Financing Strategies and Challenges in the Financing of Environmental Infrastructure-Slovenian Experience

Financing Strategies and Challenges in the Financing of Environmental Infrastructure-Slovenian Experience Breda Mulec, PhD Head of Department Section of legal affairs European Affairs and Investments Directorate Ministry of Environment and Spatial Planning Slovenia 12 June 2008 Ministry of the Environment and Spatial Planning, Ljubljana, 16 November '07

Introduction:Financial resourcesat the field of environment a)National financial resources: • State budget, • Local community budget, • Waste disposal tax, • Environmental Found of the RS credits b) European and other financial resources • EU Cohesion fund, pre-accession aid (ISPA), • Environmental financial fund Life + • Other loans (BRD, EBRD, EIB) Ministry of the Environment and Spatial Planning, Ljubljana, 16 November '07

1.The Cohesion fund • Pre- accession funds (ISPA): (22 projects), 86 million Euro, • Financial perspective 2004-2006 (7+11 from ISPA projects) (Cohesion fund):168, 6 million ear, • Financial perspective 2007-2013 (Cohesion fund): 1.5 billion EUR (48 projects). Ministry of the Environment and Spatial Planning, Ljubljana, 16 November '07

1.1 European legislation concerning the Cohesion fund in 2007-2013 at the field of environment • Council Regulation (EC) No 1083/2006 of 11 July 2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund and repealing Regulation (EC) No. 1260/1999, • Commission Regulation (EC) No 1828/2006 of 8 December 2006 setting out rules for the implementation of Council regulation (EC) No 1083/2006 laying down general provisions on the European Regional Development Fund , the European Social Fund and the Cohesion Fund and of Regulation (EC) No 1080/2006 of the European Parliament and of the Council on the European Regional Development Fund, • Council Regulation (EC) No 1084/2006 of 11 July 2006 establishing a Cohesion fund and repealing Regulation (EC) No 1164/94, • Council Regulation (EC) No 1085/2006 of 17 July 2006 establishing an Instrument for Pre-Accession Assistance (IPA). Ministry of the Environment and Spatial Planning, Ljubljana, 16 November '07

1.2 Fundamental Slovenian national documents concerning the Cohesion fund • Strategy of the Development of Slovenia • Plan for Preparation of national Development Programme 2007-2013, • National Strategic Reference Framework 2007-2013 (NSRF), • Operational Programme of Environmental and Transport Infrastructure Development for the period 2007-2013 (OP ETID), • The National Decree on Implementing of the Processes Concerning the Implementation of Financial Support of the Slovenian Cohesion Policy in the Financial period 2007-2013. Ministry of the Environment and Spatial Planning, Ljubljana, 16 November '07

1.3 Cohesion fund – Slovenian implementing structure • European Commission, • Managing Authority: Government Office for Local-Self Government and Regional Policy, • Intermediate bodies: Ministry of Transport and Ministry of Environment and Spatial planning, • Implementing bodies: Municipalities, • Certifying Authority: Ministry of Finance, National fund, • Audit Authority: Ministry of Finance-Budget Supervision Office. Ministry of the Environment and Spatial Planning, Ljubljana, 16 November '07

1.4 The role of Ministry of Environment and Spatial Planning (MESP) in the implementation process of the Cohesion Fund MESP, as the intermediate body, is responsible for the implementation of the first, second and third development priority of the operational programme (OP ETID), as following: • I. Development priority: Municipal Waste Management, • II. Development priority: Environment Protection-Water Sector, • III. Development priority: Sustainable Use of Energy. Ministry of the Environment and Spatial Planning, Ljubljana, 16 November '07

1.5 Financial support of the cohesion environmental projects in the 2007-2013 - ApplicationsActivity fields of the developments’priorities: Ministry of the Environment and Spatial Planning, Ljubljana, 16 November '07

1.5.1 Regional centres in Slovenia Ministry of the Environment and Spatial Planning, Ljubljana, 16 November '07

1.5.2 Indicative list of projects – applicationsBeneficiaries: municipalities Ministry of the Environment and Spatial Planning, Ljubljana, 16 November '07

1.5.3 Sustainable use of energy-list of calls for applications • Sustainable use of energy, • Energy restoration and sustainable construction of buildings, • Efficient use of electrical power, • Innovative local energysupply systems, • Demonstration projects, informing and energy consulting. Beneficiaries: public institutions, companies, etc Ministry of the Environment and Spatial Planning, Ljubljana, 16 November '07

1.6 The experiences and Challenges in the implementing processof the Cohesion fundrespectively pre-accession fund The comprehensive European and national cohesion legislation requires the complex structure of Cohesion fund implementation at its different phases: 1. • The project identification (agreement between local communities; lack of the regions or proper regionalisation, however, contribute to less efficient project identification; it has to be stressed, that the scientific point of view has to prevail above some particular other (political) interests ...), • preparing of Project documentation, • preparing of Application for financial support from the Cohesion fund by the Communities (preparing of the comprehensive application, however, requires corresponding knowledge by the local human resources, therefore often the more expensive consulting companies prepare the applications= the conflict of private and public interest), Ministry of the Environment and Spatial Planning, Ljubljana, 16 November '07

1.6 The experiences and Challenges in the implementing processof the Cohesion fundrespectively pre-accession fund Financial resources: • Local and national budget reconciliation, • Determination of corresponding budgetary items in the programming phase (a part from the Cohesion fund and a part from the state’s own participation) it is not an easy task; it is difficult to foresee the exact amount of moneyfor the project, needed in one year: Transfer of the rights of expenditure from one budgetary year into another, has not been allowed accordingly to the Slovenian national law; the problem has been, however, evident because of the frequent use of revisions by unsatisfied costumers (non selected offerers ) at the field of public procurement. The revisions, namely, have contributed to no timely used expected amount of financial support for the project, which has been foreseen in the budget. Therefore, no timely used financial support could be lost, • Preparing of Call for applications and its implementation (strict rules at the field of public procurement contribute to delays in project implementation), • Project implementation (supervision of financial and technical part of implementation), • Final report, • The question of ownership and maintenance’s costs after the project is accomplished, etc. Ministry of the Environment and Spatial Planning, Ljubljana, 16 November '07

1.6 The experiences and Challenges in the implementing process of the Cohesion fundrespectively pre-accession fund • 2. • The efficient administrative (implementing system should be established before the implementation starts, • Human resources (big fluctuation, lack of sufficient human resources at the levels of communities and national state institutions, lack of experiences at the project managing ). Ministry of the Environment and Spatial Planning, Ljubljana, 16 November '07

1.7 What are our general recommendations? • The competent participants shall strive for amendments of the European and national cohesion legislation, which would enable more easiest and efficient implementing of Cohesion fund, • All participants of the implementing process have to strive for efficient, transparent and simple system, • The corresponding and timely establishment ofthe system of implementing processes in pre-accession phase is very important; therefore the projects from technical support have been available, • The candidate states should continue to perform reforms at the different fields (local self - government, public administration, budgetimplementation of environment standards in pre-accession phase respectively stabilization process, which however have an influence to efficient use of EU Funds for the infrastructure environmental projects, after the accession of candidate states. Ministry of the Environment and Spatial Planning, Ljubljana, 16 November '07

2. Environmental financial fund Life • It has been established especially for the environmental projects Main objectives: • the implementation and the development of environmental policy and EU legislation, • Integration of environment into other EU policies and support of the permanent development, • Financing of environmental projects. Ministry of the Environment and Spatial Planning, Ljubljana, 16 November '07

2.1 Role of Environmental financial fund life in pre-accession It supported, from 2000 the following fields: • Nature (11 projects), which supported the protection of wild animals, birds and biotical diversity, • Environment (2) It has great positive impact for Slovenia; however without its financial support many of important environmental projects could not have been performed. Slovenia decided to support projects mostly at the field of nature. Reasons: • The projects at the field of environment were supported mostly by the ISPA • Environmental infrastructure projects are more expensive. • Slovenia received, namely, more financial support from ISPA. Ministry of the Environment and Spatial Planning, Ljubljana, 16 November '07

2.1 Role of Environmental financial fund life in pre-accession Financial support: • Proportion of EU and Slovenia Co-financing different projects at the field of Nature for 11 projects: • Total:10.342.388 EUR, • Slovenia: 2.542.099 EUR (21,66%), • EU: 6.098.725 EUR (62,15%). Ministry of the Environment and Spatial Planning, Ljubljana, 16 November '07

2.2 Environmental financial fund life +2007-2013 Centralized system: European commission: • has been publishingyearly calls for applications, • has been managing the financial support (the collection, supervision of the projects). National states: • preparing of national priorities, • preparing of projects proposals. Ministry of the Environment and Spatial Planning, Ljubljana, 16 November '07

2.2.1 Regulation (EC) no. 614/2007 on financial instrument for environment (LIFE +) Fields of support: • nature and biotic diversity, • environmental policy and management, • environmental communication. The measures financed by the fund: • operational activities, • Studies, researches, • Vocational training, etc. Ministry of the Environment and Spatial Planning, Ljubljana, 16 November '07

2.2 Environmental financial fund life +2007-2013 Financial support: • European Commission co-finances 50% of the projects, • Slovenia received 4,2 million Euro for 2007, • 5,3 million EURO in 2010. Beneficiaries: • Public authorities, • Regional and local authorities, universities, • private institutions (profitable and un profitable). Ministry of the Environment and Spatial Planning, Ljubljana, 16 November '07

3.Public-private partnership The law on public –local partnership is new law; therefore, we do nothave much experience with its implementation. 1.At the field of private investments into environmental infrastructure projects still the processes are in the beginning; 2. At the filed of public services the respective law enables to public companies, which perform public service and have been in 100 % property of Republic of Slovenia: • the transformation into business company (the acquirement of the concession for the performance of public economic services), • preservation of status of public company. Advantages and disadvantages of transforming of public companies The decision concerning the status of the companies, which perform public services, has to be based at the following principles: • transparency, • competitive position, • efficiency, • access to public services, • the lowest possible costs for beneficiaries. Ministry of the Environment and Spatial Planning, Ljubljana, 16 November '07

3.1 The advantagesof the transforming of public companies into private companiesin accordance with public - private partnership: • the transfer of financial and other risks at private sector, • the acceleration of development of the infrastructure through the private capital, • due to better competitive position, the better performing of public services is ensured. Ministry of the Environment and Spatial Planning, Ljubljana, 16 November '07

3.2 The advantages of preserving the status • the comparative surveys indicate to some problems of the institute of public –private partnership, • greater critical assessment is however needed by the implementation of this institute, • the crediting of private companies is however more expensive than the crediting of the state, • the existence of risk for private capital, • the lost of public influence at the performing of public services. And the most of all: • the services of private companies are not always less expensive for the beneficiaries (despite of more economical operations, they are more expensive). Ministry of the Environment and Spatial Planning, Ljubljana, 16 November '07

Recommendations The municipalities are at this field independent, however it should be considered: • spatial, • functional forms of the performing of public services, which perform the standards implementation at the field of public services, • the principle that we do not destroy what is consider to be good, • we are abolishing actual errors, • the insurance of local services should remain by the public companies at the field of water supply, • the transforming into private companies could be at the field of collection and cartage of waste management. Ministry of the Environment and Spatial Planning, Ljubljana, 16 November '07

Ministry of the Environment and Spatial Planning, Ljubljana, 16 November '07

Financing Strategies and Challenges in the Financing of Environmental Infrastructure-Slovenian Experience