drinking water quality in all urban agglomerations Improve the purity of watercourses Improve of the level of WWTP sludge management Create innovative and efficient water management structures This priority axis will be supported by Cohesion Fund. The operations to be developed under this priority axis will finance the following indicative activities: Construction/modernization of water sources intended for drinking water abstraction; Construction/rehabilitation of water treatment plants; Extension/rehabilitation of water and sewerage networks; Construction/upgrading of wastewater treatment plants; Construction/rehabilitation of sludge treatment facilities; Metering, laboratory equipment, leakage detection equipment, etc.; Technical assistance for project preparation (including tender documents), management and publicity (including public awareness), institutional governance improvement. The water/used water sector will benefit from the largest part of SOP ENV funding 60%. Large infrastructure projects will be financed in this sector, in order to cover several localities on a regional/county level. These projects will contribute significantly to the efforts to meet European environmental standards, and they will have a considerable impact on the development of targeted communities. This approach aims to increase the efficiency of investment costs (by achieving economies of scale), as well as the efficiency of operating costs. Table 7 RO Desired SOP ENV results for Priority Axis 1 Indicator Unit Baseline Baseline year Source Target (2015) Localities provided with new/rehabilitated water facilities in a regional management system New/ rehabilitated wastewater treatment plants Population connected to basic water services in a regional system Number MESD 300 Number MESD 200 % MESD 70 54

55 Wastewater treated (of the total wastewater volume) Number of Regional Water Companies created % MESD 60 Number MESD 35 Source: MESD, SOP ENV Ten major water/waste water projects corresponding to Priority Axis 1 were prepared with ISPA technical assistance. Nine projects were submitted to the European Commission (EC) in 2007 for approval, and 1 will be submitted before the end of Public auctions for these first 10 projects (works and services) are scheduled to take place during March 2008 September 2009; approved projects will be implemented during Thirty other projects were launched in 2007 and will be submitted gradually to the EC for analysis and approval in Public auctions for these 20 projects are scheduled to take place during September 2008 September Approved projects will be implemented in Table 8 Current Status of SOP ENV Water Projects Priority Axis 1 Project Value (approx) Beneficiary Actions Benefiting population Cluj-Salaj 197 mil EUR Somes Water Company Modernizing the water/used water infrastructure in the main agglomerations in Cluj and Salaj counties 525,000 Giurgiu 72 mil EUR SC Apa Canal SA Modernizing the water/used water infrastructure in the main agglomerations in Giurgiu county 87,000 Turda- Campia Turzii 80 mil EUR Aries Water Company Modernizing the water/used water infrastructure in the Turda- Campia Turzii area, Cluj county 97,000 Projects approved by EC Calarasi 100 mil EUR ECOAQUA Modernizing the water/used water infrastructure in the main agglomerations in Calarasi county 120,000 Tulcea 100 mil EUR SC Aquaserv SA Modernizing the water/used water infrastructure in the main agglomerations in Tulcea county n/a Sibiu 90 mil EUR Apa Tarnavei Mari Modernizing the water/used water infrastructure in the main agglomerations in the Media, Agnita, Dumbraveni and Copsa Mica area, Sibiu county n/a 55

56 Teleorman 122 mil EUR SC Apa Canal SA Alexandria Modernizing the water/used water infrastructure in the main agglomerations in Teleorman county n/a Projects under approval by EC Gorj 90 mil EUR Apa Regio Modernizing the water/used water infrastructure in the main agglomerations in Gorj county n/a Olt 73 mil EUR Olt Water Company Modernizing the water/used water infrastructure in the main agglomerations in Olt county n/a Projects to be submitted to the EC in 2008 Brasov 180 mil EUR Regional Operator Brasov Water Company Modernizing the water/used water infrastructure in the main agglomerations in the Codlea, Rupea, Zarnesti area, Brasov county n/a Source: SOP ENV Priority Axis 5 Implementation of adequate infrastructure of natural risk prevention in most vulnerable areas Objectives: Contribute to a sustainable flood management in most vulnerable areas Ensure protection and rehabilitation of Black Sea shore This Priority Axis will be supported by the Cohesion Fund. The operations to be developed under this priority axis will finance the following indicative activities: Infrastructure for flood prevention and reduction of the destructive consequences of floods; Development of hazard and flood risk prevention maps, plans and measures, including public information and training in reducing risks; Technical assistance for project preparation, management, supervision and publicity; Rehabilitation of Black Sea shore affected by erosion; Technical assistance for project preparation, management, supervision and publicity. This Priority Axis is mainly aimed at protecting the population and material goods from the devastating effects of flooding. Areas of intervention will be selected based on the national strategy for the sector, as well as on key risk analyses. Another field of action is the protection and rehabilitation of the southern Black Sea shore, in order to reduce coastal erosion. The main beneficiary of Priority Axis 5 projects is NAAR. Table 9 Desired SOP ENV results for Priority Axis 5 Indicator Unit Baseline Baseline Target Source Year (2015) Projects on floods protection Number NAAR 10 Kilometers of seashore rehabilitated km NAAR 10 Population benefiting from floods Number of protection projects in the SOP inhabitants ENV intervention areas NAAR 1,500,000 56

57 Reduction of incidence to floods risk in the SOP intervention areas % 100% 2006 NAAR 30% Extension of coastal area % NAAR Note: All funding is designated for regions without transitional support Source: MESD, SOP ENV 30 Programs managed by MDPWH- Regional Operational Program REGIO (Regional Operational Program ROP) is one of the first operational programs approved for Romania by the European Commission, and the only multi-sector operational program that finances both individual and integrated projects, with visible impact on regional and local development. The program is applicable to each of Romania s 8 development regions. Regio s objective is to reduce the differences in social and economic development between the more developed and the underdeveloped regions. It is financed through ERDF and has a total budget for of 4.4 billion EUR. Out of the total funds available through the program, 84% are provided by the EU, 16% are national co-financing (14% public funding and 2 % private funding). Funds are granted by priority axis and development regions. MDPWH is the managing authority for ROP (Regio) and the payment authority, being responsible for: determining a launch program for applications elaborating project selection criteria elaborating and signing framework agreements with the Intermediary Bodies (Regional Development Agencies, National Tourism Authority), regarding ROP making the final funding decisions evaluating ROP controlling the EU/national funds allocated to ROP authorizing eligible expenses receiving funding and making payments Water projects in urban areas are covered by Priority Axis 1 Support to the sustainable development of towns urban growth poles. This priority axis aims to increase the quality of life and to create new jobs in cities, by rehabilitating the urban infrastructure, improving services, including social services, as well as by developing business support structures and entrepreneurship. In order to contribute to a balanced territorial development of the country and to avoid the increasing internal disparities, investments will be concentrated in those cities which act as regional and / or local growth poles and spread the development into the surrounding areas, giving priority to growth poles located in regions and counties with lower level of development in terms of GDP and unemployment. Taking into consideration the present situation of Romanian towns and cities, it is envisaged that funds allocated to urban development be spent as follows: 60% for urban public infrastructure, 25% for social infrastructure and 15% for business environment. ROP only covers small-scale, individual projects in urban areas and spa resorts that are not covered by SOP ENV. The integrated urban development plans should be implemented by projects addressing the following issues: Rehabilitation of the urban infrastructure and improvement of urban services, including urban transport Development of a sustainable business environment Rehabilitation of social infrastructure, including social housing and improvement of social services The integrated urban growth poles development plans will be financed from all Operational Programs financed through structural instruments: ROP (Regio),SOP Competitiveness, SOP ENV, SOP Human Resources, SOP Transport, SOP Capacity Building, EAFRD NRDP, Other public and private sources, including national and international banks. An integrated development plan must include at least 2 individual projects from different categories, one of which must target the rehabilitation of urban infrastructure and the improvement of urban services. 57

58 Water projects are covered by the Measures: Rehabilitation of the urban infrastructure and improvement of urban services, including urban transport this Measure includes the development and/or modernization of urban infrastructure and public utilities Development of a sustainable business environment this Measure includes setting up/modernizing/expanding basic utilities within the business structure Eligible beneficiaries for ROP funding under Priority Axis 1 are: Local public administration authorities in urban areas Inter-community Development Associations Partnerships between local public administration authorities Priority Axis 1 targets: growth poles: Iasi, Constanta, Ploiesti, Craiova, Timisoara, Cluj-Napoca si Brasov) urban development poles: Arad, Baia Mare, Bacau, Braila, Galati, Deva, Oradea, Pitesti, Ramnicu- Valcea, Satu Mare, Sibiu, Suceava, Targu Mures towns and municipalities with over 10,000 inhabitants. Projects can be submitted during period under the condition to be finalized before the end of First call for projects opened on November 6, 2008 aiming exclusively towns and municipalities with over 10,000 inhabitants, projects proposals can be submitted starting with December 2, 2008 until March 31, ROP funding for Priority Axis 1 will be allocated according to the structure below: Table 10 RO ROP PA 1 allocations per development regions Development Region North-East Region South-East Region South Region South-West Region West Region North-West Region Center Region Bucharest-Ilfov Region Total Source: MDPWH, ROP Funding (EUR) mil mil mil mil mil mil mil mil mil Table 11 The funding scheme for ROP Priority Axis 1 Rehabilitation of the urban Development of infrastructure and a sustainable improvement of urban business services, including urban environment transport Total value of project (EUR) Maximum % of non-refundable financing Beneficiary contribution 485,000 38,000,000 98% 2% 485,000 24,000,000 50% (40% for Bucharest-Ilfov Region) 50% (60% for Bucharest-Ilfov Region) Rehabilitation of social infrastructure, including social housing and improvement of social services 485,000 38,000,000 98% EU funding 82.00% 86.73% 82.00% National funding 18.00% 13.27% 18.00% Source: MDPWH, ROP 2% 58

59 Programs managed by MDPWH -Cross border programs MDPWH is the implementing authority of European territorial cooperation programs financed through: 1. European Regional Development Fund (ERDF): The Operational Cross-border Cooperation Program Romania-Bulgaria has a total budget of 262 mil EUR and targets 7 counties in southern Romania (Mehedinti, Dolj, Olt, Teleorman, Giurgiu, Calarasi, Constanta) as well as 9 districts in Bulgaria (Vidin, Vrasta, Montana, Veliko Tarnovo, Pleven, Ruse, Dobrich, Silistra, Razgrad). Priority Axis 2 Environment includes actions that aim to: o Develop common systems of environmental protection management o Develop common infrastructure and services to prevent natural disasters Project proposals can be submitted starting with 2008, and eligible beneficiaries are operators, economic agents, public authorities, provided they apply as part of a cross-border partnership. Worth 275 mil EUR, the Operational Cross-border Cooperation Program Romania-Hungary targets border counties in Romania (Timis, Arad, Bihor, Satu Mare) and Hungary (Csongrad, Bekes, Hajdu-Bihar, Szabolcs-Szatmar-Bereg). Water projects are eligible under Priority Axis 1 Improving essential conditions of common sustainable development in the cooperation area, as this Priority Axis targets, among other priority sectors, the environmental protection sector. Eligible beneficiaries are public authorities and NGOs. The Operational Transnational Cooperation Program in SE Europe is currently being implemented in Austria, Greece, Italy, Bulgaria, Hungary, Romania, Slovenia, Slovakia, Croatia, Macedonia, Albania, Bosnia & Montenegro, Serbia, Moldova and Ukraine. Priority Axis 2 Protecting and improving the environment includes 2 measures that are relevant for the water sector: o o Improving integrated water management and preventing the risk of flooding Improving natural risk prevention The total funding of 245 mil EUR is available to public or private structures that can be involved in projects as partners or subcontractors. Projects are recommended to be finalized in 24 months and to be worth around 1.8 mil EUR. Launched in 2007 (first call for projects), the Operational Inter-regional Cooperation Program URBANACT II aims to optimize sustainable urban development policies. The Program has a total budget of 67 mil EUR, and water projects are eligible for the Environmental Issues measure of Priority Axis 2 Attractive and united cities. Local, regional and national public authorities, concerned with the management of urban areas, as well as urban universities and research institutes are eligible for funding within this Program. Concerned with innovation and environmental protection, the Operational Inter-regional Cooperation Program INTERREG IVC is available to all EU states, as well as Norway and Switzerland. Water management is one of the main measures under Priority Axis 2 Environment and risk prevention. The total Program budget is 405 mil EUR, available to public authorities and civil society organizations. Eligible regional projects must be worth between 500,000-5 mil EUR, with a finalization period of 36 months. 2. The European Neighborhood and Partnership Instrument (ENPI) The Common Operational Program Hungary-Slovakia-Romania-Ukraine targets environmental issues under Priority 2 Common challenges : o o Environmental protection, the management and viable utilization of natural resources Preparation for emergency situations The 74 mil EUR funding is available starting with 2008 to national, regional and local organizations, associations, public authorities, economic agents. Regions eligible for the program are: counties Szabolcs- Szatmar-Bereg, Borsod-Abauj-Zemplen (Hungary); regions Kosice, Presov (Slovakia); counties Maramures, Satu Mare, Suceava (Romania); regions Zakarpatska, Ivano-Frankivska, Chernivetska (Ukraine). Environmental protection and preparation for emergency situations will benefit from 18.8 mil EUR (approx. 25% of the total budget).the first call for projects will be launched in February

60 With a total budget of 18 mil EUR, the Black Sea Basin Common Operational Program of Cooperation targets Romania, Bulgaria, Greece, Russia, Turkey, Ukraine, Armenia, Azerbaijan, Georgia and Moldova. Water projects are included under Priority 2 Common valuation and protection of the environment. Potential beneficiaries of the Program are: local and regional authorities, NGOs, universities, research institutes, development agencies, environmental protection agencies. Environmental projects are also covered under Priority 2 Environment and preparation for emergency situations of the Common Operational Program Romania-Ukraine-Moldova. The total budget of 136 mil EUR is available to local and regional authorities, NGOs, universities and research institutes. Even though it is financed through a pre-accession instrument, the Cross-border Cooperation Program Romania-Serbia only became available in 2008 (for submitting projects). Scheduled for implementation between , the Program has a budget of 22 mil EUR between Environmental issues are covered by Priority Axis 2 - Environment and preparation for emergency situations, and eligible beneficiaries are local and regional authorities, NGOs, universities and research institutes. 3.4 Development of alternative financing schemes in the water sector (including PPP) International financing institutions WORLD BANK (WB) commenced its activity in Romania in 1991, during the beginning of Romania s transition to a market economy. Between 1991 and 2006, the bank approved a total of 50 operations with commitments of 33 billion EUR, about 200 mil EUR per year. WB operations in Romania consist of both public projects financed by the International Bank for Reconstruction and Development (IBRD), through direct loans to the Romanian government (through the Ministry of Finance), and of project privates, without state warrantee, with support by the International Financial Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA). A new Country Partnership Strategy was developed for , in order to support Romania in its efforts to fulfil its EU commitments. The new strategy involved loans of mil EUR per year, as well as analysis and consultancy services. Between 1996 and 2001, WB co-financed the Bucharest Water Supply Project, which targeted the improvement of water services in Romania s capital. Currently, there are currently 4 active water projects financed by WB, through IBRD loans. The Municipal Services Project aims to assist Romania to meet EU environmental directives in the water and wastewater sector, thereby improving the quality and coverage of water and wastewater services. The project has 3 components: Urban services in Bucharest municipality, which will include provision of urban services - water, sewerage, drainage, and road surfacing - in priority neighbourhoods (48 mil EUR) Urban services in Arad municipality, which will include provision of urban services - sewerage, drainage, and road surfacing - in priority neighbourhoods (47.2 mil EUR) Consulting services to prepare water and wastewater projects in 11 counties (11 mil UR). The project was approved by WB in 2006 and is scheduled for completion in The total value of the project is mil EUR, and mil EUR are covered by the IBRD loan (with a grace period of 5 years and a maturity of 17 years). The funds are structured by key development sector, with 5% of funding reserved for capacity building: Transport sector 39% Water sector 56% o Flood protection 23% o Water supply 17% o Sewerage 16% 60

61 The overall objective of the Hazard Risk Mitigation and Emergency Preparedness Project is to assist the Government in reducing the environmental, social, and economic vulnerability to natural disasters and catastrophic mining accidental spills of pollutants, by strengthening the institutional and technical capacity for disaster management and emergency response, by: upgrading communication and information systems implementing specific risk reduction investments for floods, landslides and earthquakes improving the safety of selected water-retention dams improving, on a pilot basis, the management and safety of dams, and waste dump facilities. The global environmental objective is the reduction of catastrophic accidental spills of trans-boundary pollution loads, from mine operations flowing into the Danube and Black Sea basins. The specific objectives of the project are: Strengthening and enhancing the capacity of Romanian authorities to better prepare for, respond to, and recover from natural or man-made disasters, Reducing the seismic vulnerability of priority technical and social infrastructure, through the retrofitting of key structures, and institutional strengthening Reducing flood risk and vulnerability in critical areas in Romania Reducing the risk of water and soil contamination due to accidental mining spills of pollutants The project was launched in 2004 and is scheduled for completion in The total value is mil EUR, with 100 mil EUR on loan from WB. The water, sanitation and flood protection sector will benefit from 50% of funding. The primary objectives of the Irrigation Rehabilitation and Reform Project are: Rehabilitating the main distribution systems in two stages, based on the likely long-term economic viability Supporting institutional reform in land reclamation, specifically through technical assistance and an appropriate management information system Supporting technologies for reducing energy consumption for irrigation Providing project management support The beneficiary of the 68.6 mil EUR (53.3 mil EUR on loan from WB) project is MARD. The rehabilitation of the main irrigation schemes would directly benefit approximately 40,000 farming families and workers in agricultural associations. Approved in 2003, the project is scheduled for completion in The Romania Integrated Nutrient Pollution Control Project aims to support the Government of Romania to meet the EU Nitrates Directive requirements by: Reducing nutrient discharges to water bodies Promoting behavioral change at the communal level Strengthening institutional and regulatory capacity The project is scheduled for implementation between and will support four components: a menu of investments focusing on Nitrate Vulnerable Zone-designated communes in ten river basins and eleven counties capacity building within MESD and NAAR as well as other national, regional, and county agencies involved with the nitrates directive broad public awareness and information campaign focused on investment replication and behavior change project management units The total project value is 50.6 mil EUR, 33 mil EUR on loan from WB and 3.6 mil EUR provided as a grant from the Global Environmental Facility, while the remaining funds are sourced from the state budget. MESD is 61

62 the beneficiary of these funds, which are allocated to the water sector in a proportion of 62% (solid waste management, sewage, sanitation). European Bank for Reconstruction and Development (EBRD) has been financing infrastructure projects since 1995, starting with major investments in water and sewerage infrastructure. EBRD cooperates with state owned infrastructure companies and utilities suppliers in order to finalize projects that meet the demands of municipalities and counties. Loans are complementary to state and EU funds and, since 2000, they do not require government warrantees. EBRD financing allows state authorities to redirect budget savings to priority investment areas. In the case of infrastructure projects, EBRD is focused on maintaining interest rates that facilitate long-term economic sustainability. EBRD plays an important part in mobilizing EU funds, and has attracted almost 0.5 billion EUR in nonrefundable financing through the PHARE and ISPA programs, directed at key areas of intervention (infrastructure, water networks, etc.). The bank implements a rigorous customer control system in order to secure a high project success rate, especially in the case of EU funded projects. Three EBRD projects with ISPA funding are currently in the final implementation phase. EBRD promotes regionalization as a strategy for accessing non-refundable financing and will continue to collaborate with its clients in this area. In 2008, EBRD announced its support for 2 water projects in Romania, both of which are currently pending final review: Brasov Water Company and Arges Regional Water Project - Phase I. The Brasov Water Company project is worth mil EUR, 33.2 mil EUR of which will be provided by EBRD as a loan. The EBRD funds will co-finance a regional investment program of up to 190 mil EUR, which will include significant grant funding from the European Union, the Government of Romania and the local governments under Romania s Cohesion Fund Program. These investments will optimize available water resources in Brasov County, as EBRD will finance the rehabilitation of the water and wastewater pipelines. Another component of the project includes a restructuring of the existing EBRD Municipal Environmental Loan Facility- OpId 18595, signed on 18 May 2002 with a committed amount of 12.2 mil EUR, to take into account the company's transformation into a commercial company and regional operator. As a result of this Project, previously un-served areas of Brasov County will receive water and wastewater services. More importantly, the Brasov Water Company will absorb water and wastewater operations from surrounding towns, many of which were not managed on a commercial basis. By restructuring itself as a regional operator, the company will have the basis to provide water services for the entire county in a commercially viable way as well as to optimize water resources. The company will have the size and capacity to absorb the funds, implement subprojects and ensure that the consolidated cash flow will provide a sound basis to service external debt. The Arges Regional Water Project will allow Apa Canal 2000 S.A. Pitesti to address key infrastructure needs of Pitesti city and its outskirts, and is designed to improve efficiency of services provided by Apa Canal, combined with continuing EU Instrument of Structural Policies for Pre-Accession (EU - ISPA) investments in the water and wastewater sector. The EBRD loan of up to 7 mil EUR (out of the total 8.5 mil EUR representing the project value) will enable Apa Canal to efficiently increase its service area through the connection of previously un-served communities adjacent to Pitesti city to the main water supply and sewerage network. The EBRD investment entails the construction of: 17.8 km of new sewerage network 28 km of new water supply network, and pumping system to ensure sufficient pressure to supply water in the network extension. An ongoing project, signed in 2007, is the Oradea Water and Waste Water Extension project. The project entails the construction of: 108 km of new water supply pipe-work 140 km of new sewerages 99 km of new rainwater collectors secondary stage pumping system to ensure sufficient pressure to supply water in the network extension. 62

63 The project, worth 48.8 mil EUR (12 mil EUR loan from EBRD), addresses a key infrastructure need in Oradea and is going to reduce pollution in the Crisul Repede River at the boundary between Hungary and Romania. In Oradea, there are 85.5 km of streets where approximately 26,000 residents are neither connected to the water nor sewerage system. In these areas, wastewater is either discharged into road ditches, resulting in the contamination of ground water, or directly into the river. Table 12 Project APA NOVA Water Treatment Plant RO Other water projects financed by EBRD Year of Total Value EBRD loan Actions Approval Municipal Environmental Loan Facility Municipal Utilities Development Program Source: EBRD website mil EUR 75 mil EUR mil EUR 130 mil EUR mil EUR 65 mil EUR Improvement of the water distribution network and completion of the Crivina water-treatment plant in Bucharest Co-financing EU-ISPA funded investments in the water, waste water and solid waste management sectors, in several municipalities Loan financing of water sector investments in ten medium-sized cities. Financing priority watersupply and waste-water investments to improve service provision. Enhancing the performance of water companies and municipalities. European Investment Bank (EIB) is the EU s financing institution, founded in It aims to contribute to achieving EU policy objectives by providing long-term financing of viable investment projects. EIB funding priorities are: balanced economic development of regions and social cohesion in the EU supporting SME investments protecting and improving the environment increasing Europe s competitiveness by supporting research, development and innovation extending the trans-european transport and communication networks sustainable, competitive and safe energy EIB can ensure co-financing for EU-funded projects and can mobilize large volumes of funds. The loan conditions are favourable to the beneficiary, due to small commissions, attractive interest rates and adequate reimbursement plans. EIB usually finances up to 50% of eligible project costs. The bank grants loans to public institutions, including local authorities, and to private operators. The main project assessment criteria are financial economic viability, as well as technical and environmental specifications. Types of available loans are: individual loans large-scale projects that cost over 25 mil EUR (financed individually by EIB) group loans a number of concrete smaller projects, with lower investment necessities, all implemented by the same organization framework loans usually reserved for public institutions, these loans finance a set of low- and medium-scale, unspecified projects, implemented by the same institution intermediated loans specific to SMEs and local authorities, these are granted through an EIB partner bank in Romania. Romanian commercial banks that grant EIB-mediated loans in Romania are: BRD Groupe Societe Generale, the Romanian Commercial Bank (BCR), Bancpost, HVB Bank, Sanpaolo IMI Internazionale. EIB finances private water public utilities companies, water projects and public authorities in EU. EIB financing in the water sector is driven by the high EU environmental standards, especially the Directives regarding drinking water quality and waste water collection and treatment. Most financing projects include the 63

64 modernization and expansion of existing distribution, collection and treatment networks. These water projects are an integrated part of national/regional/local investment strategies for the water sector. A water project currently under appraisal is the Cluj/Salaj CASSA Water Project. The beneficiary of the project is the Somes Water Company, regional operating company for water and wastewater services in Cluj and Salaj counties. The purpose of the project is co-financing of the investment project for expansion and rehabilitation of the water and waste water networks, construction and refurbishment of pumping stations and treatment facilities for water and wastewater. The project is part of the Priority Axis 1 of the SOP ENV, supported by Cohesion Funds, with end of implementation expected by It aims to improve public health and environment protection in the region comprising the counties Cluj and Salaj in Romania, by upgrading the essential water and wastewater infrastructure. The investments affect a population of around inhabitants and total project costs amount to 197 mil EUR, 26 mil EUR of which represent EIB finance. Council of Europe Development Bank (CEDB) is the oldest multilateral financial institution in Europe, founded in 1956 as a social policy instrument of the Council of Europe. It supports socially-oriented projects by granting long-term loans or guarantees to member states, local authorities and financial institutions. CEDB finances projects aimed at developing infrastructure that will help modernize rural areas and improve living conditions in urban areas. Romania became a member of CEDB in 1996 and has a 1.092% share in the bank s capital. Currently, Romania is the beneficiary of CEBD loans with a combined worth of over 600 mil EUR, directed towards improving infrastructure, health, education, child protection, dwellings, environmental protection and culture. In 2007, Romania contracted a mil EUR loan from CEBD for investments in environmental infrastructure. The total project value is 1.1 billion EUR, allocated for 121 investment objectives which include: flood protection works protecting the Black Sea coastal area rehabilitating surface water structures creating new water sources intensifying drinking and industrial water supply ensuring the supply of quality drinking water The MESD project (managed by a Management Unit that will be created within NAAR exclusively for this project) will have a significant socio-economic impact, as it will ensure the structured rehabilitation of hydrographic basins, while implementing EU standards in hydrology and meteorology and promoting sustainable development. It is estimated that 320 km of dykes will be built within this project, and 300 km of river banks will be consolidated (rivers: Mures, Crisuri, Somes, Jiu, Olt, Siret, Arges). Ecosystem protection works will be performed in the Patlageanca area (Danube Delta) and 7 new water reservoirs will be built, with a combined capacity of 72 mil m3. CEBD will also finance 77% (160.1 mil EUR) of the first stage of the Integrated system for the rehabilitation of water supply and sewerage systems, of drinking water treatment stations, of waste water purification stations in communities with under 50,000 inhabitants implemented by MDPWH in collaboration with MESD (see also the chapter on Government Funds). CEBD also acts locally in Romania, through two loans: 30 mil EUR for rehabilitating the water and sewerage systems in 9 communities in Mures county 51,2 mil EUR for flood protection works in SW Romania 64

65 Other donors One of Romania s partners in the water sector is the Japanese Government, represented by the Japan International Cooperation Agency (JICA). Founded in 1974, JICA is an implementation agency for technical assistance, focusing on building institutions, strengthening organizations, and developing human resources that will enable developing countries to pursue their own sustainable socioeconomic development. Technical cooperation projects are one of JICA's main types of overseas activities. They are results-oriented, with Japan and a developing country pooling their knowledge, experience, and skills to resolve specific issues within a certain timeframe. The projects may involve the dispatching of experts from Japan to provide technical support, invitation of personnel from developing countries for training, or the provision of necessary equipment. On 22 November 1995, the Japanese and Romanian governments signed a bilateral agreement concerning a Japan Overseas Cooperation Volunteers Program, offered to Romania by the Government of Japan, through JICA programs. Two years later, in August 1997, JICA ROMANIA Office was formally opened in Bucharest. Currently, study teams are dispatched to provide assistance in formulating development plans for the public sector and other basic areas of infrastructure, which are keys to the socio-economic development of Romania. JICA development studies focus not only on the economic side of the project, but also on its social, organizational, managerial and environmental side. One major study performed by JICA in Romania is the Study on Protection and Rehabilitation of the Southern Romania Black Sea Shore. JICA has contracted a team of experts to study the major problems and solutions for the protection and rehabilitation of the study area. The project was implemented during , having the following objectives: Formulating a coastal protection plan for the study area; Conducting a preliminary design of the priority projects; Transferring technical skills and knowledge to counterpart staff. The beneficiaries of the study were MESD and NAAR. In phase I a basic study was performed: collection and review of existing data observation of beach morphology and coastal structures analysis of the coastal erosion mechanism evaluation of the effect of existing protection structures examination of sand procurement sites formulation of the basic policy of coastal protection plan selection of priority project sites In phase II, a coastal protection plan was formulated and a feasibility study on priority projects was performed. The European Economic Area (EEA) and Norway Grants were established in conjunction with the enlargement of the European Union in In 2007, Bulgaria and Romania also joined and became beneficiaries of EEA and Norway Grants. In the five-year period , 1.3 billion EUR is made available. A total 672 mil EUR is channeled through the EEA Grants jointly set up by Iceland, Liechtenstein and Norway, to the 12 countries that have joined the EU since 2004, as well as to Greece, Spain and Portugal. Norway contributes with around 95% of the funding. Norway makes available an additional 68 mil EUR to bilateral cooperation programs with Bulgaria and Romania. The objective of the bilateral programs is to stimulate economic growth and sustainable development, and to promote innovation and technology transfer. Consequently, the programs prioritize sectors in which Norway has specific competencies and technologies, and the beneficiary states have specific needs. To be eligible for support, a partnership between a participant from one of the beneficiary states and a participant from Norway must be established, and it must be established prior to application. Public or private companies, institutions, ministries, non-governmental organizations and social partners are all eligible applicants within the sectors of priority to the programs, provided that they are legal entities, and that a partnership has been established The first and only open call for individual projects in Romania closed on 20 June 2008.The call made approximately 40.5 mil EUR available for projects in four priority areas: environment, human resource development, health and childcare and conservation of European cultural heritage. In total 95 applications were received, the priority sectors of environment and human resources development being the biggest sectors with 29 applications each. Despite its success, the call for proposal for the Norwegian Cooperation Programs will not be re-opened. 65

66 Table 13 RO Water Sector Projects Financed By EEA Grants Approval date Name of applicant Name of partner Project objective Grant (EUR) Total budget (EUR) Project deadline Norwegian Geotechnical Institute University of Bucharest Protection of groundwater resources RO BG Danube 16,000 26, DET Norske Veritas AS GEOECOMAR; Bulgarian Academy of Sciences; Turkish Black Sea Commission Risk management and contingency planning for the Romanian and Bulgarian Black Sea coast Source: Business Development Group (based on information from EEA and Norway Grants) 12,500 20, There are two main ongoing water projects in Romania which benefit from United States of America (USA) financing. One project is DESWAT (Destructive Water Abatement and Control of Water Disasters), focused on flood management (river monitoring, short and medium term hydrological forecast, etc.). This project is financed by the Romanian Government and through an USA credit. The contractor for the DESWAT project is Lockheed Martin Overseas Corp. The second project is WATMAN, which will integrate the data resulting from the DESWAT project, and from another project, SIMIN. WATMAN is financed by USAID (United States Agency for International Development) and USTDA (United States Trade and Development Agency). A subset of USAID, EcoLinks, funded a water management study tour of officials from MESD, the Ministry of Finance, NAAR and Ovidius University to USA water management institutions (such as the UWM Great Lakes WATER Institute). The trip introduced Romanian officials to research and technology that could improve Romania s water and wastewater management and flood control measures, and that could restore polluted waters. It was also a chance to build international partnerships working toward sustainable development in Romania Germany is also a partner in a bilateral program in Romania, concerned with Integrated Water Resources Management (IWRM). A declaration of collaboration in the area of water management was signed between MESD and the Ministry of Environment, Health and Consumer Protection from Bavaria, in Munchen on 25 of April In order to promote IWRM, the project partners also made presentations about IWRM implementation in collaboration with the Wasserwirtshaftsamdt Hof (Water Management Office-Hof), during the Romanian-Bavarian Economic Forum Technologies in Water Management (Sibiu, September 2007). MESD also elaborated, in the beginning of 2008, the 'Guide for promotion of the research in the domain of integrated water resources management'. The first call for the research project had a budget of approximate 2 bill EUR, out of which Romania s contribution amounted to Euro. As part of its cooperation with South-eastern Europe, Switzerland has supported Romania's transition from the start through bilateral cooperation projects and regional programs. Romania has, in fact, been a priority country for Swiss cooperation with Eastern Europe since 1992 (financial assistance through SECO State Secretariat for Economic Affairs), and 1996 (technical assistance through SDC Swiss Agency for Development and Cooperation). The Country Program Romania , applicable until 2007, defines the technical and financial cooperation between Switzerland and Romania in the medium term and provides the framework for SDC and SECO activities in Romania. Swiss cooperation with Romania aims to provide support for the transition to democracy and a market economy, by means of knowledge transfer and assistance in problem solving. Before the Swiss Cooperation Office in Romania closed, at the end of May 2008, cooperation efforts were focused on four main areas: Promotion of the private sector Reforms in the health sector Modernizing the infrastructure and environment protection Conducting regional programs Under the heading Modernizing the infrastructure and environmental protection, SDC-SECO implemented the Clean water supply and water treatment (AEPA) project. The OVR (Operation Villages Roumains) program, which initiated direct village partnerships between Europe and Romania after 1989, encouraged 66

67 several Swiss communities to express their interest in supporting environmental projects in Romania. As a result, AEPA projects were established between Ciolpani (Prahova) and Morges, Agarbiciu (Sibiu) and Belmont, Sanmartin (Harghita) and Meyrin, Telciu (Bistrita) and Monthey. All these partnerships have undertaken a program of water supply rehabilitation. The rehabilitation of the water supply services required replacing old pipes with new ones, and the construction of a new distribution system. The projects were initiated in Pipe replacement, water pump acquisition and construction of the new distribution system were all completed by The systems became functional in 1999, while the construction of sewage and filtering facilities was completed in 2000.The AEPA projects were financially supported by SDC and Romanian local authorities. The total budget amounted to 1 billion EUR. Other partners involved in the AEPA projects were Infraconsult SA (in Telciu), Foradex (a Romanian enterprise), and the local Romanian authorities. Under the heading Conducting regional programs, SDC implemented ESTROM Environmental Science and Technology in Romania. ESTROM was a joint program of SDC, the Swiss National Science Foundation (SNSF) and the Romanian Ministry for Education and Research (MEC). It supported science and research in Romania and strengthened scientific co-operation between the two countries. The specific research projects seek to increase the knowledge and understanding of polluted water environments, to evaluate the negative impact of water pollution and to propose to decision-makers realistic solutions for abating the deteriorating effects of water pollution, thereby contributing to sustainable socio-economic development and improved quality of life in Romania. The research phase of ESTROM began on and ended in September A potential partner for Romania in the near future is the United Kingdom (UK). Currently, the UK is promoting the Romanian water sector as one of great potential for British business. Water and wastewater systems in all regions across Romania are an important focus of the UK Trade and Investment Agency, due to the approx. 3.3 billion EUR directed to the sector. Marine and coastal environment protection is also promoted as a target for specialized UK companies. In order to increase British presence in Romania, a UK Seminar Mission to Romania is planned for during January 2009 (In March also In Bulgaria). The Seminar Mission is focused on water services, and aims to encourage British companies to take advantage of EU funds directed at improving water sector facilities in Romania. Alternative financing schemes (PPP) Currently, the Public-Private-Partnership (PPP) is promoted in Romania as an excellent alternative to traditional public project financing, and as an ideal option of co-financing EU funded projects. PPP is a contractual collaboration between public authorities and the private sector (companies/investors) for the purpose of designing, planning, financing and implementing projects that are usually developed through conventional mechanisms, such as the public acquisition procedure. The public authority seeks to maximize the socio-economic profitability of the public investment (developing the necessary infrastructure within acceptable financial and time limits), and the private operator aims to maximize the profit. An ideal PPP will: Supply high quality services at the lowest public costs Optimize the allocation of risk to the private sector Bring economic, social and technological benefits Ensure the modernization of the economy and bring indirect benefits Provide access to the financial market and develop local financial markets Strengthen the regulatory role of the stat and facilitate the transition from services owner/operator to services monitor Ensure the stability of the project In a PPP, a solid financial package is prepared for the project, as the private partner provides the guarantee of quality and efficiency. Project management units (private entities) control all the aspect of the project and the relations between involved parties. The public partner provides assets, funding and warrantees, and oversees the project. Conventional financing is less suitable for a PPP limited assets, income-based cash flow so alternative sources of funding must be selected (EU funds, international financial institutions, etc.). As a result of increasing demand, many companies have entered the public services management sector through a PPP, which must be developed as a long-term agreement (but not longer than 49 years). In the water sector, PPPs must take into account the following issues: Water is an essential good that must be supplied by public authorities, and the price can not be increased to very high levels The public authority must protect the public interest and must take extra care in selecting its private partner 67

68 The private partner must provide innovative solutions for providing high quality services (for water quality, customer relations, equipment and facilities, project management, etc.) at acceptable costs PPP is governed by European, national and local laws The main PPP options are: Management/leasing (regulated by GO 32/2002) Privatization (regulated by Law 137/2002) Build-Operate-Transfer (BOT) (regulated by GO 16/2002) If the government objective is efficiency, it is likely to select a management or leasing contract. For the public authority, a leasing contract may lead to better results than a management contract, as it exposes the private agent to commercial risk and encourages sales growth and cost reduction. However, leasing is only efficient if the government ensures an economically-safe environment and if tariffs can be maintained at a high enough level to allow for a reasonable return on investment. If a new investment is required, the BOT contract is the better choice, but only if the government can guarantee a good return on investment by properly regulating the commercial framework. In Romania, the regulatory framework for PPPs consists of GO 16/2002, regarding PPPs, and HG 621/2002, specifying the methodology of implementing GO 16/2002. GO 16/2002 details: the proper methods of performing (pre)feasibility studies information regarding the letter of intent and necessary documentation the selection and negotiation procedures the main types of PP the standard PPP contract and project agreement the methodology of calculating project costs the project risk allocation matrix According to the regulatory framework, the steps for initiating a PPP are: The public authority (national/regional/local) initiates the PPP on the basis of pre-feasibility study performed at its own expense The public authority announces (in the Official Monitor) its intention to initiate a project through a PPP Within 60 days, the public authority receives letters of intent and necessary documentation from interested investors (if no offers are received within 60 days, the full procedure is reinitiated) The public authority assembles a Negotiations Committee which, over 30 days from receiving the letters, analyzes the offers and preselects investors The Negotiations Committee publishes the list of preselected investors, and, within 15 days, signs pre-contracts with each applicant Negotiations are continued with the pre-selected applicants until the final decision is made (based on technical, economic and financial criteria) The public authority communicates the winner of the negotiations and accepts potential complaints from other applicants The contract between the public authority and the winning applicant is signed, and the PPP Company is established The PPP Company is a Romania-based enterprise, established by the public authority and the private investor, for the sole purpose of designing, financing, constructing, exploiting, maintaining and transferring a public good, based on a PPP project. Once the PPP contract is finalized, all public goods created within the project are transferred free-of-charge to the public authority, in good condition, exploitable and free of any liabilities. The Central PPP Unit in Romania is the Ministry of Economy and Finance which: Trains PPP experts Promotes the National PPP Strategy Promotes a PPP manual and toolkit Promotes PPP pilot projects Monitors PPP project implementation The Ministry of Economy and Finance also collaborates with the Ministry of Internal Affairs and Administrative Reform and other central public authorities, depending on the sector in which the PPP will be set up. 68

69 One of the most used examples of PPPs in Romania s water sector is the 1996 concession agreement between Veolia (affiliated with the French company Vivendi Water) and the municipalities of Bucharest and Ploiesti for the management of the water distribution system. Privatization of the Bucharest water system took place following WB recommendations, and Veolia was the chosen private partner. Apa Nova is the PPP enterprise created under the link between Veolia and Bucharest s municipality. In 2000, Apa Nova won a tender for the management of the Bucharest water concession, including the development of the Crivina Plant. The general conditions of the PPP agreement between Apa Nova and Bucharest for the Crivina Plant are the same as for 1996 s PPP agreement with Veolia. In practice, Veolia has now been incorporated into Apa Nova. The lack of adequate skills in Romania was one of the main rationales behind the government s pursuit of a partnership with a foreign operator. Thus, objectives for the project included, among others, the transfer of relevant skills to Apa Nova staff through the introduction of international management practices and operational expertise. EBRD assisted in developing the local skills in areas such as operations management, energy efficiency, capital budgeting and financial management. Other objectives included: Increasing efficiency gains and operation performance Achieving higher standards of service Upgrading the water system infrastructure Improving capital availability and efficiency The initial capital investment of Vivendi Water amounted to 35 mil EUR, which funded the construction of 2 drinking water treatment plants, complete with reservoirs. Subsequently, the private agent invested 6.8 mil EUR in the construction of 7 pumping stations, and 20 mil EUR in the construction of 2,700 km of drinking water network and 2,400 km of sewerage network. The Municipality of Bucharest is the owner of all public goods, the decision maker for all investment programs and infrastructure expansion and is protected by the Competition Office with regard to tariff adjustments. Apa Nova administrates the infrastructure, modernizes, rehabilitates and maintains public goods under concession, finances and implements investments and ensures the operation. Another successful water management PPP was set up in the Lugoj Municipality. This PPP was supported by the EU, the Romanian Government and the Timis County Council, and was partially funded (technical assistance, etc.) by the Open Foundation Society. The aim of the project was providing a solution to the urban water management problems in Lugoj. The project partners are Lugoj Local Council (public partner) and Ruhr Wasser AG International and Meridian 22 (private partners). Within the project, a PPP Company was set up, responsible for managing Lugoj s water system SC Ruwatim SRL. At the moment, 8 ISPA projects with PPP components are being implemented in Romania, 2 of which are focused on water and sewerage systems. PPP structures exist within the Ministry of Finance, Ministry of Transport and Ministry of Internal Affairs. PPP Excellence centers have been set up within the Chamber of Commerce and Industry of Romania, as well as in Bucharest and Calarasi. For more info: Ministry of Public Finance General Directorate Managing Authority for Infrastructure Ciprian Gorita Head of Central Unit for Coordination of Public-Private Partnership Activities Tel: Fax: ciprian.gorita@mfinante.ro Any PPP intervention linked with SOP ENV will be settled following a transparent and competitive awarding procedure in accordance with the principles of the Treaty and the EU law. 69

70 4 Tendering procedures The procurement of all contracts financed through SOP ENV will be done in compliance with EU legislation, and with the primary and secondary national legislation implementing EU provisions on public procurement. In order to ensure coherence with EU procurement polices, the Romanian authorities transposed Directives 17/2004/EC and 18/2004/EC, by adopting Law No 337/2006 for approving the Emergency Government Ordinance No 34/2006 on awarding of public procurement contracts, public works concession contracts and services concession contracts. To enforce the above legal provisions, the National Authority for Regulating and Monitoring Public Procurement (NARMPP) was set up. This institution has the role of: developing public procurement strategies ensuring coherence with the Community acquis ensuring conformity in the application of legislation fulfilling EU Directive obligations monitoring, analyzing and evaluating the methods used for awarding public contracts advising and training personnel involved in procurement activities All public procurement contracts will be awarded in compliance with the new harmonized national legislation. The principles applied in contracting are: non-discrimination, equal treatment, mutual recognition, transparency, proportionality, efficiency of used funds and accountability. The general procedures for concluding public procurement contracts are the open and the restricted tender. The contracts are published in the SEAP, in the National media and, where the relevant thresholds according with Community Directives are applicable, in the Official Journal of the European Communities. The law also provides as exceptions, the competitive dialogue, the direct negotiation or offer request, the framework agreement, the electronic auction and the dynamic purchasing system. The General Inspectorate for Communication and Information Technology is the operator of the Electronic System for Public Procurement (SEAP)). Starting with January 2007, all state authorities are required to publish all tendering notices on the official website of the SEAP, operated by the Information Society Services Agency (ASSI). Through SEAP, registered public institutions publish procedures related to the granting of public acquisition contracts open to any economic operator. All open auction notices are also published in Romania s Official Monitor, Part VI, Public Acquisitions (latest 1 day after the SEAP announcement). Every economic agent interested in participating in electronic public auctions must first register free of charge in SEAP, a participation being is required when exceeding 20 participations per month or 50 catalogues positions within 2 years after registration. Publishing auctions in the EU Official Journal ( is mandatory if the value of the contract is larger than 5 million EUR (any type of contract), 420,000 EUR for utilities contracts or 125,000 EUR for other contracts. The eligibility and selection criteria make reference to: the personal situation the ability to exercise the professional activity the economic and financial situation the technical and/or professional capacity quality assurance and environmental standards. The awarding criteria are: the most economically profitable offer or, exclusively, the lowest price. The contracting authority has the responsibility for the decisions made during the process of awarding public procurement contracts. There are still speculations that some auctions can by-pass SEAP based on tender conditions that may favour certain economic agents. Another potential limitation is not all tendering procedures are available in English language. 70

71 Since its start, the 10,696 contracting institutions registered with SEAP have published 251,867 announcements and participation invitations related to public acquisition procedures, of which 17,967 were announcements published in the Official Journal. To date, has been used for public acquisition procedures worth over 88 mil EUR. NARMPP provides training, courses and seminars for the main purchasers from central and local level, including institutions involved in the management of the SCF and potential beneficiaries. In order to improve the quality of the public procurement system and to ensure compliance with national legislation in the field, the Ministry of Economy and Finance, through its specialized structures at central and territorial level, verifies the process of contract awarding based on risk analysis and on a selective basis. Royal Netherlands Embassy in Bucharest is issuing and distributing a weekly "Romania Water Projects Bulletin" with active tenders for the water sector ( 71

72 C Bulgaria List of Abbreviations Bulgaria BAT CF CSP EBRD EC EIB EMEPA MoAF MoEW MH MRDPW MES NGO NIMH OP PE PPL PPP RBMD RIPCPH SCEWR SF SG WFD Best Available Techniques Cohesion Funds Compliance Schedule Plans European Bank for Reconstruction and Development European Commission European Investment Bank Enterprise for Management of Environmental Protection Activities Ministry of Agriculture and Food Ministry of Environment and Water Ministry of Health Ministry of Regional Development and Public Works Ministry of Emergency Situations Non Governmental Organisations National Institute of Metrology and Hydrology Operational Programme Population Equivalent Public Procurement Law Public Private Partnership River Basin Management Directorates Regional Inspectorates for Preservation of and Control on Public Heath Sate Commission for Energy and Water Regulation Structural Funds State Gazette Water Framework Directive 72

73 1 Brief Overview of the Bulgarian Water Sector Map 4 River Basins Bulgaria Source: Ministry of Environment and Water, National Report on Water Management at River-Basin Level in the Republic of Bulgaria, General Information The territory of Bulgaria is square kilometers with population slightly below 8 million. The country is characterized by rich diversity in morphological, geological, geo-morphological, hydro-climatic and soilbiogenic aspect. To the north, the River Danube separates Bulgaria from Romania, to the east is the Black Sea, to the south are Turkey and Greece and to the west are Macedonia and Serbia. Over two thirds of the country s territory is situated in the zones of up to 600 m above the sea level. Predominant are plains and hilly lands. The average altitude of the country is 470 meters above sea level. The climate is defined by southern temperate continental climatic zone and occupies a transitory position to the Mediterranean climate. Mean annual air temperature is about 10,5С. The average precipitation for Bulgaria is about 700 mm, resulting in about 75 billion cubic meters precipitation per year. Its distribution is exceptionally uneven both in terms of time and on the territory of the country. In the plain and hilly regions the precipitation is between 450 to 850 mm, and in the mountainous areas from 850 to 1200 mm. Therefore many dams have been constructed to regulate water distribution according to the needs. The hydro-geographic network of the country is rather complex and in most of the regions quite dense, without very big rivers with the exception of the River Danube forming the northern border. Nevertheless Bulgaria has scares water resources in comparison to other European countries. Depending on the year from 9 to 24 milliard m 3 /year are generated on its territory which is about 97% of the total runoff per year. Per capita this accounts to m 3 /year. Underground water resources form about 30%-32% of the overall water resources of the country. The fresh underground water resources have been estimated to 6 milliard m 3 /year and those possible to use to 4,9 milliard m 3 /year. 73