The last fifteen years have brought to the Central and Eastern European countries significant political and economic changes. The accession to the European Union appeared the biggest challenge due to the need to adjust to higher European standards in law, agriculture, education, finance etc. One of the most financially neglected areas, where the civilization gap between the EU and the CEE countries became evident, was environmental protection including the condition of underground infrastructure, water supply, sewage disposal and air protection.
The condition of underground infrastructure left a lot to be desired. In comparison with Western Europe water, sewer and gas pipelines were underdeveloped and both the materials applied so far and the workmanship were of poor quality.
The crucial moment for the significant growth in municipal investments occurred two years before the accession to the EU. Owing to the availability of the pre-accession funds (ISPA, PHARE, SAPARD) and the prospects of taking advantage of Structural and Cohesion Funds, comprehensive rehabilitation projects were implemented which included both building new pipelines and rehabilitation of the existing ones.
In each of the ten new Member States, and after the 1 January 2007 in twelve EU countries (including Romania and Bulgaria) rehabilitation constitutes a substantial part of all investment plans. Gas, water, sewer and industrial systems require rehabilitation due to different reasons, including poor technical conditions, safety requirements, change of usage, and increase or decrease of hydraulic parameters. Additionally, rapid economic growth in the new EU Member States, which has been observed over the last few years, contributes to the investment growth.
The subject of the following report will be the way of approaching this problem in terms of both technology and finances, basing on the examples from selected countries and projects.
1. MUNICIPAL OWNERSHIP STRUCTURE OF UNDERGROUND INFRASTRUCTURE AND ITS CONDITION
1945 was a year of vast political and economic changes in the Central and Eastern European countries, consequences of which are visible even today and for which societies in these countries will have to pay for many more years. Period of happiness and euphoria following liberation from German occupation soon came to an end and brought about new order, which was both inhumane for the society and unnatural for the economy.
Several dozen years of real socialism irreversibly changed the economy. No right to private property, command-and-quota system, not convertible local currencies, to name but a few reasons why the CEE countries economies lagged more and more behind their Western neighbors.
Consequently, the infrastructure, although it developed within last fiftyyears,ispresentlyin poor technical condition due to low quality materials, obsolete and outdated technologies, disobeying quality regulations and inadequate supervision. There was no direct correlation between the quantity and the quality and in the early 90s, after the Soviet Bloc had collapsed, the Central and Eastern Europe countries had to face the challenge of adapting their economies to the competitive and demanding European market.
The changes gained momentum when the EU decided to invite new members. In May 2004 ten new countries joined the EU, almost three years later in January 2007 Romania and Bulgaria became Member States. A few years earlier these countries benefitedfrompre-accession funds, which enabled them to prepare them for the future administration of the European Regional Development Fund (ERDF) and Cohesion funds.
Economic development in the countries was at different stages, thus their needs were not the same. By and large, ecology, in particular water, sewer and gas network, was the sector which noticed substantial investment needs. Installing new pipelines and rehabilitation of the old ones to provide proper operation of the developing economies became one of the highest priorities.
Ownership structure of the beneficiaries i.e. waterworks, gasworks and public utility companies turned out to be a major challenge. They operated for many years carrying out orders of planned economies, without any influence on utilities prices and costs.Transformation into independent institutions took years and in spite of democratic changes, it met with certain resistance from both the very companies and the former ruling bodies. The companies still have close political links with the local and municipal governments (due to ownership structure), so their pricing and investment policy and way of acting is deeply dependent on external factors. After several years since transformation different privatization trends are being noticed, varying from country to country. In the Czech Republic, Hungary or Romania there are close links (including majority shareholding) with international operators such as Veolia, Suez, RWE etc., but on the other hand in certain countries there are small, local public utility companies fully owned by local governments e.g. waterworks in Poland. Those trends change over time, depending on the ruling parties in the countries.
Infrastructure ownership is closely related to direct access to financial aid and funds,since only the property owner may be a beneficiary. Therefore, some countries experience a real investment boom in public utilities, whereas investment process in the others is much slower. However, one should not reach a conclusion that the needs are lower.
Knowledge about the condition of underground infrastructure is more and more extensive thanks to technological development of modern CCTV inspection, cleaning and maintenance systems. Network operators, owing to easier access to the up-to-date equipment and technologies, realized their needs as for pipelines rehabilitation. A rough estimate is that over 40% of water network and 30% of gas pipelines in Poland needs renovation due to losses. As far as sewage system is concerned, figures are similar, however estimation is hindered and requires complex network monitoring and technical condition assessment. Lack of measurement, infiltration and exfiltration due to leaks do no allow to estimate data, just as it is in case of pressure pipelines. Most of these pipelines were laid in the 60s and 70s using steel, grey cast iron, concrete, clay, which were then of very poor quality. Moreover, workmanship left a lot to be desired. Hence, after several dozens of operation years pipelines are in poor condition, and failure ratios per km/yr are a few times higher than acceptable levels.
Although there are new investments in infrastructure, existing pipelines are growing older rapidly and they will require immediate rehabilitation to restore them to full working order and to adapt to increasing standards.
2. FINANCING AND PROJECT IMPLEMENTATION IN CEE
Successful European integration leads to a sharp rise in investments. Moreover, Structural Funds permit to carry out the projects smoothly, without worries about lack of financialresources. Administrative procedures established by the EU, which need to be followed while realizing the project, provide a framework organizing the project in terms of design, execution and financing.
The EU resources are used to cofinancemost major projects. Initially, during the pre- accession period, such instruments as ISPA, SAPARD or PHARE were used, later replaced by the Cohesion and Structural Funds.
Figure 5 presents schematic diagram of funds and their allocation.
Several provisions, which clearly stipulate the beneficiaries’responsibilitiesrangingfrom applying for the aid to meeting all the formal requirements, including raising beneficiaries’ contribution, were introduced to hedge Figure 5. Funds and their allocation. around the resources. Beneficiaries’ contribution share depends on the fund and amounts to min.15% of the total investment value. Therefore, beneficiaries are obliged to prepare a financing scheme including own resources and to carefully plan budgets so as to ensure the required contribution level. Hence, beneficiaries quite often have to reorganize their cost and in comepolicy, prepare a business plan taking into account dynamic price changes, expand service range and increase flexibility.For instance, new financial products issued by public utility companies have appeared on the market. One very spectacular example of such activity was the issue of municipal bonds by the Bydgoszcz Waterworks (city with a population of 450,000 in northwestern Poland). Bonds were issued in the amount of 25 mln euro, mainly earmarked for covering own contribution (17%) in water pipelines construction within a program called “Water and Sewage System in Bydgoszcz II”.
Financial resources available every year for the underground infrastructure rehabilitation are presented in Figure 6. The values were determined assuming that 15% of the total EU resources available for infrastructure development will be allocated for pipelines and 10% of that sum will finance rehabilitation of old pipelines.
In total the amount reaches ca. 500 m Euro, so appropriate use of the money for the good of the whole society is a great challenge.
Proper project preparation often becomes a real problem for beneficiaries (investors); well-tried FIDIC procedures are a very useful tool. They are invaluable both at the preparation and realization stage and depending on the project type, they may be led according to a red (investor’s responsibility for design), yellow (contractor’s responsibility for design and realization) or silver (project realization and start-up) FIDIC.
In case of rehabilitation projects a yellow FIDIC, including design and project execution by contractors, applies in 80% of cases. It happens so mainly due to lack of proper inventorying and to an increased risk of using only one technology. Usually only a location, scope of works (section length, diameters, material of existing pipelines etc.) and hydraulics requirements (flowreduction etc.) are determined.
At the design stage a contactor suggest a technology (very often as the only one or one of several technologies in tender procedures), which is later accepted by an investor represented by a project engineer. Often access to a renovated pipeline is difficult, especially incase of pressure pipelines, so verifying a real technical condition is impossible. A network needs to be disconnected to perform a correct verification. Consequently, investors provide only overall parameters and offload the risk of emergency onto a contractor. Project cost in terms of risk is rising, but investor no longer needs to prepare a costly project documentation and what is more important, he does not have to bear responsibility for possible mistakes.
Renovation projects are therefore difficult and the risk of improper assessment is considerably higher.
Renovation market is a contractor-oriented market; in most cases contractors decide on the technology. Investors often face the problem of choosing the right technology without in- depth knowledge and as a result, they take into account the only available criterion – the price.
The phenomenon, which is especially visible in the CEE countries, is often supported by the current public procurement law, i.e. public tender procedures. Lack of knowledge and experience, which is so clear at the stage of drafting technical requirements by investors, too overall regulations and freedom of their interpretation increase the risk of mistakes. Additionally, wide-ranging reluctance to consultants’ expertise, as the saying goes “we always know better” leads to even more mistakes, which easily could have been avoided
It is heartening that investors learn by their own mistakes and they make fewer and fewer mistakes with time. Undoubtedly it is a positive phenomena but gaining experience is a long process and therefore a costly one.
The renovation market in the Central and Eastern European countries is gathering momentum, which is especially visible in Poland where ca. 40 % of all the financialaidisallocated. In Poland comprehensive water and sewage systems rehabilitation programs for cities and local community associations have been established. The smallest projects are worth more than 10 mln euro but many projects have a budget exceeding 40 mln euro. The underground infrastructure rehabilitation is a part of road and railway transport, modernization and restructuring of industry. A large amount of money is allocated for these projects.
The renovation market in the CEE countries is growing rapidly and consequently a number of important international companies do business there. Despite the objections of local companies international players are desirable as they possess know-how, equipment and experience that have been gained for many years. Local companies can benefit from the cooperation with international companies as they can learn and generate profits necessary for their own development.
Below some different projects of renovating systems (which the author finds interesting)are presented. They were triggered directly (financed by EU funds) or indirectly (growth caused by foreign investments and market development) by the development of the CEE countries after they joined the European Union .
Practical use of the aid has just started and there are expected to be many more investments (also in the underground infrastructure) in the following years.
One of the major projects, which has been under construction for 4 years, is rehabilitation of a sanitary sewage system in Szczecin in Poland. The project involved two stages and had two financial sources. At the initial stage 8 km of sewage in different condition and with a diameter from 200 to 2500 mm were rehabilitated. Several different technologies were applied, including CIPP (cured-in-place pipe), close-fit Omega Liner Uponor system, GRP modules and coating. Project completion lasted for two years including design stage and it was supported by the EU PHARE instrument. The rehabilitation cost totaled ca. 4 mln Euro. Installation of over 100 sewer laterals and making them tight due to high groundwater level turned out to be a major challenge.
Soon after the firststagehadbeencompleted they started the second step of the project which was nearly 10 times larger. It was financed by the pre-accession ISPA instrument and it is to be completed until the end of 2007. The project includes renovating several dozens kilometers of sewage and has the budget of 43 m Euro. Figures 7-10 show renovation techniques applied. In 2005 it was the largest project of this kind in the CEE countries. The market gained momentum and nowadays in Poland even larger projects are being undertaken. For example, the renovation of 60 km of water mains and 135 km of separate sewage system, which is the second stage of “Water and Sewage System in Bydgoszcz II”. It aims at solving all problems of environmental protection in Bydgoszcz. Its main objectives include land reclamation, renovation, rebuilding and modernization of the present water and sewage infrastructure and meeting the EU standards. In 2004 it was estimated that the budget of the project was 80 m Euro. It was such a huge task that it had to be divided into stages. Water pipelines included 7 parts and sewer pipelines included 11 parts that are due to be completed by the end of 2008.
Due to the unique nature of the system many technologies were used in order to complete the project optimally and quickly. 95% of renovation was planned to be performed using trenchless technologies depending on strength and hydraulic performance. Figures 11-13 show various technologies applied: Compact Pipe, Swagelining, Sliplining pipes with protective layer.
In Lódz the contract concerning the renovation of water and sewage system (similar in size to the one in Bydgoszcz) has just been awarded by tender. The leading renovation technologies of distribution water systems are pipebursting, using pipes of higher resistance to slow crack growth and point loading, Compact Pipe and CIPP in case of sewage systems. Another project planned by the waterworks is the renovation of the main water pipeline with diameters of 800 mm and 1000 mm and its total length of several dozen of kilometers. The Lódz project is also mainly financed by the Cohesion Fund.
In Prague, the capital city of the Czech Republic there are several parallel projects under construction, which are realized in trenchless technologies. Figures 15-16 present 1000 mm water mains renovation using Swagelining and 4 km section of 400 mm water mains using Compact Pipe technology.
Rapid development of the new EU members and foreign direct investments increased the demand for utilities such as water or gas.
In Steti on the Elbe river in pulp plants industrial water pipelines have been renovated to increase production capacity. Due to high underground and ground infrastructure density trenchless technologies had to be applied. Figure 17-18 presents relining with a PE 100 DN 630 mm pipe and a close-fit Compact Pipe DN 200, where several 45 degree bends had to be lined.
The target operating pressure in pipelines had to be increased from 10 to 25 bars owing to higher demand for gas. Since the pipeline ran through forested private land and the pipeline accessibility was hindered, the investor decided to apply trenchless technology using PE 100 Compact Pipe. The solution was unusual because the plastic pipe used was an interactive one and it was to make the steel pipe tight. Although the steel pipe was in good condition and had proper resistance, point corrosion has been detected. Special reinforcement between the pipeline sections was applied, which is presented in Figure 19.
Gas mains renovation project in Bucharest using Compact Pipe technology proved how easily a problem of an old, corroded gas pipeline can be tackled in a short period of time. Almost 1km long section in the busy city center of the capital of Romania was fixed within a week, without inconvenience to the traffic and destroying the road surface. Figure 20 presents pipeline renovation ground works.
In the Latvian holiday resort on the Baltic Sea coast, Jurmala, not far from Riga, over two kilometers of 500 mm sewage was renovated with the use of PVC modules Shortlining WIR. Renovation process proceeded through manholes, thus the road surface was not destroyed. This is yet another project which was mainly will be continued in the forthcoming years.
To put it briefly, technical condition of underground infrastructure has not improved over the years. Heavier traffic in cities, numerous reconstruction works, streets modernization andc onnecting new consumers do not improve pipelines condition, on the contrary, they pose an additional challenge for the pipeline owners. Pipeline monitoring with use of more and more advanced detection and CCTV systems permits to recognize precisely the infrastructure rehabilitation needs.
In this case, applying trenchless technologies is becoming more and more reasonable, since they decrease the risk of underground installation damage, they are less inconvenient to the public due to road works and are more environmentally friendly. External financial resources help to better adjust all investment procedures and to speed up the project completion.
However, only in-depth and comprehensive knowledge on the existing technologies, case by case problem analysis and following the advice offered by experienced professionals and consultants may lead to a proper project coordination, optimal usage of available resources and ensure long-term and failure-free operation for end users.
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