Syzranvodokanal

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On July 1, 2001, according to the order of the head of the local municipal government of Syzran, all assets and physical infrastructure of municipal unitary entity VKH (water utility) were transferred to a private company, “Syzranvodokanal” Ltd., under a 5 year trust management agreement signed between “Syzranvodokanal” and the municipality on June 11, 2001. The contract was awarded in a competitive tender with two bidders. The rival of Syzranvodokanal was a company named Spektr Ltd. The criteria for the choice of winner were determined by the Trust Management Policy for Municipal Properties in Syzran. Under the contract, the operator was to receive fixed payment for the services. The contract did not specify the tariff revision process. The contract required no investment commitments from the private operator; however it called for a detailed municipal property management plan that was, nevertheless, not developed. Under the existing law, a state registration was required for such property trust management agreement. The state registration, in turn, required independent assessment of the property transferred under the agreement. Since there were no municipal or private funds available for such an assesment, it was not undertaken. Therefore, upon several years of “Syzranvodokanal” operations, the ownership of the water utility property managed by the private operator was unclear. In the first year of operations, the private operator invested more than 100,000 $US into the utility. Several local private businesses, consisting mainly of the largest industrial customers of water and sanitation utility in the city of Syzran, created a private operator “Syzranvodokanal” Ltd. (water utility of the city of Syzran)with chartered capital of 100,000 $US in 2001. The city of Syzran was located in the Samara region, with population of about 82,000 people. 100% of the residents had access to the central water network, and 87% had access to the central sanitation network. The yearly water production capacity of the utility was 28 millions of cubic meters. The water systems suffered from high losses which reached 30% of the water produced in 2002. The project was operational as of March 2011. Syzranvodokanal contract concluded in 2006, according to 2007 press the utility is still managed by the privately owned Syzranvodokanal, no information on the contract extension.