Original scientific paper
Prices Regulation in the Water Sector in Croatia
Nikola Popović
orcid.org/0000-0002-4612-8881
; member of the Competition Council, Republic of Croatia
Abstract
Raising prices of commodities, utility services and particularly prices in water sector has prompted the Croatian Government to set up an ad hoc consultative body consisting of public authorities’ representatives, private sector representatives and social partners with the view to address the pricing issues. This article outlines the way prices of water supply, distribution, and wastewater disposal are
established at the local community level in Croatia and pertaining downsides leading to economic inefficiencies of the local water operating companies. Croatia has adopted a Strategy on water management that paves the way to meet polices laid down in European Community Water Framework Directive. One of the main principles of operating water services to the customers is the recovery of full cost associated with the provision. Economic prices thus need to reflect the costs of a well managed and efficient water supply or wastewater disposal operator. Different models of introducing competition in the water sector existin the EU countries and different models of prices regulation may be applied to provide incentive to water operators to strive for efficiency. Croatia opted for a policy of keeping water infrastructure in local authorities’ owner ship and reducing the overall number of water supply companies at the territorial level. Setting up of a sectoral regulatory body is to bring about competence and market based assessment in the water sector in Croatia. Such a regulator needs to have sufficient powers and resources to monitor the sector and make autonomous decisions. If
it is to bring efficiency in the sector, it should not to have merely a consultative or arbitrary role to the local community and the water operators. This approach requires a modern definition of the role of the local and central government in the overall economy and in particular with regard to network industries liberalisation processes, legal and natural monopolies and market failures.
Keywords
water sector – Croatia; local and regional self-government; public services; network industries; utility services; price regulation; independent regulatory body
Hrčak ID:
135554
URI
Publication date:
9.9.2008.
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