The document discusses whether "Kyivvodokanal", a water utility company in Kyiv, Ukraine, should be reprivatized. It summarizes Kyivvodokanal's current poor financial condition, with high losses, low returns, and aging infrastructure. Charts show private sector involvement can increase efficiency but results are mixed. Case studies of water utilities in Prague and New York that were privatized or public-private partnerships show they have higher efficiency and lower water losses. The document considers options for improving Kyivvodokanal's efficiency through private sector involvement, optimization of prices and labor, and improving management. It also discusses potential sources of financing such as loans from EBRD or issuing bonds.

1. Should “Kyivvodokanal” be
reprivatized?

2. “Kyivvodokanal” now
• 4 126 km of water supply network
• 73% of worn-out equipment
• Losses in 2011 = UAH 124 483

3. FINANCIAL ANALYSIS
2011:
• Return on assets = -13.5%
• Return on equity = -12.4%
• Acid-test ratio = 2.5%
• Working capital = -1 719 787 UAH

4. PAIN POINTS
Poor financial
condition
Increase
efficiency
Worn out
systems
Attract
private
investment

5. PRIVATE = EFFICIENT ?
21
5
11
15
13
3
Case Studies Econometric testing
Positive influence
of private sector
No difference
Positive influence
of public sector
Source: Peard (2007, 2008)

6. 0,53
2,65
3,09
Price
(USD)
Prague NewYork Kyiv
INCREASE EFFICIENCY
6 565
5 600
1 045
Employees
4 126
10 500
4 322
Network
(km)

7. INCREASE EFFICIENCY. PRAGUE
Main facts:
• PPP enterprise
• Profit: UAH 151.5 mln.
• Gold certificate for its integrated management system
23,8
21,4
20,8 21,0
21,6
21,1 21,3
2006 2007 2008 2009 2010 2011 2012
%
Water loss 2006-2012, %

8. INCREASE EFFICIENCY.
SOLUTION
Negative
profit
Optimize
price
Reduce labor
intensity
Improve
management
through PPP

9. SOURCES OF FINANCING. EBRD
• Is interested in water supply. Projects in:
 Kyrgyzstan, Bosnia and Herzegovina
 Russia, Armenia
• Drawbacks:
• Maximum amount of loan - EUR 88 mln.;
• Strict profitability requirements;

10. SOURCES OF FINANCING. BONDS
Eurobonds
• “Ukrzaliznytsia”: USD 500 mln - 9,5%
• “Financing of Infrastructural Projects”: USD 690 mln - 7,5%
• Kyiv: USD 250 mln – 8%
• Drawbacks:
• Credit rating requirements;
• State guarantees may be needed

11. CONCLUSION
Eliminate Raise
Reduce Create
• Inefficient
organization
• Labor intensity
• Efficiency
• Capital investment

12. THANK YOU!