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

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FIGURE 12: Water invoice collection rates (percentage) % 80 70 60 50 40 30 20 10 0 Albania Bosnia and Herzegovina Source: REC survey, 2008 Montenegro Serbia Kosovo (under UNSCR 1244) According to the two-year water sector reform implementation plan, Albania had 56 municipal utility companies in 2008. Since then, two municipal companies (Berat and Kucova) have merged into a regional company (Berat region), which means that there are currently 55 municipal utilities and one regional water utility. By the end of the water reform process, there will be 12 regional water utility companies (Gjinali and Olldashi, 2008). According to the World Bank survey, tariff revenues in Albania cover on average less than half of the operating costs, the remaining costs being covered by subsidies. This prompted the launch of a comprehensive reform in 2007. In addition to decentralisation followed by regionalisation, the aim of the reform was to further commercialise the water supply and sewerage system and to make companies self-sustaining based on long-term plans to improve performance indicators and fulfil obligations towards customers. Albanian water utilities have 13 staff per 1,000 water supply connections on average. Only a handful of utilities have high enough tariffs to cover operating costs. The level of payment collection is 73 percent, which is the highest level reported among the SEE countries surveyed. Water disconnection is not allowed by law in Albania. Utilities receive an operating subsidy from the government, but the subsidy scheme is to be phased out by 2012 according to the water reform strategy. 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 FYR Macedonia no data Croatia S T R AT E G I C M O V E S 125
126 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 S T R AT E G I C M O V E S The full transfer of the predetermined subsidy is conditional on improvements in performance, as measured by some of the indicators computed as part of the benchmarking programme: utilities need to reduce water losses, increase bill collection rates and reduce costs in order to be eligible for the whole of the subsidy. As a first step, during 2007 and 2008 the ownership of the utilities was completely transferred from the government to local authorities. The regionalisation of the currently fragmented water supply companies is a priority, as the government hopes that it will lead to lower service costs. The first case of regionalisation in Albania was the merger of the Berat and Kucova water companies, which was completed in 2008 with a EUR 6 million grant from the German Government directed to the (re)construction of the water supply infrastructure. The Albanian Government, with the support of the World Bank, provides benchmarking and technical assistance to the water and wastewater utilities of the country to prepare five-year operational plans. According to the two-year water sector reform plan, this practice has already been successfully adopted by five utilities, while the rest of the companies will follow (Gjinali and Olldashi, 2008). Based on the results of the benchmarking exercises, performance objectives are set for the companies, and the allocation of operating subsidies and investment grants from the government is partly based on progress made towards achieving these objectives. Furthermore, a training programme targeting the staff of 55 utilities is to be launched in Albania in 2009 (REC survey 2008; and Gjinali and Olldashi, 2008). In Bosnia and Herzegovina there is no national body regulating tariff setting. No reforms of the water utilities have taken place in either of the two entities, the Federation of Bosnia and Herzegovina (FBiH) and Republika Srpska (RS). Water laws at entity level were passed in 2006 and have been in force since January 2008. There are two water agencies in FBiH and two in RS. Water supply and wastewater services are highly fragmented and are the responsibility of 136 water utilities owned and controlled by municipalities. The current operational and financial condition of these utilities is generally weak. Bosnian water utilities have 13 staff per 1,000 water supply connections on average. The national average for Uf W is estimated at 50 percent. The estimated national average level of payment collection is 70 percent, and disconnection from the water supply is not allowed by law. The level of cost recovery varies among the utilities, but in most cases it is insufficient — that is, operating costs are not covered by revenues from tariffs. The government provides a total of about KM 30 million/year in operating subsidy to the water sector (REC survey, 2008; and UNDP, 2004). The process of transposition is ongoing and the water management strategies for FBiH and RS should be completed by the end of 2009. Some individual reform initiatives are outlined in the new legislation, such as the merging of public enterprises for catchments of the Sava River basin and the Adriatic Sea into agencies for the water area of the Sava River and Adriatic Sea. Private participation in the water sector is not yet developed, although the increasing of private sector capital is being considered (REC survey 2008; and UNDP, 2004). In Croatia, the overall responsibility for managing water is centralised under the governmental institution Croatian Waters. The water utilities are publicly owned in the
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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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72 C H A P T E R 4 E C O N O M I C
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176 C H A P T E R 7 F I N A N C I N
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190 C H A P T E R 8 P R I O R I T I
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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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