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

strengthening consultant who will assist these municipalities in meeting the benchmarks
in the first phase. The programme covers the municipalities of Gostivar,
Tetovo, Kavadarci, Negotino, Bitola, Kocani, Gevgelija and Radovis.
In Montenegro, local governments form water supply and wastewater public
utility companies, while the assets remain in the hands of the central government.
The municipalities are responsible for the provision of services, and the government
is responsible for capital investments. Public enterprises are legally independent entities:
in practice they have limited autonomy and no control over crucial aspects of
their business, such as tariffs, staff hiring and firing, and investments. The PUCs are
controlled by (in order of importance): 1) a board of directors; 2) the corresponding
department of the municipality; 3) the deputy mayor; and 4) the tax department of
the Ministry of Finance (normal annual financial control).
The proportion of illegal connections is estimated at about 6.5 percent in Montenegro,
and the estimated national average level of payment collection is between
60 and 75 percent. The water utilities in Montenegro have between eight and 12
employees per 1,000 water supply connections. Operating costs are not usually covered
by revenues from tariffs, thus government and municipal subsidies make up the
balance. The tariffs are set by municipalities, which means that tariff setting is influenced
by local political issues. In general, tariffs cover only operation and basic
maintenance. There is only one example of public-private partnership, in the water
PUC of the municipality of Budva (REC survey, 2008).
The Government of Montenegro regards water supply and sewerage services
as essential to economic growth, especially in relation to the country’s tourism industry.
It is recognised that the water sector should improve its efficiency, cost-effectiveness
and performance. The government therefore intends to decentralise
infrastructure ownership and then to support municipal utilities to merge into regional
utilities (WURP WG, 2007).
According to the water utility reform plan adopted in July 2007, assets and
ownership should be transferred to the local government, which will be fully responsible
for compliance with all laws and regulations related to service standards,
tariff rates and pricing, and the collection, treatment and disposal of municipal
sewage. The Ministry of Spatial Planning and Environmental Protection is identifying
interested donor organisations to support the further implementation of the
water utility reform plan.
Current institutional and financing efforts are focused on the coastal region,
where municipal water supply and sewerage infrastructure is being upgraded. The
joint service and coordination company VODACOM has been established for the
Tivat region. The government’s water utility reform plan proposes the introduction
of grants that would be available to fund part of the costs associated with the merger
of utilities, including legal costs and costs related to labour restructuring. A condition
for obtaining these funds is that utilities prepare substantial strategic reform
plans (REC survey, 2008).
In Serbia, PUCs are owned by the municipalities and each town and municipality
has its own water utility. Most PUCs are not separated by sector(waste/water/
green spaces) and the accounting lacks transparency. It is therefore hard to separate
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 129