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AS Tallinna Vesi and City of Tallinn to Enter into Administrative Contract for the Next Ten Years

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Tallinn  City Council has approved the  new Administrative Contract, approved by
the  Supervisory  Council  of  AS  Tallinna  Vesi,  with  its Decision No 114 of
03/11/2022. One  of the main purposes of this contract is to supply water to the
customers  of the public water supply and sewerage system in Tallinn and conduct
and  treat wastewater,  stormwater, drainage  water and  other soil  and surface
water.  The administrative duty was approved  and AS Tallinna Vesi was appointed
as  the water  undertaker within  the main  licensed territory  for the next ten
years,  i.e. until  30.11.2032 (incl.). The  current Services Agreement, entered
into  between AS Tallinna Vesi and the City of Tallinn on 12.01.2001, expires on
30.11.2022, the  new Administrative Contract  is entered into  for the period of
01.12.2022-30.11.2032 (incl.).

Under  the Administrative Contract to be signed, all investments in public water
supply  and  sewerage  facilities  are  planned  to  be  covered  by the charges
authorized  by law, in  particular the prices  for water services and connection
charges.  "The  investments  are  planned  on  the  basis  of  necessity,  cost-
effectiveness  and feasibility,  and ensuring  that the  implementation of these
investments  leads to  using of  public funds  as little  as possible. Under the
current  Services Agreement,  making investments  depended on  the length of the
pipelines  to be reconstructed, i.e., AS  Tallinna Vesi undertook to reconstruct
at  least 10 km of pipes each year,"  Aleksandr Timofejev, Chairman of the Board
of AS Tallinna Vesi explained.

"The  City of Tallinn welcomes the conclusion of the new Administrative Contract
aimed   at   ensuring   high-quality  water  services  for  city  residents  and
entrepreneurs,  adherence  to  the  principles  of environmental protection, and
increased   attention   to   investments  in  order  to  ensure  the  continuous
modernization  of networks and the sustainability  of the company," Priit Lello,
Tallinn  City  Secretary  and  Vice  Chairman  of  the Supervisory Council of AS
Tallinna  Vesi said. The performance of the administrative duty will continue to
be financed from by the charges for the services provided to customers and other
water  undertakings, and the prices  for water services will  be approved by the
Competition  Authority. As  a customer,  when using  the services of AS Tallinna
Vesi,  the City of Tallinn will be charged similarly to all the other customers.
In  addition, the contract will regulate the  matters related to charges for the
provision  of  separate  stormwater  service  and  water extraction service from
public  water extraction  points. The  parties wish  the price  formation of the
charges  for the provision  of separate stormwater  service and water extraction
service  from public water  extraction points to  be based on  the principles of
regulation  applying to the prices for  water services. Under the Administrative
Contract,  AS Tallinna Vesi will also start to provide the service of conduct of
stormwater,  drainage  water  and  other  soil  and  surface  water  to separate
stormwater sewer facilities. The functions of AS Tallinna Vesi will also include
the  water extraction service from public  water extraction points in the public
water supply system, including hydrants and water taps.

The  contract stipulates that the City of Tallinn will pay a charge to the water
undertaker  for the provision of stormwater  service and the operation of public
water  extraction points in the public water  supply system, by analogy with the
methodology  for calculation of the prices for water services recommended by the
Competition  Authority.  The  signing  of  the  Administrative Contract does not
entail an immediate change in the consolidated revenues of AS Tallinna Vesi and,
like  the  prices  for  water  services,  these charges include justified costs,
capital expenditure and the justified profitability of the water undertaker.

+------------------------------------------------------------+-----+-----+-----+
|Sales (th EUR)                                                |2019 |2020 |2021 |
+------------------------------------------------------------+-----+-----+-----+
|Services  of conduct  and treatment  of stormwater and water|     |     |     |
|extraction from public water extraction points              |4 002|4 588|4 010|
+------------------------------------------------------------+-----+-----+-----+
|Length of stormwater network(km)                            |513  |507  |520  |
+------------------------------------------------------------+-----+-----+-----+

Sales  from  the  services  of  conduct  and  treatment  of stormwater and water
extraction from public water extraction points under the current contract.

"The  Administrative  Contract  aims  to  resolve  as  quickly  as  possible, in
cooperation  between  the  City  of  Tallinn  and  AS  Tallinna  Vesi,  also the
historical   challenges,   such   as   the  unowned  pipes,  which  is  why  the
Administrative  Contract provides  for their  transfer to  AS Tallinna  Vesi. In
addition,  the parties see  a problem in  the chain houses  (properties with one
supply  point and  water or  sewerage pipes  running through and serving several
buildings) for which separate supply points should be built. Thirdly, the common
aim  of the parties is that all customers  will be able to join the public water
supply  and sewerage services within the  main licensed territory of AS Tallinna
Vesi,  supported by the  City of Tallinn,  where possible," Aleksandr Timofejev,
Chairman of the Board of AS Tallinna Vesi explained.

The  Administrative  Contract  is  available  to  all in the document management
system of the City of Tallinn and on the website of AS Tallinna Vesi.


Maria Tiidus

Head of Communications

Tallinna Vesi

(+372) 626 2271

[email protected] (mailto:[email protected])