Implementation of the Financial
Planning Tool at Armvodocanal
Sofya Hovhannisyan
Armvodocanal
Helsinki, Finland
24-25 May 2007
1
Why is the FPTWU Necessary?
PROBLEMS
• EECCA water utilities
remain financially weak,
unstable, with inadequate
level of funding
• There are many reasons for
such a situation. One of main
reasons is lack of mediumand long-term financial
planning
SOLUTION
• Implementing such a financial
planning scheme presumes the water
utility has practical experience in regular
comprehensive analysis of all the
financial and economic aspects
• However, such a systemic analysis is
only possible if there is a financial
modeling and planning tool in place
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
SIMPLE
EXPANDABLE
MULTI-PURPOSE
It is enough to have basic computer skills.
User-friendly and includes user manual
Can be expanded by adding additional
modules/tables
Adaptable to the EECCA country contexts (e.g.
various tax regimes)
Graphical presentation of key operational and
VISIBLE financial parameters possible
4
EAP
Task Force
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)
5
EAP
Task Force
Input – TI
Input – TD
Assets
Water supply
and wastewater
collection
Revenues and
Collection
Cost indexation
CIP module
Financial plan
Tariff module
Budget
Affordability
assessment
Demand
dynamics
Costs
Financial statements
6
EAP
Task Force
Taxation accounting
Outcomes and financial gap analysis
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
млн НДЕ
6,000
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
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Use of cash
Расходование денежных средств
NetПрофицит/Дефицит
Чистый
surplus/gap
Graphical Presentation of Parameters
Revenue and costs
Выручка и Затраты
9,000
8,000
Выручка и Затраты, млн НДЕ
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
2005
2006
2007
2008
2009
2010
2011
Total Revenue
2012
Всего выручка за реализацию услуг
9
2013
2014
2015
2016
2017
2018
2019
O&M costs
2020
Операционные затраты
2021
Graphical Presentation of Parameters
Тариф
дляpopulation
населения
Tariff for
200.00
175.00
150.00
НДЕ/М3
125.00
100.00
75.00
50.00
25.00
0.00
2005
2007
2009
2011
2015
2017
2019
2021
Расчетный тариф для населения, вода, с НДС
Расчетный тариф для населения, канализация, с НДС
Действующий
для tariff
населения, вода, с НДС
Factualтариф
water
Действующий
для населения,
канализация, с НДС
Factualтариф
wastewater
tariff
Water tariff
10
2013
Wastewater Tariff
Graphical Presentation of Parameters
Процент подключения к централизованным системам
Water вand
rates<
%
о д о сwastewater
н а б ж е н и я и в о connection
д о о тв е д е н и я , в
%
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
2004
2006
2008
2010
2012
Multi-storey
buildings,water
многоэтажные
дома, вода
Multi-storey buildings, wastewater
многоэтажные дома, канализация
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2014
2016
2018
2020
частный
сектор,
вода
Private
housing
sector, water
Private
housing
sector,
частный
сектор,
канализация
wastewater
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
–
–
–
–
–
–
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Prices for energy and materials
Staff costs
Maintenance costs
Overhead costs
Costs distribution by consumers categories
Costs distribution for water and wastewater
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
14