D23: WaterTime case study – Kaunas, Lithuania

Pekka Pietilä

Institute of Environmental Engineering and Biotechnology

Tampere University of Technology, Finland

28th January 2005

One of 29 WaterTime case studies on decision-making on water systems

Table of Contents

  1. Introduction
  1. City background
  1. Water and wastewater undertaking
  2. Background
  3. Water and wastewater undertaking profile
  4. System profile
  5. Region profile
  6. Performance indicators
  1. Actors in water and wastewater services provision and production
  1. Episodes
  2. Location of Kaunas wastewater treatment plant

5.2 Funding of the construction of Kaunas wastewater treatment plant

  1. Participation and sustainability in decision-making
  2. Participation
  3. Sustainability
  1. City in Time
  1. References
  1. Introduction

The core of Watertime project is made up of 29 case studies from 13 European countries. Two of the case studies are from Lithuania, dealing with the water companies of Vilnius and Kaunas. These two companies have a rather similar history starting with private initiatives to establish water supply systems at the end of the 1800s and during the first decades of the 1900s, but soon the city administration assumed the responsibility to develop centralised water and sewerage services. Water services remained municipal responsibility until the World War II, but after the war when Lithuania was annexed to the Soviet Union, municipal water utilities were nationalised. After Lithuania regained her independence in 1990, administration was largely decentralised, and the responsibility of water services was transferred back to municipalities. At that time there was no wastewater treatment plant for the city’s wastewaters.

During Lithuania’s struggle for the independence in the late 1980s environmental questions were high in the agenda. There had been already earlier some attempts to get a wastewater treatment plant built in Kaunas, but since independence the municipality intensified the efforts. This case study report concentrates on two questions related to Kaunas wastewater treatment: a) decision on the location of the treatment plant, and b) funding of the first phase of the treatment plant.

The author gratefully acknowledges the kind help of the Director of Kaunas Water Company, Mr Vilius Burokas, for assistance and comments. Mr Rapolas Vasiliauskas, who has a long career in environmentalsector in Lithuania, and particularly in Kaunas, provided valuable first hand information on the early stages of Kaunas wastewater treatment plant.

  1. City background

Kaunas is the second largest city in Lithuania with a population of 379000 in 2001 (Census 2001). The city is located in the middle of the country about 100 km west of the capital Vilnius. Kaunas was first put on a map by an Arabic cartographer in 1140. In 1408 Kaunas was granted town status. Over the next centuries Lithuania had wars with Russia and Sweden and the country’s economy suffered. In 1812 Kaunas became the Russian Empire’s westernmost point of defence. After World War I Lithuania gained independence in 1918, and when Vilnius and the surrounding area were annexed to Poland, the capital was moved from Vilnius to Kaunas where it remained until the break of World War II in 1939. After the war Kaunas remained an important centre of education and business even though the capital returned to Vilnius.

Figure 1. Lithuania

Kaunas is the capital city of one of Lithuania’s ten counties. Kaunas County has a population of 703000 peoplewhich means that more than half of the population live in the City of Kaunas. The area of the city is 156 km2 giving it a population density of over 2 400 people/km2.

  1. Water and wastewater undertaking

3.1 Background

At the end of the 1800s and during the first decades of the 1900s proposals were made by private individuals to build centralised water supply in Kaunas, but they were not accepted by the city. The construction of centralised water supply started in 1928. The source of water was groundwater, and has been ever since. Several wells/boreholes were drilled in the vicinity of a river, and groundwater was partially recharged by river water. In 1959-1964 canals were built from the river to bring water closer to the wells and increase recharge. The first artificial groundwater infiltration basin was built in 1963.

Construction of sewerage started in 1924, and even a small wastewater treatment plant was built in 1926, but after five years it was heavily overloaded and did not function properly any more and was abandoned (Krisciunas and Kutas 1988).

During the Soviet occupation water and wastewater services were the responsibility of a state company which had 14 regional subsidiaries. Kaunas Regional Water Company did not cover only the city, but also the surrounding area.

Until the 1990s Kaunas had no wastewater treatment plant, and the city had become one of biggest polluters in the Baltic Sea Area. In 1995 a comprehensive ‘Kaunas Water and Environment Project’ was set up with financing from different sources. The most important part of this project was the construction of a wastewater treatment plant. The first phase consisting of primary sedimentation and sludge treatment was taken into use in 1999. Construction of the second phase – biological treatment – is expected to start in 2005 and to be completed in 2007.

3.2Water and wastewater undertaking profile

After Lithuania regained independence in 1990 the responsibility for water and wastewater services was transferred from state water companies to municipalities. The special purpose joint-stock company Kauno vandenys (Kaunas Water Company) was registered in 1995.It was one of the 45 municipal water companies established to continue the work of the 14 former regional state companies. The formal status of Kaunas Water Company was changed from special purpose joint stock company to an ordinary joint-stock company in 2003. This change in organisational form was based on a legislative change which eliminated special joint-stock companies. The City of Kaunas is the sole shareholder of the Water Company. The share capital of the Company is 392 MLTL (110 MEUR). In 2003 total revenues were 56 MLTL (16 MEUR) and operating profit 4.3 MLTL (1.2 MEUR).

Figure 2. Kaunas Water Company administration

At the end of 2003 the total number of Company employees was 679. During the last ten years the number of employees has decreased continuously.

Figure 3. Water fee in Kaunas

In 2003 the water charge for residential use was 3.93 LTL/m3, and for industries and other uses 4.58 LTL/m3. These charges include VAT of 18%. The water company has to pay a tax for using natural resources when it withdraws groundwater. The tax on water used for domestic purposes is 0.03 LTL/m3, and for industrial use 0.07 LTL/m3. The water company also has to pay a pollution tax for wastewater discharges. The state charges a tax per ton of pollutant. These taxes are paid even if the discharges are within the permissible limits. If the discharges of pollutants exceed the maximum allowable amounts stated in the environmental permit, then the water company has to pay a fine for each ton exceeding the limit. These fines are several times higher per ton than pollution taxes.

One typical feature of water use has been its continuous decrease since the early 1990s. The major reason has been the dramatic change in industrial production since independence. During the Soviet era production was geared to the internal markets of the Soviet Union while exports did not play an important role. After the fall of communism and the collapse of the Soviet Union, these secure markets vanished. Many industries have collapsed, and the remaining ones are struggling, producing only a fraction of what they used to with only a fraction of their earlier work force. Another reason for the decline in water use has been that nowadays more and more households have individual water meters, and people pay according to actual use. Nearly all water users, both industrial and residential, also had water meters during Soviet rule, but in residential buildings, like big blocks of flats, there was only one meter for the whole building which often comprised 50 or more flats. People paid a fixed charge for water according to a norm consumption based on the standard of housing – not according to their actual water consumption. Now almost all flats have individual water meters.

Individual water meters have created a complicated financial and technical problem. These individual water meters are the property of the customer, who is also responsible for the maintenance of the meter. But the Water Company has no way to check the proper functioning of these meters. The occupier of the flat has the legal right to prevent access of the water company’s representative to the meter. Another difficulty with individual metering is that the internal pipes from the water company’s main meter to individual water meters are the property and responsibility of the building owner, not the Water Company. Thus, the Water Company has no right to go and check for leakages in the pipes, but cannot charge for the leaked out watereither.

These internal pipes, which are inaccessible to the Water Company, create also a water quality problem. The Water Company cannot guarantee the quality of the water from the consumer’s tap, because the Company has no access to internal piping in the building. Thus, the Water Company cannot make a standard agreement with these customers guaranteeing that the quality of the water is up to drinking water standards, but only an agreement to supply water of unspecified quality at a certain price.

3.3System profile

In 2002 the average water supply was 60000 m3/d, and the number of persons connected to centralised water supply was 339000 (324000 residents had a connection to centralised sewerage); thus per capita water consumption was 178 l/cap*d. The length of the water distribution network was 1100 km (in 2002). Water is taken from four groundwater wellfield areas located within the administrative area of the city. In some wellfields natural groundwater is complemented with artificial groundwater using riverbank infiltration. Kaunas Water Company supplies also a small amount of surface water (2000 m3/d) to the city’s district heating company.

Kaunas Water Company is also responsible for stormwater sewerage . The sewerage network totals 940 km (in 2002). About two thirds are foul sewers (including some combined sewers in the old city centre) and one third stormwater sewers. The sewerage system includes 56 wastewater pumping stations.

In the mid-1990s the City of Kaunas did not yet treat its wastewaters. In 1995 a comprehensive ‘Kaunas Water and Environment Project’ was set up with financing from various sources, and in 1999 the first phase of the wastewater treatment plant consisting of mechanical treatment and sludge treatment facilities was taken into use.

The design capacity of the wastewater treatment plant is 232000 m3/d, and in 2002 the average flow was 62 000 m3/d. Treated wastewater is discharged via a 10 km long outfall sewer into Nemunas River downstream of the plant.

3.4 Region profile

Kaunas County is the third largest county in Lithuania. It is the geographical, educational, as well as industrial and transportation centre of Lithuania. The Region comprises the City of Kaunas, the municipality of Birstonas, and the districts of Kaunas, Kaisiadorys, Prienai, Raseiniai, Kedainiai as well as the Jonava District. The County covers an area of 8 060 km2 and has a population of 703 000.

Situated in the middle of the County at the confluence of the two largest Lithuanian rivers, the City of Kaunas has been considered one of the most important cities in the country's history. The Nemunas River, still used for navigation today, has historically contributed to the development of the city. The city is also located at the crossroads of the country's two major motorways: the Vilnius - Kaunas - Klaipeda motorway connects the capital city of Vilnius and the ice-free Klaipėda Seaport. The Via Baltica leading from Estonia via Latvia to Poland will be integrated into the TransEuropean motorway systemto connectthe Nordic countries and Central and Western Europe.

The Kaunas Free Economic Zone (Kaunas FEZ) is a site of about 10 km2 located near Kaunas, and is planned to become one of the largest free economic zones in the Baltic Sea Region. Some Districts of the County, such as Jonava, Kedainiai and Kaunas, have been industrial centres for many years, with deep traditions in textile and fibre, electronics, chemical, wood processing and furniture industries. The town of Birstonas, situated on the spectacular banks of the Nemunas River, is a rehabilitation centre with all kinds of sanatoria and is famous for its spa.

The climate is transitional between maritime and continental. The average temperature ranges from around 20°C in July to a couple of degrees below zero in December-February. The mean annual precipitation in Lithuania ranges from 540 mm in the Middle Lowlands to 930 mm on the southwest slopes of the Zemaitija Uplands.

Figure 4. Kaunas County

3.5 Performance indicators

During 2003 there were a total of 4 100 breakdowns in the water supply network, i.e. an average of 11 per day. These figures have remained fairly constant during the last ten years.

In the case of the sewerage system 8600 breakdowns and accidents were recorded during 2003, i.e. an average of 24 per day. This figure has also remained more or less at the same level since 1990. During 2003 the company’s sewer maintenance team cleaned 6200 sewer manholes and 520 stormwater manholes, and flushed some 120 km of sewer lines.

4. Actors in water and wastewater service provision

According to legislation, municipalities are responsible for the supply of cold and hot water, sewerage and wastewater treatment (Astrauskas et al 1996). Municipalities are responsible for water and sanitation services, but these services may be provided by both state and municipal enterprises, joint-stock companies, private and non-profit companies, etc. (Beksta & Petkevicius 2000). Forty-five municipal water companies were formed out of the former state water companies and their subdivisions. These municipal companies provide some 90% of the water and wastewater services, but there are also more than 700 smaller water suppliers (cooperatives, residential groups, agricultural companies, municipal companies, other companies, etc.) (Spokas 2000, Lithuanian Water Partnership 2002).

Kaunas Water Company is an independent financial unit (a joint-stock company), but the water tariffs set by the company have to be approved by the municipal council (Law on local self-government, 1994)as well as the National Control Commission for Prices and Energy.

The Ministry of Health together with the State Food and Veterinary Service is responsible for controlling the quality of drinking water. The Ministry of Environment is responsible for the regulation and sustainability of water resources and the regulation of environmental pollution (Spokas 2000, Spokas 2001).

A permit is required for the abstraction of both surface water and groundwater (Law on taxes on state natural resources 1991). A tax has to be paid on the water abstracted (Speck et al. 2001).

All industries must have environmental permits, and have to pay taxes and fines for the environmental pollution they produce (Law on pollution tax 1991, Law on water 1997). Even a municipal water utility has to pay environmental pollution taxes when it discharges wastewaters into the environment. The taxes collected are forwarded to the state nature protection fund but a large share is returned to the municipalities' own Environmental Protection Funds. Before the wastewater treatment plant was built in Kaunas, Kaunas Water Company was the biggest contributor to the city’s Environmental Protection Fund.

Municipalities are responsible for implementing the laws related to environmental protection, developing and implementing local environmental programmes, and allocating funds for environmental protection purposes (HELCOM 1994). Furthermore, they are responsible for screening environmental permits before they get final approval from the Regional Environmental Protection Department, exercising control over permits and stopping the operations of a company that fails to observe permit conditions.

5. Episodes

5.1 Location of Kaunas wastewater treatment plant

In 1974 seven coastal states around the Baltic Sea signed a convention to protect the marine environment of the Baltic Sea from all sources of pollution through intergovernmental cooperation. This convention came into force in 1980. The Helsinki Commission (HELCOM) is the administrative body of this cooperation. The activities of HELCOM are based on the principle of consensus, and HELCOM has never sought legal sanctions . After the political changes in 1990, a new convention was signed in 1992 by all the states bordering on the Baltic Sea and the European Community.

One of the concrete accomplishments of HELCOM was the identification of the most important pollution sources, so-called hot spots, around the Baltic Sea. A total of 132 were identified, 16 of them in Lithuania, one being the lack of sufficient municipal and industrial wastewater treatment in Kaunas and Vilnius.

The City of Kaunas with some 400000 people had no wastewater treatment plant in the beginning of the 1970s, when several other major Lithuanian cities already had one, and Vilnius was planning one whose construction started in 1975. The importance of a wastewater treatment plant for Kaunas was stressed in 1976 in the act “Regarding the measures to better protect Baltic Sea Basin from pollution” approved by the Council of Ministers of the Lithuanian Soviet Republic. The proposed location for the plant was Ezerelis village some 30 kilometres west of Kaunas. The planning and building of the wastewater treatment plant was left entirely to the Lithuanian Soviet Republic: the Soviet Union’s central administration in Moscow had nothing against this plan, but it did not offer any support. Construction of such a large facility proved to be a difficult task. Acquiring the funding was a major obstacle because no support could be expected from Moscow. Another big problem was where to get the large diameter (2 m) pipes needed to transfer wastewater from the city to the treatment plant. Thus years passed and nothing concrete happened towards the implementation of the wastewater treatment plant.