Closing of Chapter 27: Environment is one of the most difficult and expensive challenges Serbia faces on its EU accession path.
The rough estimate is that the fulfillment of obligations arising out of the Chapter 27 will cost the astounding 10, 5 billion EUR. At the end of 2016, Serbia established the Green Fund, a new budgetary line which will serve solely for implementation of environmental projects and is funded by various environmental taxes, donations and loans. The Green Fund itself will not be nearly enough to cover the necessary investments – Serbia largely relies on EU’s financial help in order to fulfill its obligations on the long and difficult Chapter 27 journey, but the engagement of private sector will, for sure, be of great importance.
Amongst other environmental issues Serbia faces, the most concerning one is the fact that there are not enough systems for water and waste management, which require investment of around 8 billion EUR. Serbia needs to construct more than 300 wastewater treatment facilities in the next couple of decades. Current situation is rather bleak – Serbia has less than 50 of such facilities, out of which under 10 comply with relevant EU standards.
Financing of investments requires synergy of multiple sources – state budget and local municipalities’ budgets, the Green Fund, various loans, EU funds, and the deployment of public-private partnerships (PPPs). Tapping into private sector is not only crucial for funding, but also for the exchange of very specific expert knowledge private companies possess, especially given there aren’t enough environmental experts in Serbian public administration.
Promotion of public-private partnerships is particularly important when it comes to the two biggest environmental issues Serbia faces – wastewater treatment plants construction and construction of waste management plants and landfills. One of the most significant PPPs in Serbia is the PPP for waste management in Vinča, worth more than 300 million EUR, which will also serve for the production of green energy. In the last years, the number of PPPs for the storage of non-hazardous waste are increasing in Serbia and feature a long-term cooperation between municipalities and private companies.
When it comes to construction of wastewater treatment plants, reports show that there are some developments in plans to construct a wastewater treatment plant in Belgrade, which is the only European capital without such plant. However, the funding might represent a major issue for wastewater treatment plants construction. Therefore, the synergy of a public and potential private partner in applying for EU funds, as well as a more decisive approach in water pricing might be a good solution.
The good news is that Serbia already possesses legislative supporting the establishment of PPPs and that recent years show a major progress in this field – PPPs are more often, and the public stakeholders show a much bigger openness to engage in such endeavors.
By Marija Oreski Tomasevic, Partner, and Dunja Tasic, Senior Associate, Samardzic, Oreski, & Grbovic