RESOLUTION OF THE CABINET OF MINISTERS OF THE REPUBLIC OF UZBEKISTAN

of April 13, 2019 No. 309

About measures for enhancement of procedure for forming, declaring (approval) and establishment of regulated prices (rates) for services of water supply and the sewerage

According to the resolution of the President of the Republic of Uzbekistan of November 30, 2018 No. PP-4040 "About additional measures for development of systems of drinking water supply and the sewerage in the Republic of Uzbekistan", and also for the purpose of further enhancement of procedure for forming, declaring (approval), establishment and use of regulated prices (rates) for services of water supply and the sewerage Cabinet of Ministers decides:

1. Approve Regulations on procedure for forming, declaring (approval) and establishment of regulated prices (rates) for services of water supply and the sewerage according to appendix.

2. Determine that during the forming and establishment of rates for services of water supply and the sewerage for consumers the covering of complete cost of the rendered services is provided, and also costs for development and upgrade of the organizations of water supply and the sewerage are considered.

3. To the ministry of housing-and-municipal servicing of the Republic of Uzbekistan till:

On July 1, 2019 to carry out inventory count of condition of equipment and checking of metering devices of cold and hot water of all customer groups;

On August 1, 2019 together with the Uzstandart Agency to develop and bring the Setup of metering devices of cold and hot water providing sources of financing and real terms of full completion of installation of metering devices of cold and hot water in individual and apartment housing stock in the Cabinet of Ministers of the Republic of Uzbekistan.

4. To Council of Ministers of the Republic of Karakalpakstan, khokimiyats of areas and the city of Tashkent till July 1, 2019 to review and approve standard rates of consumption by the population of drinking water.

5. To the Ministry of Finance of the Republic of Uzbekistan together with the interested ministries and departments to bring the regulatory legal acts adopted by them into accord with this resolution in a month.

6. To impose control of execution of this resolution on the deputy prime minister of the Republic of Uzbekistan - the Minister of Finance D. A. Kuchkarov, the minister of housing-and-municipal servicing of the Republic of Uzbekistan M. H. Saliyev and the chairman of the Antimonopoly Committee of the Republic of Uzbekistan N. Sh. Sharipov.

Appendix

to the Resolution of the Cabinet of Ministers of the Republic of Uzbekistan of April 13, 2019 No. 309

Regulations on procedure for forming, declaring (approval) and establishment of regulated prices (rates) for services of water supply and sewerage

Chapter 1. General provisions

1. This Provision determines procedure for forming, declaring (approval) and establishment of regulated prices (rates) (further - rates) on the services of water supply and the sewerage rendered by the organizations of water supply and the sewerage - the subjects of natural monopolies included in the State register of subjects of natural monopolies.

2. In this Provision the following basic concepts are used:

the organization of water supply and the sewerage (further - the organization) - the organization created for the purpose of provision of services of water supply and the sewerage;

body of price regulation - the Ministry of Finance of the Republic of Uzbekistan and according to its order - the Ministry of Finance of the Republic of Karakalpakstan, the head financial departments of khokimiyats of areas and Tashkent;

profitability - the relative indicator of profitability of organization activity calculated by division of size of necessary profit (expense amount of the period, expenses on financial activities and net profit) on the amount of the production costs falling on amount of the rendered services of water supply and the sewerage;

the regulating coefficient (lowering or raising) - the relative size established for determination of level of the price (rate);

the tariff estimate - indicator of the income and expenses, amounts of the made goods and other economic indicators reflecting activities of business entity and accepted in reasons in case of determination of the regulating coefficient;

the plan of investments and rendering services - the plan developed by the organization for the form approved with the Ministry of housing-and-municipal servicing of the Republic of Uzbekistan (further - Minzhilkomobsluzhivaniya) which includes target indicators regarding rendering services, data on investments into infrastructure and other types of activity necessary for achievement of target indicators, and also the estimate of operating expenses on the period of its action.

The plan of investments and rendering services is developed for three years in coordination with the relevant khokimiyats and is one of the main components of the request for approval of rates for services of water supply and the sewerage;

required income level - the summary amount of the income during application of rate for services of water supply and the sewerage which is necessary for the organization for covering of all operating expenses, costs for development and upgrade of water supply systems and the sewerage, their expansion, expenses on financial activities of the organization, and also receipt of net profit.

3. For review and approval of rates for the rendered services of water supply and the sewerage of the organization of water supply and the sewerage together with the Ministry of housing-and-municipal servicing of the Republic of Karakalpakstan, managements of housing-and-municipal servicing of areas and Head department of housing-and-municipal servicing of the city of Tashkent (further - territorial subdivisions) address to bodies of price regulation according to the procedure, determined by this Provision.

4. In case of cost determination on production and rendering of services of water supply and the sewerage accepted in reasons for rates, the organizations of water supply and the sewerage are guided by Regulations on structure of costs on production and sales of products (works, services) and about procedure for forming of financial results, the approved resolution of the Cabinet of Ministers of February 5, 1999 No. 54, and other regulatory legal acts.

5. The organization has the right to reduce independently declared (approved, established) rate, at the same time:

decrease in rate for the purpose of establishment of exclusively low prices is not allowed;

reduction of tariffs is performed at the same time for all consumers, with the subsequent informing body of price regulation.

6. The procedure for forming, declaring (approval) and establishment of regulated prices (rates) for services of water supply and the sewerage is performed according to the scheme according to appendix No. 1 to this Provision.

Chapter 2. Forming of rates for services of water supply and sewerage

7. Forming of rates for services of water supply and the sewerage is performed according to task of achievement of the required level of profitability by the organization.

8. Rates are established individually for the organizations which are separate legal entities or functioning as the isolated organizations.

9. Average rates are calculated by division of required level of income of the organization which includes the components of costs specified in Chapter 3 this provision for the expected water sales amount.

10. For each type of consumers different rates can be established provided that the expected total amount of cash receipts from all types of consumers will be sufficient for achievement of the required level of income of the organization determined according to this Provision.

11. Rates for each type of consumers will be charged according to the number of the cubic meters of water delivered to the corresponding type of consumers. Thus, for the first cubic meter of the consumed water the same payment, as well as for the last cubic meter of the consumed water will be charged. Over time in process of collection by means of metering devices of the additional information about amounts of consumption of the organization and Minzhilkomobsluzhivaniya can develop and offer progressive tariffing in case of which lower fares will be established for consumption within the minimum amount, higher rates - for the large volume of consumption.

Chapter 3. Calculation of rates for services of water supply and sewerage

12. Rates for services of water supply and the sewerage are established according to the principle of full recovery of costs, including extension costs and upgrade of water supply systems and the sewerage according to the plans of investments and rendering services of the organizations developed and approved according to the procedure, the established Minzhilkomobsluzhivaniya which include:

target indicators regarding rendering services on planning period;

the needs for investments for development and upgrade or expansion of water supply systems and sewerages, and also the approved financing sources (at the expense of own means, means of the Government budget of the Republic of Uzbekistan, loans of the international financial institutions and (or) commercial banks);

the estimates of annual periodic expenses calculated on the basis of expenses of last years;

calculation of annual required income level;

calculation of the expected water sales amount;

calculation of average rate for services of water supply and sewerage;

the offered rates for services of water supply and the sewerage for different types of consumers.

13. Average rates for the period of action of the plan of investments and rendering services are calculated by division of required level of income of the organization which will be determined by method "costs plus", on the expected annual sales amount of water.

The method purpose "costs plus" - forming of sufficient income level in the long term for covering of regular (annual) maintenance costs, costs for capital repairs or upgrade of infrastructure and cost of heavy capital investments in construction of new infrastructure or expansion of services.

14. Calculation of required income level for method "costs plus" is made taking into account (according to the approved plan of investments and rendering services) the operating expenses including:

all annual production costs (for example, materials, salary, electricity, depreciation charges);

period expenses (for example, costs for realization, management expenses, other operating expenses and losses);

expenses on the upgrade and reconstruction paid at the expense of annual earnings of the organization;

expenses from implementation of financial activities (interest expenses);

receipt of the income by the organization.

The amount received as a result shall be sufficient on planning period that the organization could settle the amount of principal debt on the approved borrowings during effective period of the plan of investments and rendering services, taking into account all its money expenditure.

15. Calculation of rate is perfromed based on indicators of the costs and net profit having on the rendered services and created:

on the normalized costs - taking into account the specifications and technical documentation (compounding, regulations of expenditure of raw materials and materials, the heat and electric power, work, etc.) and the regulating documents on standardization (GOST, OST, TU, etc.) approved by the relevant authorized bodies;

on not normalized costs - on the basis of the analysis of reporting indicators and taking into account the forecast change in price.

If technical and technological consumption rates of raw materials, materials, fuel, energy and other resources are approved by the relevant authorized bodies in the ranges of the minimum and maximum expenditure of these resources for the purpose of calculation of rate body of price regulation their average value within this range of regulations is used.

16. Calculation of expenses on services of water supply and the sewerage is made separately, at the same time indirect material costs, overheads of production nature, indirect costs on work, expenses of the period and expenses on financial activities are distributed on these types of service in proportion to the salary of production personnel.

17. Costs are calculated for every year of the period of action of rates without the expected inflation increase in costs.

18. The average required rate for services water supply in the first year of the period is calculated as follows:

Wednesday = (Ud1 + Ud2 + Ud3 +, etc.) / (Ov1 + Ov2 + Ov3, etc.),

where:

Wednesday - average required rate for water supply services;

Уд - the required level of the income (by years);

Ов - water sales amount (by years).

19. The average required rate for services of the sewerage in the first year of the period is calculated as follows:

Wednesday = (Ud1 + Ud2 + Ud3 +, etc.) / (Ov1 + Ov2 + Ov2, etc.),

where:

Wednesday - average required rate for services of the sewerage;

Уд - the required level of the income (by years);

Ов - water disposal amount (by years).

20. Annual operating expenses are calculated on the basis of the last expenses and also offered and reasonable changes in such expenses.

21. Expenses on development and upgrade in addition include as a part of net profit of the organization.

22. Expenses on financial activities include all annual costs on short-term or long-term financing (i.e. expenses in the form of percent). Expenses on financial activities do not include expenses on repayment of the amounts of principal debt on the credits or bonds. Expenses on financial activities can be included in calculation of required income level only if the corresponding long-term borrowings are approved within the plan of investments and rendering services.

23. If in the previous accounting period the organization achieved economy of fuel and energy resources due to enhancement of engineering procedures and implementation of modern resource-saving technologies, in case of the next review of rates of costs for fuel and energy resources, raw materials and materials are accepted taking into account the reviewed expense rates applied as a result of implementation of modern resource-saving technologies.

24. The means saved due to implementation of modern energy-saving technologies are considered as a part of net profit and go in the amount of 50% for development, upgrade of infrastructure and implementation power - and resource-saving technologies and the equipment. Other 50% go according to the resolution of the President of the Republic of Uzbekistan of June 19, 2007 No. PP-655 "About measures for further enhancement of the mechanism of material work incentives of employees of the organizations of heat supply and water supply" to fund of stimulation of employees of the organization.

25. At the same time exceeding over 10 percent of the limit of profitability established according to the Presidential decree of the Republic of Uzbekistan of April 17, 2001 No. UP-2832 "About New Stage of Deepening of Economic Reforms in the field of Public Service" for the organizations for the account as a part of net profit of the means aimed at the development and upgrade of the organization according to the plan of investments and rendering services of the organization, and also means from economy of energy resources is not considered antitrust violation and economic sanctions are not applied to the amount of exceeding.

26. Expenses, stipulated in Article 147 Tax codes of the Republic of Uzbekistan, are not considered in costs when forming of the approved rates for services of water supply and the sewerage. At the same time the services of water supply and the sewerage rendered to the population are assessed with the value added tax at the "zero" rate.

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