Tirana Water Price Hike Is the Result of Veliaj’s Failure – Exit Explains

Mayor of Tirana Erion Veliaj has decided to double the water price for families living in Tirana. This is a decision that will affect hundreds of thousands of families and will have a substantial influence on the living costs of especially the poorer families.

The draft decision sent to the Municipal Council claims that the decision to raise the water price is based on a 5-year strategy drafted by the UKT and report of the Municipality itself based on statistical data from INSTAT about the expected population growth in Tirana. None of these documents has been made public.

Yesterday morning, Mayor Veliaj gave another explanation why he is doubling the water costs; the UKT would be drowning in debt, for which he blamed his predecessor:

When he had a budget deficit, Berisha told the Bank of Albania to buy Hotel Dajti, while he told the Municipality of Lulzim Basha to buy the Lana Bregas. In order to plug his deficit, Basha had the UKT taken hostage by a second-level bank. We need to take out a loan in the case of a reform that would bring 24-hour water. We need €220 million, which is impossible for anyone to finance when you don’t have any income.

The Chinese investor

We were unable to verify the credit situation of the UKT, but Veliaj’s declaration is in total contradiction with his claims of last year, when he publicly touted with the successes of the UKT. In August 2016, Mayor Veliaj claimed that the UKT would be privatized, and that he had received offers from several serious companies, and that in the case of one of them, an unidentified Chinese company, concrete steps had been taken.

According to Mayor Veliaj, this interest was “a compliment for the work of the UKT […] which is quoted on the market thanks to the performance in also raising the number of payments by citizens.”

We had called out Mayor Veliaj’s declaration as a distraction, because in the same days the State Supreme Audit Institution (KLSh) published a damning report, accusing the UKT of financial mismanagement. As we already foresaw, nothing was further heard of the “serious companies” that according to the Municipality had expressed such a great interest. No further news was given about the UKT’s impending privatization, or about the unidentified Chinese company, with which the “concrete steps” had been made.

A memorandum with Puglia

Another initiative related to the UKT that was broadly advertised by the municipality was the collaboration with the water supply company of Puglia, Italy. In November 2015, Mayor Veliaj signed, surrounded by his media circus, a memorandum of understanding with the President of the Puglia region, Michele Emiliano. This memorandum included the exchange of expertise and investment from the Puglia water supply with the UKT. Back then, Mayor Veliaj declared:

We will audit the company to understand on a technical and financial level what is not going well with this company and where we have to start with new investments. Later we will move to the stage of investments, where together with the water supply of Puglia we will make sure that every cent that is invested will have a concrete positive effect.

Nearly two years have passed, but except the photographs and the declarations of the signing ceremony, there has been no information about the implementation of this memorandum. It is unknown whether the UKT was actually audited by the company from Puglia, or whether any expertise or investment was offered from their side.

There is no infrastructure in Kashar

Yesterday evening, Mayor Veliaj offered yet another justification for doubling the water price. In an interview with Ilva Tare, he claimed that the price hike was necessary to make new investments on the Astir zone in Kashar, where there is no water infrastructure:

About the water situation […] For the first time the Municipality of Tirana has taken up water management when Lulzim Basha was mayor. But back then it was only Tirana, whereas today the Municipality also includes zones like Kashar. A part that has not at all been in Tirana is the water supply and sewage of the villages. During the period that the PD managed the municipality of Kashar it only gave building permits without putting water infrastructure in place.

This is a scandalous justification. To try to build water supply and drainage system with income taken from a water price increase is absurd from a social, economical, and political perspective. These are infrastructural investments which ought to be covered by the government’s investment funds, so the Municipality has to explain why the water infrastructure of Kashar cannot be financed as public investments by te government.

Mayor Veliaj needs to explain based on which priorities and logic he asked and received €13 million from the government to rebuild Skënderbeg Square, which has no influence on the lives of the people at all, but failed to ask money for crucial water infrastructure.

He needs to explain why he received a promise of €130 million to build a useless garbage-fueled power plant, which can also be built by private companies, when he ignored the essential needs of the citizens of Tirana.

Missing documents

Any reasonable explanation for the decision of the Municipality is difficult to give, because neither on its website, nor on the website of the UKT, is there any information about the documents, agreements, or strategies of the UKT. All the information about the management of the UKT is dated and not transparent. The strategy published on the company website dates back to 2011 and has no relation whatsoever to the current reality.

The most credible explanation for the Municipality’s behavior is that a crisis in management has produced a financial crisis in the UKT and the Municipality is trying to crawl out of this hole by presenting the bill to the citizens of Tirana and doubling the water price overnight.

This decision is not supported by any form of analysis, strategy, or project that has been presented to the public. It is an arbitrary decision, even though as always the words of the Mayor are presented as the truth and the law.

But different from his other hollow declarations, this doubling of the water price has a direct effect on the lives of the people, making it difficult for the Mayor just to say the word and go on with his daily business.

This is the moment that the Municipality has to provide complete transparency about the management and financial situation at the UKT, as well as its activities and business strategy.

Mayor Veliaj should

  • Publish the UKT’s balance sheet over 2015 and 2016 as is required by law, which will show the financial management of the company, including creditors and debtors;
  • Publish the 2015 and 2016 annual report of the company as is required by law, which will show the general management of the company, including human resources;
  • Report what measures the UKT and the Municipality have taken in response to the KLSh report from 2016 regarding the financial management of the company;
  • Publish the 2015 and 2016 annual budget of the Municipality of Tirana, to understand its investment priorities.

Moreover, Mayor Veliaj should argue in front of the public, and not in television studios, how he arrived at the doubling of the water price as the best solution for the problems of the UKT. This argument should be supported by studies and financial analyses, showing that burdening the citizens is a better option than borrowing money on the private market or receiving funding from government investment funds.