Why Is Veliaj Hiding the UKT Balance Sheets?

By Carloalberto Rossi ,
Why Is Veliaj Hiding the UKT Balance Sheets?

The debate about the increase in the water price in Tirana, despite the illegal approval of the Municipal Council, continues to be at the center of citizens’ discussions.

On the one hand, Mayor Erjon Veliaj and his officials insist that the increase in water price will generate enough funds to make the necessary investments needed to supply the city with water 24/7. But on the other hand, there are an ever increasing number of citizens who understand that the argument is hiding something, which the mayor and the officials chose not to disclose.

Exit has received the balance sheets of the UKT (Water and Sewerage Utility of Tirana) over 2015 and 2016. Despite the manipulated numbers which could not be verified by the auditors, the balance sheets reveal that UKT has been managed for many years by dishonest and incapable people. These people have shirked their responsibilities creating unredeemable debts, they have cooked the books and have distorted the numbers in an incomprehensible way. It is rather hard to really understand what is going on behind the numbers.

In the past two years, Mayor Veliaj did not correct this maladministration, on the contrary, in the past two years the situation has gotten worse.

The UKT has been a bankrupt for many years, even before Veliaj was appointed as mayor.

Today the UKT has further deteriorated as its debt reaches 9.5 billion lekë (€71.6 million), an amount that is equal to its revenue over the past three years. We can go on: the increase in the number of unpaid invoices from companies, institutions, and families; the increase in the number of cases filed in the court of law by dismissed employees; the unsolved accounting issues (the two balance sheets have not yet been certified by the auditors); technical issues like losses in the water supply system, fewer new contracts, a high number of consumers that do not benefit from the current system, and to conclude the issue concerning a lack of a regular daily water supply.

Maybe it is easier blaming the citizens that do not pay their water bills, but the fact is that based on its balance sheets UKT has a huge problem of management that hinders company’s normal functioning. In the last months, the issue has become worse, as the company has invested in marketing and advertising, shrinking the budget dedicated to maintenance work.

UKT sells 3 billion lekë of water every day. Only 23 % of the water supplied by the company is invoiced, while the other 67% of the money that is missing at the end of the fiscal year is not invoiced. An efficient management would focus on this specific issue and would equip 40% of families that still don’t have them with devices that measure their water consumption.

It is difficult in some areas to distinguish between the properly installed connection and the clandestine ones, because the water measurement devices are not installed. The main issue is that getting a proper report for the water produced and supplied with the water that is invoiced is impossible, and for this reason a large amount of water produced cannot be traced.

The revenue generated by the water measurement devices are another revenue stream in the UKT budget. The revenue from selling and installing the water devices is decreasing, because the directors are not doing their work and senior technicians are being fired.

When UKT will collect all the invoices, then the €5 million yearly profit accounted for in the balance sheet will be real and spendable. Add to the € 5 million the government’s financing and foreign support and the investment can be used to improve the water system and water quality. The water can be filtered, and thus made drinkable without increasing the price.

To justify the increase, Veliaj said that in the next five years €220 million are needed for investments, an exaggerated number for a country that each year sells €25 million of water and collects through bills less than €20 million.

So what will happen with all the money?

According to Veliaj, the UKT will increase its production capacity, and will build a new outlet for the Bovilla dam to a large reservoir in Yzberisht and other smaller initiatives. None of these projects justify €165 million in pubic spending. So here is a possibility:

Veliaj plans to increase the water price by 40% and the added income from bill payments will be used to justify the new debt owed to second-level banks. In this way, he can skip inspections on procurement procedures. This strategy won’t work as the regulations of the Central Bank of Albania states that the UKT cannot be financed by any other institution than state. The level of debt is significantly high, the management is inefficient, and the balances are not audited by certified foreign accountants.

If Veliaj is dedicated to make the UKT work, he must drop the price increase, the projects of merging the UKT with the water supply company of Puglia, or the plan of selling the UKT to China, and he must drop the propaganda.

If Veliaj is dedicated to make the UKT work, he must replace the entire team which has failed the UKT and use the money that he spends on city concerts to improve the water measurement devices and the water system. Then, he would discover that instead of using 100 million cubic meters of water every year, he would spend less than 50 million cubic meters to supply the whole city, without investing in wells and purifying the water.

This is the paradox of a company that is destructively run, and Veliaj knows full well that the water needed in Tirana now and for the future will be much less than 100 million cubic meters that it is currently using and wasting. Such is clearly written in his undisclosed strategic plan.



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