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“Report on Stability Pact Working Table II activities “ Oswald Hutter

REREP The Regional Environment Reconstruction Programme 7 th REReP Task Force meeting Belgrade, 30 th September – 1 st October 2004. “Report on Stability Pact Working Table II activities “ Oswald Hutter Stability Pact for South East Europe. ReRep and the Role of the Stability Pact.

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“Report on Stability Pact Working Table II activities “ Oswald Hutter

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  1. REREPThe Regional Environment Reconstruction Programme7th REReP Task Force meetingBelgrade, 30th September – 1st October 2004 “Report on Stability Pact Working Table II activities“ Oswald Hutter Stability Pact for South East Europe

  2. ReRep and the Role of the Stability Pact • REReP launched under auspices of the Stability Pact and has evolved into a highly successful autonomous initiative with a considerable degree of regional ownership • ReRep is an excellent example of how to use the office of the SP i.e. • Identify on area that can foster and enhance regional cooperation in SEE • Act as a catalyst to bring together the appropriate parties • Promote political consensus among the beneficiary countries • Monitor progress

  3. SP Working Table II – Promotion of Environmental Issues • Monitor ReRep. Happy to lend political support if requested • Ensure other WT II initiatives take account of environmental issues e.g. • Transport infrastructure projects • Regional energy initiative – adoption of environmental directives • Water and waste water management • Solid waste treatment according to EU Directives

  4. Recent developments (1) • Projects within the Regional Infrastructure Project List moving forward, namely (environment related) • Water Supply and Wastewater Rehabilitation Project in Albania (EC 29.30 Mio. € under Phare) – soon completed • Zagreb Wastewater Treatment Plant financed by EBRD and co-financed by KfW - total cost € 270‘0 Mio. – to be completed by 2007 • Municipal Environmental Loan Facility in Constanta in Romania, ISPA: €71.6 Mio.- EBRD: €20 Mio. - Local: €8.8 Mio. – to be completed in2005 • Infrastructure Steering Group mandate extended to environmental issues – particularly water • Establishment of a Public Private Partnership Task Force

  5. Recent developments (2) • SP membership of ISG important to: • highlight environmental issues and to support the beneficiary countries to promote environment related projects. • strengthen consensus among members of the ISG and the countries of SEE, on the need for regional approach. • The key challenge will be of TRIPLE nature: • prioritisation between projects and different sectors (transport, energy, environment) • Implementation capacities at national and local level • Creditworthiness and absorptive capacities ( affordability, PPP, IMF)

  6. Recent developments (3) • Extension of the ISG mandate to environmental issues – February 2004 • Aim is to provide overall strategy to allow countries move towards integration with EU / reach EU standards in a progressive manner • ISG will use EU environmental legislation and standards as the strategic framework for their activities • ISG will set up a database with an overview of activities and policies of the IFI's and the EC in this sector

  7. Recent developments (4) • Establishment of a Public Private Partnership Task Force • Objective: Facilitate improvements in environment for PPPs in SEE using pilot projects for demonstration /replication effect • Members: WB, IFC, MIGA, EIB, EBRD, ECB, BAC • 5 projects with high potential demonstration effect (replication), located in 5 different countries, in 5 sub-sectors of infrastructure (all have an environmental aspect) Shortlist includes: • Water Treatment Plant in Herceg Novi - Serbia/Montenegro • Solid Waste Treatment Plant in Bucharest -Romania • Solid Waste Treatment Plant in Belgrade

  8. PPPs in SEE – Key Success Factors • World Bank/EBRD study established 4 country groups based on market size, level of economy liberalisation, GDP/head, FDI and degree of democratic transformation. • Group 1: PPP feasible Czech Republic, Hungary, Poland, Slovakia, Slovenia (not beneficiary countries of SP) • Group 2: Difficulties to be overcome for more PPPs Romania, Bulgaria, Croatia, Estonia, Latvia, Lithuania • Group 3: PPPs more problematic Albania, Bosnia/Herzegovina, FYR Macedonia, Serbia/Montenegro, Russia, Ukraine, Kazakhstan, Kyrgyz Republic • Group 4: PPPs not feasible Moldova, Belarus, Armenia, Georgia, Azerbaijan, Tajikistan, Turkmenistan, Uzbekistan

  9. WHY THESE PROJECTS HAVE BEEN SUCCESSFUL ? (1) • Subject of PPP is of primary interest (water is vital, motorways not necessarily, if traffic not sufficient) for the public sector • Commercial viable projects • Strategic interests of the private sector (cost intensive PPP preparation is prohibitive for fast cash up strategies) long term perspectives • Involvement of IFI as guarantor for smooth preparation phase  restricts the possibility of inappropriate lobbying (tendering)

  10. WHY THESE PROJECTS HAVE BEEN SUCCESSFUL ? (2) • IFIs as financing or co-financing institution provides for unobstructed operation phase • Clear defined structure (especially choice of PPP type and period) • Clear defined role of all parties involved (lenders, sponsors, contractors)  risk allocation (private sector cannot take all the risks) • Selection of experienced and successful private and public partners • Strong involvement of the authorities (public partner) and political support

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