A further BGN 80 mln needed by Bulgarian municipalities for water and sewage construction projects

raya.atanasova@klassa.bg


The implementation of projects agreed under Operational Programme Environment may be delayed because the resolution of several important issues has been postponed for the next 2-3 years. Besides, Bulgarian municipalities need some BGN 80 mln to finance their involvement in the problem-solving process, announced for Klassa Ginka Chavdarova, Executive Director of the National Association of Municipalities in Republic of Bulgaria (NAMRB). 
A few days ago, the Environment Minister, Nona Karadjova was handed a letter sent by the Director-General of the European Commission Regional Policy DG. It read that the Ministry has improved the management control systems, while the detected shortcomings up to 2009 have been eliminated. 

In fact, it is still not clear what will be the financial sources for the mandatory involvement of municipalities in large infrastructure projects, indicated Chavdarova. These are construction projects of wastewater treatment plants and landfills under the Water programme, which, subsequently, will generate revenue for the population from fees collection, but not for municipalities and for companies. 

Moreover, the loan withdrawal for funding VAT levied on projects still remains a pending problem for local authorities. When these projects are worth over BGN 30 mln, the VAT tax is unaffordable for many municipalities. Even if the VAT amount is reimbursed by the state, municipalities must provide funds in advance. Actually, loans remain the only funding option but there is a 6% interest charged on borrowing from the FLAG Fund, emphasised expert Simeon Petkov.  However, no decision has been made on this issue yet. 

In fact, the reform in the water sector is dilatory, the final deadlines for the transfer of ownership of water supply and sewerage companies to municipalities have expired, indicated Chavdarova. The Environment Ministry finances water projects and their implementation depends on decisions taken by the regional ministry. The drafting of the water strategy has also been delayed. 

Municipalities also demand a rapid approval of the Fund's operating rules for covering the financial adjustments. Under OP Environment, they already cost over BGN 20 mln but, actually, municipalities are not always responsible for this. Due to the lack of a signature of a member of the Evaluation Commission, the adjustment could be estimated at 5% of the project value.

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