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

• Countries should take full advantage of the available regional cooperation
frameworks and make full use of the opportunities presented through them.
They offer a unique chance to improve project preparation capacities and to
tackle transboundary environmental pollution.
• Regional cooperation should not to be underestimated, since IFIs and donors
often have a regional approach to programming. In addition, by adopting a regional
approach the investment market expands and becomes more interesting
for investments.
Overall challenges at local and regional level
Institutional setup and functioning
Utilities in SEE are usually fragmented, overstaffed and underfinanced, as well as
being highly dependent on the political context. The utilities in the region are caught
up in a vicious circle of poor operational efficiency and service performance problems,
which lead to inadequate cost recovery and a lack of own funds for infrastructure
and service modernisation. Public utility companies are subsidised by the
municipalities, and cross-subsidisation between different sectors is also common.
Way forward
• Institutional reforms of utilities are necessary in order to improve their efficiency
by clarifying ownership and management responsibilities. In addition,
increasing the autonomy of utilities would allow for more efficient operation,
improved performance and access to market capital.
• Corporatisation and more advanced types of reform such as public-private partnerships
and partial or full privatisation could bring in the necessary expertise
and capital to achieve the desired service quality and economic sustainability.
• Utilities’ chances of success increase the more flexible they are and the more
open they are to cooperating with other utilities through regionalisation and cooperation
with the private sector. This is valid for both the public and private
sectors. Regionalisation requires an appropriate institutional form to bring
those who intend to use the regional facilities under one umbrella. It represents
a serious challenge to municipalities that are traditionally used to solving their
problems on their own. They should be assisted in this process and active mediation
should be offered by national authorities.
Investment planning and preparation
As a result of decentralisation, local governments have legal obligations with
respect to water and waste management that far exceed their financial capacities.
The weak financial capacity of local governments is also due to the poor financial
performance of water and waste utilities, which are far from achieving cost recov-
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T H E WAY F O R WA R D
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