1. Support to the employment in the water sector in Bulgaria
MINISTRY OF LABOR AND SOCIAL POLICY
Operational Programme
“Transnational and Danube partnerships for employment and growth“
Discussion Forum
Support to the employment in the water sector in Bulgaria
г. – Park hotel Moskva, Sofia, Bulgaria
Contract № BG05M9OP C01 for project “Support to the employment in the water sector in Bulgaria”
under OP “Transnational and Danube partnerships for employment and growth“ co-financed by European Social Fund

2. Areas of operation of the utilities
MINISTRY OF LABOR AND SOCIAL POLICY
Operational Programme
“Transnational and Danube partnerships for employment and growth“
Areas of operation of the utilities
In Hungary the water utility companies have two main fields of interest. Provision if drinking water and waste water treatment service. In this view I think there is no difference between Hungary and Bulgaria. Of course, many of the utility companies have other interests like construction works, or operation of thermal bathes.
The two main activities are supported by other duties like billing, customer service, water quality control etc..
In addition to the production-operation processes, communication with the customer, billing, water quality control and troubleshooting are also part of the activities of the water utility services.
Contract № BG05M9OP C01 for project “Support to the employment in the water sector in Bulgaria”
under OP “Transnational and Danube partnerships for employment and growth“ co-financed by European Social Fund

3. Utilities providing drinking water service in Hungary
You can see the map of Hungary and the location of the water utility companies providing drinking water. There are 40 licenced companies and only 2 of them are interested in only waste water collection and treatment.

4. Utilities providing drinking water service in Hungary
This map shows the waste water companies. You can see that the service territories are quite different. There are regional companies with huge areas and there are smaller companies focusing mainly on populated towns.

5. Data about the water sector (2016)
MINISTRY OF LABOR AND SOCIAL POLICY
Operational Programme
“Transnational and Danube partnerships for employment and growth“
Data about the water sector (2016)
Indicator
Year of 2016
Total water production
618 million m3
Production of water (%)
- Groundwater / protected aquifers
43 %
- Surface water
7 %
- From Limestone and dolomite mountains
12 %
- From gravel beds along rivers
38 %
Total water consumption accounted
443 million m3
Domestic water consumption
94 l/person/day
Not accounted water consumption
~25,9 %
To mention some statistical information:
The amount of extracted water reaches 600 million cubicmeter, which source are mainly groundwater and river basin with gravel beds.
The water consumption is around 94 liter per person per day, which is quite steady for many years.
The non accounted water consumption is around 26%, from which the real loss is circa 21%.
Contract № BG05M9OP C01 for project “Support to the employment in the water sector in Bulgaria”
under OP “Transnational and Danube partnerships for employment and growth“ co-financed by European Social Fund

6. Datas about the water sector (2016)
MINISTRY OF LABOR AND SOCIAL POLICY
Operational Programme
“Transnational and Danube partnerships for employment and growth“
Datas about the water sector (2016)
Indicator
Year of 2016
Length of drinking water system km
Length of sewage system km
Rate of households having access to the tap water system
94,9 %
Rate of households having access to wastewater system
78,8 %
Number of wastewater treatmant plants
816
- Only mechanical treatment
m3/year
- Mechanical and biological treatment
127 million m3/year
- 3rd level treatmant ability (nutrient removal)
474 million m3/year
You can see the length of the pipes and i can gladly say that every municipalities have piped drinking water, and almost 80% of the population have connection to sewage system.
Contract № BG05M9OP C01 for project “Support to the employment in the water sector in Bulgaria”
under OP “Transnational and Danube partnerships for employment and growth“ co-financed by European Social Fund

7. Wastewater treatmant 816 wastewater treatment plant
MINISTRY OF LABOR AND SOCIAL POLICY
Operational Programme
“Transnational and Danube partnerships for employment and growth“
Wastewater treatmant
816 wastewater treatment plant
Quantity of sewage sludge: ~250 tonnes of dry matter/year
Composting / incineration (biogas)
Thanks for the EU funds in the last few years there was an intensive modernisation concerning the wastewater treatment plants and by now many of them have the 3rd level treatment ability.
Contract № BG05M9OP C01 for project “Support to the employment in the water sector in Bulgaria”
under OP “Transnational and Danube partnerships for employment and growth“ co-financed by European Social Fund

8. Condition of water system
MINISTRY OF LABOR AND SOCIAL POLICY
Operational Programme
“Transnational and Danube partnerships for employment and growth“
Condition of water system
Reconstructions are needed:
High rate of asbestos cement
Relatively old pipes
Of course nothing is perfect. We have problems with the drinking water system. First of all the age of the pipes. Almost 40% of the pipes are 40 years old and regarding their material, quite big share of the system was made of asbestos cement.
Contract № BG05M9OP C01 for project “Support to the employment in the water sector in Bulgaria”
under OP “Transnational and Danube partnerships for employment and growth“ co-financed by European Social Fund

9. Condition of wastewater system
MINISTRY OF LABOR AND SOCIAL POLICY
Operational Programme
“Transnational and Danube partnerships for employment and growth“
Condition of wastewater system
No urgent intervention is needed:
Many pipes were installed after 2000
Failures at pump stations are more frequent
The condition of the wastewater system is really well, cause they were laid mainly in the last decades.
Contract № BG05M9OP C01 for project “Support to the employment in the water sector in Bulgaria”
under OP “Transnational and Danube partnerships for employment and growth“ co-financed by European Social Fund

10. MINISTRY OF LABOR AND SOCIAL POLICY
Operational Programme
“Transnational and Danube partnerships for employment and growth“
Integration process
The transformation of the water utility sector’s market structure has began with the Water Utility Act entering into force in 2011.
The regulation set a minimal value for the number of customers in order to stimulate the integration process of the water utility sector. The rate is user equivalents at the moment, which is the requirement to possess the operating licence issued by the Hungarian Energy and Public Utility Regulatory Authority (MEKH)
As a consequence of the integration process, the number of water utility companies decreased from about 400 companies in 2011 to 41 by January 2016.
Some words about the regulation. As I said there are 40 companies now, but 8 years ago their number reached 400. In 2011 the water utility act was accepted by the parliament and a forced integration process has started. The companies had to get their licences which were issued by the Hungarian Energy and Public Utility Regulatory Authority.
Contract № BG05M9OP C01 for project “Support to the employment in the water sector in Bulgaria”
under OP “Transnational and Danube partnerships for employment and growth“ co-financed by European Social Fund

11. MINISTRY OF LABOR AND SOCIAL POLICY
Operational Programme
“Transnational and Danube partnerships for employment and growth“
Ownership
According to the legislation the assets of the public utility works can be owned exclusively by local municipalities or the state.
The asset owner signs a contract of service provision with the service provider (utility company).
There are 3 types of contract:
- asset management contract
- concession
- rent-operation scheme
According to the Act the ownership of the utility assets and themselves the companies devided. The assets can be owned only by the municipalities or the state. The utility companies had to sign a contract to operate them.
Contract № BG05M9OP C01 for project “Support to the employment in the water sector in Bulgaria”
under OP “Transnational and Danube partnerships for employment and growth“ co-financed by European Social Fund

12. Ownership The ownership of the utility companies is the following:
MINISTRY OF LABOR AND SOCIAL POLICY
Operational Programme
“Transnational and Danube partnerships for employment and growth“
Ownership
The ownership of the utility companies is the following:
- in 5 of the corporations the majority shareholder is the Hungarian State.
- in 2 companies the capital city has a majority ownership, in the 33 remaining companies, local municipalities have a majority ownership.
- the vast majority of the utility companies are exclusively in national property but in 6 corporations foreign service providers also have a minority ownership.
The companies are owned mainly by the municipalities and the state too, but there are some minority ownership at some multinational companies like Veolia.
Contract № BG05M9OP C01 for project “Support to the employment in the water sector in Bulgaria”
under OP “Transnational and Danube partnerships for employment and growth“ co-financed by European Social Fund

13. MINISTRY OF LABOR AND SOCIAL POLICY
Operational Programme
“Transnational and Danube partnerships for employment and growth“
Tariffs
With the Water Utility Act entering into force in 2011, the local governments lost their price setting authority.
The Authority (MEKH) is providing the Minister responsible for the supervision of the sector with the suggested tariffs.
The Minister taking into consideration these tariffs will define in a decree the official tariffs for each water utility provider / water utility system or the type of water utility provision activity.
As a heritage of the previously decentralised tariff setting system, at the moment the number of different tariffs used by the utility companies is in the scale of with significant differences in their rates.
Tarrifs are hot potatoes. Before the Act the local governments have the right to set the tariffs, but now after the suggestion of the regulatory auhority the Minister has to declare them. By the way till this time no tarrifs were set by the Minister, because of political reasons. The tarrifs have been frozen since Because this awquard situation there are around different tarriffs in Hungary. Moreover in the case of resident users the utility companies have to decrease them with further 10%. If it was not enough, in 2013 the government introduced a special tax, so called utility tax which has to be paid after the length of the operated system. Its amount is 0,5 EURO per meter. Because of the constant and incomes, the increasing oprating costs, and the financial burdens the companies get intoa hard financial situation. They could not spend enough money on reconstruction and have to cut costs, especially the salaries.
Contract № BG05M9OP C01 for project “Support to the employment in the water sector in Bulgaria”
under OP “Transnational and Danube partnerships for employment and growth“ co-financed by European Social Fund

14. Human Resource MINISTRY OF LABOR AND SOCIAL POLICY
Operational Programme
“Transnational and Danube partnerships for employment and growth“
Human Resource
So we reached the problem of the labour force. We are in the same situation like Bulgaria and many other countries.
More than 40% of the employees are older than 50 years and 10% of them are going to be retired within 5 years. Unfortunately the kids are not really keen on choosing the water utility sector, and many workers decide to move abroad because of higher salaries.
Nr. of employees: 21 309
Physical workers: 65,8 %
At least high school degree: 52,9 %
Above the age of 45 year: 57,4 %
Employee turnover rate: 13,1 %
Contract № BG05M9OP C01 for project “Support to the employment in the water sector in Bulgaria”
under OP “Transnational and Danube partnerships for employment and growth“ co-financed by European Social Fund

15. Salaries in Hungary MINISTRY OF LABOR AND SOCIAL POLICY
Operational Programme
“Transnational and Danube partnerships for employment and growth“
Salaries in Hungary
You can see different wages which were reachable in different fields in the given year. The black line is the national average, the blue one shows the average wages of the water utility companies and the green one is the other companies whom our sector have to fight with. You can see that with the integration and with the financial burdens the water utility sector could not keep the race and rise the salaries like the others. Now it is under the national average. In the last year the contruction sector started to boost and it sucked all the workforce, the professionals and experts move to Austria or to the western countries where they can get three times more money. Because of these the companies have to prepare themselves for the rising fluctuation, for the less educated labour force and they have to work out training programs to be fit in the newcomers and to be more efficient.
Contract № BG05M9OP C01 for project “Support to the employment in the water sector in Bulgaria”
under OP “Transnational and Danube partnerships for employment and growth“ co-financed by European Social Fund

16. Challanges of the now and the future
MINISTRY OF LABOR AND SOCIAL POLICY
Operational Programme
“Transnational and Danube partnerships for employment and growth“
Challanges of the now and the future
Short-term challenges
Handling of high taxes (utility tax, authority fee etc.)
Lack of financial resources to cover the costs
Workforce supply (lack of future experts / next generation)
Medium-term challenges
Tariffs
Settling the accounts of EU funded projects, requirements of cost recovery
Reconstruction
Recording the assets of the public utilities, evaluation and development
Smart metering
Contract № BG05M9OP C01 for project “Support to the employment in the water sector in Bulgaria”
under OP “Transnational and Danube partnerships for employment and growth“ co-financed by European Social Fund

17. THANK YOU VERY MUCH FOR YOUR ATTENTION
MINISTRY OF LABOR AND SOCIAL POLICY
Operational Programme
“Transnational and Danube partnerships for employment and growth“
THANK YOU VERY MUCH FOR YOUR ATTENTION
Gergely Patkó
Sector Analyst
Hungarian Water Utility Association
Contract № BG05M9OP C01 for project “Support to the employment in the water sector in Bulgaria”
under OP “Transnational and Danube partnerships for employment and growth“ co-financed by European Social Fund