1. Priority Environmental Investment Programme (PEIP) – CARDS Regional Regional Meeting for Senior Officials from SEE and Donors’ Community 19-20th June Budva, Montenegro Progress on financing priority investment projects, progress on environmental infrastructure development Report from the national workshop May 13-14, 2008. Ms.Ana Krunic Ministry of tourism and environment of Montenegro

2. PEIP Workshop in brief 2-day workshop (12-13 May); focus on water and waste investment projects Organized by the Ministry of Environment and tourism and REC project team Objectives: to address the challenges in water and waste investment project development faced by the proponents of the projects on PEIP list. Participants: representatives of municipalities, utilities, national authorities, donors

3. Main topics Progress on strategic and legal framework in the water and waste sector; investment priorities Discussion on progress of each project on the PEIP list and identification of new projects Reforming the utilities; case studies and examples from implemented projects in Montenegro and CEE (Hungary, Estonia, Croatia Discussion on financing options (IPA, other sources of funding)

4. Update on the PEIP list Progress achieved with water infrastructure projects: Emergency rehabilitation of the existing Podgorica WWTP and construction of a new plant located outside the city area (including the main conveyor from the existing site to the new location); Construction of sewage system in the town of Tivat, and expansion and reconstruction of sewage system in the town of Kotor; Construction of new wastewater facility and reconstruction of the existing sewage system in Niksic

5. Update on the PEIP list Progress achieved with waste infrastructure projects: Mojkovac Mining waste disposal site Remediation; Closure and remediation of the existing waste disposal site and construction of a new Podgorica landfill along with recycling centre.

6. Progress on strategic and legal framework in the water and waste sector; investment priorities Legislation in the water supply sector is being adapted to the regulations of EU. Law on Water (“ Official gazette of Montenegro”, No. 27/07). The law was adopted in May 2007 and it’s harmonized with the EU Water Framework directive 2000/60/EC. Based on the Law on Water 5 sub legal acts were enacted in the water sector. New sub legal acts in the water sector are being planned. Water supply layout of the Republic of Montenegro 2001. The Law on Water provides enactment of water management plans in the water region of the river basin. Master plans for wastewaters drainage and treatment for the Southern, and for the Central and Northern region respectively (2004, 2005); Study on wastewaters management in the coast region ( Kocks)

7. Progress on strategic and legal framework in the water and waste sector; investment priorities Legislation and strategic documents in the waste management sector: Law on Waste Management Law on Communal Utility Services Law on Environment Law on EIA National policy on waste management (2004) Master plan on waste management on the republic level (2005) Spatial plan and Sector study on waste management (2005) National plan on waste management in Montenegro (2008) The Republic of Montenegro is divided in the following 8 sectors from which the waste is collected. The priority in the waste management sector is construction of regional sanitary landfileds in Montenegro for the following municipalities:  Bar (municipalities Bar and Ulcinj)  Berane (municipalites Berane, Rožaje, Andijevica, Plav)  Budva (municipalities Budva, Kotor, Tivat)  Herceg Novi (municipality Herceg Novi)  Mojkovac (municipalities Mojkovac, Bijelo Polje, Kolašin)  Nikšić (municipalitiesNikšić, Šavnik, Plužine)  Pljevlja (municipalities Pljevlja, Žabljak)  Podgorica (municipalities Podgorica, Cetinje, Danilovgrad

8. Reforming the utilities; case studies and examples from implemented projects in Montenegro The municipalities and ViKs/CEs in the Coastal Region (Hercog Novi, Kotor, Tivat, Kotor, Budva, Bar,) and Cetinje and the government of Montenegro created joint service and coordination company VODACOM, DOO. in order to institutionalize the ongoing rehabilitation process of the municipal water supply and wastewater services. VODACOM carries out a series of general coordination functions such as planning and optimization of the future development of the water supply and wastewater services, and the monitoring of the billing process and the debt management of the existing ViKs.VODACOM offers special services that, due to lack of capacity, are currently are either not performed or outsourced at high cost.

9. Discussion on financing options (IPA, other sources of funding) One of the ways of financing environmental projects is through IPA program The beginning of IPA program - 1. January 2007. Period: 2007-2013 components Transition Assistance and Institution Building Regional and Cross-border cooperation Regional development Development of human resources. Rural development Montenegro has access to the funds from the first two components only Review of funds IPA 2007 and 2008 Environment 4,5 million € for 2008. Projects from waste management sector shall be partially financed from the funds provided by the World Bank (WB) and European Investment Bank (EIB) The most interest in the water supply and waste water projects was shown by: EIB, EBRD, KFW and WB.

10. Key conclusions Progress in strategic framework development (e.g. National plan on waste management in Montenegro (2008) and steps towards investment project preparation Update on the progress made on the PEIP projects; discussion on new projects to be added Progress in preparations with regards to IPA implementation and options for municipal investments to obtain financing

11. Key conclusions Implementation of the adopted legislation and strategies remains a challenge; Progress made towards preparation of feasible investment projects mostly in coastal areas; Less activities and lower capacity in the Northern municipalities