E A P T a sk F o rc e“INTER-MUNICIPAL COOPERATION: concept and forms.Results from the OECD financed task on sustainable business modelsfor rural sanitation”Rafal Stanek, 5 June 2012 1 THE SPECIALIST FOR PUBLIC CONSULTING
THE SPECIALIST FOR PUBLIC CONSULTINGInformation about the project Project: Improving Environmental Quality of the Black Sea through better waste water treatment and climate change adaptation of the water sector in Moldova. Objective: improve the water quality of the Black Sea basin, and health situation in Moldova and downstream. Sponsors: European Commission (DG ENV) and OECD/EAP Task Force SoW: 3 tasks and task 3 is to develop a viable business model for rural sanitation. This task comprises studies on business models existing in other countries. Inter-communal cooperation is a one type of business models discussed.
THE SPECIALIST FOR PUBLIC CONSULTINGObjectives of presentation Present results of the studies on IMC (business models) for water supply and wastewater services existing in other countries; Present two different approaches to inter-municipal co-operation in WSS: voluntary and (semi)obligatory. Overview examples from European countries.
THE SPECIALIST FOR PUBLIC CONSULTINGVoluntary model Local authorities (municipal) are legally responsible for organizing water and sanitation (wastewater collection and treatment) services (WSS). Local authorities have free choice to form inter- municipal partnerships to provide jointly WSS services. Incentives may be provided to encourage inter- municipal cooperation e.g. easier access to EU grants. Example of countries where voluntary model of IMC is applied for WSS: Austria, France, Croatia, Germany, Czech Republic, Poland, Romania.
THE SPECIALIST FOR PUBLIC CONSULTING(Semi) Obligatory model Regionalization process is required by the legislation and heavily promoted England and Wales, Romania, Bulgaria, The Netherlands (only water).
THE SPECIALIST FOR PUBLIC CONSULTINGFrance In France, provision of water service is a municipal responsibility and many small towns have decided to combine service areas to improve service efficiency with private participation contracts. The local representative of the central government (the Prefect) can mandate or influence the creation and shape of proposed aggregated structures. In particular, the Prefect can apply the principle of “territorial continuity,” requiring that all aggregated municipal services have a geographical boundary in common to strengthen the technical coherence of the grouping. Municipal associations Municipal associations (établissements publics de coopération intercommunale, EPCI) are widespread in water and sanitation service. 63% out of 36,700 municipalities is part of municipal associations providing water and sanitation services (there are 2,000 such associations).
THE SPECIALIST FOR PUBLIC CONSULTINGFrance An example of a single-purpose intermunicipal association for water supply is the Syndicat des Eaux dIle-de-France; SEDIF groups 144 municipalities in the metropolitan area of Paris except for the city of Paris itself. Leaving private service providers apart, it is the largest utility in France, serving more than 4 million users. While SEDIF owns its infrastructure, it has contracted out service provision to the private enterprise Veolia Eau. Some municipalities within SEDIFs service area have chosen to provide water services themselves through communities of municipalities or metropolitan communities
THE SPECIALIST FOR PUBLIC CONSULTING AustriaType of Utility / Owner Water supply Wastewater treatment Number of water Connected Number of Connected suppliers inhabitants [%] wastewater inhabitants [%] – CompaniesProvincial enterprise (staterun, public enterprise) 2 6% - -Associations ofmunicipalities 125 21% 330 51%(publicly owned)Municipalities - publiclyowned 1,900 59% 1,100 38%User Cooperatives(cooperation of private 3,300 4% 650 1%persons)Private wells / cesspits* 250,000 10% 250,000 10%
THE SPECIALIST FOR PUBLIC CONSULTINGAustria An interesting case study for the improvement of the rural water supply and sanitation in Austria is Oberösterreich Wasser (OÖ Wasser), an umbrella organisation (association) representing water and wastewater cooperatives in the federal state of Upper Austria. The association is a feasible model for a sustainable waster supply and sanitation solution in rural areas. The association provides support and advice on the set-up of water cooperatives, organise trainings and offer external quality control of of water/wastewater services provided by their members. Members: 972 water cooperatives, 542 melioration cooperatives, • 119 wastewater cooperatives and others
THE SPECIALIST FOR PUBLIC CONSULTINGAustria OÖ Wasser principles: Non-profit character, Professional competence, Cost recovery , Voluntariness OÖ Wasser services: Advice and support in technical, legal, financial and organizational questions. legal information, technical audit, pooling program for water metering, water analyses, measurement and detection services, leak detection, location of pipes and valves, water loss analysis, measuring flow rates and pressure, operational services, emergency water supply service, advice and help to assemble and change water meters, water analyses, measurement of chemical, physical and bacteriological parameters, maintenance service, spring tapping, drainage and channel maintenance, education and training for officials and technical personal / capacity development Members are outsourcing those services to OÖ Wasser
THE SPECIALIST FOR PUBLIC CONSULTINGPoland According to law on municipal self-government (1990) municipality is responsible for the provision of water and sewerage services within its territory. WSS services can be delegated to other local government (meanings another municipality or other tiers of local government). Law on municipal self government defines legal framework for inter-municipal associations. Single purpose inter-municipal association is treated as local governemnt Thus WSS services could be easily delegated to the association. The model is not wide-spread (about 1400 WSS utilites for 2500 municipalities)
THE SPECIALIST FOR PUBLIC CONSULTINGPoland – Dolina Redy i Chylonki Inter-municipalassociation Established in 1991 by eight municipalities (population of 446.4 thousand); Water/wastewater treatment, waste management, central heating, environmental education; Association set up several companies: WSS, waste management, central heating. WSS utility (PEWIK Gdynia Ltd.) - 43.8% of shares owned by Gdynia largest member of the association. Interesting one of the important members of the association (Sopot – 38 thousand) does not participate in joint WSS project (Sopot delegated services to private operator).
THE SPECIALIST FOR PUBLIC CONSULTINGPoland – Podhalańskie Przedsiębiorstwo Komunalne Name of municipality Inhabitants Members of (thousand) association in In 2003 Podhale Inter- PPK municipal Association set up 1. Nowy Targ – miasto 33.0 No inter-municipal company for 2. Nowy Targ - gmina 22.3 Yes 3. Poronin 10.8 Yes joint provision wastewater 4. Biały Dunajec 6.8 Yes treatment services in ten 5. Szaflary 10.3 Yes municipalities from Podhale 6. Kościelisko 8.0 Yes 7. Czarny Dunajec 21.4 Yes region 8. Czorsztyn 7.3 Yes The company operates 16 9. Łapsze Niżne 8.8 Yes 10. Ochotnica Dolna 8.0 No local WWT plants and 300 km 11. Krościenko nad 6.5 Yes of sewarage network (but not Dunajcem water); 12. Szczawnica – miasto 7.3 Yes Total 150.5 Municipalities transfered assets to the company. Not all the municipalities from the association joint the company.
THE SPECIALIST FOR PUBLIC CONSULTINGThe Netherlands The degree of fragmentation is very different for water supply, wastewater collection and treatment. Water supply is highly consolidated with only ten regional water supply utilities. Wastewater collection is much more fragmented as most of municipalities operate their own systems. On the other hand wastewater treatment is responsibility of 25 wastewater boards.
THE SPECIALIST FOR PUBLIC CONSULTINGRomania Strong regionalization process – only municipalities that join regional structures can benefit from EU funds for WSS investments; Business model promoted under reform: Formation of Intercommunity Development Association (IDA) Setting up regional operator/regional operating company (ROC) Delegating water supply and wastewater services to a regional operator. Number of small operators is constantly decreasing and the model becomes predominant.
THE SPECIALIST FOR PUBLIC CONSULTINGMontenegro “Light” regionalization. In 2005 the government together with several municipaliteis (Bar, Tivat, Herceg Novi, Budva and Kotor) set up a Joint Service and Coordination Company for Water and Waste Water Services for the Montenegrin Coast and the Municipality of Cetinje (Vodacom). The company works as the agency for implementation of the KfW loans and grants, and as a partner for municipalities and water utilities in their work on improving the overall functioning of the network, water distribution, and waste water collection and treatment in the coastal region. Except project preparation and implementation services, Vodacom performs some consulting services for water utilities operating in the region. These includes performing benchmarking, organizing trainings, GIS system and hydraulic modeling, preparation of business plans and recently “Vodacom“ performs a tariff studies for it member local governments.
THE SPECIALIST FOR PUBLIC CONSULTINGBulgaria Service delivery is highly consolidated by creating regional WSS companies. Only a few municipalities have not participated in the regional companies and provided services on their own. According to new law (2012 proposal) all municipalities will be obliged to join regional companies. Publicly owned regional water & wastewater utility companies. According to new policy utilities will be operators of the infrastructure, assets ownership will be transferred to municipalities and state.
THE SPECIALIST FOR PUBLIC CONSULTINGBasic Features – centralized vs. decentralized Co-operation Tariff policy Decentralised - There is no co-operation between municipalities. Tariffs are set by local - Services are provided predominantly by individual municipalities authorities. or utilities to which municipalities delegate responsibilities. Light - Services are predominantly provided by individual municipalities Tariffs are set by local regionalisation or utilities to which municipalities delegate responsibilities. authorities (advice can be - Regional agency is set-up to facilitate service provision and provided by the regional project preparation (it has mostly advisory role, some technical agency). services, however, maybe subcontracted to regional agency etc.). Voluntary - Municipalities enter formal cooperation to provide jointly the Tariffs are set by inter- regionalization services. municipal structures - Inter-municipal utility is set-up to provide services. (agreement necessary between municipalities). Obligatory - Governmental policy requires that the services are provided on Tariffs are set by regional regionalization regional level; structures. - Country is divided into regions – regional utilities are set-up
THE SPECIALIST FOR PUBLIC CONSULTINGBasic Features Advantageous Disadvantageous Decentralised - Good understanding of local population - Limited technical and institutional capacities needs to operate and maintain the infrastructure (e.g. lack of qualified structures capable to react quickly to emergency situations). - Limited capacities to prepare investment programmes. Light - Technical advice provided to local - Regional agency do not have direct control regionalisation governments with regard to over the system (advisory role may yield investments preparation and system limited benefits). operation. - Some technical adivce Voluntary - Firm and formalized commitment to - Due to local political factors some regionalization provide jointly the services. municipalities may stay out of the inter- - (Potential) benefits ensuing from municipal structures (even if they are in economies of scale. geographical system boundaries). This may interrupt investment optimisation. Obligatory - (Potential) benefits ensuing from - Municipalities that are capable to provide regionalization economies of scale. services in more cost-efficient manner than regional utility are worse-off.
THE SPECIALIST FOR PUBLIC CONSULTINGBasic Features – direct service provision by municipality or delegatedservice provision Direct Delegated Decentralised - Direct service provision by - Municipality delegates service provision to selected municipality or its department utility (e.g. private operator or neighbouring municipality that has more developed sanitation system). Light As above - As above. regionalisation - There is also possibility to delegate some services to regional agency (e.g. maintenance services). Voluntary No direct service provision Service provision is delegated to inter-municipal regionalization institution. In this model inter-municipal bodly may be service provider or services may be further delegated to private operator. Obligatory No direct service provision Service provision is delegated to regional institution. regionalization In this model inter-municipal body may be service provider or services may be further delegated to private operator.
THE SPECIALIST FOR PUBLIC CONSULTING Consolidation & privatization Consolidated (regional) England & Wales 1989 1990 Bulgaria 2012Lithuania PrivatePublic 0% Romania 20% 50% 80% 2007-2013 France 1999 1973 Czech Republic 1990s 1990s Poland 2000-2004 Denmark 2009 Fragmented (municipal)