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

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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