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
revenues from different sectors and different services, let alone relate costs to tariffs.
The level of bill collection is 60 percent. Disconnection due to non-payment of
bills is allowed by law but it is almost never applied in the case of households.
Service revenues are not sufficient to cover operational costs. Cross-financing
between these sectors and subsidising from the municipality are commonplace (Dax,
2008). Tariffs are set at municipality level, usually by a political decision that is sensitive
to popular voting. It is recognised that tariffs in municipal PUCs are too low
and that this is a major problem. At present there are no utilities in private ownership
and, according to the applicable laws, the assets of PUCs cannot be privatised.
Public-private partnerships are possible according to the legislation, but as yet
there is no practice in place, nor is it expected in the near future. The Serbian Government
is considering future privatisation in the water sector, although it is not yet
defined in any strategy, policy or plan. Government preparations for a reform of the
PUCs are at an early stage. A reform strategy that may include privatisation options
is currently being drafted within the Ministry of Finance (REC survey, 2008).
Status of utilities and status
of reforms in the waste sector
In some SEE countries, where a waste utility, either public or private, serves several
settlements (e.g. a town and the surrounding settlements, or sometimes a whole region),
a uniform tariff is set for the whole service area even though the cost of serving
the individual settlements differs. Such practices inevitably translate into cross-financing
between service users. Several countries have started the reform process, which
includes sector separation and geographical regionalisation, but only Croatia has made
actual progress. In terms of current waste tariffs, charges are not based on the weight
or volume of waste produced but on household surface area. This, combined with a
lack of enforcement of rules against illegal dumping, does not encourage waste prevention,
reuse or recycling as mandated by EU legislation. Also, there is a marked difference
between the charges levied on commercial enterprises and industry compared
to household charges: the higher charges for enterprises represent another form of
cross-subsidisation. The justification often given by municipal authorities in response
to both these issues, but especially with respect to cross-financing, is that this approach
to setting tariffs has been inherited from the earlier system. Nevertheless, the true reasons
are partly social and partly political: policy makers are more willing to charge enterprises,
as they are perceived as being able to afford higher prices than households and
as being less able to effect change in terms of voting numbers.
From an institutional point of view, municipal solid waste (MSW) management
is even more demanding than water and wastewater management: based on good international
practice it has been shown that it is more economically viable to organise
waste management systems over larger territories covering a bigger number of inhabitants.
This is because modern landfills are expensive facilities and a minimum volume
of waste is needed to justify their construction. At the same time, in the SEE
region there is no tradition of municipalities jointly solving their MSW problems by