The Association of Municipalities calls for urgent amendments to the Law on Communal Services

The Union of Municipalities of Montenegro (ZOCG) has called on the Working Group for the Draft Law on Communal Activities to intensify its work, in order to reach a new legal solution in this area as soon as possible, which would change the method of determining water prices and thus create conditions for the smooth operation of municipal water supply companies.

They remind that the bill was expected at the end of last year.

"To date, however, there are no indications that it could be prepared in the foreseeable future. The Association of Municipalities has continuously warned of the damage suffered by water utilities due to the application of the current model for determining water prices, based on the existing law, which does not take into account numerous important factors for ensuring quality water supply," the statement reads.

They say that the expert working group of the Union of Municipalities submitted a detailed proposal in March 2024 for the necessary amendments to the relevant articles of the Law on Communal Activities.

"It is necessary, among other things, to include in the price formation elements the costs of expanding the material basis of work for the needs of improving business operations, training staff, and introducing new technologies, as well as the costs of a reserve fund for reducing business risks. In addition, the possibility of changing prices when there is a deviation from the planned annual costs of the company of more than 10 percent should be standardized," they said.

They point out that, out of 24 municipally owned water utilities, 2023 of them operated with a total loss of more than six million euros in 11, and that, judging by the first reports for 2024, this trend continues.

"The costs of maintaining and modernizing water systems have increased significantly as a result of both local and global economic trends and inflation, and the revenues generated from current water prices, including those that will be applied in 2026 based on the current methodology, are not sufficient to cover all company costs, which leads to the accumulation of debts and the inability to invest in necessary infrastructure projects," they said in a statement.

If we want to have a safe and high-quality water supply, a change in regulations that will allow for an increase in water prices is inevitable, along with adequate intervention that would enable subsidies in order to prevent negative effects on socially vulnerable categories of the population, the Association of Municipalities says.