How to improve the water supply and sewerage market regulation: BRDO’s analysis

In Ukraine, water use is extremely inefficient.

One-third of the water from underground sources is lost during the extraction — that’s how outdated the production process in Ukraine is.  

More than a third of water and sewage networks have deteriorated and need to be replaced immediately. This affects the quality of drinking water supplied to the population, but only up to 2% of networks (out of the infrastructure that should be replaced) are replaced annually.   

Moreover, the volume of water consumption by users is decreasing — compared to 2010, water consumption fell by 39% in 2019. Drinking water supply in the regions of Ukraine is also uneven: only a third of the rural population is provided with centralized water supply services. Other rural consumers are sometimes forced to use water from wells, but it does not meet drinking water quality standards. 

The financial status of water supply and sewerage companies is also unsatisfactory in recent years: in 2019, the net loss of relevant enterprises amounted to UAH 2.13 billion. 

All these problems accumulate because Ukraine has the lowest water availability in Europe, and these resources rapidly become polluted. It is clear that the domestic water supply and sewerage sector needs urgent changes.

BRDO experts analyzed the sector economic performance and the current regulation and concluded that the existing public policy in the sector was ineffective and did not meet Ukraine’s obligations under the Association Agreement with the EU, strategic planning was imperfect, and tariff policy discouraged investment in the sector and prevented further development.    

To outline solutions to the problems in the sector and create conditions for its development, our experts prepared a Green Paper “Water supply and sewerage market regulation”.

The Green Paper contains:

  • analysis of the market and stakeholders
  • regulatory framework analysis
  • description of the problems of market participants
  • analysis of EU best practices in the sector and ways to harmonize Ukrainian legislation with the European one
  • a public policy concept with several alternatives for solving the problems in the sector

Our study will be useful for executive bodies to formulate public regulatory policies in the sector comprehensively, improve the technical condition of water supply and sewerage systems, as well as improve the drinking water supply quality.

The Green Paper is available here