Municipal companies cannot enter the market

The Union of Municipalities of Montenegro has asked the State Assembly for an amendment to the Draft Law on the Management of State-Owned Companies, requesting that the paragraph that stipulates that "every state-owned company must also meet the condition of covering at least 50% of its operating costs, in terms of accounting regulations, from revenues from the sale of goods or the provision of services on the market, be deleted from Article 12."

Operating expenses are the daily, ongoing business expenses required for the regular functioning of a company, which are not directly related to production, but to maintaining the business. They include salaries, rent, utilities, marketing...

This draft law is in the Parliamentary procedure.

According to the law, "state-owned companies" also include companies founded by municipalities. This position would mean that these companies must obtain at least half of the money for their regular operations on the market, in commercial operations.

The Union of Municipalities claims that this is not possible for all utility companies, which is why they are requesting the deletion of this paragraph in order to enable the functioning of municipal companies that perform non-commercial activities.

"The draft law did not take into account the functioning of these business entities, that is, they are not exempted from the prescribed obligation according to which business entities must cover at least 50 percent of their operating costs in terms of accounting regulations. It is clear that companies that perform non-commercial activities cannot fulfill this obligation. These are business entities that are recognized by the Law on Communal Activities, on the basis of which it is possible to establish business entities for performing communal activities of joint communal consumption, where the service cannot be measured or otherwise individually determined and charged. The Law on Spatial Planning also prescribes the establishment of business entities for the preparation of planning documents by the Government and local self-government units, which also do not provide commercial services," the Union of Municipalities said in a statement yesterday.

They point out that in the explanation of the proposed amendment, they stated that the establishment of these companies cannot be conditioned by at least 50 percent of their own operating costs generated from income from the sale of goods or the provision of services on the market, because they do not place services or goods on the market and are financed entirely from the budget of Montenegro or local self-government units.