Fuad Jafarli and Zohrab Ismayil PUBLIC PARTICIPATION IN PUBLIC INVESTMENT PROGRAMS: INTERNATIONAL EXPERIENCE AND AZERBAIJAN Baku– 2010, 29 pages.

This publication includes the research carried out and materials developed within “The Advocacy of increasing public participation in public investment budget” project realized by National Budget Group and Public Association for Assistance to Free Economy with the financial support of the Embassy of Norway in Azerbaijan. The research materials cover the international experience on public participation and parliamentary control, as well as opportunities in Azerbaijan and the recommendations for the country. At the same time, information on public hearings carried out in the regions within the project has also been included into the publication. The opinions and conclusions put forward in the given material belong to the authors of the Final Report and the donor carries no responsibility for them.

Tranlated by Aydan Najafova

This report has been published with the financial support of the Embassy of Norway in Azerbaijan.

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CONTENTS ACRONYMS ............................................................................................................................... 3 INTRODUCTION......................................................................................................................... 4 1.FOREIGN EXAMPLES ON THE INSTITUALIZATION OF PUBLIC PARTICIPATION…..................................................................................................................... 6 1.1. Russia does have public participation motivation, however with limited sphere of activity ....................................................................................... 6 1.2. The forms of public participation in Kazakhstan are limited by effective …….................. 7 1.3. Norway has expanded public participation means through electronic government .............. 9 2. FOREIGN EXPERIENCE ON PARLIAMENTARY CONTROL OVER PUBLIC INVESTMENTS ........................................................................................................................ 10 2.1. Activity of Parliamentary control bodies ............................................................................ 10

2.2. Efficient models of control over public investment projects ............................................... 12

2.3. Recommendations for Azerbajan from the effective experiences on control over public investments.............................................................................................. 14

3. THE POLICY PAPER ON PUBLIC PARTICIPATION IN PUBLIC INVESTMENTS OF AZERBAIJAN..................................................................... 16 3.1. CURRENT CONDITION OF PUBLIC INVESTMENT ACTIVITY................................ 16

3.2. WHAT STAGE ARE WE IN REGARDING PUBLIC PARTICIPATION IN PUBLIC INVESTMENT PROGRAMS? .............................................. 17 3.3. CONCLUSIONS ................................................................................................................. 21 3.4. RECOMMENDATIONS .................................................................................................... 22

4. PUBLIC HEARINGS ON PUBLIC INVESTMENT PROJECTS ........................................ 24

4.1. Guba district center .............................................................................................................. 24

4.2. Sumgayit city........................................................................................................................ 25

4.3. Barda city ............................................................................................................................. 26

4.4. Tovuz city ............................................................................................................................ 27

REFERENCE SOURCES ………….......................................................................................... 29

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ACRONYMS ADB Asia Development Bank CAO Chief Auditors Office CEC Central Election Commission EBRD European Bank of Reconstruction and Development FS Feasibility study MENR Ministry of Ecology and Natural Resources MLSFP Ministry of Labor and Social Defense of Population MT Ministry of Transportation NBG National Budget Group NGO Non-government organization NSR Norway State Railway PAAFE Public Association for Assistance to Free Economy PFMC Public Finance Monitoring Center PI Public Investments RF Russian Federation RFCA Russian Federation Chamber of Accounts SPA State Procurement Agency WB World Bank

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INTRODUCTION Since 2005 the considerable growth of oil revenues of Azerbaijan and consequently of the incomes of state budget urged the increase of funds for the reconstruction of infrastructure that had become out of date and unfit since 1990. The amount of investments directed to various fields of social and economic infrastructure made up 7,5% of annual budget expenses initially and 39% later as of 2005. At present more than 1000 projects of public investment program are being realized, however, unfortunately the public often faces with difficulties when acquiring detailed information on these projects. The improvement of the implementation of public investment programs, as well as the increase of the awareness and control of civil society in the realization of these programs in regards to the measures on the acceleration of social and economic development are among the most essential points. The civil initiatives and access to information are quite important issues in the countries we’re going to study. For instance, in Norway the modern communication technologies allow the citizens, public organizations and media to acquire all necessary information about the activities of the government through electronic government. In Hungary the citizens have the right to participate at the hearings of the parliament, the legislative body of the state, and to introduce their initiatives in regards to legislation. Having gone even further in the implementation of public investment projects, Kazakhstan has an effective practice of making amendments to state programs. As for Russia, despite being one of the leading European countries in the realization of public investment projects and even national programs the public participation issue in this country is very poorly developed. The importance of electronic government characterized with the application of modern electronic information means too is extending at the present time. One can observe the growing understanding of public participation through electronic government in the experience of various countries. Despite the unsatisfactory level of public participation in public investment projects in Azerbaijan at the present time, the weakness of participation initiatives in its certain elements is quite obvious. The limited legislation initiatives stand among the reasons for this problem. It’s also worthwhile mentioning that the public is not much interested in the essence of SI projects and their implementation and suffice with the final outcome only. The small number of NGOs specialized in this field and the ineffectiveness of mass media hinders the dissemination of detailed information about these programs and the reveal of problems. Even within limited legislative acts public participation seems to be visual only. Taking into account the plans of the government to carry out larger social and economic projects, the essence of such participation becomes quite clear. The “Advocacy of increasing public participation in public investment budget” project carried out by NBG and PAAFE with the financial support of the Embassy of Norway in Azerbaijan considers the study of international experience on public participation and parliamentary control, as well as the study of Azerbaijani legislation and practical opportunities and the development of recommendations. Russia and Kazakhstan, that have been studied, are countries

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with transit economy like Azerbaijan. They acquire huge oil revenues and possess large public investment activities. The studied Norway is a country with conformably diversified oil revenues that can stand as a model for Azerbaijan. The study of effective practices and the extension of public participation opportunities in PI projects can assist for the efficient, correct and assigned utilization of public investments which is highly required in Azerbaijan now.

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1. FOREIGN EXAMPLES ON THE

INSTITUALIZATION OF PUBLIC PARTICIPATION 1.1. Russia does have public participation motivation, however with limited sphere of activity Talking broadly about the practice of public participation in public investments on federal level in Russia is not possible at the present time. Without regard for a couple of facts, there are too many gaps in this field. The reduction of contra-centralization practice in Russia since 2000, the increase of the role of the state in investment projects and the imitated trends of democracy have much reduced the level and importance of public participation in general state projects. Russia Federation Public Chamber was established in 2006 under the initiative of civil society and not-for-profit organizations. According to the legislation in force the primary function of the chamber was the broader consideration of the interests and demands of the citizens, the defense of their rights and freedoms and the provision of mutual relations between the civil society and the government and local self-governing bodies in order to establish civil control over the authorities. To achieve this purpose the Public Chamber could involve the citizens and their voluntary unions into the realization of state policy through various means, could put forward civil initiatives related to different fields, could carry out public expertise on normative and legal acts and involve the citizens and their voluntary unions to mass discussions on the rights and benefits of citizens. According to article 19 of the Law on Public Chamber the supreme state authorities, federal subjects, local self-governing bodies and the State Duma of Russia should review the results of public expertise and the initiatives of the Chamber and react accordingly. However considering the review of 64 legal and normative acts by the Chamber in 2006-2007, we come to witness that they included no federal budget documents or articles on the expenses or nothing on investment projects. The establishment of public councils within the government is widely spread now. For instance, the Public Council functioning within the Regional Development Ministry under the Public investment Fund is an advisory body responsible for the relations between the citizens of Russian Federation, civil society institutes, businesses and mass media and the ministries and covering the issues related to the activities of the Regional Development Ministry. Its power is as large as the functions of the ministry – carrying out the function of advisor and councilor on issues from the social and economic development of the Russian Federation to city building, construction and municipal economy. The work of the council is built on the solution of problems related to the activity fields of the ministry on the basis of mutual benefit of civil society members, businesses and mass media and on the implementation of state policy. The council is a permanent body with voluntary participation. The decisions made within the authority boundaries are based on the principles of self-governance, publicity and independence. However, when regarding the activities of the council it turns out that it does not take any measures related to public investments. NGOs and other civil society agencies functioning in the field of budget and investments are represented in public councils established in various government agencies of the Russian Federation. However, the form of this representation is still unclear which creates the idea of formality of participation. When reviewing the examples we

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come up with limited participation in investment projects. Despite the legislative provision of public participation in budgeting, it is restricted. The budget processes in Russia are regulated on the basis of Budget Code1

accepted in July 31, 1998. In general the code includes no direct clauses on public participation during the compilation, discussion, approval and implementation phases of federal budgets. However, article 36 of the Code on the “principle of clarity” states the necessity of the clarity of budget information in the following way: “The approved budget and budget implementation report shall be published in official newspapers, information on budget implementation shall be detailed, procedures on the review of budget project and on budget decisions shall be fully clarified for the public”. As is seen, this clause ensures the passive participation in the form of acquisition and accessibility of budget information at best. Such a clause can also be found in reports. For instance, the report of the Accounts Chamber of Russia in 2008 includes no chapter titled affairs related to citizens and civil society. Instead the Accounts Chamber contents itself with regular bulletins and placement of important news on internet. For the sake of fairness it should be mentioned that all the news is delivered effectively, but as already mentioned no clauses on citizens have been included. The best examples of public participation cover environmental problems.

Another visual proof of passive public participation in Russia is the acceptance of federal law on access to information on the activities of state and local self-governing bodies on February 9, 2009 only2

. The law on access to information on the activities of juridical bodies was accepted in December 2008. Thus the law on access to information had been fragmented and its application was given a start as of January 1, 2010. As is seen, the Russian Federation still does not consider it necessary to give a “green light” to the public participation in the development and realization of public investment projects.

1.2. The forms of public participation in Kazakhstan are limited by effective Kazakhstan has more stable and reliable economic growth among Central Asian countries. The political and red tape system similar to that of the regional countries exist in Kazakhstan to a certain degree. However the research showed that the capital investments of the country include active elements of public participation. It’s worthwhile mentioning that Kazakhstan is among countries with best practice in regards to civic participation in budgeting. This can be found not only in the presence of numerous civil society institutes specialized in budget issues, but also in budget becoming a professional activity both in the capital and large towns with high public activity and in different regions. For instance, the Ministry of Economy and Budget Planning regularly places press releases and monthly bulletins on the progress of public investment projects on its web site3

.

1 Budget Code of Russian Federation http://bk-rf.ru 2 Federal Law of Russian Federated No 8-ФЗ dated February 9, 2009 on “provision of access to information on the activity of state and self-governing bodies”. 3 http://www..minplan.kz

Public participation in public investments in Russia started to expand in the 1990s. It’s probably due to the political environment of the 2000s that the public participation in present day Russia is accompanied with limited participation forms. For instance, the public participation in the large investment project on Baltic pipeline system carried out in 1997-2001 is memorable not only due to the raise of local environmental problems but also due to the interference of the local population in feasibility study of the project.

http://bk-rf.ru/�http://www..minplan.kz/�

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According to article 137 of the Budget Code of Kazakhstan that came into force in 2009 transparency is one of the main principles of state financial control4

. The Code states that all normative legal acts of budget legislation, approved (also defined and amended) budget projects and budget implementation reports should be published. As is seen, the budget legislation of this country does not reflect the requirements on active public participation mechanisms in budget process either. However, the Public Chamber at parliament functioning on corresponding legal basis exists only in Kazakhstan among CIS countries except for Russia. The activity of this chamber is regulated by “Charter on Public Chamber at the Parliament of the Republic of Kazakhstan” approved by order No 72 dated November 20, 2007. According to the charter the mentioned body has advisory status and its activities are financed by funds allocated from the state budget. The main duty of the Public Chamber is the provision of expert assistance to parliamentary members. The charter states that the chamber shall evaluate all projects, develop its opinion regarding all projects that enter the parliament and carry out round tables and hearings in regards to the development and improvement of various projects. Besides this the chamber experts have the right to join the parliamentary discussions on projects and represent the chamber at such meetings.

The Public Chamber at the legislative body of Kazakhstan can be considered to be the main mechanism in ensuring public participation in budget process so far. Most of the experts included into the chamber actually represent civil society institutes. According to the charter in force, the Public Chamber has 30 members. Deputy head of Kazakh parliament holds the position of the chief of the chamber. 10 out of members are representatives of NGOs, 7 of legislative bodies, 3 of state authority and 4 of political parties. Other members belong to creative unions (Writers Union), educational and scientific organizations (Academy of Sciences, universities and institutes) and specialized unions representing the interests of various social groups (trade unions). On a regional level Kazakhstan NGOs are more experienced in budget participation process. In reality participation in regional budgeting is in the long run one of the principal means of providing civil participation in state budget. About one third of state budget resources of this country are shared among local budgets. As in many transit countries public participation in Kazakhstan too is realized through various non-government organizations. A couple of important public institutes, including Kazakhstan Budget Transparency and Accountability Program participate in the realization of public control over state budget expenses. These institutes regularly place their research and information related to budget and public investments on their websites and provide instructions and opinions during the development of central budget.

4 Budget Code of the Republic of Kazakhstan, December 4, 2008

One of the investment projects of 2008 in Kazakhstan has an interesting point. Kazakh government has directed the greater portion of funds allocated for the expansion and improvement of housing resources to Almati and Astana. The housing problem characteristic for transit countries exists in Kazakhstan as well and the government has started to allocate investments to housing construction in order to eliminate this problem. However these resources soon turned out to be ineffectively used and in certain cases the investors left their work unfinished. In order to avoid such cases Astana and Almati municipal governments met with local population and provided them with information and discussed the new forms of financing with residents and apartment owners.

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1.3. Norway has expanded public participation means through electronic government The experts who discuss the aspects for the improvement of transparency in Norway suggest matching the corresponding laws more with the general criteria of the European Union. People often address to state bodies and municipalities for the solution of various problems. They also use public services, apply for social insurance and get permission for construction activities. At the same time they need to appeal to various state agencies for certain applications. The role of electronic government in this field is huge. E-government in Norway is an important tool for citizens who want to benefit from their rights as appeal to central and local governing bodies. The web sites of corresponding state bodies in this country provides sufficient information on budgeting issues, state projects, agricultural subsidies, state procurements and other fields. The legislative acts of Norway allow the online acquisition of information too. This right is provided by Information Freedom Act and Environmental Acts5 accepted on May 19, 2006. There is a special web site created for the complaints related to any shortcomings or illegal procedures during state procurements. One of the most spread forms of public participation in EU countries is electronic government. The state agencies that carry the responsibility for the transfer or placement of information should also care about the regular update.6

It’s worthwhile mentioning that the Chief Auditor Office of Norway ensures provision and regular update of information. For instance, the bulletins of the office on monthly and quarterly activities prove it. However, the CAO has not sufficed with this and has placed all information in local language on the progress of specific public investment projects, finance and quality indicators and procurements on its web site.

5 Law 2006-05-19 № 16, 'Act relating to public access to documents in the public administration' (Freedom of Information Act) 6 Research interview with Lars Hansen, first secretary of the Embassy of Norway in Azerbaijan

Lessons for Azerbaijan The following are conclusions for Azerbaijan having studied the models of public participation in SI projects in foreign countries: 1) The implementation of SI projects in Russia is an integral part of national programs and information on their implementation (including delays and shortcomings) is shared with the community; 2) Regular information bulletins of RF Accounts Chamber and information in annual reports on SI projects can be applied in case of Azerbaijan; 3) One of the methods applied during the implementation of SI projects in Kazakhstan is the organization of meetings between project management authorities and citizens and this can be considered an advanced form of public participation. The application of this practice in Azerbaijan can enable amendments and additions to the projects on the basis of opinions and suggestions, as well as study of problems; 4) The Kazakhstan practice on the establishment of public committees with the participation of NGOs, parliament members and government bodies can be beneficial for Azerbaijan; 5) Norway experience can be considered an ideal one for Azerbaijan. Hence the legislation and access to information internet are effectively developed and any citizen has the right to acquire detailed information alongside with e-government.

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2. FOREIGN EXPERIENCE ON PARLIAMENTARY

CONTROL OVER PUBLIC INVESTMENTS Control over state budget is one of the main priorities of the parliament. The parliaments of most countries start budget discussions as of September of each year. This direction holds an important share of budget expenses in countries where public investments are widely spread. The details of public investment expenses are not discussed at the Parliament in the case of Azerbaijan. At the same time accountability in regards to the implementation of programs in this field is zero. In efficient international models accountability covers all expense directions. On the top, accountability on state programs is even more widely developed. 2.1. Activity of Parliamentary control bodies Most of the model countries have parliaments who carry the responsibility for budget control through their account chambers. Account chambers vary due to their authorities, scope and structures. For instance, the Auditors Office of Norway together with its central and regional offices has around 500 employees and auditors. In Russia this figure goes up to 8000. Taking into account the presence of local control bodies one comes to notice the impact of geographical and population structures as well as political systems on the size of these bodies. Without doubt, the audit targets of countries with democratic and already “settled” market economy sharply differ from the financial control of parliaments in countries that are new in market economy and are transiting from strong red-tape system. The supreme body on the control and monitoring of budget expenses in Russian Federation is the Accounts Chamber. It is established by the parliament and its chief is elected for 5 years upon the introduction of the President. The Budget Code of Russian Federation has established vast local and federal opportunities for assessing the effectiveness of budget expenses. The Accounts Chamber controls all budget expenses, including the implementation of public investment projects and purposeful national programs carried out on federal level.7

The controlling authorities of the Accounts Chamber cover all state bodies, non-budget funds, local self-governing bodies, enterprises, organizations, banks, insurance companies and other finance and credit organizations and their unions that acquire federal budget allocations, that use or run federal properties, that get tax, duty or other concessions and benefits.

All state bodies, local self-governing bodies, Central Bank, enterprises, companies and all organizations irrespective of their form of ownership of the Russian Federation are obliged to submit all information to the Accounts Chamber. Rejections non-conforming with the law or evasion of the provision of information, as well as the submission of incomplete or fraud information can lead to criminal liability.

7 http://www.ach.gov.ru

http://www.ach.gov.ru/�

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The control bodies of the President, government, ministries and agencies, as well as other state control organizations shall assist to the work of the Accounts Chamber.

The budget control authorities in Norway belong to CAO. Its main duty is to assist for a more rational and effective implementation of Storting and to achieve a better administration.8

CAO implements the audit of public finances and financial activity of the government. The financial activity of the government is carried out on various layers – from budget resources to that of non-budget funds and from state-owned enterprises to those with part of the shares owned by the state. CAO can carry out multi-direction audits and monitorings. The most developed ones among these are financial, executive and corporate audits. Financial audit is applied in state funds and agencies as well as companies established on the basis of separate legislative acts. Executive audit considers the audit of purposefulness and effectiveness based on the decisions of Storting. Corporate audit is used for the control of companies established on the basis of separate legislative acts, health and state-owned organizations, fully private limited state companies and companies with state share.

Norway has a parliamentary government type and the functioning of the government depends on the Storting.

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The control over state budget expenses in Kazakhstan is carried out by the Accounts Committee. The committee is the supreme state body carrying out the state financial control, is under direct supervision of the president of Kazakhstan and reports to him. Kazakhstan Accounts Committee makes sure that the legislative requirements are met and reports to the president.

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Budget development in Kazakhstan is carried out by the Budget Commission established with the decree of the President. The most important feature of the Budget Code of Kazakhstan is that it reflects the legal regulations for changes and amendments in budget investments.

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The cost of investment projects cannot be increased without the discussions and recommendations of budget commission. It’s not possible to develop the estimation documents of public investment projects that have been included into state or local budgets. Besides the correction of technical solutions that can increase the cost of the projects can only be realized under the recommendations of the budget commission. The inclusion of additional components to any project realized through state budget transfers can only happen based on the opinon and decision of the state budget commission. The government itself evaluates the completed projects and prerapes a corresponding report.

Budget investment plans are executed in accordance with the approved feasibility study. The construction activities within budget investment projects are approved in accordance with the approved project estimations.

8 http://www.riksrevisjonen.no/en/AboutRR 9 Similar source 10 http://www.esep.kz/first2.php?lang=kaz 11 Budget Code of the Republic of Kazakhstan

According to the law on budget system of Georgia the body receiving state budget allocations shall state its investment and donor programs including its obligations and long-term programs separately. Annually the state budget allocations, including capital investments are supervized by the Ministry of Finance and Accounts Chamber. If the actual project expenses exceed the estimated ones by 10% upon the submission of annual report, the state body shall provide its explanation letter and judgement.

http://www.riksrevisjonen.no/en/AboutRR/�http://www.esep.kz/first2.php?lang=kaz�

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2.2. Efficient models of control over public investment projects

Regular control and audit of public investment projects vary due to their forms and the political-economic systems of countries.

The investment projects in Russian Federation fall under 2 groups: a) all-national programs carried out by Russian government; b) projects carried out by Public investment Fund under Regional Development Ministry. It should be noted that most of these projects are long-term and usually cover several federal subjects; control over them is carried out by regional control-evaluation agencies. However, it has been revealed that the decisions were not made in time in 2008 and there were delays in tenders on procurements. Consequently the ACRF suggested the establishment of a single coordinated financial control body in order to avoid the clash of dual authorities.

The State Duma is continuously informed about the outcomes of the monitorings on the implementation of purposeful state programs and federal budget allocations during its audits on various fields. The greater part of these reports reflect the implementation of federal investment plans and the remaining part the sectoral development of separate fields and their monitoring.

The reports include information both on current audits and project implementations and on their financial condition. The reports of ACRF for 2008 cover several sectors, including all-national programs. Unlike the previous approach ACRF mentions about the improvements in certain sectors but also stresses on obstacles, law breaches and ineffective utilization of financial resources. 12

In Kazakhstan the Economy and Budget Planning Ministry carrying out public investment policy has certain regulations related to the methods and analysis of implementation of public investment plans and they are effective in practice. These regulations include both project selection terms and their feasibility studies. An important point is that there are rules related to the monitoring and analysis of the period following the implementation of investment projects.

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According to the rules of monitoing, the post-investment period of investment projects is evaluated annually and covers 3 years following the exploitation of the project. The project can change depending on the actual outcomes of the monitoring analysis. The monitoring on the realization of projects during postinvestment period considers the following:

12 Report on the activity of the Accounts Chamber of Russian Federation in 2008. Moscow 2009 13 http://www.minplan.kz

Extract from the opinion of the Accounts Chamber of RF on the social and economic

development of Far East and Baikal region

The outcomes of the analysis related to the utilization of state resourcse for the social and economic development of the Baikal region and the monitoring of the subprogram on the “Development of Vladivostok city as the center of international cooperation in Asia-Pacific region” revealed lag in the activities during the fourth quarter of 2008, including the construction of the bridge to the isle of Rus. Below are the reasons: documentation of land areas have not been completed, the buildings to be destroyed on the construction sites are still there, experts required for the growth of construction rate have not been involved into the activities and there is shortage of construction machinery. There is need to accept a couple of normative-legal acts in RF in order to eliminate the gaps existing in the implementation of important state projects. . Report of the Accounts Chamber of Russian Federation on the activities in 2008, page 89

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1) Collection of information on the progress of projects;

2) The analysis of the direct outcomes of the project through the comparison of the indicators stated in the strategic plan of a state agency or in the feasibility study documents of the project;

3) Development of reports on the outcomes of project monitoring.

The outcomes of the monitoring of projects of country importance are submitted to the central government and those of communal projects to local state agencies. The monitoring reports shall be submitted to the state planning organization by January 15 of each year and the progress reports on projects implemented through state or local budget resources shall be submitted to the government by February 25 of the current year.

The financial evaluation of projects is carried out in a similar way and includes the following:

1) Collection of information;

2) Analysis of information on the monitoring of postinvestment period;

3) The final cost of the project and its impact on the social and economic condition of the area (region)

4) Recommendations.

The project progress reports for the next 3-year period shall be submitted to Kazakhstan government by May 1.14

In Norway there are numerious reports for the audit of activities of state organizations. One of such is by Norway State Railway (NSR) on the study of procurements related to passenger transportations.

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The report submitted to the Storing states: NSR received an allocation of 4649,3 million krona during the first 4 years within Norway State Railway Plan (covering 1998-2007). The main purpose of this plan was to expand the capabilities of Norway railway and to utlilize economically more efficient and environmentally safer means of transportation. The audits of CAO show that the railway prices had increased by 12,5% and effectiveness decreased by

14 Similar source 15 The Office of the Auditor General's investigation of state procurement of passenger transport services from NSB.

The analytical information of the Accounts Committee of Kazakhstan related to the

State Program on the development of highways in

2001-2005

The studies of 2001-2004 showed that the planning activities in the state program had not been fully completed each year. Thus 18% of construction and reconstruction activities and 13% of renovation activities were not completed in 2001. The reason was that the activities of the state program neglected during the previous years had not been considered. The activities had not been completed due to the shortage of 40,6 million tanga. This tendency continued up to 2003. The auditors of the Accounts Chamber concluded that the following reasons cause the problem: 1) Lack of the financial justificaiton of costs during the implementation of the state program; 2 )Lack of calculations on annual amounts, allocated financial resources and calculations based on the scope of planned road activities and non-transparency. The assessment of the effectiveness of state program implementation shows that the activities according to the program are not fully carried out. The amendments or additions to the state program have sharply decreased the cost per km of road construction. This indicates to the ineffectiveness of planning and casts a shadow on the justified expenses in the state program. In general the effectiveness of the implementation of state programs and financial provision can be considered as satisfactory.

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10,2% at NSR during 1997-2001. This leads to the decrease in the number of railway passengers. The work of management and operators is not satisfactory.16

The recommendation of CAO submitted to the Transportation Ministry for the management of resources allocated for NSR till 2007 and for the establishment of a more effective railway transportation system states that price-directed procurement procedures are carried out rather than maintaining continuous quality service of NSR which leads to the reduction of effectiveness of railway service.

CAU has also told the Ministry of Transportation of Norway to apply new forms approval for procurement plans. It’s recommended that the company purchases new trains and especially express trains which can enable the railway transportation to achieve a better position in this sector. The report also includes recommendations for NRS on the establishment of an effective management system.

2.3. Recommendations for Azerbajan from the effective experiences on control over public investments

The countries, the budget expense and especially the program expenses on public investments of which we’ve studied, have achieved much success in this field. Each of the 3 countries studied gain the greatest portion of their national revenues through the extraction and sale of mineral resources and the huge part of public investments in these countries is formed by these revenues. The distribution and control mechanisms of these resources have been legalized. Certainly, Norway is a developed democratic country with market economy. However the experiences of Russian Federation and Republic of Kazakhstan that do not correspond to this rank are still worth being noticed.

Besides, it should be mentioned that when reviewing the annual reports or quarterly bulletins of the Accounts Chamber of Russian Federation one can rarely come across with opinions related to economic effectiveness and inefficient utilization of resources in the expenses paragraph. No information exists on procurement procedures and tenders that are considered the main procedures in the implementation of federal projects. Cases of corruption are shown as “financial breaches” and no reasons are stated for these breaches. Unlike Russia, certain government accountability and transparency in regards to procurements is vivid in Kazakhstan. On the other hand, the experience of control over state programs in Kazakhstan shows that problems are stated in a more detailed and clear way upon evaluation of the financial effectiveness of the projects.

Azerbaijan shall certainly carry out reforms on the improvement of budget process and on control over budget expenses. From this point of view the advantages of experiences studied should be applied.

a) Norway, Russian Federation and Republic of Kazakhstan have a Budget Code that reflects the general principles of budget legislation. Azerbaijan needs to accept a budget code for regulating the budget process.

b) The Budget Code of the Republic of Kazakhstan includes special regulations and rules related to the implementation of public investment programs. As already mentioned, these regulations shall be reflected in the recommended budget code;

c) The Chief Auditors Office in Norway carries out executive and corporate control, alongside with financial one. In Azerbaijan the activity field of the Accounts Chamber is limited. Similar to Norway experience, control mechanism based on quality criteria of control over public investment programs should be applied in Azerbaijan. In order to

16 CAO acquired the information it used during the research from the inquiry sent to the Ministry of Transportation

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achieve this it’s necessary to make amendments and additions to the law on the Accounts Chamber of Azerbaijan and to expand the authorities of the chamber.

d) Each of the 3 countries studied has special public investment programs. It is advisable that

SI projects of Azerbaijan are of national character.

e) Kazakhstan has methodological indicators for the justification of public investment projects and for the development of their methodology. It would be useful to develop and apply similar methodology and indicators for Azerbaijan.

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3. THE POLICY PAPER ON PUBLIC PARTICIPATION

IN PUBLIC INVESTMENTS OF AZERBAIJAN There is no need to go back to distant future in order to study the traditions of public participation in Azerbaijan. Actually these participation forms started to appear at the end of 1990s. During these years humanitarian organizations and international donors functioning in various areas carried out intensive work in several regions of the country related to the forms and contents of public participation in local and community level in the first place. The reality is that local participation primarily covered the establishment of local self-government bodies and activity of communities. In 2000s the sharp increase of the country’s resources due to oil boom and the growth of state budget revenues for 10 times led to the implementation of numerous public investment projects. However how much effective and correct were these projects and how much did they correspond to the needs? 3.1 CURRENT CONDITION OF PUBLIC INVESTMENT ACTIVITY

The growth of oil revenues since 2005 has been going on to cause serious changes in the structure of state budget. This change is reflected in the sharp growth of direct oil revenues in the structure of incomes on one hand and in the increase of the amount of allocations for construction in the structure of expenses on the other hand. Besides this, investments to the economy and social sector of the country are continued to be made through international loans acquired with state guarantee, by state institutions and State Oil Fund of Azerbaijan Republic17

.

The amount and dynamics of investment expenses allocated from the state budget in 2005-2010

Indicators 2005 Actual 2006

Actual 2007

Actual 2008

Actual 2009

Actual 2010 Law

Public investment expenses (million AZN)

159,9

879,6

1902,2

4275,2

3554,8

3549,0

Dynamics compared to the previous year (in %)

70,8

450,1

117,7

124,8

-16,9

-0,2

As is seen the share of SI projects of Azerbaijan in general budget expenses grew year by year and reached some fantastic figure in 2008. This was the “golden age” in the history of SI projects of Azerbaijan and clearly the directions of investment projects too developed at a growing rate. At present the public investment activity in Azerbaijan is carried out by the state budget, non-budget state funds, state-owned companies and through international loans. 17 Report on the study of improvement of legislation and regulatory acts related to public investments, National Budget Group, 2007.

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The prioritization of public investments upon their growth, their conformity to the demands of functional fields, determination of the principles and procedures for the development of public investment projects, establishment of evaluation mechanisms for public investment projects, as well as the formation of control mechanisms over the efficient implementation of these projects are among important tasks. Besides all these, the reflection, categorization of investment projects implemented through state capital investments and especially through state budget funds in the budget project and their parliamentary discussion and transparency are very essential. Since 2005 the government has managed to increase the political scope of both direct and shared investment projects (especially those carried out through WB, EBRD and ADB) on various fields. In relation to this, the implementation mechanisms of the projects were improved and financial and procurement activities were advanced during the initial periods. However these activities continued up to a certain period and during the later stages information on financial management and procurement procedures that interested the community most was closed. This led to the increased significance of acquiring that information. 3.2. WHAT STAGE ARE WE IN REGARDING PUBLIC PARTICIPATION IN PUBLIC INVESTMENT PROGRAMS? The activities related to the acquisition of information on public investments have expanded lately. One of the main reasons for this is the investment expenses that grow year by year and the activity of the civil society in regards to the effectiveness of these problems. The “green light” for the monitoring of SI projects was turned on in 2005. The government has taken certain steps related to access to information and its acquisition since that time. The regulation of this participation was given a start with the law on “Access to information” accepted in 2005.18

In fact the acceptance of this law was long discussed at the parliament. In any case this legislative initiative facilitated the work of civil society and Mass Media that monitored SI projects during later years. Later activities show that sometimes the given legislation turned out into a “headache” for some government bodies that carried out SI projects.

As shown in the preamble of the law on access to information its main purpose is to determine the legal basis for the provision of the right to acquire information set in article 50 of the Constitution on free, unimpeded and equal terms, according to the principles of open society and democratic legal state and to enable the citizens to control the performance of public duties. Article 10 of this law directly reflects the obligations of the information holders who have to reply to all written enquiries within 7 days and provide explanation for any non-replies in case they do not possess some information. Article 29 of this law provides the incomplete but framed list of types of information that can be revealed. It’s quite interesting that besides geneal information, reports on the implementation of state budget and review budget as well as information related to the conditions of state and municipal procurements are included into the list of information that can be revealed. The transition provisions of the law reflect the creation of web sites of state bodies and the frame of information to be placed on them. Later on, the requirements on the creation of internet resources for state and municipal boides approved by the decree of Prime Minister in 2007 and normative legal documents on gov.az

18 http://www.state.gov.az/download/Qanunvericilik/qanun_informasiya.pdf

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domain elucidated the regulations on the update of information of public importance on internet.19

Reviewing the recent activities of civil initiatives and Mass Media who are the main carriers of public participation process one comes to notice the scanty interest to this field by civil society who’s holding a passive position. A) Electronic Mass Media is demonstrating passive attitude towards SI projects The monitoring of recent years shows that the forms of civil participation in SI project, despite the limited size of legislative base, is still satisfactory. Mass Media and especially television is too passive in the monitoring and study of projects of public and state importance. Televisions usually suffice with the press conferences and briefings held by NGOs that carry out research in this field. Except for “Radio Liberty” that operated on FM band until 2009 no other radio channels have even organized programs on the monitoring of SI projects. In general, the activity of electronic mass media which is considered the most effective participation method in SI projects can be considered passive and static. This passiveness is partly due to the fact that mass media is not independent and partly to the shortage of researcher journalists, the low level of their professional skills and lack of interest to this topic. On the other hand the study of SI projects is not really welcomed by the state bodies that carry out these projects and only those attempts that include some positive elements can get through onto the scene. The practice of holding discussions on SI projects that was typical for some radio stations up to the recent times is also being forgotten. As is seen the lack of interest to this field has turned the most effective civil participation method into something useless. Unlike electronic Mass Media, the share of newspapers and magazines in the monitoring of SI projects is quite big. Despite the goal of independent and party newspapers to criticize the political government through various means, it’s true that the researcher journalists of those papers possess certain information about the projects and usually they are supplied with information both by government sources and by NGOs that carry out the monitoring of SI projects. Another point that increases the interest of newspaper journalists to this field is the motivation of their products. Thus a number of international organizations and donors as well as NGO, whose field of activity is budget processes and monitoring of SI projects, support the media representatives in order to illuminate the current condition. B) NGOs demonsrate a more active attitude Certainly the main role in the monitoring of SI projects belongs to NGOs and there are sufficient grounds for that. The activity of the third sector that commenced its work with humanitarian field in the 1990s necessitated the existence of more professional NGOs. Consequently, since 2000 international NGOs and powerful donors have started to collaborate with local partners on issues like budget transparency and effective management. The application of the law on access to information as of 2006 has been accompanied with the growth of public control over the implementation of a number of investment projects. Since that period a couple of NGOs and Mass Media representatives have started their activities on the assessment of transparency and economic efficiency of various investment projects. The experts of National Budget Group carried out research on civil participation in state budget of Azerabijan in 2007. This research reflected the examples of civil participation in state budget in a number of European countries, including the regional neighbors of Azerbaijan. All of the respondents of the survey covering 420 people in each country stated that the transparency of documents reflecting the expenses and revenues of the state budget and access to corresponding

19 Decision of the Cabinet of Ministers of Azerbaijan Republic, № 033, February 16, 2007

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information were essential for them. 62% of the respondents unanimously answered that they possessed no information about state budget.20

The same is true about the public investment projects. Taking into consideration the fact that public investment expenses are stated as a general figure in budget documents and the decrees of the Cabinet of Ministers on the distribution of resources are not revealed to the population, the level of awareness in this field would not be difficult to imagine. C) Will internet resources become an active form of public participation? IT and internet resources that demonstrate speedy growth recently are among the most important methods of effective and efficient monitoring of public investments. It’s worthwhile mentioning that some positive trends are being noticed in the creation of internet sites for state government bodies, including both central and local bodies.

About half a year after the law on “Access to Information” came into force the Cabinet of Ministers passed an order on the approval of the “Forms and Rules for the creation of internet information resources for state bodies and municipalities” on February 16, 2007. As it is stated in the second part of this law state bodies and municipalities will establish internet information resources in order to supply public information stated in article 29.1 of law on “Access to Information”. Central executive bodies shall enable the state agencies under their subordination to form the internet information resources of the latter. Field (corporate), regional and other forms of internet information resources can be established with this purpose.

Article 4.1 of the order states that through mass media information holders shall inform the public about corresponding links that include information about the means of acquaintance with internet information resources or any amendments made. Also according to article 4.4 of the given law state and municipal bodies who are information holders shall state the time and date of placing some document in internet information resources and ensure quick and easy access to the infromation placed on internet information resources in accordance with article 4.5 of the given law.

Besides this the Cabinet of Ministers has determined 38 types of information required by state bodies and municipalities that have internet sites.

As is seen, the application mechanism of these orders and regulations set forth by this mechanism shall be utilized for the reveal of information. Monitorings have been given a start since 2007 in order to find out how much the provisions set by the requirements of this law are being fulfilled. The monitoring of the internet sites of state bodies revealed that most state bodies developed their web sites initially; some are in the process of preparation, whereas others have not placed certain information on their websites. Following the outcomes of the continuous monitoring, most central state bodies established their internet resources during the second half of 2009.21

Certainly the content and information base of these internet sites are more important that their existence. Hence most official internet pages include only limited information. For instance the web site of a central governing body that carries out some inevstment project does not include detailed information about the project. No information exists about any tenders during procurement procedures and information on selected contractors and subcontractors is only available in press-releases and from Public Relations departments.

20 Experience on participation in budget process, Public Finance Monitoring Center, Baku 2007 21 http://informasiya.org

http://informasiya.org/�

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The outcomes of the monitoring carried out by Multimedia Center on the web site of SAP (http://tender.gov.az) stated that the general structure of the site and the update of information are satisfactory; however there are also severe problems in place. For instance, the site of this agency includes no link to procurement procedures and corresponding state agencies. The site on the monitoring of procurements has no information and there is no menu for the complaints related to procurement tenders. In general there is no link to any information that would enable the monitoring of procurements.22

The condition of websites of state agencies that are the clients for SI projects in Azerbaijan is even worse. Only the web site of the Ministry of Ecology and Natural Resources has general information on SI projects among the ministries of Transportation, MENR, Education, Labor and Social Defense and Central Election Committee that are the clients for the projects on road infrastructure, reconstruction of administrative buildings, construction and renovation of schools and that had been monitored by Public Association on Assistance to Free Economy in 2006-2009.

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http://www.yolneqliyyatservis.gov.az

Ministry of Labor and Social Defense has not web site at all. The web site of the Ministry of Transportation that possesses the largest share in public investment expenses does not include even general information about the road infrastructure projects. “Azeryolservis” JSC under the ministry that is usually client and sometimes contractor for such projects does not have a web site either. Section “Highways” on the website of the Ministry of Transportation includes a link to website of “Service of Road Transportation” Department for more information. However this department was annuled 3 years ago and “Azeryolservis” JSC was established instead. As for the mentioned web site – it’s not working.

The recent trend shows huge problems with access to primary information on SI projects. Whereas it was not difficult to acquire the decrees of the Cabinet of Ministers on the distribution of public investment expenses, since 2009 the public access to this document has been under severe control. The lack of indicators on the distribution of resources and list of projects decreases the capability to monitor different investment projects.

D) The number of court cases on information inquiries is growing

Despite the small positive changes in the field of access to information the inquiries of NGOs who address to the state agencies for acquiring information on the realization of SI projects remain unanswered. Most state agencies break the law by delaying the answers to inquiries, by rejecting to answer with no justification or by not answering at all.

PAAFE that has been carrying out the monitoring of SI projects for the past two years has managed to get timely answers from 2 state agencies (Ministries of Economic Development and Finance) only out of the 17 inquiries sent. The other three agencies have sent delayed answers (Ministry of Ecology and Natural Resources, Ministry of Sports and Ministry of Health). For the remaining inquiries PAAFE either got a rejection to answer or no response at all. Consequently the Association has brought 10 actions against the state agencies. Out of these 3 claims were fulfilled and the inquiries have been responded to at court process on 4 claims. One claim (against SEC) has been sent to the European Court of Human Rights.

E) Other forms of public participation

Any form of participation is welcome under the condition of undeveloped public participation in SI projects. NBG organized the public discussion of public investment programs in 2008-2009. At the same time PAAFE that carries out the monitoring of SI projects held the final

22 http://informasiya.org 23 http://freeeconomy.az

http://tender.gov.az/�http://www.yolneqliyyatservis.gov.az/�http://informasiya.org/�http://freeeconomy.az/�

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presentation. These forms of public participation too are effective, since the issues that interest the community a lot are widely illumited by mass media and especially by the print media (including Internet). Conferences and presentations on monitorings are important means of public participation and Azerbaijan has an experience of some 10 years in this field. However such presentations, press conferences, as well as seminars are attended by a very few number of state agency representatives. Usually the attendees of such events are heads of departments or divisions of certain state agencies who actually possess limited power of influence on the policy of those agencies.

Other sources of information, namely, bulletins, monthly and quarterly reports, are not applied in the practice of public participation over SI projects. Nevertheless the provision of the community with such information and reports in counties whose practices have been studied is something common. Lately the direct communication of authorized representatives of different state agencies with citizens over forums has turned into an advanced form of participation and Azerbaijan lacks this practice as well..

3.3. CONCLUSIONS Despite the mass character of SI projects in Azerbaijan for about 5 years, transparency, accountability and public participation are pretty weak in this field. Alongside with this, the application of public participation forms by the civil society, the development of policy documents and advocacy and legislative initiatives are not sufficient, which negatively affects the expansion of public participation. In general the reasons for ineffective public participation can be summarized as followis: On normative-legal acts and state agencies 1) The government is not interested in the full application of law on “Access to Information”

at state agencies;

2) The formation of e-government is being delayed and the government is not interested in this project;

3) The decision of the CM on internet resources of state agencies and municipalities does not state the full and precise list of information that should be revealed to the community;

4) The state agencies carrying out SI projects have no instructions or normative-legal acts

reflecting the requirements and mechanisms on the elucidation of information on project implementation, cost estimates, contractors, procurements, interim reports or outcomes of independent evaluations and monitorings;

5) SPA cannot or is not interested in classifying the procurements on SI projects and placing

information about tender outcomes, as well as in expanding its activities related to previously carried out tenders;

6) The work of the Accounts Chamber on the audit of SI projects cannot be considered

effective and the Chamber has no public relations in place at all;

7) The normative legal documents of the Cabinet of Ministers and ministries are being concealed from the public;

On civil participation initiatives

1) Small number of NGO or experts dealing with the monitoring of SI projects;

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2) Forms of public participation on SI projects are not effectively utilized. Most often the scope of discussions on information related to the detailed monitoring of joint project activities or separate projects is very limited;

3) The number of SI projects monitored is very small and usually these include road

infrastructure, water economy, administrative buildings and education projects;

4) The international financial institutions who participate at SI projects have no activities related to civic participation at credit or grant projects;

5) No activities are in place related to the monitoring of SI projects carried out by local

governing bodies;

6) There is need to improve the skills and capabilities of mass media journalists on SI projects;

7) The initiatives of the civil society are not sufficient for the application of the requirements

of law on “access to information” at state agencies.

3.4. RECOMMENDATIONS 1) Increasing public participation at government level Legitimizing the public participation is something that all branches of the government should deal with, thus, activities in this direction can be listed as follows: – Organizing presentations on public investment projects, preparing separate reports on their implementation, presenting them to Parliament and publishing by the Ministry of Economic Development.

– Disclosure of the quarterly information of the Cabinet of Ministers on public investment projects;

– Adoption of particular regulatory acts on participation of local municipalities in public investment projects;

– Placing particular information about public investment projects on the web-sites of state agencies;

– Classifying public investment projects by groups, country and local projects, programming them by fields and regions;

– Grouping procurements on the web-site of State Procurements Agency, placing tender results, information on complaints on tenders carried out, establishing mechanisms for dealing with complaints;

– Providing public discussions with NGOs, media and experts on state agencies who are clients for public investment projects and future projects in regions.

2) Increasing Parliament control over public investment projects

The legislative bodies of the studied countries have full control over public investment projects. Taking this into consideration, it is necessary for the Parliament to take certain measures and make amendments to several legal acts: – Define the liabilities of authorized people who refuse to provide information according to “Access to Information” law without any reason;

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– Achieve hearings on reports of the Cabinet of Ministers and the MoED on future public investment projects and their implementation;

– Prepare separate review of the Chamber of Accounts on planning and implementation of public investment projects. Evaluate the effectiveness of public investment programs and projects by Chamber of Accounts according to special indicators.

3) Expansion of the role of NGOs and Media in public participation As already mentioned, there are civic oversight mechanisms over implementation of public investment projects in Azerbaijan. However, there’s need to expand these mechanisms to multi-branch activities. In this regard, NGO-Media relations should be supported by the government as well:

– Specialize and increase the skills of NGOs and other civic initiative groups in different branches of public investment projects;

–Organize the discussion and blogs on alternative forms of public participation like bulletins and annual report in social networks;

– Support the participation of the media in public investment projects, improve skills and capacities and study the experience of other countries;

- Increase the initiatives on public participation by utilizing corresponding policies of international financial institutions that finance public investment projects as shareholders;

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4. PUBLIC HEARINGS ON PUBLIC

INVESTMENT PROJECTS Public hearings in four regions were held together with MPs within “Advocacy on increasing public participation in public investment budget” project. The goal of these hearings was establishing models of public participation in public investment projects implemented in the regions. Public Hearings were held in Guba, Sumgait, Barda and Tovuz.

4.1. Guba

Public hearing on “Public investment projects implemented in Guba region” was held on January 21, 2010. Vahid Ahmadov, MP from Guba region, Emil Omarov, NBG coordinator, Zohrab Ismailov and Ingilab Ahmadov, NBG experts, as well as representatives of local executive power, municipalities, public unions, NGOs and Media participated at this event.

Zohrab Ismailov, NBG board member, opened the ceremony and provided information on the importance of public investment projects in Guba and their impact on different spheres. Later Vahid Ahmadov, MP spoke about the projects in Guba financed through budget and local resources. Construction of the road in Gonagkand and water wells to resolve the water problem was mentioned as projects carried out through local resources.

Ingilab Ahmadov made a presentation on projects implemented in Guba for the past 3 years. During 2007-2009 twenty seven public investment projects were implemented in Guba and the total amount allocated for this purpose from budget made up AZN 703 million. When calculating by years, in 2007 the number of investment projects with direct relation to the region

Public hearing with participation of Vahid Ahmadov, MP and NBG experts January 21, 2010, Guba district center

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was 11 (AZN 3,340 million), in 2008 it was 14 (AZN 9,021 million) and in 2009 3 (AZN 1,508 million). The number of projects with indirect relation to the region was 2 (AZN 9,5 million) in 2007, 5 (AZN 322661.8 thousands) in 2008 and 2 (AZN 345426 thousands) in 2009.

Later discussions with local executive power and municipalities, NGO and media representatives took place. Suggestions were made on the existing problems in the region and their solutions. It turned out that there wasn’t a theatre in Guba, musical schools were not functioning and the 3-kilometers section of the water pipeline was destroyed during construction of Khinalig road. Absence of library in Guba, use of building of House of Youth as public catering and commerce object were also among the mentioned problems.

It also became clear that there were serious problems with the supply of disinfectants and fertilizers for the agriculture within state programs. Their prices were more expensive than the market prices, though said to be on 50% sale, the quality was low and the service period was expired.

Several proposals were made by local authorities. The proposals were on building the along mountain rivers, construction of small bridges, reconstruction of school buildings that had not been renovated for almost 50 years, restoration of roads destroyed by sand-pits mentored by ranked officials, as well as solution of irrigation problems caused due to the wells dug along rivers.

At the end MP Vahid Ahmadov and Zohrab Ismailov asked local municipalities, NGOs and media representatives to increase their initiatives and impacts on prioritization of public investment projects necessary for their region.

4.2. Sumgait

Public hearing on “Public investment Projects implemented in Sumgait city” was held on February 17, 2010. Ikram Israfilov, MP from Sumgait, NBG experts, local executive power and municipality representatives, as well as NGOs and Media representatives participated at this meeting. The event was organized by “Pre-eminence of Law” recourse center of OSCE.

The ceremony was opened by NBG expert Zohrab Ismayil. He stated about the importance of public participation in public investment projects carried out in Sumgait city. Later MP Ikram

Public hearing with participation of MP Ikram Israfilov and NBG experts February 17, 2010, Sumqaıt city

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Israfilov made a speech, sharing his thoughts on public investment projects implemented in Sumgait. Fuad Jafarli provided information on projects carried out in Sumgait for the last 3 years.

It was noted that 26 public investment projects were carried out in Sumgait during 2007-08. AZN 59597 thousand was spent for this purpose. If taken by years, AZN16544 thousand was spent in 2007, AZN 32840 thousand in 2008 and AZN 10202.2 thousand in 2009.

Later, discussions with local executive power and municipality representatives, NGO and media took place. Information and proposals on existing problems in Sumgait were discussed. It became obvious that, the main problems in Sumgait remained power supply, unemployment, and renovation of roads in micro districts.

Ferman Kazimov, representative of local executive power, stated that certain problems of the city are being resolved only due to the concerns and proposals of the city people. Elvin Hanifayev, representative of city municipality said some projects were implemented by district committees having coordinated with municipality and this can actually be considered a form of public participation.

At the end, Zohrab Ismailov asked the representatives of municipality and local executive power, as well as NGO and mass media representatives to increase their initiatives and influence on prioritization of public investment projects necessary for their city. He noted that ideally the initiator of such public hearings should be state executive power. Problems of the city should be revealed at these public hearings, prioritized and consequently proposals should be sent to government.

Another important point was public oversight over public investment projects implemented in the city. NGOs, municipality and district committees and Media should participate in this initiative for ensuring effectiveness and transparency of the projects.

4.3. Barda

Public hearing on “Public investment Projects implemented in Barda region” was held on February 20, 2010. NBG experts, local executive power and municipality, as well as NGOs and Media representatives participated at this event. The event was organized by local “Aran” organization and children’s library.

Zohrab Ismailov, NBG expert opened the ceremony by providing information on public investment projects carried out in Barda and indicating on the importance of public participation. Later NBG expert Fuat Rasulov made a presentation on public investment projects carried out in Barda for the last 3 years. During 2007-2009 19 public investment projects were carried out in Barda. AZN 15997.6 thousand was allocated for this purpose. If it is taken by years it makes AZN 1915 thousand in 2007, AZN 4326 thousand in 2008 and AZN 4717.9 thousand in 2009.

Broader discussions followed by representatives of local executive power and municipality and NGOs. They provided information on the existing problems of the region and suggested their own proposals.

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It was stated that several projects that had to be implemented in Barda were not carried out yet. These include the restoration of cultural center, water supply project and reconstruction of Barda tomb. According to local agencies, the main problem of the city is the construction of sewage system and supply of potable water. Besides, there were no secondary schools in several large villages (for example Alachadilri village with 2000 inhabitants).

Additionally, the topic of discussions included the quality of projects and amount of expenses. According to local executive power and municipality representatives, local resources and companies should be involved into these investment projects most which will bring additional indirect benefit to the region’s economy and will help to save expenses.

The discussions revealed that the role of municipalities in public investment activities was almost null. Though municipalities have implemented a number of projects through foreign donors and non-budget resources, the costs of these projects were not big. Municipalities are capable of implementing public investment projects, but they haven’t been enabled to do that yet.

4.4. Tovuz Public hearing on “Public investment Projects implemented in Tovuz region” was held on February 25, 2010. MP Nazim Mammadov, NBG experts, local executive power and municipality, as well as NGOs and Media representatives participated at this event. The event was organized by local Tovuz Information Centre. NBG expert Zohrab Ismailov opened the ceremony, talked about the importance of public investment projects in Tovuz region and provided general information. Later, NBG expert Fuat Rasulov made a presentation on public investment projects implemented in Tovuz for the last 3 years. It was stated that 25 public investment projects were financed during 2007-2009 in Tovuz and AZN 67918.1 thousand was spent for this purpose. If it is taken by years it makes AZN 13079 thousand in 2007, AZN 43718.4 thousand in 2008 and AZN 11119.9 thousand in 2009. Later, discussions with MP Nazim Mammadov, NGOs and Media were given a start. They provide information on existing problem in the region and made their suggestions. It turned out that there were problems in Tovuz-Alibeyli road, which had been submitted for exploitation just

Public hearing with participation of NBG experts February 20, 2010 Barda city

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recently and the road had sunk in certain sections. Besides, the lack of road signs and control allows high speed which leads to frequent road accidents.

It was stated, several projects considered for the region lately have not been carried out yet. One of them is the improvement of water and sewerage system of small towns. Additionally, the construction of Tovuzchay water reservoir was left uncompleted. According to meeting participants the main problem for Tovuz at present is related to water supply and sewage system. The region is experiencing severe problems with its irrigation system as well. After the public hearing NBG experts and MP Nazim Mammadov were invited to “Objective” program of regional “Simurg TV”. Public investment projects implemented in Tovuz were discussed at the program. The program was broadcasted on February 28 at 8:35 pm. It should be stated that “Simurg TV” covers an audience of about 1 million in western regions.

Public hearing with participation of MP Nazim Mammadov and NBG experts February 25, 2010, Tovuz city

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REFERENCE SOURCES 1) Budget Code of Russian Federation 2) Law of Russian Federation on “Access to Information on activities of state and municipal bodies” 3) Budget Code of Kazakhstan 4) Freedom of Information Act of Norway

5) http://www.stortinget.no/no/In-English/About-the-Storting/Budget

6) http://www.riksrevisjonen.no/en/AboutRR

7) http://www.minfin.md/ru/actnorm/budget 8) http://www.minfin.md/ru/nationalbuget/lowsreglament 9) http://www1.worldbank.org/publicsector/pe/BudgetLaws/EstoniaStateBudgetLaw1999.pdf 10) http://www.ach.gov.ru 11) Report of Chamber of Accounts of Russian Federation on the activities of 2008 12) Investigation of Norway Auditors’ Office on procurements in Norway railway 13) http://www.minplan.kz 14) “Expert” magazine, Kazakhstan, August 13, 2008 15) http://www.esep.kz/first2.php?lang=kaz 16) Report on improvement of legislation and legislative acts on public investments, NBG, 2007 17) http://www.maliyye.gov.az 18) http://www.state.gov.az 19) Law on “Access to Information” 20) Public participation in Budget process, PFMC, 2007 21) Final report on monitoring of budget means allocated to reconstruction of roads. PAAFE, 2006 22) http://www.cit.az 23) http://www.freeeconomy.az

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