Ewald Spitaler, international expert GIZ - IMC: concept and forms

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Speaker: Mr. Ewald SPITALER

Function: Environmental Engineer (Waste / Waste Water / Energy)

>> Inter-Municipal-Cooperation “The Why – The How – Potentials, Risks and Roadmap

towards IMC” <<

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Content of Presentation

Chapter 1 - Introduction

Chapter 2 - Inter-Municipal-Cooperation –

„THE WHY“

Chapter 3 - Inter-Municipal-Cooperation –

„THE HOW“

Possible IMC/IRC structure –

Satelite Model

Chapter 4 - Potentials, Risks towards IMC

Chapter 5 - Factors relevant for future steps

and Roadmap“Coming together is a beginning;

Keeping together is progress;

Working together is success”Henry Ford

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Main – Objective of IMC: >> The improvement of the QUANTITIY (Service Level) and QUALITY (Performance) of the PUBLIC SERVICE PROVISION due jointly identification of the technological most appropriate (BAT/BATNEEC), financial affordable, economical feasible, environmental sound and political acceptable solution with the focus on economical factors by achieving positive ecological impacts for the welfare of the population of the Republic of Moldova <<

FOUR main priniciples to be taken into consideration• Development through Competition• Income Generation instead of Expenses Generation• Economical Ecology vs Ecological Economy• Meeting the EU „AQUIS COMMUNAUTAIRE“

Chapter 1 – Introduction

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Intention of today´s meeting:

„To bring relevant stakeholder and decision maker together to increase and harmonise the common understanding for future requirements, technical solutions and financial needs and joint efforts“ and to harmonise the intentions, comments, recommendations, critics, suggestions and advises during the IMC development process.


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PLEASE NOTE – PRIMARY CLARIFICATION !!!! IMPORTANT !!!!

• PUBLIC SERVICE PROVISION REGION (IMC structure) IS NOT consequently ident with POLITICAL REGION

• PUBLIC SERVICE CANNOT become cheaper through IMC IMC supports the effect of expenses reduction

• There is NO ULTIMATE / UNIVERSAL / PERFECT Model of IMC extisting no state interference into Model, but into timeschedule (to define the THAT and WHEN, but not the HOW)

• The model of IMC in the Southern Region may look totally different to those applied in the Northern Part Model development are strongly depend on

• Local capacity (legal/institutional/technical/financial)• Population density• Geography/topography (eg. River Bazins)• Economical capacity and affordability• Political landscape


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Chapter 2 – The WHY

LEGAL ASPECTS

• Development of one legal entity for public service

• Increase of transparency• Meeting Local Governance

Service Obligations• Achieving implementation

needs regarding EU Acquis

Insitutional Aspects

• Share of administration• Building and Strengthening

Capacities• Sharing of capacities• Clear Responsibilty Structure• Supervision through Board• Centre of Competence• Uniform public awareness

strategy• Prepares for PPP structures

Technical Aspects

• Increased efficiency of asset us• Share of infrastructure• Increase of service level

• Quantitative• Qualitative

• Extension of Service Areas• Extension of related services

(eg. Recycling in SWM)

Financial Aspects

• Reduction of specfic investment costs

• Reduction of operation costs due to efficiency increase

• Flattening of cost curve• Uniform Billing and Accounting

and Cost Centre establishment• Meeting affordable tariff

structures (Cross subsidizing method and flat fee structure)

• Increased revenue collection

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Chapter 2 – The WHY – The Financial Aspect

IMC provides mainly possitive financial implications1. Reduced Specific Investment Costs (long-term reduction of

specific capital costs)2. Increased efficient use of assets leads to fix cost degression3. Capacity Sharing (eg. Admin) leads to expenses reduction4. Other cost minimising factors

0

10

20

30

40

50

60

70

80

90

100

1,00 2,00 3,00 4,00 5,00 6,00 7,00 8,00 9,00 10,00

Nominal

Red.Invest

Fix Cost Degression

other cost reduction factors

0,000

0,020

0,040

0,060

0,080

0,100

0,120

10 20 40 80 160 320 640 1280 2560 5120

Specif ic Investment Costs - IMC

Specif ic Investment Costs - Singular

[Fix cost digression][Totaly Sum in € / hour]

16,47

13,83

12,95

12,00

12,50

13,00

13,50

14,00

14,50

15,00

15,50

16,00

16,50

17,00

Shifts

[in

€ /

ho

ur]

Totaly Sum in € / hour

Totaly Sum in € / hour 16,47 13,83 12,95

Shift 1 Shift 2 Shift 3

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Chapter 3 – The HOW – The ART

„Following inter-municipal and inter-rayonal strategy in the interest of population without losing local individuality and to combine commercial oriented public service with public interest“

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Chapter 3 – The HOW – Proposal of Sturtures

1.) IMC between Primarias and Communas SERVICE CONTRACT

2.) IMC between Primarias and Communas to cover a Rayon • One POE takes over the overall service provision

Service Contract• POEs contracted by overall management for service provision

Satelite Model at Sub-Rayonal-Level

3.) IMC between Rayons • One POE takes over the overall service provision

Service Contract• Rayonal POEs contracted by overall management for service

provision Satelite Model at Inter-Rayonal-Level

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Chapter 3 – The HOW

5.) Agreement / Approval Chain1. Proposal of structure to be developed individually on local level

according local conditions; Sub-Rayonal in agreement with Rayonal Authority

Information to RDC Inter-Rayonal proposal Approval by RDC

4.) Further steps• Outsourcing of specific operational tasks (eg. Asset Management)• PPP either with neighbourhood or private partners

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Chapter 3 – Possible Structure on a Sub-Rayonal Level IMC

Supervisory Board

POE 2POE 3 POE 1

Collection

Rayonal Authority – Regulatory Body

Executive Management (Rayonal Company – POE Rayonal)

Disposal

Operation

Management

Service Contract

Treatment

Cashflow

Cash Flow LocalitiesCash flow landfill

Representative Rayon AuthoritySanitary InspectoratePOEs related Mayors (2/3)3 elected mayors representating clientsObserver/Adviser(non-voting)

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Chapter 4 – Possible Structure on Inter-Rayonal Level IRCSatelite Model – Linking of the operation units to General Management

Inter-Rayonal Waste Managment

Rayon 1Rayon 2Rayon 3

WasteWaste

Waste

SWM Core businesses

Collection Treatment Disposal PR

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Chapter 4 – Possible Structure of Inter Rayonal Approach IRCSatelite Model – Linking of the operation units to General Management

General Inter-Rayonal Waste Managment

FINANCE MANAGEMENT

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Clie

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Billin

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Ca

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Fin

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Ra

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Ac

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Fin

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Inter-Rayonal (Shadow) Balance

Fin

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R

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Ba

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Consolidation Budget

PIANO

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Chapter 5 – Potentials and Risks

1. Opportunities / Potentials +

a.) Increased quantitative and qualitative service provision

b.) Centre of Competence developmentc.) Capacity sharing with neighbourhoodd.) Reduction of specific investment costs

– flattening of cost curvee.) Cost Centre development – uniform

accounting structuree.) Cross subsidizing and meeting of

local/rayonal overal affordabilityf.) Focuse on core activitiesg.) Preparation for outsourcing and PPP

structureh.) Increased transparency due to clear

responsibility distribution – operation/management/controlling

i.) Uniform public awareness strategyj.) One-hand operational and budget

planningk.) Rural development component

2. Risks and Challenges+

a.) Missing support and technical assistance during the implementation phase

b.) Legal binding structure by national authority (see Austria)

c.) Missing political willingness joining IMC structures

d.) Already existing PPPs – difficult to incorporate into an overal structure

e.) Delay in baselining and information sharing

f.) Finding of concense in assignment of executive board and supervisory board

g.) Surplus vs. Profit (POE vs. LTD)h.) Parallel structures in service provision

(funding issue)i.) continuation of usage of out-dated

facilities due to cost reasonsj.) Continuation with non-core busineses

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1. Formulation of the structure and strategy2. Agreement and approval by Rayonal Authority or Regional Development

Council3. Establishment of POE or LTD including relevant statutes4. Establishment of supervisory board5. Assignment of required executive mangement staff6. Baselining and Assetevaluation 7. Detail definition of financial procedure (Accounting Program)8. Proposal for assets, staff and cash – split / shares / participation9. Detail definition of operation procedure10. Detail definiton of service extension (area and kind)11. Unbundling Process of core and non-core actvities and contracting of

services to existing structures12. Only more technical assistance and financial support of IMC structures13. Linking the operative Units with the inter-rayonal company14. Integration of existing inter-municipal facilities (recycling centres, etc.)15. Perparation of consolidation budget for a minimum period until new fiscal

year16. Information Campaigns during the whole and overal process

Chapter 5 – Required next steps and Roadmap

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Roadmap:

3- phase approach• Preparatory Phase• Transition Phase• Optimisation Phase

3- topic appraoch• Legal / Institutional• Technical• Financial

9 phases


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Technical Phase

a.) Preparation Phase:

Asset Summarization and data collection o Vehicles o Store inventory o Office Inventory o Construction (Buildings, Network…)

b.) Transition Phase:

Asset Transfer according Cost Centres (Example)

POE 1 - N1

Rayonal Office - RC

Preparation of Asset lists


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Technical Phase


Singing and confirming of transfer o Signing by SB

o Signing by Municipalityo Signing by Rayonal Directorate

Transfer of the values into regional financial account (by using cost centre

structure) Store and warehouse goods – transfer of the values into regional financial account

(cost centre – IMC Management = Regional Office – RO)


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Technical Phase

c.) Optimisation Phase:

• Distributing assets according needs, by not loosing the owner and

custodianship

Concentration of waste treatment as within few centres Internal technical and service quality standard


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Administrative Issues

Preparation Phase:

Staff list and function distribution Staff splitting and function distribution Uniformity of staff requirement Optimisation of function and administration Announcing an acting regional director Announcing and acing regional finance manager Organigram and function distribution optimised Service contract list Working contract list


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Transition Phase:

Organization of an regional office Follow up of administration staff reduction plan Implementation of organigram Change of positions (directors to managers) Transfer of Working contracts Transfer of service contracts Preparatory work for SB meetings Preparation of Statutes and cooperation agreement


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Optimisation Phase:

Optimisation of internal structure Additional service contracts with regional office Payment of compensation fee for released staff Internal education and qualification standard


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Financial Issues:

a.) Preparation Phase:

Uniformity of Billing System and Accounting System (Piano)

Uniformity of Code of Accounts

Up to date client accounting

Up to date financial accounting

IMC /IRC budget (debt – operational costs for 6 months)

Closing of the financial accounts – final balance


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Financial Issues:


Implementing of Cost Centre Financial Accounting Model in the Rayonal

office

Opening balance into the different cost centres

Implementation of financial standards - request form

Opening of an separate Bank account

Transfer of Cash


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Financial Issues:

c.) Optimisation Phase:

Financial reporting central Debt reduction measurements (starting from authority debts) Uniform salary strategy Uniform tariff and revenue strategy Business reporting service and plan Internal financial minimum standards


FINAL RECOMMENDATION

Implementation of two working groups on Rayonal levels

I.) - Legal / Institutional

II.) - Technical / Financial

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Thanks for your kind attention

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Questions, Discussions, Comments, Requests outcome

and technical applicability (micro/macro-level)

Points of Discussion / Commments / Suggestions / Critics / Recommendations.....

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Documents

Ewald Spitaler, international expert GIZ - IMC: concept and forms