Evaluation of Social and Economic Efficiency of Investments in Public Utility Services

Tatiana Jurievna Kudryavtseva,Juriy Jurievich Kuporov

doi:10.5539/ass.v11n19p151

Tatiana Jurievna Kudryavtseva, Juriy Jurievich Kuporov

Open Access

https://doi.org/10.5539/ass.v11n19p151

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Abstract

This article substantiates theoretical approaches to evaluating the efficiency of investment projects in the field of public utility services, taking into account all elements of the system for public utility service delivery. The proposed methodology is based on the calculation of social, economic, and budgetary efficiency of the investments. Calculation of social efficiency is based on accounting lower prices as a result of cost savings arising due to the investments, and improving the quality of services. Calculation of budget efficiency savings assumes the costs of public utility services provision over the budgetary investments to economic efficiency of public utility services. The developed method has been tested at a Ukrainian public utility company.

Highlights

The relevance of the theme chosen for the study can be explained by the fact that currently assurance of economic growth is necessary to achieve significant gains in efficiency of the organization’s management and to increase the efficiency of its economic activity
The developed method was tested at the Ukrainian public utility company PUC "Gorvodokanal" of the Sumy City Council (SCC)
The analysis shows that PUC "Gorvodokanal" of SCC is unprofitable because of the following factors: existing rates do not correspond to economically justified costs that, as a consequence, leads to the unprofitability and the inability to meet the expenses of the enterprise, as well as to the lack of compensation of the difference in rates from the state budget for services on centralized water supply and water disposal and large amount of receivables

Summary

Introduction

The relevance of the theme chosen for the study can be explained by the fact that currently assurance of economic growth is necessary to achieve significant gains in efficiency of the organization’s management and to increase the efficiency of its economic activity. Consumers purchasing services meet their needs fully or partially, depending on the level of their ability to pay, the amount and quality of services provided. Local governments perform their functions on the implementation of their mandates. Local authorities set rates for basic services in order to protect consumers from the increase of services’ cost by enterprises. Such an approach allows showing the interdependence and interaction of subjects of public sector - elements of the delivery system and consumption of services (Figure 1)

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Discussion

Conclusion