Water supply and Sanitation. Pre-Crisis Secondary Data Ukraine and Donbass (April, 2015)

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1 Water supply and Sanitation. Pre-Crisis Secondary Data Ukraine and Donbass (April, 2015) Overall purpose of these notes is to provide the reader of minimum and basic information on the preemergency water and supply sanitation in Ukraine and Donbass. This is to support project proposals preparation as per their scale and scope as well as to define project sustainability and exit strategy approaches. About exit strategies, the present humanitarian emergency in Donbass involves several large scale urban areas, densely populated and serviced by centralised water supply networks and off-set sewerage networks. Each step of a response strategy (exit strategy included) needs to consider the level of technology and the quality and quantity of the services the population had access before the crisis. Useful support can be found in Responding to urban disasters: learning from previous relief and recovery operations (ALNAP, 2012). Among the recommendations provided by ALNAP, the first key lesson highlights the following: 1) In planning an urban response, know what you want to achieve, and when you will leave. Cities often have extremely high levels of chronic poverty and poor service provision it can be difficult to tell when an emergency ends and normal conditions begin. Agencies responding to urban emergencies need a clear exit strategy (DEC, 2011, IASC, 2010a). Following the Haiti earthquake, Clermont et al. (2011: 4) observed that, In future urban responses agencies may also have to pre-decide at what point they withdraw, and to achieve that, make some hard choices about what they will engage in, and what they will not (see also Lesson 7: Water, sanitation and hygiene (WASH); Health) 2) In planning an urban response, consider focusing on specific geographical areas and specific sectors 3) Ensure that you have the right technical expertise to achieve objectives 4) Work in a flexible manner within the boundaries set for the programme Water supply Improved water supply covers 98% of the urban areas and 98% of the rural areas (World Bank indicators, 2012). About 11 million rural inhabitants are still using water from upper aquifers for drinking purpose. Centralized water supply services are provided to urban and rural residents; however, centralized water supply networks covers only a quarter of all villages in Ukraine. For decentralized use, countryside households mostly use wells or groundwater intake (predominantly of poor technical quality). The cost of digging individual wells and the equipment are approximately Euro which cost is quite expensive for the rural population in average. Water treatment from private wells is not common for rural households, and other ways of diversion, such as collecting rainwater, are not used (Market study: Ukrainian water sector. Larive International, 2014). At household level, 21.9% of the population use water treatment methods like filtration through clothes, boiling, water filters, settlement/sedimentation, bleach or chlorine. 32.2% of the urban population doesn t use any water treatment methods while in big cities, small towns and rural areas this percentage is respectively 23%, 45.9% and 62.5%. 40% of the population using improved water sources and the 76% using unimproved water sources don t adopt any water treatment method at domestic level (Ukraine-Multiple Cluster Indicators.UNICEF, 2012). About 1 / 4 of the Ukrainian population (11.5 M) currently use bottled water from different manufacturers. Indicatively, cost of modern and reliable water treatment at house level based on reverse osmosis technology is from 1,500 Euros and it is not affordable for more than 80% of the population of Ukraine (Purification and sale of drinking water in Ukraine, Eurotechnocom, 2013). The leading company in the area of purification and bottling of drinking water is Ukrainsky Vodni Tekhnologiyi LCC ( The company operates a number of water purification and bottling plants equipped with modern treatment plants manufactured by western countries. According

2 to UWT, the investment for modernization the treatment equipment has been returned in less than 8 months. More than 260 water companies with about 72,000 employees provide for prime necessities of the population and create the basic conditions for operation of the infrastructure of the inhabited areas (total length of municipal water distribution networks or so called centralised water supply systems: 135,958 km). Before the present emergency, the Company of Water Donbass utility was not considered profitable by investors due to the discrepancy between water production cost and collected fees which deficits amount respectively to 44.0% and 54.7% for drinking water services and waste water management. These discrepancies are largely imputable to obsolete equipment, water losses in distribution networks, inconsistent water metering policies, needs for reduction of tariffs for water and wastewater to economic levels. In the past, the gap cost/fees was filled by the central government but in the last decade this support is not present anymore (International business magazine "Invest-Ukraine". 2013; "Company" Water of Donbass, 2011). The main source of water supply in Ukraine is surface water: about 80 % is utilized by industries (40% of total water intake) and by agriculture (39% of total water intake). The remaining 21% is used by public utilities (drinking water). The most water consuming regions are the following (Market study: Ukrainian water sector Larive International, 2014): Donetsk region - 2,093 M m3 Dnipropetrovsk region - 1,684 M m3 Crimea autonomous republic - 1,625 M m3 Kherson region - 1,392 M m3 Odessa region - 1,236 M m3 Zaporizhzhja region - 1,211 M m3 Kyiv region - 1,170 M m3 At country level, the availability of water resources has been estimated at 2,850m3/yr per person (Aquastat, FAO 2002), which is defined as sufficient (for comparison: Poland 1,596 m3/yr per person; Germany: 1,878 m3/yr per person; Iraq: 3,298 m3/yr per person). This is an average for the whole country and there are many regional variations. In the Donetsk watershed water availability is described as extremely scarce at <500 m3/yr per person and researches have suggested that water resource availability within the Donetsk region is only 190 m3/yr per person due to significant consumption of water by the mining and steel industries that dominate the area (Water futures- Working together for a secure water future. GTZ, Sab Miller, 2010). Fig.1.

3 Fig. 1: Availability of water resources per person per year (Source: Water futures-working together for a secure water future. GTZ, Sab Miller, 2010) On average, the consumption of water in Ukraine is times higher than in developed countries: the reasons are the high level of water pollution, including underground water, which leads to insufficient availability of pure water (first of all, drinking water) typical for the industrial regions of the eastern and southern parts of the country: Donetsk, Lugansk, Dnipropetrovsk, Zaporizhzhja and Odessa. The total length of the water supply networks in Ukraine was 135,958 km in % needs replacement, because of expired operating lifetime ( 30% wear rate) but only 1.9% was replaced in 2012 due to the lack of financing. The situation in Lugansk is the worst, where approximately 80% of the total water supply pipes need urgent overhaul/replacement. The technical conditions of the networks and facilities remains inadequate in terms of continuity and quality of the services: 25 % of water supply and 24 % of waste water collection networks are in a state of emergency with 2 breakdowns per year for every 1 km of networks, which considerably exceeds the corresponding rate in the West European countries (Dancee, 2010). Half of all losses (51%) were caused by the public utility sector in the eastern part of Ukraine; in Lugansk the losses reached 67% and energy consumption is 1.54 kwh per 1 m3 of purified water (Market study: Ukrainian water sector. Larive International, 2014). The dominant part of losses in this sector is purified water. The combination of large losses and excessive consumption leads to very high costs of extraction, pumping, treatment etc. Dated information quote that in Donetsk, lack of innovations and new energy efficient technologies resulted in the fact that the share of electric energy consumption in the total cost of water supply amounted to 70-75% (Danfoss, 2006). Raw water pumping represent another challenge: old pumping equipment with its high deterioration level is affected by frequent breakdowns, downtime and high energy costs during water pump over. The average age of pumps at Vodokanals is around 30 years and 80-85% of them are still old Soviet models. In 2012 there were 6,856 water pumping plants in operation, the number of pumps was 16,312. In 2012, due to the termination of the lifetime period, 4,659 pumps required complete replacement, but only 1,3 (28%) of them were replaced throughout the year (see table 1 for pumping equipment figures only for South East Ukraine).

4 Region (oblast) N. of pumping stations N. of pumps N. pumps in needs to % pumps in needs to be replaced (pre-2012) be replaced (pre-2012) N. pumps replaced in 2012 % gap pumps in need to be replaced (2012) Depreciation (%) Electricity consumption in 2012 (kwh/1000 m³) Dnipropetrovsk region Donetsk region n/a Luhansk region Zaporizhzhja region Kharkiv region Tab.1: Pumping equipment figures for South East Ukraine (Larive International, 2014) A 20 year financial analysis ( ) aiming to plan how to bring Ukraine water and waste water utilities to EU utilities standards highlighted that a combination of grants, loans and budget financing of more than 1,000 million EUR per year for 10 years will be required in order to fill the gap between the Ukraine and EU water and waste water services quality. This would require a very marked change of public expenditure priorities, increasing the ratio of public expenditure for the sector from 0.5% to approximately 10% of the total amount per annum. Another financial analysis conducted by the World Bank and the European Bank for Reconstruction and Development (EBRD, 2014) calculated that the total investment and rehabilitation needs of Ukrainian public water supply and sanitation sectors amount to USD 7 billion. Also a tariff revision needs to be considered: dated information quoted that that about 25% of Ukrainians were using privileges for payment of housing and communal services in Their billings were decreased by 20, 30, 50, 75 or 100% (Tariff rules: cost identification, cost allocation and rate structuring-possibilities for Ukraine, 2002) Sanitation Almost the entire population of Ukraine (98.9%) lives in households that have improved sanitation facilities. In urban areas, 74.9% of the population have access to piped sewerage water while in big cities, small towns and rural areas the access is respectively 86.5%, 57.8% and 7.8%. Pit latrines are still utilised by a large number of people: 9.9% in urban areas, 2.4% in big cities, 21.1% in small towns, 57.9% in rural areas (Ukraine-Multiple Cluster Indicators.UNICEF, 2012). About piped sewerage (off-set sanitation), the overall system components, including pipes, collectors and treatment plants, are generally in a very poor condition. Most of the wastewater treatment plants were established in the period from 1960 to The age of plants ranges from 7 to 48 years, with an average age of about 25 years. The method of wastewater treatment is also subject to variation depending on the size of the area covered. In cities with a population above 100,000 people, about 80% of wastewater is estimated to undergo mechanical-biological treatment. In the smaller towns, the average is at about 45%. Many of the mechanical-biological treatment plants no longer work according to their design specifications and will need significant rehabilitation (Larive International, 2014). The regions which generate the most of polluted water/year are: Donetsk region M m3 Dnipropetrivsk region M m3 Odessa region M m3 Lugansk region M m3 In total, these four regions discharge 75% of the total polluted waste water. At national level, there are 3,093 sewage treatment plants (STP), of which 2,638 (about 87%) need a complete overhaul. During 2012, renovation was carried out at 34 STPs (only 1.3% of the required

5 replacements) due to the lack of financing. In Donetsk reconstruction is required at more than 50% of the STPs. In Ukraine there are 8,207 sewage pumping stations, 2,849 need replacement, 358 were replaced in Total length of the sewage network in 2012 increased to 44,832 km. 17,187 km of the network needs to be replaced (38% more than in 2011) and 179 km was replaced in 2012 (1% of the required length). In Luhask and Donetsk, respectively 57% and 62% of the sewerage networks need urgent renovation (Larive International, 2014; World Bank, 2012). In all Ukraine, during the past 10 years, 410 outbreaks of acute infectious intestinal diseases waterrelated have been registered (5508 people affected; 3330 children among them). The main cause of poor water supply is the water supply schedule, or full stopping of it within a day or more. Historical data on deviations in water quality of centralized water supply are registered in the following cities in Luhask oblast: Bryanka (100%), Luhansk (63,9%), Stakhanov (43,7% ) and Donetsk (34%) and Zaporizhzhia (20.6%) oblasts (Ministry for Environmental Protection and Nuclear Safety of Ukraine, 2000; Luhansk State Medical University- Hygiene and Ecology Department, 2011; Estimation of Technogenic Loading on Environment System of Donbas and Prognosis of its Slowing Down, 2004). In June 2011, the State Sanitary and Epidemiological Service of Donetsk, Ukraine confirmed an outbreak of cholera in the port city of Mariupol on the Azov Sea, Donetsk Oblast. Plans of multilateral and/or bilateral institutions in support of the sector At present, the international financing institutions (IFI) are the main financing bodies for water and waste water utilities in Ukraine while the level of financing from the state budget remains negligible (between USD 20 and 70 million of investments per annum). EBRD and World Bank announced plans to invest in water sector projects in a number of Ukrainian cities at the same time forcing the Ukrainian government to increase the tariffs for public utility services (expected in 2014). This will create a financial basis for implementing technical modernization programs in the coming years. The primary investments that have been identified include the adoption of energy saving technologies, the replacement of pumps and pipes, improvements to the water and waste water treatment facilities, the installation of water meters, the provision of leakage detection equipment and the set-up of hydraulic models of the water distribution systems. The implementation of the investment programs will be managed by private operators and the water companies in cooperation. Project funding is provided to local utilities secured by municipal guarantees which, in turn, are approved by the Ministry of Finance. The procedures for obtaining such guarantees are quite complicated, however in many cases, the loan amounts and respective project scope are limited by the creditworthiness of the target cities. The municipalities need to prioritize the projects to be funded and often opt for district heating projects over water and sanitation projects. This is because the fee collection is much easier. The most active IFIs funding the Ukrainian municipal water sector are: 1. EBRD 2. IFC 3. KfW 4. World Bank Grant support and technical assistance are provided to municipalities, utilities and sometimes private companies by GIZ, USAID and UNIDO. NOTE: the following projects list is not a comprehensive list of the projects undertaken by IFI and the Goverment of Ukraine. The brief description of the projects aim only to provide the reader of the scale of the investment cost as well as the specific WASH and energy efficiency initiatives. Examples of EBRD projects are: A) installation of new gas engine units for simultaneous cogeneration of heat and electricity and the installation of individual heating stations at the building level

6 in the district heating system of the city of Zaporizhzhia. Overall project cost: 12.5 M Euro. B) reduction of operation and maintenance costs, water losses and discharge of untreated sewerage into Dnipro river and the Black Sea Basin and to improve the operational and financial performance of the municipal water and waste-water services in Dnipropetrovsk. Overall project cost: 30 M Euro. C) improving the energy efficiency, reducing energy losses, gas and electricity consumption and improving the quality of heat and hot water supply services in Donetsk City. Overall project cost: 26.5 M Euro (EBRD website, 2014). From 2002 to 2014, KfW Development Bank (Reconstruction Credit Institute) has signed a framework agreement for loans totalling EUR 500 million on behalf of the German federal government, which has provided a guarantee for these loans. The loans are primarily earmarked for modernisations in the transport sector, energy sector, heating supply, energy efficiency, water supply and waste water disposal, social infrastructure and housing construction/reconstruction. Due to the current crisis in the Ukrainian financial sector, a project is also planned to protect the deposits of small savers by strengthening the Ukrainian deposit guarantee fund. Examples of World Bank projects are: A) improving the quality and efficiency of water, wastewater, and solid waste services in selected 9 cities in Ukraine included Luhansk and Kramatorsk (Donetsk oblast). Overall project cost: 350 M USD. B) improving the energy efficiency and quality of service of selected Ukrainian district heating companies in Donetsk oblast included. Overall project cost: 382 M USD (World Bank Group Ukraine Partnership: Country Program Snapshot, 2014). GIZ is involved in energy efficiency analysis for optimization of energy demand of city infrastructure in Luhansk City in partnership with Krasnodon, Roven ky, Sievierodonetsk and Sverdlovsk (giz website 2014) Database of investment project (energy efficiency) by the Ministry of Economic Development and Trade (2008), reports specific project activities carried out to improve water and waste water management and energy efficiency: reconstruction of the existing pumping station of the 1st ascent at Donets-Donbas channel, which has been operational since 1958; construction of water water treatment plant in Donetsk oblast (capacity: 350,000 m3/day; overall project cost:92 M USD) On top of the past investments involving the Donbass Region, the Peace and Economic Development in Donbass-Rehabilitation plan for Donbass includes several WASH initiatives. The mission of the parliamentary-governmental commission is to initiate the process of developing a state program of rehabilitation and socio-economic recovery of Donbass. Measures on restoring public safety and establishing a peaceful life includes: 1. Taking measures to improve the epidemiological situation: recovery of sewers, containers and treatment facilities. Recovery of water, gas and power supply, sewage, removal of household garbage. Cleaning in homes and surrounding areas. 2. Construction of temporary points of health care (based on mobile hospitals of the State Service for Emergency Situations and the MoD). Taking steps to restore fixed medical stations, health care providers (MoH). 3. Restoration of payments of pensions and social assistance; targeted assistance to those left without property. Organizing food and humanitarian aid supplies. 4. Repair of dwellings affected by the emergency. 5. Restoration and maintenance of uninterrupted power, gas and water supply to technologically dangerous objects. (Peace and Economic Development in Donbass-Rehabilitation plan for Donbass. Special parliamentary-governmental commission on post-conflict settlement in the Donetsk and Lugansk oblasts. 2014)