YAROSLAVL MUNICIPAL WATER SERVICES
DEVELOPMENT PROGRAMME

The City of Yaroslavl has developed the Yaroslavl Municipal Water Services Development Programme to define and implement the immediate facilities improvement needs of the water system. The objective of the Project is to develop and implement a series of investments, which will increase the operational and financial performance of the water supply system.

In 2001 a feasibility study was developed by CH2M HILL International Services and Deloitte, Touche and Tohmatsu Emerging Markets, which includes the Priority Investment Programme (PIP) to be implemented in the coming three years. To this end, the Yaroslavl Water Works has requested a loan from the European Bank for Reconstruction and Development (EBRD) to support the Project. On January 15, 2003 the Loan Agreement was signed. The EBRD loan amount shall be RUR 490.6 mln.

Components of the PIP include most beneficial measures of improvement, aimed at energy and resource saving and water demand reduction. To ensure a successful implementation of the projects a number of institutional development components for the City and the Yaroslavl Water Works are envisaged.

Project Structure
The Project consists of eleven separate sub-projects.  Their objectives are: rehabilitation of the water distribution network and water pumping stations, automation and control of the water system, leakage reduction.  The biggest project for water distribution network rehabilitation is approximately 300 million RUR; the smallest has a budget of 2.4 million RUR and is aimed at demand reduction.

Project Financing
The Yaroslavl Municipal Services Development Project is estimated in the total sum of USD 22.5 million equivalent.  The project shall be financed with the EBRD loan (RUR 490.6 mln.), and the enterpriseґs own funding, which shall be spent on implementation of minor projects and payment of taxes and customs duties. The company’s own sources in amount of 155 million RUR will be spent on minor projects, as well as on taxes and custom duties.  It is envisaged to attract some grant funding for Project implementation purposes.  Institutional development should support the effective loan utilization, as well as implementation of progressive management approaches.  The institutional part of the Project is essential, and may be implemented in a most efficient way only with support of international donors, which have essential experience in financing and implementation of similar programmes.

Institutional Development Programmes

Corporate Development Support Programme
One of the most important institutional improvements is development and implementation of the Corporate Development Support Programme, which should ensure a stable development of the Yaroslavlvodokanal during the Project implementation and later on.  Within the framework of the Programme, the company should improve its financial performance; introduce international accounting standards (IAS) and appropriate financial management approaches.  A separate task is integrated project management training of the Yaroslavlvodokanal executives.

PIU Training
Since the Yaroslavlvodokanal is implementing the Project on its own, with the EBRD assistance it received a grant for staff training .  The major responsibilities of the Project accomplishment rest with the Project Implementation Unit (PIU).  Therefore the PIU have been trained in such fields as general project management, procurement, project accounting in compliance with IAS standards, as well as reporting principles acceptable for international financial institutions.  A very specific part of the training programme was instruction in procurement, tender procedures, and in reporting to the EBRD.

Municipal Housing and Communal Services Management Improvement
The City (Municipality) is the key structure in the housing and communal service improvement.  To enable a better transition, in particular, public-private partnership development, some legal reviews and advisories are necessary.  One of the important aspects is transfer to contract-based relations between the City and Municipality-owned enterprises for housing and communal services.  As part of the Project activities, a template of the Service Contract for the Yaroslavlvodokanal will be developed. This document will be developed by the British firm Severn Trent Water International, the winner of the tender, which was held from November 2002 till December, 2003.

Project Benefits
After the Project is implemented, a considerable amount will be saved because of energy saving measures, a better chemicals feeding, and pressure control.  A reliable operation of facilities will be the next very important benefit of the Project, which will ensure further activities for municipal water system improvements.