Implementation of the Financial
Planning Tool at Armvodocanal
Sofya Hovhannisyan
Armvodocanal
Helsinki, Finland
24-25 May 2007
1
Why is the FPTWU Necessary?
PROBLEMS SOLUTION
• EECCA water utilities • Implementing such a financial
remain financially weak, planning scheme presumes the water
unstable, with inadequate utility has practical experience in regular
level of funding comprehensive analysis of all the
financial and economic aspects
• There are many reasons for
such a situation. One of main • However, such a systemic analysis is
reasons is lack of medium- only possible if there is a financial
and long-term financial modeling and planning tool in place
planning
TOOL FOR IMPLEMENTING SOLUTION
•The main objective of the project was to develop such a Financial
Planning Tool for Water Utilities (FPTWU)
EAP Task Force
2
Concept of the FPTWU Tool
Computerized Model in Excel:
User
DATA INPUT
MODEL CALCULATIONS
DATA OUTPUT
Decision making,
statements, monitoring
3
EAP Task Force
FPTWU Tool Features
It is enough to have basic computer skills.
SIMPLE
User-friendly and includes user manual
Can be expanded by adding additional
EXPANDABLE
modules/tables
Adaptable to the EECCA country contexts (e.g.
MULTI-PURPOSE various tax regimes)
Graphical presentation of key operational and
VISIBLE financial parameters possible
EAP Task Force
4
General Features of the FPTWU Tool
Consists of 34 linked spreadsheets (Excel)
Model navigation is done through the menu
Planning period – quarterly model for three years (with a
possibility to extend the forecast period of the model to
twenty years)
Calculations can be done either in nominal prices or in
reference year prices
Information presented separately by water supply and
wastewater collection
Allows entering “historical/actual” data
“Historical/actual” data period can be modified
Data entry is concentrated mostly in two spreadsheets
(facilitates the entry process and reduces room for error)
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EAP Task Force
Input – TI Input – TD Cost indexation
Assets CIP module Financial plan Budget
Water supply
and wastewater
collection Revenues and Affordability
Tariff module
Collection assessment
Demand
dynamics
Costs Taxation accounting
Financial statements Outcomes and financial gap analysis
EAP Task Force
6
Implementation at Armvodocanal
Structure
Utility assets
Consumers
Taxation
Unaccounted-for-water
Accounting practice
Payments structure
Method of tariff calculation and approval
Costs calculation
Investment plan
7
Financial Gap Analysis
Финансовый дефицит/профицит
Financial Gap/Surplus
10,000
8,000
6,000
млн НДЕ
4,000
2,000
-
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
(2,000)
(4,000)
Cash
Поступление денежных средств Use of cash
Расходование денежных средств Net
Чистый Профицит/Дефицит
surplus/gap
8
Graphical Presentation of Parameters
Revenue and costs
Выручка и Затраты
9,000
8,000
7,000
Выручка и Затраты, млн НДЕ
6,000
5,000
4,000
3,000
2,000
1,000
0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Total Revenue
Всего выручка за реализацию услуг O&M costs
Операционные затраты
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Graphical Presentation of Parameters
Tariff для населения
Тариф for population
200.00
175.00
150.00
125.00
НДЕ/М3
100.00
75.00
50.00
25.00
0.00
2005 2007 2009 2011 2013 2015 2017 2019 2021
Расчетный тариф для населения, вода, с НДС Расчетный тариф для населения, канализация, с НДС
Water tariff Wastewater Tariff
Factual water населения, вода, с НДС
Действующий тариф для tariff Factual wastewater tariff
Действующий тариф для населения, канализация, с НДС
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Graphical Presentation of Parameters
Процент подключения к централизованным системам
and н а б ж е н и я и в д о о т в е д е н и я rates< %
Water в о д о сwastewaterо connection, в %
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2004 2006 2008 2010 2012 2014 2016 2018 2020
Multi-storey buildings,water
многоэтажные дома, вода частный сектор, вода
Private housing sector, water
Multi-storey buildings, wastewater
многоэтажные дома, канализация Private housing sector,
частный сектор, канализация
wastewater
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Necessary input-data set (1/3)
Economical data
– Inflation
– Exchange rate
– Процентные ставки
– Income per capita and per household
– Population and households
Water demand
– Water consumption by consumer categories
– Wastewater by consumer categories
– Water consumption norms
– Metering
Service level
– Water and wastewater coverage
– Water infrastructure capacities
– Wastewater infrastructure capacities
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Necessary input-data set (2/3)
Technical conditions and assumptions
– Infrastructure age (pipes, pumps etc)
– УWear and tear of infrastructure
– Service level
– Assets lifetime
Capital costs
– Plan of replacement/repair/reconstruction of assets
– Capital costs by assets categories
– Materials costs
– Construction and installation works costs
O&M costs
– Prices for energy and materials
– Staff costs
– Maintenance costs
– Overhead costs
– Costs distribution by consumers categories
– Costs distribution for water and wastewater
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Necessary input-data set (3/3)
Financial Data
– Revenues by consumer groups
– Water and wastewater tariffs
– Billed and collected amounts
– Public budget/municipal subsidies
– Other revenues
Financing
– Conditions and characteristics local loans
– Conditions and characteristics international loans
Accounting and taxation
– Depreciation
– Income tax, VAT and other taxes
Operating assets
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