report on legal framework final – november...

iC consulenten Ziviltechniker GmbH

REPORT ON LEGAL FRAMEWORK

FINAL – NOVEMBER 2010

PROJECT TECHNICAL ASSISTANCE AND LEARNING

PROGRAM ON THE MANAGEMENT OF

MUNICIPAL PUBLICLY OWNED

ENTERPRISES (POEs)

Loan/Credit Number Project ID P101616, TF091130, Post Conflict Fund (PCF) – Support for Kosovo

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KOS – TA and LEARNING PROGRAM POEs iC et al Report on Legal Framework - FINAL November 2010

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Table of Content

1. BACKGROUND AND OBJECTIVES ........................................................................................................ 1

2. SCOPE OF WORKS.................................................................................................................................. 1

3. OBJECTIVES OF THE ASSIGNMENT..................................................................................................... 2

4. APPLIED METHODOLOGY...................................................................................................................... 3

5. PARTICIPATION REQUIREMENTS ......................................................................................................... 3

6. LEGAL REGULATION .............................................................................................................................. 3

6.1 POSITIVE LEGISLATION ......................................................................................................................... 3 6.2 LAW ON PUBLIC ENTERPRISE ................................................................................................................ 4

6.2.1 Ownership of local enterprises (Article 3.2) ................................................................................... 5 6.2.2 Shareholders of the local public enterprise (Article 5.2) ................................................................ 5 6.2.3 Adoption and Disclosure of Ownership Policy (Article 6,2)............................................................ 5 6.2.4 Election of Directors of a Local POE (Article 16) ........................................................................... 6 6.2.5 Remuneration of POE Directors (Article 20) .................................................................................. 6 6.2.6 Remuneration of POE Directors (Article 21) .................................................................................. 7 6.2.7 Audit Committee (Article 24) .......................................................................................................... 7 6.2.8 Business Plan (Article 30) .............................................................................................................. 8 6.2.9 External Audit of POEs (Article 33) ................................................................................................ 8 6.2.10 Bylaws (Article 34) ..................................................................................................................... 8 6.2.11 Corporate Code of Ethics (Article 35) ........................................................................................ 8

7. TARGET GROUPS OF BENEFICIARIES................................................................................................. 9

8. RECOMMENDATIONS.............................................................................................................................. 9

8.1 RECOMMENDATIONS............................................................................................................................. 9 8.2 NECESSARY ACTIONS FOR THE APPLICATION OF THE LAW ON POES ................................. 10

8.2.1 Actions on Municipal Level........................................................................................................... 10 8.2.2 Actions on Central Level .............................................................................................................. 11

8.3 HARMONIZATION OF LAW ON LOCAL SELF-GOVERNMENT WITH THE LAW ON POES ......... 12 8.4 NEW LAW ON MUNICIPAL UTILITY ACTIVITIES........................................................................... 12 8.5 ITINERARY AND CONSULTATION MEETINGS .......................................................................................... 15

9. TRAINING PROGRAM FOR LEGAL FRAMEWORK............................................................................. 16

10. COMMENTS OF PARTICIPANTS ...................................................................................................... 17

11. RECOMMENDED ACTIONS ON MUNICIPAL LEVEL....................................................................... 17

11.1 NOTE 1 RE-NEGOTIATED CONTRACTS WITH THE REGIONAL POS........................................................... 18 11.2 NOTE 2 – CONTRACTING A PRIVATE COMPANY ..................................................................................... 18 11.3 NOTE 3 – DIRECT EMPLOYMENT .......................................................................................................... 18 11.4 NOTE 4 – FORMATION OF A NEW LOCAL POE....................................................................................... 18

12. RECOMMENDED ACTIONS BY GOVERNMENT:............................................................................. 18

ANNEXES: Training Material, Program of the Training Seminar, Minutes of the Training Seminar,

Register of Participants, Conclusions from the Training Seminar from the 07 October

2010, Presentation of the Legal Framework from 06 October 2010


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List of Abbreviations AC......................................Audit Commission

AKM ....................................Association of Kosovo Municipalities

BoD.....................................Board of Directors

DR......................................DFID Report

CoK.....................................Constitution of Kosovo

EC......................................Ethical Code

EU......................................European Union

iC.......................................iC consulenten ZT GmbH, Vienna, Austria

ICO .....................................International Communication Office

IPRR ....................................Immovable Property Rights Register

KWL ....................................Kosovo Waste Law

LEP.....................................Law on Environment Protection

LMF.....................................Law on Municipal Finance

LSG.....................................Law on Local Self-Government (Law Nr. 03/L-040)

LPE.....................................Law on Publicly Owned Enterprises

LPFMA ..................................Law on Public Finance Management and Accountability

LTA .....................................Law on Trade Associations

MAFRD ..................................Ministry of Agriculture, Forestry and Rural Development

MCSH ...................................Municipal Commissions of Stock Holders

MEF.....................................Ministry of Economy and Finance

MESP ...................................Ministry of Environment & Spatial Planning

MoLG....................................Ministry of Local Government

NGO ....................................Non-governmental Organisation

POE.....................................Public Owned Enterprises

PR......................................Public Relations

PSC.....................................Project Steering Committee

SOE.....................................Socially Owned Enterprises

TA ......................................Technical Assistance

ToR.....................................Terms of Reference

TP ......................................Technical Proposal

TL ......................................Team Leader

ToR.....................................Terms of Reference

UNIFEM..................................United Nations Fund for Women

UNMIK...................................UN Mission in Kosovo

WB .....................................World Bank

WD .....................................working day

WL......................................Water Law

WWRO ..................................Waste and Water Regulatory Office


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1. BACKGROUND AND OBJECTIVES

The World Bank is supporting the decentralization process in Kosovo. The Grant aims to provide just-in-time technical support to the implementation of decentralization arrangements, as these are mandated by the Constitution of Kosovo. Inter alia, the Grant seeks to support the Ministry of Local Government Administration in implementing the Decentralization Action Plan, which includes the ongoing transfer of delegated competences to municipalities, public communications and outreach to minority communities, establishing new municipalities, and building municipalities’ capacity to fulfil their increased functions.

With the entry into the force of the Kosovo Constitution, on 15 June 2008, the Publicly Owned Enterprises (POEs) previously administrated by the Kosovo Trust Agency were transferred to Kosovo authorities. Enterprises listed in Schedule 2 of the Law on Public Enterprise are defined as Local POEs and are to be transferred to the ownership of one or several municipalities, as specified in Schedule 2 of the law. Local POEs provide public utility services at the municipal level (Municipal Solid Waste Collection, Transport and Management; Water and Waste Water).

POEs providing services of the waste collection, transporting and management; water and sanitation, within the boundaries of a single municipality are transferred to the ownership of this municipality; meanwhile, in the case of POEs that provide services to residents of more than one municipality, shares are divided among the municipalities according to the percentage of registered clients resident in each municipality. According to the LPE, municipalities exercise their shareholder rights in POEs through Municipal Shareholder Committees.

The management and oversight of POEs represents a new competence for Kosovo municipalities. Recent researches however indicate that most municipalities are inadequately prepared for taking on this new competence and that most municipal officials working in this area have low awareness of the relevant legal framework. Moreover, local POEs are heavily affected by low management capacity, low service delivery standards, and inadequate collection rates.

In view of the importance of such Local POEs for municipal service delivery, there is an urgent need to develop the professional capacity of municipal officials to exercise this function in an effective manner to ensure adequate standards of service delivery and efficient financial management.

Supporting measures/ programmes are needed especially for implementation of transfer of competence in water supply/ wastewater and waste collection and treatment in order to increase the role of the municipalities in these sectors, further to improve collection of fees for the services, to open-up the market for these services, allowing municipalities to determine appropriate arrangements for their size and rural-urban composition and to improve the regularity, effectiveness and efficiency of these services in Kosovo.

This legal framework will endeavour to distinguish and revise the current contradictions present at this stage; contradictions such as those arising by the different interpretations among municipalities, regions or Kosovo-wide POEs.

2. SCOPE OF WORKS

After promulgating the declaration of Independence of Republic of Kosovo on 17 February 2008 and following the approval of the Constitution of the Republic of Kosovo on 15 June 2008, the


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Assembly of Kosovo adopted a legislation required under the Comprehensive Proposal for the Kosovo Status Settlement of 26 March 2007, by which the Comprehensive Plan for Kosovo’s final Status of ex-President of Finland Marti Ahtisaari was incorporated, the legal basis for approval of set of laws was established regarding decentralization process; this an integral part of the Constitution of Republic of Kosovo.

The “Ahtisaari Law” among others include the Law on Publicly Owned Enterprises (Law No. 03/L-087); Law on Local Self-Government (Law No. 03/L-040); Law on Trade Associations (Law No.02/L-123); Law on Local Government Finance (Law No.03-L049); Law on Public Financial Management and Accountability (Law No. 03/L-048); Law on Environmental Protection (Law No. 03/L-025); The Waste Law (Law No. 02/L-30) and amended Water Law (2004/24).

The purpose of the Law on Local Self-Government is to implement the provisions set out in the Constitution which guarantee the right of local self-government to municipalities. On the other hand, the Law on Publicly Owned Enterprises (POEs) transfers to Kosovo Authorities ownership over POEs, which were formerly under the administrative authority of the Kosovo Trust Agency. The Law on Publicly Owned Enterprises is meant to implement the provisions of the Comprehensive Proposal for the Kosovo Status Settlement, The Law on Public Enterprises was approved and created the possibility for the local government to start dealing with its capital activities in the file of utility services including water supply, sewers and drains, sewage treatment, waste management, local roads, local transport, and local heating schemes.

With the entry into force of the Kosovo Constitution on 15 June 2008, the Publicly Owned Enterprises (POEs), which were previously administrated by the Kosovo Trust Agency, were transferred to Kosovo authorities. Enterprises listed in Schedule 2 of the LPE are defined as Local POEs and are to be transferred to the ownership of one or several municipalities, as specified in Schedule 2 of the law. Local POEs provide public utility services at the municipal level (e.g. waste collection and management; water and sanitation). POEs that provide services within the boundaries of a single municipality are transferred to the ownership of this municipality, while in the case of POEs that provide services to residents of more than one municipality, shares are divided among the municipalities according to the percentage of registered clients resident in each municipality. According to the LPE, municipalities exercise their shareholder rights in POEs through Municipal Shareholder Committees.

The training of Municipal Shareholder Committees, management body of the Enterprises listed in Schedule 2 of the LPE, will provide superior services for consumers and sustainable economic prosperity of the POEs established by LPE. Actually, local POEs are heavily affected by low management capacity, low service delivery standards, and inadequate collection rates.

In order to reach the EU standards there is an urgent necessity to develop the professional capacity of municipal officials so as to exercise their function in an effective manner ensuring the delivery of adequate level of services; services which are stable as such and which ensure the existence of sustainable financial efficiency and environmental sustainability.

3. OBJECTIVES OF THE ASSIGNMENT

This assignment aims to contribute to the following objectives:

• Ensure consistency among the laws that make up the legal framework on municipal POEs (LLSG, LPE & LTA) and support the effective implementation of this legislation;


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• Develop the capacity of municipalities to exercise their rights as shareholders by ensuring adequate monitoring of POEs’ financial management and service delivery standards in the interests of their citizens;

• Improve standards of corporate governance of municipal POEs by building managerial capacity among the members of boards of directors delegated from municipality in POEs;

• Encourage of inter-municipal co-operation in the delivery of services provided by POEs through development of municipal public joint enterprises; and

• Build municipalities’ capacity to assess alternative mechanisms for the efficient delivery of public services currently provided by municipal.

After completing this Training Seminar, participants will be able to:

• Explain the objectives of the Law No. 03/L-087 on Publicly Owned Enterprises, Law No. 03/L-040 on Local Self-Government, Law No.02/L-123 on Trade Associations course,

• Understand the learning methodology and participant requirements.

4. APPLIED METHODOLOGY

The empirical analysis will be based on the up-to-date experiences in a centralized system of public utility services, perceptions of Municipalities and their leaders about what they expect from the decentralization of public utility services.

The data were received from the available records, results from questionnaires and interviews as well as from consultations with experts, persons familiar of practice and analysis of existing legislation, coherent to opinion of nongovernmental organizations and existing private sector for providing similar services.

Interviews with: Sector Experts representatives from the national and international community, local experts, Local Government representatives, regulatory body representatives, NGOs;

Comments received from participants in the training seminar are tackled in the Annex.

5. PARTICIPATION REQUIREMENTS

The participants in the training Seminar comes with a variety of the valuable professional experience. Their contribution in group discussions and exercises will be very helpful to other participants, Likewise, the experiences of other participants serve as a valuable resource to participants. During the course, they asked the participants in several ways: Group discussions, completing individual assignments and working in teams with other participants, to analyze problems and make recommendations.

6. LEGAL REGULATION

6.1 Positive Legislation

After Comprehensive Plan for Kosovo’s final Status of ex-President of Finland Marti Ahtisaari and entry into force of the Constitution of the Republic of Kosovo on 15 June 2008, the ownership of Public Owned Enterprises, which until this date was administered by Kosovo Trust Agency, has passed to Republic of Kosovo authorities.

In accordance with Article 160 paragraph 1 of the Constitution of Republic of Kosovo, Republic of Kosovo has ownership to all publicly owned enterprises located in the territory Republic of Kosovo.


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Obligations referring to the property rights are the obligations of Republic of Kosovo. Government of Kosovo can privatize, give in concession or rent enterprises with public ownership as regulated by the Law.

Article 160, paragraph 2, determines that the property rights of a Public Owned Enterprise that provide services in a specific municipality or in limited numbers of municipalities will be the property rights of the Municipality or respective Municipalities. Obligations regarding such property rights will be the obligations of Municipality or corresponding Municipalities. The Assembly can, by law, identify such an enterprise and Municipality or Municipalities that have the property rights and obligations against the enterprise. If regulated by the Law, Municipality or corresponding Municipalities can privatize, give in concession or lease socially owned enterprises.

Having in consideration, poor experience, and created sui generis situation during implementation of the Marti Ahtisaari Plan for final Status of Kosovo, between the Law on Publicly Owned Enterprises, Law on Trade Companies and Law on Local Self-Government has contradicts on provisions which regulated: a) Property issues; b) responsibilities of the authority’s in the POEs; and c) reporting.

Exemplarily the above given theoretical outline is explained on the practice of Waste Management, however similarities to Water/ Wastewater are given. There are four principle laws that impact municipal waste management:

• The Law on Local Self Government (Law Nr.03/L-040) that assigns full and exclusive powers to the municipality in respect to waste management (Article 17.1,f)

• The Waste Law (Law Nr. 02/L-30) that elaborates the municipal responsibilities in waste collection including the setting of tariffs and gives powers to the Ministry of Environment to license waste collection companies (Article 13, 14 and 15)

• The Law on Publicly Owned Enterprises (Law Nr.03/L-087) that schedules the local enterprises that are active in this field (Schedule 2) and sets rules for the formation of new POE-s (article 11)

• The law on the Waste and Water Regulatory Office (Law nr.03/L-o86) that should license the operation of public enterprises that provide waste collection services waste collection services

The intention of the laws is such that municipalities are assigned a general competence for waste management, the exercise of that competence for waste management is elaborated by the Law on Waste Management, to the extent that existing services are provided by POEs. These enterprises are governed by the POE Law and the same enterprises regulated by the WWRO. The legal framework would be clearer if the obligations to regulate collection was removed from the WWRO.

6.2 Law on Public Enterprise

The Law on Publicly Owned Enterprises (LPE) concretizes the provisions of the Constitution of Republic of Kosovo Article 160, determines which Public Enterprises are owned by one or many Municipalities and what is the percentage of ownership.

Pursuant to Section 1 of the LPE, law shall provide a legal framework for the ownership of POEs and for their corporate governance in accordance with internationally recognized principles of corporate governance for publicly owned enterprises. Provisions of the law of Kosovo – including, but not limited to - the Law on Trade Associations - governing joint stock companies, their


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directors, their management, their shareholders and the rights and obligations of each, shall fully apply to POEs, their directors, their management and their shareholders unless the present law specifically and explicitly provides otherwise.

Participants of the Training Seminar explained problems in their municipalities related to the LPOE, municipal ownership property and number of the established POE-s.

6.2.1 Ownership of local enterprises (Article 3.2)

According to Article 3.2 of the LPE, all enterprises listed in the Schedule 2 attached to the Law are local public enterprises. All local public enterprises are under the ownership of municipality or municipalities determined in the Schedule 2, and the percentage of the ownership of each Municipality. All other POEs listed in the Schedule 1 of the LPE are central public enterprises and are in the ownership of the Republic of Kosovo and are managed from the Ministry of Economy and Finance.

In principal all POEs are in same time Join stock companies and their management shall implement rules issued for Corporate (Law on Trade Associations of Kosovo no.02/L123).

Article 4 paragraph 1 about organization regulated: “Every POE shall be organized as a joint stock company under the applicable law on business organizations”. Same article paragraph 2 regulated period and precise authority for transformation of the ownership from public to join stock company

6.2.2 Shareholders of the local public enterprise (Article 5.2)

According to Article 5.2 of LPE, municipalities are the shareholder of the local Public Owner Enterprise; while its shareholding rights are exercised by a municipal shareholder Commission composed by one member nominated by the Mayor of the Municipality and two other members nominated by the Municipal Assembly. In accordance with the municipal ownership of the Public Owner Enterprises it is implied that municipality is the owner of the shares of local public enterprise, or that municipality is the shareholder.

Two or more Municipalities are co-owners of shareholders of local Public Owned Enterprises; regarding this issue the Law on POEs and Law on Local Self Government in accordance to the Article 25.2 regulates the requirement from shareholding municipalities in order to find a common and coordinated platform for the management of the Public Owner Enterprise. In harmony with this, decisions are taken by the bodies of local Public Owner Enterprise by majority number of the votes in the meeting of the Board of shareholders as well as in the Board of Directors meeting.

6.2.3 Adoption and Disclosure of Ownership Policy (Article 6,2)

Article 6, paragraph 2, foresees that the Municipal Shareholder Committee of each municipality owning shares in a Local POE shall develop and issue, within one hundred and twenty (120) days after the effective date of the present law, an ownership policy that defines the municipality’s overall objectives with respect to its ownership of such Local POE and its role in the corporate governance of Central POEs. Such ownership policy shall be consistent with the provisions of the present law and the other applicable provisions of the law in Kosovo. Such ownership policy shall also contain detailed provisions on how such ownership policy will be implemented. If more than one municipality owns shares in a Local POE, the concerned Municipal Shareholder Committees shall cooperate on the development of a joint ownership policy. If in any case an agreement cannot


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be reached on any element of the content of such joint ownership policy, the issue shall be decided by a majority vote of the concerned Municipal Shareholder Committees.

Special competencies of the Municipal Shareholder Board are defined in the Law on POEs. It is important to mention the obligation for the issuance of a “proprietorship policy” throughout which shareholding municipalities present their objectives regarding the Public Owner Enterprise as well as for rigorous supervision of the work of Board of Directors and Auditing Commission regulated in accordance to Article 7 of the LPE.

All municipalities out of the list in the Schedule 2 attached to the Law are local public enterprises are not established municipal shareholder Commissions.

6.2.4 Election of Directors of a Local POE (Article 16)

Article 16 of the LPE stipulates:

• Establishment of the Board of Directors of a POE which shall consist of five directors.

• Four of such directors shall be elected at a shareholders meeting as provided for in the Law on Business Organizations; and each such elected director shall have a term of three years. A municipality’s Municipal Shareholder Committee shall represent the municipality at such meeting and such committee shall exercise the municipality’s voting rights as provided in Section 5.2 of this Law. The other director shall be the POE’s CEO, who shall be selected by the POE’s board of directors in accordance with Section 21 of the present law.

• In case where more than one municipality owns shares in the Local POE: (i) each Municipal Shareholder Committee shall have the right to elect one director; and (ii) the remaining directors who are subject to shareholder election shall be elected by the concerned Municipal Shareholder Committees in accordance with the provisions of the Law on Business Organizations governing the election of directors of a joint stock company.

• In electing directors, the Municipal Shareholders Committee(s) shall ensure that at least two elected directors are proficient in, or at least have an adequate knowledge of, accountancy, as required by the LPE.

• No person may be nominated or elected to a director position unless he meets the eligibility, independence and professional suitability criteria specified in paragraphs 1-of Article 17 of the LPE and he has executed the affidavit required by Article 17.5. Each Municipal Shareholder Committee shall have the right to identify and nominate qualified candidates for election to a Local POE’s Board of Directors; provided, however, that any person so nominated must meet the referenced eligibility and professional suitability criteria and must have executed the referenced affidavit.

• The board of directors of a Local POE shall, immediately after election, elect one of its members to serve as its chairperson. No member of a Local POE’s Board of Directors, other than the member who is also the POE’s CEO, shall have executive powers. The CEO may not serve as the chairperson or acting chairperson of the Board of Directors.

• Hence the Established Municipal Commission of Stock Holders, represents the interests of the Municipality and Citizens in accordance to the Stock Holder meeting, in accordance with the LTA.

6.2.5 Remuneration of POE Directors (Article 20)


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Article 20 of the LPE regulates payment of the Directors, and they shall be paid a basic fee, for time actually spent in Board meetings. Directors shall also be paid a Public Owner Enterprise performance incentive remuneration in accordance with the remuneration policy statement developed and disclosed by the Audit Committee of the Board of Directors.

The basic fee for Public Owner Enterprise, directors shall be established by a decision of the concerned Municipal Shareholders Committee(s). The basic fee established for the directors of a Local POE shall not be more than that established by the Government for the directors of a Central POE. If a Local POE is owned by more than one municipality, the decision on the basic remuneration fee shall be subject to a vote of the Municipal Shareholders Committees, where each such committee shall have the right to cast that number votes that is equal to the shares owned by the concerned municipality.

The level of the basic fee shall be established at a level that can be expected to attract applications from highly competent persons who meet the requirements established by paragraphs 1-4 of Article 17 of LPE, and who can reasonably be expected to professionally and responsibly discharge the director duties provided for by the present law and the Law on Business Organizations.

The Audit Committee shall develop and publicly disclose a remuneration policy statement that covers the POE’s directors and officers.

Such remuneration policy statement shall, inter alia, specify the relationship between remuneration, especially performance incentive remuneration, and performance and include measurable standards that emphasize the longer run interests of the POE over short term considerations; cover the payments, if any, to be made when terminating the contract of an officer; and the employment contracts of all officers shall reflect and incorporate the relevant provisions of such remuneration policy, limit the annual performance incentive remuneration payable to a director, if any, to no more than the aggregate annual amount of the basic fee provided for pursuant to paragraph 2 of this Article, and (iv) if the remuneration policy provides for performance incentive remuneration payable to the CEO in connection with his performance as an officer, it shall not permit the CEO to also participate in the performance incentive remuneration payable to directors, if any.

The POE shall be responsible for paying all required remuneration to its directors. The directors of a POE shall not receive any other remuneration or benefits from the POE.

6.2.6 Remuneration of POE Directors (Article 21)

Officers of a POE will be selected and appointed by the POE’s Board of Directors. The Audit Committee shall have exclusive authority to appoint and remove the Internal Audit Officer, who shall serve at the pleasure of the Audit Committee and which may, at any time by majority vote, terminate his contract with or without stated cause.

In selecting persons to be appointed as the officers of the POE, the Board of Directors shall conduct an open, transparent and open competition aimed at ensuring that all such appointments are based exclusively on merit in accordance to the article 39 of the LTP.

6.2.7 Audit Committee (Article 24)

Each Public Owner Enterprise shall have an Audit Committee of three elected directors.


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Audit Committee shall verify the business and affairs of the Public Owner Enterprise are conducted lawfully, responsibly, and in the exclusive interest of the Shareholders.

Audit Committee shall designate its own chairman.

6.2.8 Business Plan (Article 30)

Preparation of the Public Owner Enterprise business plan will be approved by the Board of Directors. Officers of Public Owner Enterprise shall, by October 31 of each calendar year, prepare Business Plan for the upcoming calendar year. Such Business Plan shall be submitted for approval first to its Board of Directors. After approval shall be provided for information purposes to the concerned Municipal Shareholder Committee.

Business Plan shall be public information. However, if the concerned POE operates in a market that is currently characterized by competition or that is reasonably expected to be characterized by competition in the next 24 months, any information in such a Business Plan that, if made public, could reasonably be expected to negatively affect the POE’s competitive position on the market shall be maintained as confidential and shall not be made public. In such a case, the POE shall prepare a public version of its Business Plan that does not contain such information.

6.2.9 External Audit of POEs (Article 33)

Public Owner Enterprises shall be subject to an annual, objective, external audit conducted by an independent, competent and qualified auditor.

The auditor shall be required to provide the Board and the Shareholders the financial statements in accordance with the rules and accounting principles. The auditor owes a fiduciary duty to the Public Owner Enterprise and the Shareholders.

All directors, officers, employees and contractors of the Public Owner Enterprise shall cooperate fully with the auditor during the conduct of the external audit.

6.2.10 Bylaws (Article 34)

Every Public Owner Enterprises shall establish and put in force bylaws as required by the Law on Business Organizations.

The Ministry of Economy and Finance shall have the authority and duty to promulgate a model set of bylaws for use by Public Owner Enterprises, and each POE shall ensure that its bylaws are consistent with such model bylaws. The Ministry shall ensure that such model bylaws comply with the present law and other applicable laws of Kosovo and reflect widely accepted international standards for the corporate governance of publicly owned enterprises. The Ministry shall also give due consideration to the model bylaws for POEs previously adopted by the Kosovo Trust Agency.

6.2.11 Corporate Code of Ethics (Article 35)

Public Owned Enterprise shall prepare, adopt and implement a mandatory code of ethics and corporate governance. Ministry of economy and Finance shall have the authority and duty to promulgate a model code of ethics and corporate governance for use by POEs, and each POE shall ensure that its code is consistent with such model code.


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7. TARGET GROUPS OF BENEFICIARIES

This assignment will aim to build capacity in POEs management among the following key target groups through technical assistance and a series of trainings for the following group of beneficiaries: a) Mayors and/or other municipal executive officials (Directors of Municipal Services Departments); b) Members of municipal legislative assemblies; c) Members of Municipal Shareholder Committees; d) Members of POEs Boards of Directors; end e) Officials in the Ministry of Local Government Administration.

The total number of participants in learning program events is estimated at around 150, one working day.

8. RECOMMENDATIONS

8.1 Recommendations

Recommendations for revision of the current legal framework, including text of draft amendments are presented here below in order to consult elimination of contradictions among these legal acts.

Reviewed laws are: Law on Publicly Owned Enterprises (Law No. 03/L-087); Law on Local Self-Government (Law No. 03/L-040); Law on Trade Associations (Law No.02/L-123); Law on Local Government Finance (Law No.03-L049); Law on Public Financial Management and Accountability (Law No. 03/L-048); Law on Environmental Protection (Law No. 03/L-025); The Waste Law (Law No. 02/L-30) and amended Water Law (2004/24).

Although the Law’s intention is to develop a regulatory framework for POEs based on corporate governance principles, there are some issue which raise questions as to the compatibility of the Law with the constitutionally guaranteed right to local-self government and POE relevant provisions of the Constitution and of the Settlement Proposals. Some of the more serious issues will be addressed in the following.

The analysis of this Study show that the decentralization process of Municipal POEs is a complicated process everywhere and requires a very strategic and coordinated approach. The circumstances within which this process is applied in Kosovo, and, the dynamics and the circumstances, within which basic Laws were approved for the functioning of local government and other, make this process even more complicated.

The data and analysis stated above show several weaknesses of the approved legislation which is now in force. If the implementation process should not create detrimental and un-repairable consequences, Consultant’s team proposes the phase-based approach and coordinated activities of the institutions parts of this process. The first phase that could be called the emergency phase is the start of immediate implementation of the Law on POEs with interpretations and suggestions that will be given below. Following this phase it is necessary to start harmonizing

the existing laws which directly or indirectly is connected with this field. Also a special focus must be made to the harmonization of LPE and LLG. And in the final phase there should be a comprehensive law drafted for the municipal utility activities on a local level that would make all these activities legally binding.

In order to rapidly functionalise POEs and fairly apply the LPE, recommend such actions necessary to be undertaken without delay on municipal and central levels:


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8.2 NECESSARY ACTIONS FOR THE APPLICATION OF THE LAW ON

POES

In order to rapidly functionalise POEs and fairly apply the LPE, the following actions are recommended/ considered necessary to be undertaken without delay on municipal and central levels:

8.2.1 Actions on Municipal Level

Municipalities are asked to strengthen their role in the operation of municipal Services (water supply/ wastewater and waste collection and treatment) and to take action as required by the Law on Local Self Government and other related legislation, e.g. Waste/ Water Law to:

• Develop/ complete Plans for Local Service Provision

• To determine the institutional arrangements for provision of Services as appropriate to the municipal circumstance

• To actively manage Services to avoid health risks to the population

• To engage in public awareness and information campaigns to inform citizens of the new arrangements for Services and to inform them of their obligations (in exchange for improved services)

• To take action to increase fee collection including the possibility of collecting fees as part of property tax

In this context municipalities should consider the following institutional arrangements:

Re-negotiate contract(s) with regional POEs currently operating in the municipal area. Municipalities have the right to determine exactly the services they wish to secure from the regional POE in order to deliver the services required. Service agreements may provide for collection of citizen payments to be made by the POE or by the municipality and if by the municipality either for the POE to be subsidised by the municipality or for the POE to pay a franchise to the municipality depending on the volume and range of services requested by the agreement. A municipality may determine not to require services from the regional POE.

For the waste sector another potential solution could be contracting to a private company in order to secure services in the municipality. Private companies can seek a license from the Ministry of Environment and Spatial Planning in accordance with article 14 of the Waste Law (the MESP has not yet issued any licenses, se below). Municipalities can publish a tender in accordance with standard procurement procedures to contact a private company to provide Services. The contract may determine the extent o services including arrangements for fee collection. By opening positions for municipal employees to provide the services (Direct Employment), municipalities may employ staff who are tasked to provide waste collection services. Municipalities should be conscious of the problems in relation to staffing limits. This opinion is seen as most suitable for smaller municipalities or for rural areas.

Formation of a New Local POE: The formation of a new local POE will require a decision of the government and should only be considered for spatial circumstances where other options have failed. Municipalities would be required to provide their own assets to establish the POE and would not be able to share from the assts of existing POEs. Once established a new POE would be bound by the requirements of the POE Law and would be regulated by the WWRO.

Responsibilities of the municipalities in accordance to the positive law are follow:


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A. Establishment of the Municipal Shareholders’ Commission (Section 5.2 i LPOE)

B. Issuance of the ownership policy by Municipal Shareholders’ Commission (Section 6.2 i LPOE)

C. Appointment of the Board of Directors by Municipal Shareholders’ Commission as the representative of Municipality in the shareholders’ meeting (Section 16 of LPOEa)

D. Definition of the salary of members of Board of Directors from Municipal Shareholders’ Commission (Section 20 of LPOE)

E. Nomination of officials of POEs from Board of Directors (Section 21 of LPOE)

F. Establishment of the Auditing Committee (Section 24 of LPOE)

G. Preparation of the Business Plan of the POE for the approval by Board of Directors (Section 30 of LPOE)

H. Procurement of an internal auditor’s services (Section 33 of LPOE)

I. Approval of regulations of POEs from shareholders’ meeting in which Municipality is represented by Municipal Shareholders’ Commission (Section 34 of LPOE)

J. Issuance of ethics code for POEs (Section 35 of LPOE)

8.2.2 Actions on Central Level

1. Establishment in all municipalities of the Municipal Shareholders’ Commissions which are direct reperentatives of the property rights into municipal shareholder companies.

2. Nomination of the Interim Board of Directors, which functions until Municipal Shareholders’ Commissions appoint the regular Board of Directors (Section 43 of LPOE)

3. Definition of the ownership of municipalities and the ownership percentage for the following local POEs:

• Regional Waste Company Pastrimi Sh.A, Prishtina

• Regional Waste Company Ambienti Sh.A, Peja

• Regional Waste Company Pastërtia Sh.A, Ferizaj

• Regional Waste Company Eco-Regjioni Sh.A, Prizren

• Regional Waste Company Higjiena Sh.A, Gjilan

• Regional Waste Company Uniteti Sh.A, Mitrovica

4. Transfer of all shares of “Shareholding Associations” from Ministry of Economy and Finance to respective local POEs (Section 39.1 of LPOE)

5. Decision which budgetary organization will inherit the financial funds entrusted to Kosovo Trust Agency for subsidizing local POEs

Recommended actions for the Government are (exemplatory for the Waste Sector):

• The MESP should take action to determine the mechanisms by which private companies can be licensed.


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• The MESP together with the MoLG administration should then make a public announcement setting the first date by which the first private waste collection companies are invited to make their license applications.

• The government should encourage the liberalisation of the waste market and allow the municipalities to exercise their competence in waste management without pre-determining the manner in which that should executed.

• To propose a change to the Law on Waste and Water Regulatory Office (Law No.03/L-086) to remove the obligations of the WWRO to regulate waste collection.

8.3 HARMONIZATION OF LAW ON LOCAL SELF-GOVERNMENT WITH THE

LAW ON POEs

By starting with the above fact that LPOE and LLG are in serious disharmony with each other and the harmonization of these laws is very necessary, the team analyzed the nest European experience in this field. The focus is on the part of the Law that deals with Regional POEs for water and sewage services that remain under state ownership and municipal possibilities to carry out the obligations set out in Section 17, paragraph f, of LLG regarding water supply. Best consulted experiences inform us that four factors should interact in order to make these enterprises providing efficient and effective services for the citizens. The relevant factors defined are: central government, local government, consumer and the donor17. Different countries have had various experiences on how these four factors interact with each other but the scheme below is an example for a better adapted interaction in the circumstances and condition of Kosovo.

From the scheme it can be seen that central government has decisive role in policies, regulations, ownership, management and finance. Local government has a role in finance, management and ownership. Donors provide finance as the consumers do, which, through taxation, affect in finance but they should also have the right in submitting requests, have their opinion about quality of services. Our model proposes co-management, co-financing and co-ownership of central and local governments. Central government furthermore must make main policies for utilization of water and regulation of tariffs and quality19. The method how could municipality participate in co-management and co-ownership with regional Enterprises for water and sewages is open for discussion. It is worth mentioning that the storages where dangerous materials are stored must be under the ownership, management and control of central government without the possibility of privatization. In the Annex some models we proposed for regional water and sewages Enterprises have been provided.

8.4 NEW LAW ON MUNICIPAL UTILITY ACTIVITIES

Having in regard that municipal utility activities are of the vital interest and without which it is impossible for citizens and legal entities to live, we estimate that it is necessary to define which activities that must be considered suchlike. LPE does not include all these activities whilst it treats them as instrument by which central and municipal governments could exercise forms of corporate POEs. However, municipal activity also may imply other activities, which, by nature, volume of work and municipal capacities, can be exercised with other instruments; we think that it is necessary to draft a Law which will define legal framework for other instruments within municipality. A list of municipal utility activities is presented here below:

1. Supply with potable water which implies the water treatment and distribution to the water meters;


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2. Treatment and distribution of industrial water which implies water that has not been treated in order to be suitable for human consumption. (Actually Bulk water-issues are under the authority of the Water and Waste Regulatory Office – in accordance to the article 1.2. of the regulation no.2004/49 on the activities of water, wastewater and waste services providers);

3. Conduction and cleanup of faecal waters which implies the direct or indirect release of treated or untreated wastewaters, used waters, sewage, chemical products and by-products, industrial wastes and other substances without regard to their nature, into surface or groundwaters, onto the land, or into the ground or excavated areas (Actually is regulated by the Kosovo Water Law);

4. Conduction and ejection of rain water which implies the manage sources for important water supply at local level such as natural water springs, public springs, public wells and ditches (Actually regulated by the Kosovo Water Law), for flood protection, Municipalities are obliged to undertake measures for protection against floods in accordance with Law and shall propose and implement Flood Management Plans.

5. Urban traffic and inter-urban traffic which implies the road transport of Passengers and of Goods activity. Pursuant to the article 7 of the Law on road transport (Law no.2004/1) Municipality may issue rules in relation of buses provided that they are without prejudice to the rights and interests of all communities which shall be duly respected. Such rules shall include:

i. Regulation or prohibition of the use of public buses in certain roads or road related areas;

ii. Embarking and disembarking of passengers and other matters in relation to transport of passengers;

iii. The making and maintaining (keeping) of records and their inspection;

iv. Transport of passengers’ luggage or other goods;

v. Regulation or prohibition of passenger transport standing on bus;

vi. Maximum speed of public buses;

vii. Design, equipment, fittings (internal or external) of public buses;

viii. Terminal points and bus stops on bus lines; and

ix. Regulation or prohibition of notices, signs and advertisements inside and outside of public buses.

6. Treatment and storage of solid waste which implies the activities and provision for providing collection and transport of municipal solid waste, container density, providing services for waste collection site housekeeping and prevention of flying and loose debris.

7. Industrial and Commercial waste shall regulated Municipality, and hazardous waste which implies the any substance or object belonging to a category of waste which the holder discards or intends or is required to discard produced from the industry or other waste producer which has at least one of the following characteristics, as explosive; oxidizing; flammable; irritant; harmful; toxic; carcinogenic; corrosive; infectious; teratogenic; mutagenic; release toxic gases in contact with water, air or an acid; capable of yielding another ‘hazardous’ substance; ecotoxic, shall regulated from central (Government) level.


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8. Maintenance of public cleanliness in towns and dwellings which implies the washing and refresh public area during summer period, washing during spring and autumn, and cleaning from the snow during winter period. All this activities are under authority of the Municipality. (Actually: Public companies participate in the tender for this job in competition with private companies);

9. Maintenance and usage of parklands, greenness, resorts, aquatic recreational places which implies the activity manage from the Municipal Department of the Public Services throw Public enterprise established from the Municipality.

10. Maintenance of traffic lights and other infrastructure which implies the ...1;

11. Maintenance of cemeteries, crematoriums, burial services which implies the ...;

12. Maintenance of public lights which implies the ...;

13. Maintenance of public places and parking places which implies the ...;

14. Maintenance and usage of markets which implies the ...;

15. Performance of chimney cleanup activities which implies the ...;

16. Maintenance of municipal infrastructure such as public clocks, fountains which implies the ...;

17. Removal of wrongly parked vehicles, dealings with wandering dogs, decoration of parts of the town which implies the ...;

Surely that all these activities could not and must not be exercised by establishing independent subjects such as POEs, for sure other methods are possible and indispensable. Law must also define which of these activities must be privatized, which method and which level to use.

The scheme below will show what a Law should contain according to best practices.

This scheme shows which actions must be organized, divided and controlled by each other. Also this scheme must be used in the cases of privatization, provision of concessions and licences for carrying out such services.

What should a Law on municipal utility activities contain?

1. To define what is public utility activity.

2. Which utility activities should be carried out at local level?

3. How should municipalities organize the carry-out of utility activities?

4. Which utility activities can be carried out by a sector of municipal administration?

5. Which activities must be carried out by more sectors and how to control the activities of these sectors?

6. Which activities must be carried out from independent municipal subjects?

7. Which activities must be carried out in partnership with Private Sector?

8. Which types of public-private partnership can be used for carrying out these activities?

9. Which activities can be privatized and what type of privatization to use?

10. Which activities cannot be privatized?

1 Please note: Activities 10, 11, 12, 13, 14, 15, 16 and 17 are regulated in same form as Activity 9


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11. In which circumstances could a municipal POE bankrupt and who should carry out the obligations for provision of public utility services during the bankruptcy period?

12. How and in which circumstances the workers in Municipal POEs can used the right of termination of the work.

The approval of a Law and the application of the two above phases would harmonize the legal framework of municipal utility activities in local levels in Kosovo

8.5 Itinerary and Consultation Meetings

Day Activities Present

14.12.09 Process of nomination of the administrators of the Public Companies, article 39 of the Law of the

Enterprise

Eset Mazreku, Director of the LEGAL UNIT and Xhevdet Shala IC Group

15.12.09 Constitution of Kosovo; Law on Local Self-Government (Law Nr. 03/L-040); Law on Publicly Owned Enterprises; Law on Trade Associations;

Law on Municipal Finance; Law on Public Finance Management and Accountability; Law on

Environment Protection; Kosovo Waste Law; and Water Law, for implementation: Technical Assistance and Learning Program on the

Management of Local Publicly Owned Utilities (POEs)

Shqipe Ajvazi, Legal Officer, Municipality Association of Kosova, Prishtina,

Republic of Kosova and Xhevdet Shala IC Group

16.12.09 How many will need necessary training Vjollca Selimi, Head of Division for donor coordination and NGOs and Xhevdet

Shala IC Group

16.12.09 Process of the Technical Assistance and Learning Program on the Management of Local Publicly

Owned Utilities (POEs) 0f training

Lulezim Dragusha, Political Advisor of the Minister, Ministry of Administration and Local Government, Prishtina and

Xhevdet Shala IC Group

26.01.10 On going process of the project implementation Mr. Agim Demukaj, Research Analyst, World Bank - Kosovo CO and Xhevdet

Shala IC Group

02.02.10 Information about Draft Legal Framework of the project, and process of nomination of the

beneficiaries from the target group of the project

Mr. Besim Kamberaj – Director of Department for local government reforms and European Integrations and Xhevdet

Shala IC Group

02.02.10 Review of the comments in Legal Framework from Mrs. Clelia Rontoyanni

Vjollca Selimi, Head of Division for donor coordination and NGOs and Xhevdet

Shala IC Group

02.02.10 Review Law on Publicly Owned Enterprises, Law on Local Self Government, and Law on Trade

Associations

Mr. Agron Maxhuni - Director of the Legal Department, Ministry of Administration

and local Government and Xhevdet Shala IC Group

04.03.10 Information about Draft Legal Framework Mr.Ardian Haxhaj, Senior officer for Municipality Coordination Ministry of

Administration and local Government and Xhevdet Shala IC Group


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Day Activities Present

02.04.10 Information about Draft Legal Framework of the project, and process of nomination of the

beneficiaries from the target group of the project

Mrs. Rozafa Ukimaraj, Head of the Division on municipality coordination and

Ministry of Administration and Local Government and Xhevdet Shala IC

Group

07.04.10 Coordination of the implementation Legal Framework of the project, and process of nomination

of the beneficiaries from the target group of the project

Mr.Ramadan Sejdiu, Director of the Unit for Monitoring Public Ownership Ministro

of the Economy and Finance and Xhevdet Shala IC Group

08.04.10 Legal Framework of the project, local government and process of the decentralisation after

Comprehensive Plan for Kosovo’s final Status of ex-President of Finland Marti Ahtisaari

Mr. Agron Maxhuni - Director of the Legal Department, Ministry of Administration

and local Government and Xhevdet Shala IC Group

09.08.10 Development and strategy of the Kosovo Landfill Management Company and relations with licensed company for solid municipal waste collection and

transport

Mr.Avni Ramadani, Executive chef, of the KLMC and Xhevdet Shala IC Group

17.08.10 Legal regulation of the Kosovo Landfill Management Company and relations with licensed company for

solid municipal waste collection and transport

Mrs. Blerina Uka, Secretary of the Bourd of the KLMC, and Xhevdet Shala IC

Group

23.08.10 Level of the Immobile property tax collection in municipality Peja

Mrs. Aferdita Grapci, Director of the Department of Finance and Property of

the Municipality Peja, and Xhevdet Shala IC Group

24.08.10 Level of the fee collection in Regional Company for Waste Transport and Collection

“PASTËRTIA” FERIZAJ

Mr.Nazmi Jashari, secretary of the Regional Waste Company “Pastërtia” Ferizaj, and Xhevdet Shala IC Group

9. TRAINING PROGRAM FOR LEGAL FRAMEWORK

The component of the training programme on the regulatory framework basically consists of eleven parts:

1. Establishment of the Municipal Commissions of Stock Holders (Art. 5.2 of LPE), compare with the Law on Trade Associations.

2. Issuance of policies for ownership by Municipal Commission of Stock Holders (Art. 6.2 LPE)

3. Election of the board of directors from Municipal Commission of Stock Holders as representatives of municipality in the stock holder meeting ( Art. 16 of LPE)

4. Determination of fees for members of the board of directors by Municipal Commission of Stock Holders (Art. 20 of LPE)

5. Designation of officials for Public Enterprises by the board of directors ( Art. 21 LPE)

6. Establishment of the Audit Commission (Art. 24 of LPE)

7. Preparation of public enterprises business plan that will be approved by the board of Directors (Art. 30 of LPE)

8. Procurement of external audit services (Art. 33 of LPE)


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9. Approval of Public Enterprises’ Regulations by Stock Holders, where municipality is represented by Municipal Commission of Stock Holders (Art. 34 of LPE)

10. Issuance of ethical code for public enterprises (Art. 35 of LPE) and

11. Recommendations for revision of the current legal framework, including text of draft amendments in order to consult in elimination of contradictions among these legal acts.

Training material of the Work shop is attached in Annex 1.

10. COMMENTS OF PARTICIPANTS

The participants in the training Seminar came with a variety of valuable professional experience. Their contribution in group discussions and exercises were helpful to other participants, Likewise, the experiences of other participants serve as a valuable resource to participants. During the seminar, several communication ways were plasticised, namely group discussions, completing individual assignments and working in teams with other participants, to analyse problems and formulate recommendations as given above.

1. Amendments of the first paragraph on article 16 of the Law on POEs, having in consideration representation of the all municipalities in the Board of directors (POE “Pastrimi” provide services in Prishtina, Obiliq, Fushe Kosove, Podujeve, Drenas, and Lipjan).

2. Review number of the POE-s in municipal level in accordance to the number of consumers and provided services in the municipalities.

3. Establishment of the Municipal Shareholder Commissions in the all Municipalities

11. RECOMMENDED ACTIONS ON MUNICIPAL LEVEL

Municipalities are asked to strengthen their role in the operation of municipal Services (water supply/ wastewater and waste collection and treatment) and to take action as required by the Law on Local Self Government and other related legislation, e.g. Waste/ Water Law to:

• Develop/ complete Plans for Local Service Provision

• To determine the institutional arrangements for provision of Services as appropriate to the municipal circumstance

• To actively manage Services to avoid health risks to the population

• To engage in public awareness and information campaigns to inform citizens of the new arrangements for Services and to inform them of their obligations (in exchange for improved services)

• To take action to increase fee collection including the possibility of collecting fees as part of property tax

In this context municipalities should consider the following institutional arrangements:

� Re-negotiated contract with the regional POE currently operating in the municipal area (note 1)

� By contracting to a private company in order to secure waste collection services in the municipality (note 2)

� By opening positions for municipal employees to provide the services (note 3) � By the formation of a new local POE (note 4) � A combination of the above


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11.1 Note 1 Re-negotiated contracts with the regional POEs

Municipalities have the right to determine exactly the services they wish to secure from the regional POE in order to deliver the services required by the Waste Management Plan. Service agreements may provide for collection of citizen payments to be made by the POE or by the municipality and if by the municipality either for the POE to be subsidized by the municipality or for the POE to pay a franchise to the municipality depending on the volume and range of services requested by the agreement. A municipality may determine not to require services from the regional POE.

11.2 Note 2 – Contracting a private company

Private companies can seek a license from the Ministry of Environment and Spatial Planning in accordance with article 14 of the Waste Law (the MESP has not yet issued any licenses, see below). Licensed company for providing public services has opportunity to apply in tender for provide public services in accordance to the contract’s between authorised companies and Municipalities.

Municipalities can publish a tender in accordance with standard procurement procedures to select and contact a private or/and public company to provide municipal solid waste collection and transport services. The contract may determine the extent services including arrangements for fee collection. Municipalities should support Authorised Companies after contracting for increase their fee collection, implementing their authority and using all measures in accordance with their baylaws and other legal acts.

11.3 Note 3 – Direct employment

Municipalities may employ staff who are tasked to provide waste collection services. Municipalities should be conscious of the problems in relation to staffing limits (see below). Thos opinion is seen as most suitable for smaller municipalities or for rural areas.

11.4 Note 4 – Formation of a new local POE

The formation of a new local POE will require a decision of the government (see below) and should only be considered for spatial circumstances where other options have failed. Municipalities would be required to provide their own assets to establish the POE and would not be able to share from the assts of existing POE-s. Once established a new POE would be bound by the requirements of the POE Law and would be regulated by the WWRO.

12. RECOMMENDED ACTIONS BY GOVERNMENT:

• The MESP should take action to determine the mechanisms by which private companies can be licensed.

• The MESP together with the MLGA should then make a public announcement setting the first date by which the first private waste collection companies are invited to make their license applications

• The government should encourage the liberalization of the waste collection market and allow the municipalities to exercise their competence in waste management without pre-determining the manner in which that should executed

• To propose a change to the Law on Waste and Water Regulatory Office (Law No.03/L-086) to remove the obligations of the WWRO to regulate waste collection.

KOS – TA and LEARNING PROGRAM POEs iC et al Report on Legal Framework – FINAL-Annex November 2010

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ANNEX 1

Training Material

As extra document: KOS-ASS_RLF-Final-Annex1.pdf


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ANNEX 2

Program of the Training Seminar

Date: 26 April 2010

Venue: Hotel Viktoria, Prishtinë/ Priština

Time: 9.30 AM

PROGRAMME

09.30 – 10.00 Registration + coffee

10.00 – 10.10 Opening by Mr Besnik Osmani, Permanent Secretary of the Ministry of Governance Local Administration (MGLA)

09.45 – 10.00 Presentation of the Project

Mr Sali Fazliu, Local Team Leader, iC consulenten

10.00 - 10.30 Law no. 03/L-087 on Public enterprise

Mr Xhevdet Shala, Legal Expert, iC consulenten

10.30 -11.00 Law no. 02/L-123 on Corporate

Mr Xhevdet Shala, Legal Expert, iC consulenten

11.15 -11.30 Coffee break

11.30 – 12.00 Law no.03/L-040 on Local Administration and contradicts with applicable laws

Mr Agron Maxhuni, Director of the Legal Department MGLA

12.00 – 13.00 Lunch break

13.30 - 14.00 Comments of the participants in introduced laws

Moderator: Mr Xhevdet Shala & Mr Agron Maxhuni

14.00 – 14.30 Discussions of the collected comments and proposal for amendments in the applicable laws

Moderator: Mr Xhevdet Shala & Mr Agron Maxhuni

14.30 -14.45 Coffee break

14.45 - 15.30 Conclusions of the participants

General Important Information

All training material elaborated in course of the Program will be uploaded and secured for future use in the virtual library

available at

http://www.kosovo-poes.org/content


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ANNEX 3

Minutes of the Training Seminar Date: 26 April 2010

Venue: Hotel Viktoria, Prishtinë/ Priština

Time: 9.30 AM – 15.30 PM

- Opening of the Training Seminar and welcome for participants by Mr Agron Maxhuni

Director of the Legal Department of the Ministry of Governance Local Administration (MGLA);

- Presentation of the Project by Mr Sali Fazliu, Local Team Leader, iC consulenten.

- Presentation and explanation of the Law no. 03/L-087 on Public enterprise by Mr Xhevdet Shala, Legal Expert, iC consulenten, continuing with the Law no. 02/L-123

- Presentation and explanation of the Law no.03/L-040 on Local Administration and contradicts with applicable laws Mr Agron Maxhuni, Director of the Legal Department MGLA.

- Moderated by Mr Xhevdet Shala & Mr Agron Maxhuni participants presented their comments of the participants in introduced laws:

1. Mr Ismet Kukleci, representative of municipality Decan, expressed his concern regarding the Municipal POE’s with poor income (Waste Companies); POE’s with good business remaining under the central level. Further he asked for explanation of all necessary steps for process of establishing an own Public Enterprises on public property.

Mr Xhevdet Shala explained and advised drafting all documents which have to be issued by municipality to establish a new Joint Stock Company in Public Ownership, and/ or to ask for parts of existing public Join Stock Company in Public Ownership.

2. From the Association of Municipalities Mr. Sazan Ibrahimi, informed the SEMINAR’S participants regarding contradictios between law on central level, municipal level and law on POE’s. These issues remaining main problems that affecting Municipalities and POE’s

3. Mr Rushan Ceka, representative of municipality Kaqanik, addressed to Kosovo administration for more clarification between law on local administration and law on POE’s. Further he raised his concern on difficulties and pressure to smaller municipalities.

4. Mr Sami Istrefi, representative of municipality Vushtrri, agreed with all legal solutions, but he asked for support for implementation of the approved laws. Further he confirmed difficulties in implementation of LPE.

5. Mr. Ramadan Sejdiu, Director of the Unit for Management of the Public Owned Enterprises, informed the SEMINAR’S participants about new process of management and role of the Municipal Commission of Stock Holders. Further he informed about


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existance of two lists of the POE’s, by ex KTA on central and local level, and both are still valid

Conclusions from the Training Seminar:

1. A necessity for continuing with trainings of the Municipal Commissions of Stake Holders in all Municipalities exists;

2. Proposals from the Consultant (iC) conc. amendment of laws are accepted;

3. During project implementation it may be recommended to collect data about implementation of the Law’s related to Public Ownership and Local government.

4. Establishing of POE’s Boards.

5. Activities of the established POE’s Boards.

6. Business strategy of the established POE’s Boards.

7. Registration of the POE’s (they are still under KTA)

8. Amendments in the applicable laws

Discussions between representatives of the Consultant and seminar’s participants continued till to 15.30.

General Comment:

The participants in the training seminar came with a variety of the valuable professional experience. Their contribution in group discussions and exercises was very helpful to other participants. Likewise, the experiences of other participants serve as a valuable resource to participants. During the course, they asked the participants in several ways: Group discussions, completing individual assignments and working in teams with other participants, to analyze problems and make recommendations.


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ANNEX 4 Register of Participants


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ANNEX 5

Conclusions from the Training Seminar from the 07 October 2010

Our focused aims are providing technical support for the implementation of decentralization arrangements, as these are mandated by the Comprehensive Plan for Kosovo’s final Status of ex-President of Finland Marti Ahtisaari, incorporated into the legal basis for approval of set of laws regarding decentralization process; this an integral part of the Constitution of Republic of Kosova.

During presentation in the Training seminar from 06 October 2010, in Prishtina, where we receive comments from participants, discussed their proposals for harmonization of the Law on Publicly Owned Enterprises (Law No. 03/L-087); Law on Local Self-Government (Law No. 03/L-040); Law on Trade Associations (Law No.02/L-123); Law on Local Government Finance (Law No.03-L049); Law on Public Financial Management and Accountability (Law No. 03/L-048); Law on Environmental Protection (Law No. 03/L-025); The Waste Law (Law No. 02/L-30) and amended Water Law (2004/24).

Municipalities seek through coordination with all interested parties in sectors of water, waste water and waste, to contribute to economic –finances sustainable and stable development of these sectors in the level of municipalities and all territory of Republic of Kosovo.

Law on Local Self Government, Publicly Owned Enterprises of Kosovo and other laws related to municipal competencies in the field of municipal services in implementing the Decentralization Action Plan, has obligation to define their responsibilities and expect the freedom for reason what they have been established to do.

In Training Seminar through presentations we provide an explanation of the rights of municipal competencies, regulated by European standards of decentralization; Transfer of the competences to the municipalities, in accordance to the LLSG: Implementation of the process of return to the Municipalities from the Central Institutions of the Republic of Kosovo; and transfer of the property from the public and become co-owners of shareholders of local Public Owned Enterprises.

Proposals from participants of the Training Seminar are:

1) Harmonize Article 5.2 of the Law on Publicly Owned Enterprises (establishment of the Municipal shareholder committee), with the Law on Trade Associations;

2) Implementation of the process of foresees the Municipal Shareholder Committee’s of each municipality owning shares in a Local POE. Ownership policy shall be consistent with the provisions of reviewed laws and the other applicable provisions of the law in Republic of Kosovo. Ownership policy shall also contain detailed provisions on how such ownership policy will be implemented. Concerned Municipal Shareholder Committees shall cooperate on the development of a joint ownership policy by the majority vote of the Municipal Shareholder Committees.

3) Harmonize Article 16 of the LPE for process of establishment of the Board of Directors of a municipal POE with the Law on Trade Associations (procedures of appointment the Board of Directors by Municipal Shareholders’ Commission);

4) Harmonization of the paragraphs in Article 20 of LPE and with Law on Trade Associations, for definition of the salary of members of Board of Directors. Because, directors shall also be paid


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a Public Owner Enterprise performance incentive remuneration in accordance with the remuneration policy statement developed and disclosed by the Audit Committee of the Board of Directors.

5) Harmonize Article 21 of the LPE with Law on Trade Associations, because the in selecting persons to be appointed as the officers of the POE, the Board of Directors shall conduct an open, transparent and open competition aimed at ensuring that all such appointments are based exclusively on merit in accordance to the article 39 of the LTA.

6) Harmonization of the Section 24 of LPE with Law on Trade Associations for Establishment of the Auditing Committee.

7) Harmonization of the article 30 of the LPE for Preparation of the Business Plan of the POE for the approval by Board of Directors.

8) Harmonization of the Article 33 of the LPE for Procurement of an internal auditor’s services.

9) Harmonization of the Article 34 of LPE for determining process of approval regulations of POEs from shareholders’ meeting in which Municipality is represented by Municipal Shareholders’ Commission.

10) Implementation of the applicable norms for contracting a private company in order to secure waste collection services in the municipality. Private companies can seek a license from the Ministry of Environment and Spatial Planning in accordance with article 14 of the Waste Law and contract may determine the extent on services including arrangements for fee collection.

FINAL RECOMMENDATIONS

Municipalities (local level)

Review and approval of proposals collected in the training seminar mentioned above, as requirement form the direct involved persons in the process of providing of public services, and implementers of the applicable law in local and central level. Recommendations for authorities of municipalities are:

1) Establishment of shareholder commissions as soon as possible, and establish it in accordance to the applicable law’s in Kosovo Public shareholder companies for public services (solid municipal waste collection, water supply and treatment of the waste water and other public services);

2) Review and approve sustainable financial plans of public shareholder companies for public services;

3) Encourage and support initiatives for establishment of new Public shareholder companies in public sector (methods for encourage and support are mentioned above);

4) Establishment of new forms of contracting public and private companies for providing public services (franchise contract’s); and

5) Better control of implementation of public services from contracted providers in their territory.

Government

Kosovo Government has authority to review and propose amendments related to the applicable rules for organization public companies and providers of the public services in Republic of Kosovo.


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Government has authority to use proposals given in the training seminar and review following law’s:

- Law on Publicly Owned Enterprises (Law No. 03/L-087); - Law on Local Self-Government (Law No. 03/L-040); - Law on Trade Associations (Law No.02/L-123); - Law on Local Government Finance (Law No.03-L049); - Law on Public Financial Management and Accountability (Law No. 03/L-048); - Law on Environmental Protection (Law No. 03/L-025); - Kosovo Waste Law (Law No. 02/L-30); - Kosovo Water Law (2004/24), and - UNMIK Regulation for establishment of Water, Waste and Waste water Regulatory

Office nr.2004/49 and Law on Amending UNMIK Regulation 2004/49 on the Activities of Water, Wastewater and Waste Services Providers no.2008/03-L086.

Process of legal gap analyses which is implement during this period include legal gaps, legal contradictions and recommended amendments are mentioned above.


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ANNEX 6

Presentation of the Legal Framework

from 06 October 2010

KORNIZA LIGJORE

MBËSHTETJE TEKNIKE DHE PROGRAM I MËSIMIT PËRMENAXHIMENTIN E NDËRMARRJEVE NË PRONËSI PUBLIKE

Mr.Sci. Xhevdet Shala - IC Consulence

Prishtinë, 2010

HISTORIKU

• Organizimi i shërbimeve publike gjatë në romën e lashtë;

• Shërbimet publike në mesjetë;

• Shërbimet publike në Perandorinë Osmane;

• Mbretritë e Serbisë, Serbo-Kroate-Sllovene dhe Jugosllavisë;

• Periudha 1945 – 1976;

• Ligji i punës së bashkuar;

• Rregullore e UNMIK 2002/12;

• Rregullore e UNMIK 2004/49;

• 26 Mars 2007 Pako e Ahtisaari-t;

• 17 Shkurt 2008 Pavarësia e RK;

• 15 Qërshor 2008 Aprovimi i Kushtetutës;

LIGJET E SHQYRTUARA

o Ligji për ndërmarrjet publike (03/L-087);

o Ligji vetqeverisjen lokale (03/L-040);

o Ligji për shoqërit tregtare (02/L-123);

o Ligji për financat e pushtetit lokal (03-L049);

o Ligji për menaxhimin e financave publike (03/L-048);

o Ligji për mbrojtje të mjedisit (03/L-025);

o Ligji për mbeturinat (02/L-30); dhe

o Ndryshimet dhe plotësimet e Ligjit për Ujrat (2004/24).

OBJEKTIVAT E KOMPONENTËS LIGJORE

• Mbeshtetje për zbatimin e kushtetutës së RK;

• Mbeshtetje Ministrisë për Administrimin e Pushtetit Lokal në sferen e Decentralizimit;

• Mbeshteje zbatimit të pakos së Marti Ahtisaari;

• Mbeshtetje menaxhmentit të kompanive në pronësi publike të renditura në shtojcën 2 të LNP; dhe

• Paraqitja e propozimit për harmonizim dhe ndërrime e plotësime të ligjeve të shqyrtuara.

METODAT E PËRDORURA

• Analizë empirike e bazuar në përvojëne e kompanive të centralizuara;

• Shfrytëzimi i rezultateve të grumbulluara nga pyetësoret; intervistat e personave të kyqur në shërbimet publike;

• Analiza e legjislacionit dhe komentet e grumbulluara për ligjet e aplikueshme;

• Shqyrtimi i opinioneve të OJQ-ve; dhe

• Analiza e aktivitetit të Kompanive private me shërbime të përafërta.


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BAZA LIGJORE

• Neni 160 i Kushtetutës

Paragrafi 1: Pronësia e ndërmarrjeve publike në Qeveri e cila mund të : privatizojë; jep me koncesione; jep me qira ose ta rregulloj me dispozita të veqanta qeverisjen.

Paragrafi 2: Caktohen të drejta pronësore për ndonjë komunë apo disa komuna mbi ndërmarrjet publike komunale si dhe shfrytëzimin, qiradhënje, koncesione dhe privatizim të ndërmarrjeve publike.

AKTIVITETI NË NIVEL KOMUNASH

• Plotësimi i Planeve për kryerjen e shërbimeve publike

• Caktimi i mënyrës së përzgjedhjes dhe ofrimit të shërbimeve publike

• Paraqitja e shërbimeve publike si të rëndësishme për shëndetin

• Të jetë e angazhuar në fushatë publike

• Të ndikojnë në ngritjen e cilësisë së aktiviteteveme rëndësi për publikun (Taksa grumbullim etj)

DETYRIMET PËR KOMUNA

Nga Ligji për pushtetin Lokal kërkohet të:

� Plotësimi i planeve për menaxhimin e mbeturinave;

� Caktimi i autoritetit komunal për kontrollin e kryerjes së shërbimeve komunale;

� Menaxhimi i shërbimeve komunale si rrezik për shëndetin e publikut; dhe

� Ndërmarrja e aktiviteteve për rritjen e shkalles së inkasimit.

FRANSHIZA – KONTRATAT ME KOMPANI

Komunat kan të drejtë të caktojnë saktësisht shërbimet të cilatata i kërkojnë nga Komnpanitë Publike, kërkesa të cilat do tëpërmbushen varsisht nga plani i menagjimit të komunës.

Marrëveshtjet për grumbullimin dhe transportin e mbeturinave tëngurta komunale të cilat do të kryhen nga kompania, do ofrohetpërkrahje në sisitemin e inkasimit të për shërbimet e ofruara dhetë kontraktuara (Franshiza).

Komuna kontrakton shërbnimet dhe përcjellë ekzekutimin ekëtyre kushteve të parashikuara me kontratë në mes komunësdhe kompanisë ofruese të shërbimeve komunale.

KONTRAKTIMI I KOMPANIVE PRIVATE

Në bazë të nenit 14 të Ligjit për mbeturinat,kompanitë private do të kërkojnë licencim ngaana e MMPH.

Komunat do të shpallin tender për caktimin ekompanisë për shërbime publike, në pajtim mestandardet e prokurimit.

Kontrata mund të caktojë edhe cmimin përshërbimet komunale të cilat kan të bëjnë meshërbimet publike.

PUNËSIMI

Komuna mund të punësoj personel shtesë për grumbullimin e

mbeturinave.

Komunat duhet të jenë të kujdeshme për problemet në lidhje

me numrin dhe kushtet e domosdoshme që duhet të

plotësojnë të punësuarit.

Aktiviteti I tyre do të jetë i mirëritur për zgjerimin e zonës së

shërbimit në komunat më të vogla ose për zgjerim në zonat

rurale.


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THEMELIMI I NDËRMARRJEVE PUBLIKE LOKALE

Themelimi i Ndërmarrjeve të reja Publike kërkojnë vendim ngaqeveria dhe mund të vendoset vetëm për raste dhe rrethana tëjashtëzakonëshme.

Komunat mund të kërkojnë që me mjetet e tyre të themelojnëkompani publike dhe do të mund të përgatisin kërkesë përthemelim nga mjetet e reja dhe nga mjetet krejtësisht të reja.

Mënyra e themelimit të kompanive publike për ofrimin eshërbimeve të ujit, kanalizimit dhe grumbullimit të mbeturinavetë ngurta komunale bëhet pas pelqimit paraprak nga ZRRUM.

AKTIVITETET E REKOMANDUARA PËR QEVERINË

• MMPH të caktoj mekanizmat për licencimin e kompanive private.

• MMPH bashkë me MAPL inkurajojnë forcimin dhe licencimin e kompanive private për kryerje të shërbimeve publike.

• Qeveria të inkurajon dhe liberalizoj tregun dhe me masa admnistrative të ndihmoj rritjen e shkallës së inkasimit për shërbimet publike.

• Të propozoj në Kuvendin e Kosovës ndryshimin dhe plotësimin e ligjit për ZRRUM (03/L-086) me rekomandim për shkurtim të kompetencave dhe kalim në Ministri dhe Komuna.

KONFLIKTI NË MES DISPOZITAVE LIGJORE

1) Themelimi i Komisioneve Komunale të Aksionarëve (n.5.2 LNP), krahasuar ne Ligjin për shoqëritë tregtare.

2) Nxjerrja e politikave të pronësisë nga Komunat për Aksionarët (n.6.2 LNP)3) Zgjedhja përmes konkursit e anëtarëve të bordit të drejtorëve nga ana e

Komisionit Komunal të aksionarëve (n.16 LNP)4) Caktimi i tarifave nga ana e Bordit të drejtorëve të emëruar nga Komisioni

Komunal I Aksionarëve (n.20 LNP)5) Shkarkimi i zyrtarëve të ndërmarrjes publike prej bordit të drejtorëve (n. 21

LNP)

6) Themelimi I Komisionit të auditimit (n. 24 LNP)7) Përgatitja e Planit të biznesit të aprovohet nga Bordi I drejtorëve (n. 30 LNP)8) Shërbimet e prokurimit dhe auditorit të jashtëm (n. 33 LNP)9) Aprovimi I rregulloreve të Ndërmarrjes publike nga Komisioni Komunal i

Aksionarëve (n. 34 LNP)10)Nxjerrja e Kodit të etikës për ndërmarrjen publike (n. 35 LNP) dhe 11)Rekomandimet për revizionin e kornizës ligjore.

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