The Priority Environmental Investment Programme for SEE (PEIP)

Analytical Report on progress on developing and implementing environmental investment projects in the SEE.

BACKGROUND DOCUMENT NR: 4

Country name: BOSNIA I HERZEGOVINA

Timescale: Progress until June 2008.

Introduction

The purpose of the analytical report is to present major developments in the countries on creating conditions for implementation of environmental investment projects. It also attempts to track and explain progress on financing these projects. The document is constantly evolving and through it the PEIP team is trying to map drivers and barriers for environmental investments in the SEE countries. It is hoped that eventually it would help countries, IFIs, the EC and other relevant beneficiaries to understand better the underlying factors for accelerating environmental investments in the region. This document accompanies the updates lists of project (background document 5).

This version of the report is prepared for the Regional Meeting of the PEIP on 19-20 th June 2008.

1. Progress on financing priority projects from PEIP list

The updated list of priority investment projects contains eight projects. Out of the eight projects five are in the water sector, two are air projects and one is waste related.

Since November 2007 no progress with the current projects on the PEIP list can be outlined.

New projects

It is intended that new projects are added to the list at the next update based on the Public Investment Programme 2008 - 2010 of Bosnia and Hercegovina that was recently adopted. It contains 57 priority environmental projects without secured financing. The Programme is attached to the analytical report (Annex 1). Based on the PIP it is intended that new projects are added to the PEIP list for the next update.

Germany, Italy, Sweden, United Kingdom, EBRD, EIB, World Bank, Canada, Japan, Norway, Switzerland and USAID support the approximation of Bosnia i Hercegovina to the EU acquis including in the enviromental sector.

2. Legislative framework

Progress can be reported on the legislative framework in the water sector with the adoption of the Water Law (FBiH 2006, RS 2006), and implementation started in 2007. The abovementioned laws are in accordance with Water Framework Directive. The new Water Laws also envisage higher involvement of the local government units in project identification and preparation activities.

Regarding FBiH Law implementation, former Public Water Companies in Sarajevo and are re-registered as Water Agencies. RS Water Law foresees the establishment of two Agencies in Bijeljina and . The Agencies are yet to be established, i.e. Water Directorate still operates in Bijeljina.

Preparation of the State Environmental Law started. Working group for law preparation is established and consists of representatives of the entities and state representatives. Deadline for First Draft of the Law is end of October 2008. The Environmental Law will define the establishment of the BiH Environment Agency.

3. Strategies and programmes

Public Investment Programme of (PIP) is a strategic three-year rolling document, and it consists of prioritized projects, based on the needs of Bosnia and Herzegovina, for which the financial assets have been or need to be secured in the future period. Only projects included in PIP can be considered national priority and eligible for financing.

Preparation of strategies and bylaws for adoption is under procedure in both entities.

Republika Srpska currently prepares Nature Protection Strategy. The Strategy is in the phase of the pre-draft. RS has focused its activities in preparation and adoption of the strategic document, i.e. Nature Protection Strategy with Action Plan and Air Protection Strategy.

Federation of BiH has completed the preparation of the Federal Stategy for Enviroment Protection. The Strategy consists of four separate strategies i.e. Nature Protection, Air Protection, Waste Management and Water Protection (to be prepared separatly) Strategy. The Strategy is in the procedure of adoption by the Federal Governement and Parlament. It is expected that Strategy will be adopted by the end of this year.

4. Organisational structures

One of the main objectives of the continuation of the EU funded project Water Quality Management at River Basin Level in Bosnia and Herzegovina (September 2007 - September 2008) is to increase availability of environmental investment projects for IFI financing. This is expected to be achieved through improved project preparation capacities of BiH authorities and improved cooperation with IFIs. The envisaged establishment of Project Preparation Unit is in line with this objective.

5. Financing mechanisms

BiH, as a potential candidate country, will benefit from the first two components of EU IPA Programme, the Transition Assistance and Institution Building as well as the Cross-Border Cooperation. Under IPA Component II, BiH is participating in the cross border programmes, that include the enviroment component, as follows:

Cross-border cooperation between IPA countries: Croatia, Serbia, Montenegro and Bosnia and Herzegovina. One of the focus areas for support under IPA is protection of the enviroment and promotion of sustainable management of natural resources. Projects from BiH can obtain funds from EU funded transnational programme „South-East Europe“.

Directorate of European Integration of BiH presented Programming of IPA 2008 – Component I (Transitional Assistance and Institutional Building) to Donor Community and Civil Society in May 2008.

6. Relevant projects

Several recent or planned technical assistance projects aimed at supporting identification, prioritization and preparation of environmental investment projects. Since January 2006 relevant EU BiH CARDS Projects are as follows:

 Water Quality Management at River Basin Level in Bosnia and Herzegovina (completed)

 Additional Services to the Support to Water Quality Management in BiH (current).

Other relevant projects:  Waste Recycling Pilot Project in BiH (completed). Goals of the project: (a) to help develop a sustainable solid waste management in the region through the definition of economically sustainable pilot recycling activities; and (b) to initiate secondary legislation and regulations on economic instruments supporting the recycling industry in BiH including finalization of bankable documents for all investment projects.

 Support to Environmental Field Inspection (completed) Goals of the project: to increase the capacity of all authorities involved in environmental management at local level.

BiH is receiving assistance for infrastructure environmental investments by IFIs. For example, key focus of KfW activities in BiH is the upgrade of the water supply and sewage network. Currently up to 36 MEUR has been allocated to the sector. Besides the financing of infrastructure investments the programmes also concentrate on management of financial aspects of water utilities. Rehabilitation of Water and Sewage Systems in BiH is one of the biggest water supply projects in BiH with an amount of 14 MEUR. The programme which started in 2006 includes municipalities in both entities: Bihac, Derventa, Kakanj and Konstanica. Planned activities of KfW include the project on construction of the WWTP Bihac and water supply rehabilitation project in Banja Luka. In the water supply sector EBRD a major project with EBRD involvement is the preparation of Plava voda regional water supply system.

7. Key challenges for the next 6 months

The following key challenges were identified for the next six months:  First Draft of the State Environmental Law preparation;  Follow up the activities for Entities Strategies adoption;  Capacity building of the responsible institutions;  Development of the Water Management plan and harmonization of all planned documents with the EU directives;  Increasing investments in environmental projects.

8. Other relevant developments

Attached to analytical report (Annex 2) is a table with the identified 23 projects based on the results of the EC CARDS project “Water Quality Management at River Basin Level”. However, the process of development of these 23 projects into bankable investments is currently in an initial stage. Annex 1 Public Investment Programme of BiH 2008 - 2010

BOSNIA AND HERZEGOVINA Candidate Projects of High priority from the Public Investment Programme of BiH 2008 - 2010 without secured funding sources

Value in No. Location Project Title KM* 1 RS Construction of facilities for flood protection 8,500,000 2 RS Rehabilitation and construction of the irrigation systems in RS 15,000,000 3 RS River stream regulation in RS 13,300,000 4 RS Water supply to municipalities in RS 29,500,000 5 RS Construction of sewage systems in RS municipalities 42,000,000 6 RS Sewage system Bi је ljin а (2 and 3 phase) 30,000,000 7 RS Support to the establishment of regional sanitary landfills 8,000,000 8 RS Collection, treatment and disposal of wastewater in B аnj а Luka 20,000,000 9 RS Pr оје ct of water suppy of rural border area Мrk оnji ć Gr аd 640,000 Preparation of information-documentation basis on territory and environmental 10 RS protection 1,000,000 Rehabilitation of lead and zinc mine landfill for mining waste material disposal 11 RS Sr еbr еnic а 1,500,000 12 FBiH NEAP - Water supply system Dubrave-Čapljina II ohase / HN Canton 10,000,000 13 FBiH Water supply system Trebižat-Pr ćavci-Zvirovi ći, Čapljina II phase / HN Canton 3,500,000 14 FBiH Waterworks "Šanica" Jablanica, II phase / HN Canton 2,950,000 15 FBiH Rehabilitation of the regional waterworks Gabela - Neum / HN Canton 1,200,000 Wastewater collection and treatment of municipalities Čitluk and Me đugorje / HN 16 FBiH Canton 5,000,000 NEAP-Construction of sewage system and wastewater treatment plant for - 17 FBiH II phase / HN Canton 17,600,000 18 FBiH Collector of waste and rain waters in Neum / HN Canton 4,000,000 Reconstruction of facilities for flood protection at the territory of Posavski Canton 19 FBiH (Phase I) 5,000,000 20 FBiH Medical waste disposal / SA Canton 3,100,000 Rehabilitation of collector inTrnovo and construction of sewage system network in 21 FBiH Turovi and Toši ći / SA Canton 746,400 Project of reconstruction of distributive water supply network in the water supply 22 FBiH system of Sarajevo / SA Canton 6,230,000 23 FBiH NEAP-Revitalisation of central waste water treatment facilities, Ilidža / SA Canton 77,060,000 System od remote management and controlling of central heating (II and III phase) 24 FBiH / SA Canton 3,000,000 Plant for combined production of cca 5MW heat and 5 MW of electric power, Novi 25 FBiH Grad / SA Canton 6,500,000 26 FBiH Warmification of Vitez / SB Canton 2,200,000 27 FBiH Reconstruction of Travnik heating station / SB Canton 2,210,000 28 FBiH Construction of water supply system for Kruš čica , Vitez / SB Canton 338,000 29 FBiH Water supply system "Gor čevica Han Bila" ( I phase ), Travnik / SB Canton 1,800,000 30 FBiH Water supply system "Gor čevica Han Bila" ( II faza ), Travnik / SB Canton 2,500,000 31 FBiH Water supply system Nova Bila - Trebišnjica, Travnik / SB Canton 2,521,000 32 FBiH Rekonstrukcija korita Rijeke Bile-Mehuri ći ,Travnik / SB Canton 1,500,000 33 FBiH Inter-municipal waterwork Fojnica - Kiseljak / SB Canton 13,459,280 34 FBiH Reconstruction and extension of water supply in Novi Travnik / SB Canton 250,000 35 FBiH Reconstruction and extension of water supply in Novi Travnik / SB Canton 256,456 36 FBiH Water suply system of Teo čak municipality / TZ Canton 1,225,000 37 FBiH Plant for conditioning of drinking water in Kalesija Municipality / TZ Canton 1,440,000 Regulation of Jala river at the section Slavinovi ći-Simin Han, Tuzla II phase / TZ 38 FBiH Canton 3,326,400 39 FBiH Regulation of Solina river in Tuzla - II phase/ TZ Canton 3,326,400 40 FBiH Regulation of Jala river at the territory Lukavac / TZ Canton 5,482,880 41 FBiH Regulation of Drinja ča river in Kladanj / TZ Canton 2,850,535 I phase of the ecological protection of Modrac accumulation -water supply source / 42 FBiH TZ Canton 15,998,480 43 FBiH Warmification of Srebrenik - II phase /TZK 4,000,000 Construction of new tapped line of warm water for heat energy supply to Tuzla / 44 FBiH TZ Canton 10,000,000 Construction of collectors for feacal sewage system Slavinovi ći - G. Tuzla / TZ 45 FBiH Canton 5,000,000 46 FBiH River bed reconstruction of Sana river, Sanski Most / UNS Canton 4,000,000 47 FBiH Water supply Studenci of Ljubuški municipality / ZH Canton 5,700,000 48 FBiH Sanitary landfill for the Westherzegovina Canton , Ljubuški / ZH Canton 2,400,000 49 FBiH Additional water volume for the population from "Plava voda" Zenica / ZD Canton 39,000,000 50 FBiH Sewage system construction in Vareš / ZD Canton 3,000,000 51 FBiH Babina rijeka river basin protection (II phase), Zenica / ZD Canton 6,300,000 52 FBiH Sewage system of municipality Misuri ći - Maglaj / ZD Canton 1,500,000 53 FBiH central heating of town Maglaj / ZD Canton 10,452,000 54 FBiH Sewage system of the settlement Novi Šeher, Maglaj / ZD Canton 1,000,000 55 FBiH River stream regulation of Bistrica river in Livno / HB Canton 1,720,000 56 BD River stream regulation at the territory of Br čko district BiH 16,700,000 57 BD Sanitary landfill of Br čko district BiH 22,400,000 Total for Bosnia and Herzegovina 509,182,831

* 1 EUR =1,95583 KM

Projects' data are available in the PIS form, which is a part of the Public Investment Programme

Annex 2 List of 23 priority agglomeration, WQM Programme of Measures

Naselja koja ENTITET Unit Agglomeratio WWTP sa činjavaju Entity UWWTP ty

n Recipient Qmin PE Investment for

Total Total aglomeraciju KANTON Investme RANK RANK tion No Opština Opština Ukupan Ukupan of BOD of BOD zbir 'RV 'RV zbir

Aglomeracija Cost Potential reduction reduction Municipali Agglomera 'Settlements Canton nt Costs (m3/s) mil. Euro Euro/PE (mg/l) Ilidža, Lukavica, Novi Grad, Novo Sarajevo, Centar, FBiH/ 1 1 Sarajevo 4.83 Hadži ći Kanton 9 5.06 379439 64.26 169.34 52.05 FBiH/ 2 2 Me đugorje 4.54 Čitluk Kanton 7 0.10 30000 5.99 199.75 204.86

Živinice Donje, Živinice Gornje, FBiH/ 3 3 Živinice 4.51 Živinice, Ður đevik Spre ča Živinice Kanton 3 0.55 27272 5.59 205.00 34.60 FBiH/ 4 4 Čitluk 4.51 Luko č Čitluk Kanton 7 0.03 15246 3.66 240.16 385.44 FBiH/ 5 5 Banovi ći 4.43 Litva Banovi ći Kanton 3 0.10 10000 2.69 269.38 71.33 FBiH/ 6 6 Grude 4.41 Kanal Grude Kanton 8 0.02 9486 1.27 133.81 377.10 7 7 4.39 Nevesinje RS 0.02 9090 1.23 135.32 376.16 Banja Luka; 8 8 Banja Luka 4.29 Trn , Banja Luka Laktaši RS 25.59 241750 40.94 169.34 6.56 Sokolačk 9 9 Sokolac 4.28 i potok Sokolac RS 0.04 18850 4.27 226.68 335.14 FBiH/ 10 10 Livno 4.27 Bistrica Livno Kanton 10 0.42 11280 2.94 260.69 18.76 11 11 4.27 Mušnica Gacko RS 0.11 9500 1.27 133.76 61.95

23 22 21 20 19 18 17 16 15 14 13 12 Agglomera

tion No 45 40 36 30 29 23 22 16 15 14 13 12 RANK rd 4.04 Grad eia 3.15 3.26 Zenica Bužim 3.33 3.56 Derventa 3.59Bijeljina 3.73 Prijedor 4.00 Mostar Petrovac Bosanski d 4.16 Tomislavgra 4.19 4.19Mrkonji Posušje Pale Tuzla Agglomeratio Aglomeracija n ć

Ukupan 3.76 zbir 'RV

Total Prijedor, Hambarine, Mostar, Cim, Ili Bužim, Lubarda, aglomeraciju Naselja kojaNaselja 'Settlements Bijeljina, Velika sa č injavaju Gomjenica Mrazovac Obarska Rodo ć i, č

Recipient Miljacka Meliorat channel Glinica Ukrina Japaga Ri Šujica Bosna rijeka Crna Sana č Jala ina ion ion

Tomislavg Mrkonji Derventa Bosanski Bosanski Petrovac Bijeljina Prijedor Posušje Mostar

Zenica Opština Bužim Tuzla Grad

Pale Municipali rad ty ć

KANTON ENTITET Kanton 10 Canton Canton Entity Kanton 8 Kanton 3 Kanton 4 Kanton 1 Kanton 7 Kanton 1 FBiH/ FBiH/ FBiH/ FBiH/ FBiH/ FBiH/ FBiH/ RS RS RS RS RS

m/) ml uo uoP (mg/l) Euro/PE mil. Euro (m3/s) mn PE Qmin 50.15 14.98 0.66 6.13 7.80 0.01 0.01 0.04 0.01 0.15 0.26 0.21

125000 123805 108400 18000 76462 54494 25000 12071 3000 6000 7953 5000

Investment WWTP Cost Cost 11.84 21.17 20.97 18.36 4.13 9.25 0.54 0.91 2.28 0.79 5.25 3.09

UWWTP Investme nt Costsnt Unit Unit 229.55 154.84 169.80 169.34 181.17 150.96 286.71 158.38 209.91 169.34 169.34 255.92

Potential 335.57 364.96 126.07 358.68 113.17 331.12 18.90 39.74 for 8.66 4.85 1.73 5.02 reduction

of BOD