Strategic Moves - Regional Environmental Center for Central and ...

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Introduction This chapter presents an overview of water and waste utilities, their operational efficiency, and their readiness for technical and organisational changes. Differences between countries with respect to utility reform are relatively small. All countries are at the very beginning of the utility reform process. The transfer of ownership from the state level to the local level has been completed (with the exception of Montenegro and Serbia). As a result of the decentralisation process, in most countries of the region responsibility for water services, solid waste services and sewage treatment falls squarely on the lowest self-governing municipal level. However, no significant efforts have been made to reorganise the public utilities into more efficient organisations that work according to sound economic principles. The public utility companies (PUCs) are burdened with obsolete infrastructure, leading to water and energy losses that increase their operational costs and decrease net income. Further inefficiencies stem from low tariffs and bill collection rates, overstaffing, and the absence of sound organisation and management inherited from the past. Without appropriate legislation, plans, strategies and support from the national level, the municipal PUCs are unable to improve their own status, organisation and efficiency, even where there is local-level political will to do so. In Croatia and Serbia, the national ministries (and in some cases funds) responsible for environment, water and/or infrastructure provide financial and technical assistance to the preparation of regional infrastructure projects and to construction. However, this financial and technical assistance is not accompanied by sufficient institutional assistance for the creation and development of the regional utility companies that should run these regional installations. Albania, Kosovo (as defined under UNSCR 1244) and Montenegro have made efforts to create regional companies 11 in a systematic way, while in Croatia and Serbia, regional companies are being established based on regional (waste management) infrastructure projects in the pipeline. Even though a systematic approach has the potential to achieve better results than a case-based approach, both groups of countries face great difficulties in establishing regional utility companies. The emerging regional utility companies are weak or virtually non-existent: they comprise one or two members of staff who, in most cases, do not have the required skills or leverage, and the municipal utility companies have not yet been integrated into them. In most SEE countries there are project preparation units/departments that belong to relevant ministries and/or environmental protection funds. The following two sections describe in greater detail the current state of infrastructure and the utility companies in each individual country. The current status of the water and waste utilities has a direct impact on the potential for investments in water and waste. The utilities’ political independence, adequate human resources capacity, sound organisational set-up and financial health are preconditions for successful investments: the water and waste utilities are the project proponents in any investments and must secure proper physical and fi- S T R AT E G I C M O V E S 121
122 C H A P T E R 6 WAT E R A N D WA S T E U T I L I T I E S I N S E E — S TAT U S A N D R E F O R M FIGURE 9: The “vicious” cycle of water supply and sewerage utilities WASTE MANAGEMENT CENTRE S T R AT E G I C M O V E S POOR OPERATIONAL EFFICIENCY DETERIORATED CLIMATE FOR PRIVATE SECTOR PARTICIPATION Source: REC, 2007 LACK OF FINANCING SERVICE PERFORMANCE PROBLEMS POOR TARIFF COLLECTION AND COST RECOVERY LOW “BANKABILITY” OF MUNICIPAL UTILITY AND ITS INVESTMENT PROJECTS POOR MANAGEMENT PRACTICES WATER SERVICES DEMAND: CUSTOMER PERCEPTION, AFFORDABILITY AND POLITICAL ACCEPTABILITY nancial implementation of the projects. This section also presents an overview of the utility reforms currently under way. Reforms in most SEE countries are at a very early stage and there are a variety of approaches that will be described separately for the water and waste sectors. During 2008, the PEIP team conducted a survey regarding the status of reforms and the status of infrastructure in the water and waste sectors in PEIP countries. In addition, information from national PEIP workshops in Albania, Croatia, Montenegro and Serbia; individual interviews with key stakeholders; and already published national and regional reports by DABLAS (2006) and the World Bank (2006) have been used in order to provide an updated overview of the status of reforms in the water and waste sectors. Status of utilities and status of reforms in the water sector Water supply and wastewater services in SEE are traditionally the responsibility of municipalities. During recent reforms, the ownership of facilities in most SEE countries has been transferred from the state level to the municipalities. In Montenegro, assets are still owned by the state. Most utility operations in the region
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The Priority Environmental Investme
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About the REC The Regional Environm
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4 C O N T E N T S Chapter 3 Challen
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6 A B B R E V I AT I O N S S T R AT
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8 A B B R E V I AT I O N S S T R AT
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10 S T R AT E G I C M O V E S
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12 Foreword from the Regional Envir
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14 A U T H O R S A N D A C K N O W
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16 A U T H O R S A N D A C K N O W
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20 E X E C U T I V E S U M M A R Y
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32 I N T R O D U C T I O N S T R AT
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40 C H A P T E R 1 T H E R O L E O
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48 C H A P T E R 2 S TAT U S O F E
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58 C H A P T E R 3 C H A L L E N G
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172 C H A P T E R 7 F I N A N C I N
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206 C H A P T E R 9 T H E WAY F O R
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214 A N N E X E S A N N E X 1 Bosni
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216 A N N E X E S A N N E X 1 The f
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218 A N N E X E S A N N E X 2 Annex
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220 A N N E X E S A N N E X 3 Croat
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222 A N N E X E S A N N E X 4 S T R
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224 A N N E X E S A N N E X 5 Annex
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226 A N N E X E S A N N E X 5 Alban
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228 A N N E X E S A N N E X 5 Bosni
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234 A N N E X E S A N N E X 5 Kosov
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236 A N N E X E S A N N E X 5 Kosov
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238 A N N E X E S A N N E X 5 The f
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240 A N N E X E S A N N E X 5 Monte
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242 A N N E X E S A N N E X 5 Serbi
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244 A N N E X E S A N N E X 5 Serbi
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246 A N N E X E S S T R AT E G I C
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THE REGIONAL ENVIRONMENTAL CENTER F
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