Priority Environmental Investment Programme (PEIP) –

1. Priority Environmental Investment Programme (PEIP) – CARDS RegionalRegional Meeting for Senior Officials from SEE and Donors’ Community 19-20th June, Budva, Montenegro Progress in Environmental Investments in SEE Ruslan Zhechkov, Senior Project Manager Team Leader Environmental Financing

2. Contents • Progress dynamics since November 2007 • Project success rate since Nov. 2007 • Country developments (Albania, BiH, Croatia, Montenegro, Kosovo UNSCR 1244, FYROM) • Manuals outline • Coming PEIP activities and focus

3. Project Dynamics since Nov. 2007

4. Progress since Nov 2007

5. Albania The progress in the waste sector has been significant. • good planning (Government Plan 2008-2011 listed projects supported from the state budget) • waste management is a priority of the Ministry. Budget funds have been secured for 5 new feasibility studies. • Insignificant tariff increases can be observed; • 1 inter-municipal association established (6 municipalities) working on common Regional Waste Management Plan; Five new projects are added to the list. • 3 waste projects Urban Waste Management and sanitary landfill for 3 regions. • 2 water projects. Drinking water and Waste Water Treatment for Shkodra and Vlora Projects removed from the list: 1 fully funded; 1 removed from the plans of the ministry; The rest have been removed either because they are not in the ministry plans any more or will be integrated in regional projects. The progress on financing projects on the PEIP list is considered unsatisfactory • Projects stuck in negotiation processes • Projects no longer considered as projects, i.e. no longer in the plans of the Ministry • Landfill of Vlora and hot spot of Elbasan had difficulties on starting implementation due to a very high community sensitivity. Elbasani was canceled and funds moved to Rubik. Development of the strategic framework • Intersectoral Strategy on Environment Adopted 2007 • Water supply and Waste Water sector strategy (drafting, 2008) Updates the previous one. • Strategy for Solid Waste Management (drafting, 2008). • Establishment of Environmental Fund possible in the near future.

6. Status of Water and Waste Utilities (WWU) in Albania • 56 utilities – Both state owned and private • Supervised by Water Regulation Utility, Water Agencies and “Basin Councils”. • The WWU’s have in general a poor performance • Weak financial situation • Low billing rates • Low incomes compared to collection rates • Immense amount of unaccounted-for water • Low managerial capacity • Poor rules implementation • Damaged water supply systems  • Low water tariffs

7. Bosnia and Herzegovina • Adoption of state Public Investment Programme (PIP) 2008-2010: BiH strategic 3-year document includes 57 priority environmental projects without secured financing; To be added to the list at the next update! • No progress with the current projects on the PEIP list. • Establishment of Project Preparation Unit; Selected challenges for the next 6 months: • Preparation and adoption of the State Environmental Law; • Preparation and adoption of strategies and bylaws (e.g Nature Protection Strategy, RS; Federal strategy for environmental protection, FBiH) • Development of Water management plan and harmonization with acquis • Strengthening the capacity at national and local level for implementation of the adopted legislation;

8. Croatia • Progress only in project documentation: 7 in waste and 1 in water; • 2 new waste regulations adopted – C&D waste, WWT sludge; • Water management strategy completed and in adoption phase; • Water Financing Strategy being drafted. • National Waste Management Plan adopted in August 2007. • Environmental Protection Operational Plan (EPOP) 2007 – 2009 is being revised. • Reform of utilities: consolidation, regional cooperation, In waste – there are two regional cooperation structures. • Key challenges for the next six months: IPA accreditation, 3 RWMC and 2 water projects applied for IPA funding.

9. Kosovo UNSCR 1244 • Progress on ‘Improvement of Air quality in Kosovo A. No other progress on projects achieved. • The PEIP priority list consists of ten projects: 2 air; 7 water, 1 waste. • No new projects suggested to be added to the list • 4 projects have been removed as all funds have been secured from the WB. • Draft Development strategy – revisions to wastewater projects; • Sustainable Development Strategy – under development; • Kosovo investigates possibilities for establishing an Environmental Fund • Donors currently focus on industrial pollution abatement and construction of regional sanitary landfills – URGENTLY ADD NEW WASTE PROJECTS TO LIST! • Restructuring of utility stalled. Some municipalities not supportive to consolidation. • Donor Conference on Kosovo will be held on July 11, 2008. Several infrastructure projects are expected to be supported.

10. FYROM • PIP lacks prioritization; NEIS corrects that; • Present PEIP list 16 projects – 1 air, 8 water and 7 waste. List will undergo changes with the adoption of NEIS. • List will probably converge eventually. • Progress noted in document preparation (4 projects). • 4 new projects proposed – 1 hot spot (Zletovo Plant Veles), Medical Waste Management, Polog Regional Landfill, Monitoring of Air Quality • Intensive bylaw drafting in the waste sector • Main legal gap in water sector – adoption of Law on Water delayed • Main obstacle to environmental investments – weak capacity of utilities to implement polluter pays principle. Political will needed to reform utilities. • Boost in MSW sector – Ordinance on Landfill of Waste, regional cooperation through strategy. Work on several FSs. • Adopted bylaws in HZW – possibilities for projects • Development of remediation plans with financial requirements for elimination of industrial hotspots, 2008 • Medical Waste Master Plan, 2008

11. Outline of Manuals • 2 manuals are due within the project; • 1st option: ‘Strategies for Reforming the Water Utilities’ and ‘Project Preparation’ • 2nd option: ‘Strategies for Reforming the Utilities I’ and ‘Strategies for Reforming the Utilities II’

12. Contents of ‘Strategies for Reforming the Utilities’ • Implementation of Polluter Pays Principle • Streamlining operations: improving productivity; metering reforms; improving technology (cost saving investments); improved management of the utility; invoicing and collection of tariffs; benchmarking • Tariff setting for water utilities and regulators (principles and models) – tariff designs, cost recovery, affordability, • Possibilities for attracting private capital to the water utilities – advantages and disadvantages, different models

13. Contents of Manual on Project Preparation 1/ Feasibility studies preparation • PFS preparation • FS preparation • Section on FIDIC rules • Section on how to prepare for IPA applications 2/ Section on Donors anf IFIs - General information about Donor Organisations (most update) - General information about IFIs (most uptodate) • Section on WB • Beneficiary / Project / Loan conditions • Conditions for PFS, FS EIA… • Section on EBRD • Beneficiary / Project / Loan conditions • Conditions for PFS, FS EIA… • General information about Donor Organisations (most uptodate)

14. Other Developments of PEIP • Further strengthening of analytical reports to create added value for governments, EC, IFIs; Constant monitoring of all environmental investment factors; • Streamlining of project lists; • Fill in PIFs for viable new projects; • National workshops in autumn in Albania, Macedonia and Croatia; • Project team missions to all PEIP countries.

15. Thank you for your attention Ruslan Zhechkov Senior project manager Environmental financing and economic instruments Environmental Financing Team Environmental Policy Programme Regional Environmental Center for Central and Eastern Europe rzhechkov@rec.org