Estonia's water providers likely to have to rationalize in coming years

A domestic cat drinking water from a running tap (picture is illustrative)..
A domestic cat drinking water from a running tap (picture is illustrative).. Source: Pablo Klaschka / Pixabay

The fragmented nature of Estonia's provision of water and sewage services will require reforms likely to lead to the consolidation into a far smaller number of suppliers nationwide.

At the same time, a pressing need for major investments into water will inevitably lead to rising water rates, ETV news show "Aktuaalne kaamera" (AK) reported Saturday.

While Tallinn as by far the largest city in Estonia is covered by one private sector firm, Tallinna Vesi, the situation elsewhere is often far more fragmented, with most water supplied by small firms relating to municipalities.

While these were scaled down to 79 in reforms several years ago (from over 200), this was not followed by a similar rationalization among water service providers.

The recent outbreak of e.coli in the water supply in Kuressaare, Saaremaa's capital, and concerns about water quality elsewhere on the island, has highlighted shortcomings even as overall Estonia's water quality is adjudged to be good.

Improvements nationwide can include cleaning pipes of, for example, residue from legal drugs.

To maintain the current, level of standard of water management in Estonia, the Climate Ministry says investing two billion euros within a decade is required.

An added complication is that EU support in the water supply sector is coming to an end. How and why that support had not already been pressed into action in making the necessary reforms was not reported.

However, the problem is on the way to solving itself; since there are only four or five major water companies in Estonia that can meet the stricter requirements this will entail, many companies will either have to merge or cease operations. 

Kaupo Läänerand, undersecretary at the Climate Ministry, told AK that: "We need to start cleaning up medicine residues, and this will require investments."

"Water companies must become more energy efficient and reduce carbon emissions, which, again, requires investments. These investments even been estimated at over two billion euros, which will be forthcoming, for the sake of good water quality for all residents."

"Behind this lies a situation where we have 79 local governments, but 90 water companies, added to which there are 100 companies which additionally bear the characteristics of water companies, bringing a total of nearly 200," Läänerand went on.

The price of water services is currently fixed at 1.1 percent of the average income of a household member.

Andres Aruhein, head of one regional water firm, Emajõe Veevärk, in Tartu, said that reforms must not simply involve the merger of companies and the termination of some, but also how the sector can be invested into.

Emajõe Veevärk's 12-year investment plan includes pending investments worth €100 million. "Where this money will be found is the biggest question at present," Aruhein said.

In any case, he said, the need for investment will inevitably spell rise in the price of the service.

"Most likely, we will not be able to escape a water price rise, as in the current tariff regulations, the regulator is not particularly disposed to allowing the depreciation component to be factored into the price. For this reason, many investments have not been made yet and have been put on hold for quite some time," he went on.

Smaller companies must merge to obtain economies of scale and reach the necessary standards, Juri Gotmans, a board member at Võru Vesi, in Southeastern Estonia, says.

Gotmans said: "I think that we need to move in the direction that there could be one water company in the county in Southeastern Estonia, and second, we should cooperate more effectively between the water companies in the county, so we can perhaps better share special specialists and special equipment and so on somewhat reduce the pressure on the price increase."

Gotmans told AK that the loans the firm would need to take out would inevitably be passed on to end-user prices.

ERR reports that overall, Estonia's drinking water and sewage service is already at a very high level, both due to water firms' work and EU support.

Water as a service has been kept relatively low in price for around 85 percent of the population, ERR reports.

Price rises of around 4 percent would be required, Kaupo Läänerand said, which would lead to an average monthly water bill for a family of four of €124.

Läänerand noted that the reforms in the sector are needed to head off greater rate rises.


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Editor: Andrew Whyte, Merili Nael

Source: 'Aktuaalne kaamera,' reporter Toomas Pott

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