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The Balkans, where cheap water comes at a high price

March 08, 2022
topics: Transparency and Corruption
by: Katarina Panić
located in: Bosnia and Herzegovina
tags: Bosnia, corruption, water, Western Balkans

The operations of water supply companies in the Western Balkan are compromised by political considerations that force them to funciton as social-care tools and prevent them from adjusting to the ebbs and flows of the market and economics. This fosters an incredibly expensive and brittle 'social calm' that secures the elites' power. But how much longer can the status quo last?

During communism, Western Balkan states had owned their water supply companies. Following the dissolution of the bloc in the nineties, the companies were, in most cases, handed over to the municipalities and cities that own them nowadays. The companies practically have a monopoly over water supply, also referred to a 'natural monopoly', since water is arguably the most essential public good.

It would therefore seem appropriate for the authorities to control this precious resource in order to provide expansive and equal access to all citizens. However, this scenario would appear less favourable should interests other than those of the public become a priority for the state.

In Bosnia, for instance, it is extraordinarly unpopular to raise the price of the water, even if the costs of all other utilities rise and it is entirely justified to do so. 

ELECTORAL HYPOCRISY

"Over the last five years, the price [of water] has been the same. Meanwhile, the minimum wage in the country rose by 44 percent, the electricity by ten per cent. The fuel and food are on their ten-year records these days. The inflation exploded. So we asked to increase the price of water last September, and we were not allowed to do so. Why? Because the election had been approaching at that time," Vlado Reljić, general manager of the water company in the Bosnian town of Prijedor, told FairPlanet.

On the other hand, Reljić pointed out, certain countries had transformed their water companies from state-owned to private ones only to regret the move, as the new owners were primarily interested in profit. At the same time, the maintenance was marginalised and the quality of service was far away from desirable.   

"Cities such Bucharest and Budapest had struggled to get back their companies. So, I won’t say that public ownership is not a good solution. It might be if they let us [operate] as market-oriented, not as a social care system. Otherwise, we will be doing business with losses forever," he said.

"Countries in the region strive to the European Union and standards by which the consumer pays, as it is the rule that the polluter pays. Here, the owner pays instead of consumers only to keep the social peace, i.e. the power."

PUBLIC COMPANIES used TO EMPLOY 'DESERVING MEMBERS'

The city pays the water company some 0.6 percent of the yearly budget to fulfil the gap. In comparison, with these 340,000 BAM the city could cover the annual costs of its art gallery almost three times or of its soup kitchens more than twice.  

"The politicians use the public companies to employ deserving members, especially those who contributed to the widely known fraudulent election. The ruling parties chose their people to run the companies and then expected that these people employ many others," one manager told FairPlanet under condition of anonymity. "If you resist, they dismiss you. Once I told my party boss that I didn’t have any more offices left to put those people in. Only corridors." 

The overcrowded public sector increases the costs for public funds and, ultimately, artificially keeps water prices cheap. "Both makes us, managers, incapable of running a business. We don’t have enough money to run the operation, not to mention investing in improvements. Our hands are tied," the anonymous source told FairPlanet. 

envisioning a way forward

Murisa Marić from DON, a Bosnian NGO for consumers protection, said that water supply companies are even in a worse position than, for instance, electricity or telecom ones since they cannot turn off supply for debtors.

"One cannot leave someone without water due to health and hygiene considetations. Even if we exclude this human angle, the systems were built during communism 50 or 60 years ago, without even predicting the possibility to disconnect someone," Marić told FairPlanet. "The only way to force consumers to pay debts is to sue them. And the courts are overcrowded, so we have lawsuits from 2011 that are not solved yet.

"We are looking forward to different services for citizens to be conditioned by regular payments of water."

According to Marić, privatising water companies would not be an ideal solution to the problem.

"The system would collapse, I believe. Water is too important to exclude it from state ownership. Even in this so-called natural monopoly, some standards measure efficiency. On the other hand, the people are used to having running water 24/7. They must be aware it is a privilege that some billion people on this planet do not have," Marić added. "They should think about it once they will be asked to pay more than 0.6 EUR per cubic meter."

Image by pixabay.com

Article written by:
Katarina Panić
Katarina Panić
Author
Bosnia and Herzegovina
"Over the last five years, the price [of water] has been the same. Meanwhile, the minimum wage in the country rose by 44 percent, the electricity by ten per cent."
© Akos Stiller/Bloomberg via Getty Images
"The system would collapse, I believe. Water is too important to exclude it from state ownership."
© Akos Stiller/Bloomberg via Getty Images
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