REREP The Regional Environment Reconstruction Programme 7 th REReP Task Force meeting Belgrade, 30 th September – 1 st October 2004 “Report on Stability Pact Working Table II activities “ Oswald Hutter Stability Pact for South East Europe Stability Pact for South East Europe

ReRep and the Role of the Stability Pact   REReP launched under auspices of the Stability Pact and has evolved into a highly successful autonomous initiative with a considerable degree of regional ownership   ReRep is an excellent example of how to use the office of the SP i.e. Identify on area that can foster and enhance regional cooperation in SEE Act as a catalyst to bring together the appropriate parties Promote political consensus among the beneficiary countries Monitor progress

SP Working Table II – Promotion of Environmental Issues   Monitor ReRep. Happy to lend political support if requested   Ensure other WT II initiatives take account of environmental issues e.g. Transport infrastructure projects Regional energy initiative – adoption of environmental directives Water and waste water management Solid waste treatment according to EU Directives

Recent developments (1)   Projects within the Regional Infrastructure Project List moving forward, namely (environment related) Water Supply and Wastewater Rehabilitation Project in Albania (EC Mio. € under Phare) – soon completed Zagreb Wastewater Treatment Plant financed by EBRD and co- financed by KfW - total cost € 270‘0 Mio. – to be completed by 2007 Municipal Environmental Loan Facility in Constanta in Romania, ISPA: €71.6 Mio.- EBRD: €20 Mio. - Local: €8.8 Mio. – to be completed in2005   Infrastructure Steering Group mandate extended to environmental issues – particularly water   Establishment of a Public Private Partnership Task Force

Recent developments (2)   SP membership of ISG important to: highlight environmental issues and to support the beneficiary countries to promote environment related projects. strengthen consensus among members of the ISG and the countries of SEE, on the need for regional approach.   The key challenge will be of TRIPLE nature: prioritisation between projects and different sectors (transport, energy, environment) Implementation capacities at national and local level Creditworthiness and absorptive capacities (  affordability, PPP, IMF)

Recent developments (3)   Extension of the ISG mandate to environmental issues – February 2004 Aim is to provide overall strategy to allow countries move towards integration with EU / reach EU standards in a progressive manner ISG will use EU environmental legislation and standards as the strategic framework for their activities ISG will set up a database with an overview of activities and policies of the IFI's and the EC in this sector

Recent developments (4)   Establishment of a Public Private Partnership Task Force Objective: Facilitate improvements in environment for PPPs in SEE using pilot projects for demonstration /replication effect Members: WB, IFC, MIGA, EIB, EBRD, ECB, BAC 5 projects with high potential demonstration effect (replication), located in 5 different countries, in 5 sub- sectors of infrastructure (all have an environmental aspect) Shortlist includes:5 projects with high potential demonstration effect (replication), located in 5 different countries, in 5 sub- sectors of infrastructure (all have an environmental aspect) Shortlist includes: Water Treatment Plant in Herceg Novi - Serbia/MontenegroWater Treatment Plant in Herceg Novi - Serbia/Montenegro Solid Waste Treatment Plant in Bucharest -RomaniaSolid Waste Treatment Plant in Bucharest -Romania Solid Waste Treatment Plant in BelgradeSolid Waste Treatment Plant in Belgrade

PPPs in SEE – Key Success Factors   World Bank/EBRD study established 4 country groups based on market size, level of economy liberalisation, GDP/head, FDI and degree of democratic transformation. Group 1:PPP feasible Czech Republic, Hungary, Poland, Slovakia, Slovenia (not beneficiary countries of SP) Group 2:Difficulties to be overcome for more PPPs Romania, Bulgaria, Croatia, Estonia, Latvia, Lithuania Group 3:PPPs more problematic Albania, Bosnia/Herzegovina, FYR Macedonia, Serbia/Montenegro, Russia, Ukraine, Kazakhstan, Kyrgyz Republic Group 4:PPPs not feasible Moldova, Belarus, Armenia, Georgia, Azerbaijan, Tajikistan, Turkmenistan, Uzbekistan

WHY THESE PROJECTS HAVE BEEN SUCCESSFUL ? (1)  Subject of PPP is of primary interest (water is vital, motorways not necessarily, if traffic not sufficient) for the public sector  Commercial viable projects  Strategic interests of the private sector (cost intensive PPP preparation is prohibitive for fast cash up strategies)  long term perspectives  Involvement of IFI as guarantor for smooth preparation phase  restricts the possibility of inappropriate lobbying (tendering)

WHY THESE PROJECTS HAVE BEEN SUCCESSFUL ? (2)  IFIs as financing or co-financing institution provides for unobstructed operation phase  Clear defined structure (especially choice of PPP type and period)  Clear defined role of all parties involved (lenders, sponsors, contractors)  risk allocation (private sector cannot take all the risks)  Selection of experienced and successful private and public partners  Strong involvement of the authorities (public partner) and political support