Sochi Water Utility

active

On Nov. 14, 2006 Sochi City Assembly approved a rehabilitate, lease and transfer type concession for the water utility of the city of Sochi with OOO SochiVodokanal, which was subsequently renamed OOO Yugvodokanal. OOO Yugvodokanal was a subsidiary of OAO Evraziysky (Eurasian), which operates several water utilities in Russia. On Dec. 29, 2006, the concession contract entered into force. The length of the concession contract was not identifiable. Under the contract, OOO Yugvodokanal was responsible for the quality of services and infrastructure development of the water utility. The project company was to invest its own capital in the amount of RUR800 million (US$29.4 million) to pay off the current debt of Sochi Water Utility, register property rights, and make investments in water supply and sanitation. All the water utility's assets remain in municipal ownership. Further, the municipal authority coordinates the development of water infrastructure and sanitation systems by identifying and monitoring targets for quality, reliability, availability, service delivery, as well as the tariff, and environmental and health regulation. In case of breach of contract terms, the municipal authority may terminate the contract. Investment commitments in 2006 were denominated in Russian rubles and were converted to USD using IMF annual average exchange rate for 2006: 1USD/27.191 RUR