Tallinna Vesi cleans up city water

The Baltic Times, TALLINN
By Kairi Kurm
Aug 20, 1998

The Tallinn water utility Tallinna Vesi claims the sewage waters it purifies are cleaner than in some rivers, and Tallinn tap water is as good as bottled drinking water.

The company, owned by the Tallinn City Council, managed to make Tallinners forget about rusty water by implementing its restructurization and investment program started in 1994.

The water utility, which supplies water and provides sewage services to Tallinn and the surrounding region, privatized subsidiary services and replaced several repair and emergency services with specialized companies.

Tallinna Vesi has been trying to attract investments to reconstruct its infrastructure. The company earned every fifth kroon in profits on its 1997 turnover of 477 million kroons($34 million), and redirected its profit toward investment. It has also received a 355.2 million kroon loan from the European Bank of Reconstruction and Development (EBRD) to renovate its network in 1994.

Tallinna Vesi asked the EBRD to change the terms and conditions of the loan it issued. The bank is expected to give its answer after a thorough study of Tallinna Vesi’s investment program. The program foresees a 2 billion kroon investment in the company’s infrastructure until 2003.

The Tallinn City Council is planning to sell one-third of the water utility’s shares after it increases share capital to 1 billion kroons through a 15 million share issue.


Improving water quality

The company owns 780 kilometers of water supply network and 850 kilometers of sewerage. The water supply network in Tallinn is oversized because during the Soviet period it was presumed that Tallinn would grow, and the water consumption would increase. Now the water utility works at half capacity and more emphasis is placed on water quality than its quantity.

The company has been working on improving water quality together with Helsinki Water and using studies from British Parkman Ltd.

Last year, the company introduced ozonization at its water treatment plant that significantly improved tap water taste. Pre-ozonization allowed the elimination of pre-chlorification. The consumption of chlorine decreased about four times or by 180 tons.

Valdur Vacht, Tallinna Vesi spokesman, said he is amazed that people prefer to buy bottled drinking water when the city is supplied with tasty, high quality water.

According to European Union standards, Tallinna Vesi’s drinking water from the water treatment plant has been qualified as “very good.”

Vacht said people who live in old houses receive poorer quality water because pipelines, which do not belong to Tallinna Vesi, are old and have to be renovated.

Not only is the company’s network oversized, it is also getting old and could worsen water quality.

For the period of 1999 – 2003, the company has prepared an investment plan that foresees the reconstruction of pipelines older than 60 years. Only 18 percent of the pipelines reach this age. The average age of the water supply pipelines is 30 years old, but there is one sewer in Tallinn’s Old Town that has been in use since the 17th century.

Tallinna Vesi’s annual water production decreased after the collapse of the Soviet Union because of price increases for water and sewerage services. In 1997, the annual water production fell by about 10 percent, compared to 1996, and the total amount of treated potable water was 47.5 million cubic meters.

About 90 percent of Tallinners use purified water from surface water resources coming from as far away as 70 kilometers. The present surface water system guarantees the necessary daily amount of approximately 120,000 cubic meters.

In seven Tallinn regions, only ground water is used, which is also supplied by Tallinna Vesi at the same price as the purified surface water.

Drinking water and sewerage prices increased considerably during the beginning of the year, but the company promised not to raise the price during the next couple of years.

On July 1, tariffs on joint water supply and sewerage network services increased by almost four times. By 2005, it is planned to unify tariffs for private users and companies. The latter pay twice as much as private persons and consume only about 20 percent of all the water.

Vacht said the water consumption price compared to other countries is cheap. Nonetheless, Estonians pay a larger share of their monthly income for water than other Europeans.


Cleaning up waste waters

Until 1980, waste water was directed into the sea and was not mechanically treated, but now Tallinna Vesi can boast of one of the best waste water treatment systems in the Baltic Sea region.

About 670 million kroons were invested in the waste water treatment plant which works at half capacity on average days. On rainy days the plant might have to work at full capacity. In 1997, about 67 million cubic meters of waste water were pumped from the main pumping station into the waste water treatment plant.

The waste water treatment branch of Tallinna Vesi includes a waste water inspectorate, which inspects the pollution level of companies and charges them for the pollution.

According to Vacht, purified sewerage water is cleaner than that of rivers flowing into the Gulf of Finland. He confessed to having tasted purified sewerage water, and added that he would never dare to try river water.

Insurance companies merge to fight market slowdown

Te Baltic Times, TALLINN
By Kairi Kurm
Aug 20, 1998

After Hansapank and Hoiupank merged, their insurance subsidiaries decided they will follow suit with a merger of their own. The two largest Estonian life insurance companies, Hansapank Insurance and Eesti Elukindlustus, will consolidate their insurance portfolios in the beginning of 1999.

Eesti Elukindlustus is a life insurance branch of Hoiupank’s subsidiary Eesti Kindlustus. The bank’s subsidiary also has a non-life insurance division, Eesti Varakindlustus.

Eesti Elukindlustus with its 43 percent market share and Hansapank Insurance with its 22 percent share plan to collect 175 million kroon ($12.5 million) premiums in 1998. They have also decided to cut costs on collecting premiums from 0.5 to 0.3 kroons per one collected kroon of premium.

Eesti Varakindlustus in its turn has planned to collect 240 million kroon premiums and cut costs by 0.1 kroons to 0.32 kroons per one collected kroon.

In most countries the share of life insurance premiums in an insurance company is half of all the collected premiums, and specialists predict the same tendency for Estonia in a couple of years.

Today premiums from life insurance form only 30 percent of the total premium portfolio. Premiums from life insurance in Eesti Elukindlustus increased by 130 percent in the first half of 1998. Life insurance service is becoming more popular due to the new pension insurance law.

Life insurance is also the only service for which tariffs have not been raised during the second half of the year. However, most Estonian companies are about to raise their tariffs, which were lowered earlier under pressure from competitors. .

According to Mart Einpalu, Eesti Kindlustus board chairman, the decrease of activity on the insurance market is caused by changes in the economical situation in Estonia. Einpalu cites the decline in optimism, rise of unemployment and the problematic situation on the Estonian financial markets as some of the contributing factors.

In order to work more efficiently, Eesti Elukindlustus merges with Hansapank Insurance. After the merger the companies will control close to two-thirds of the market in terms of premiums.

Both companies ended last year with losses. Hansapank Insurance incurred an 0.2 million kroon loss, while Eesti Elukindlustus’s loss was about 14 million kroons.

According to Mart Magi, financial manager at Eesti Kindlustus, high level of costs and unprofitable investments caused the negative results. The strategies worked out for the year 2000 should bring about more profitable results.