Regulatory Framework for Tariff Setting in Water Supply and Sewerage Services in Bosnia and Herzegovina

What is the project about?

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The key long-term challenge in Bosnia and Herzegovina’s water sector is the lack of financial sustainability of water utilities. Capacities to appropriately manage financial planning and management are limited while the accounting practices neither comply with national legislation requirements nor international professional standards. Without management system, water utilities are incapable of investing in their equipment, maintenance of infrastructure, development, or charging the actual price for their services. If these institutional weaknesses are not addressed, the current problems with water delivery and quality control will persist.

PROJECT OBJECTIVE
To contribute to sustainable development of utility companies that are providing high quality water supply, wastewater collection and sanitation services to citizens while preserving a healthy environment and  strengthening the social protection and inclusion system.

What we do

The Project produced two documents, “Study on the best ways of administrative positioning of the regulatory body in the process of tariff setting of communal affairs of water supply and wastewater collection and treatment services” and “Tariff setting methodology for water supply and sewerage services in Bosnia and Herzegovina”. Currently, the methodology is being tested  through the pilot projects in two local communities and their utility companies.  

KEY ACTIVITIES

  • Test the Methodology in water utilities of the municipalities of Tešanj and Teslić, in order to improve financial and operational efficiency of the utility companies
  • Raise awareness and strengthen capacities of key actors for adoption and implementation of the Methodology
  • Raise awareness on the importance of incorporating the draft tariff setting methodology and regulatory body(ies) in the structure of BiH legislation governing the provision of utility services, with the aim of establishing a regulatory body at the appropriate administrative level, in order to implement the tariff methodology that will enable sustainable operating performance of the utilities on the long-term.

What have we accomplished so far?



Implemented activities:

  • Methodology presented to mayors and municipal councilors within the General Assembly’s of the Association of Cities and Municipalities of Federation of BiH and the Association of Cities and Municipalities of Republika Srpska
  • Thematic workshops organized for 50 representatives of civil society organizations in  Banja Luka, Sarajevo and Tuzla
  • Over 200 pupils and teachers visited water utility companies in Banja Luka, Bosanski Petrovac, Istočnu Ilidžu and Neum
  • Consultative meeting with the members of the Project Board and government institutions regarding “Tariff setting methodology for water supply and sewerage services in Bosnia and Herzegovina” was held.
  • Project activities presented at the RENEXPO BiH conference
  • World Environment Day and World Water Day marked
  • Educational materials developed for: municipal councilors „Guidelines for councilors:  When considering request for changes in tariff of water supply, sewerage and wastewater treatment “, citizens „ How does water get to your faucet? “, pupils „Advices how to reduce water usage”
  • The Methodology is integrated in the Draft law on modifications and amendments of the Law on Water of Federation of BiH from 2017. For the adoption and application of the Methodology it is necessary that the Federal Ministry of Agriculture, Water-Management and Forestry and Federal Ministry of Environment and Tourism adopt a Decree on methodology for defining lowest tariffs for water services.

The Project produced two documents, “Study on the best ways of administrative positioning of the regulatory body in the process of tariff setting of communal affairs of water supply and wastewater collection and treatment services” and “Tariff setting methodology for water supply and sewerage services in Bosnia and Herzegovina”.

How the Project contributes to Sustainable Development Goals (SDGs)?

SDG 6: Clean water and sanitation - Ensure access to water and sanitation for all

Proportion of population using safely managed drinking water services – one of the key principles to be followed, as defined by the water tariff methodology, is principle of equity. It specifically underlines the responsibility of the local community to secure safe water supply for all its citizens, including those living in rural and remote areas where the city water supply network does not extend. If being applied, this principle leads to increase of proportion of population using safely managed potable water supply services

Change in water-use efficiency over time – tariff methodology has a strong focus on economic efficiency of the water supply utility, this is another key principle to be followed. It request implementation of measures leading to control of non-revenue water and forces utilities to decrease real losses before considering any new water intake. One more principle defined by the water tariff methodology is the principle of environmental efficiency, requesting increasing block tariffs to be applied as a tool for supporting efficient use of water.

Level of water stress: freshwater withdrawal as a proportion of available freshwater resources – tariff methodology has a strong focus on economic efficiency of the water supply utility, requesting implementation of measures leading to control of non-revenue water and effective decrease of real losses, what will save the water from excessive intake and thus decrease withdrawal as a proportion of available freshwater resources.

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