STATE AUDIT OFFICE
- Press release -
Skopje, 29 January 2021
At least 204.713.000 denars or 3.3 million euros collected but not paid in the Budget of RNM by public utility enterprises at local level on the basis of water rights fees
The State Audit Office conducted audit on the implementation of audit recommendations contained in the Final Performance Audit Report from 2019 entitled "Effectiveness of policies, measures and activities in granting water rights", to assess the degree of implementation of recommendations and the adequacy of measures taken.
The audit provided basis for expressing conclusion that involved entities have not taken activities and measures for implementation of audit recommendations, and thus it is necessary to take on activities for implementation of recommendations in the coming period.
Auditors found out the following:
- out of 19 audit recommendations given to entities at central level (Ministry of Environment and Physical Planning, Ministry of Finance and State Inspectorate of Environment), only 1 recommendation is implemented, 2 recommendations are partially implemented and 9 recommendations are not implemented. Implementation of 7 recommendations is in progress;
- out of 11 audit recommendations given to entities at local level (municipalities and public enterprises), 4 recommendations are implemented, 2 recommendations are not implemented and 5 recommendations are in progress.
Incomplete action upon audit recommendations of the certified state auditor resulted in payment of less funds in the Budget of RNM for at least 204.713.000 denars or 3.3 million euros as unpaid water rights fees that were collected from end users (legal entities and individuals) by the public enterprises providing water services.
The public enterprises have expressed liabilities for calculated and unpaid water rights fees in the amount of at least 426.448.000 denars or more than 6.9 million euros, which is a potential revenue for the Budget of RNM.
According to the Report from the Ministry of Finance submitted at request of the Government of RNM, as of March 2019, the reported liabilities of 60 municipalities toward public enterprises that provide water services amounted to 348.365.000 denars or over 5.6 million euros. The water delivered by the public enterprises for the needs of the municipalities, for irrigation of greenery and parks, fountains, street washing, etc. is not measured and invoiced in line with the real consumption in m3, and most often, it is invoiced as a lump sum according to annual programs.
Following the inspection and data analysis, the auditors concluded that in 2019 the total water abstraction is 229.017.078 m3, of which 63% is not invoiced. The auditors also found out that public enterprises in the following municipalities recorded highest percentage of water losses: Debar 84%, Dolneni 82%, Gostivar 81%, Kicevo 77%, Ohrid 72%, Krushevo 71% and Kocani 70%.
The quantities of not invoiced water include physical water losses, commercial water losses due to illegal consumption and inaccuracy of water meters and data handling errors, as well as not invoiced legal water consumption, measured and unmeasured consumed water for regular sanitation and washing of reservoirs, fountains and public decorative fountains, watering public green areas, tree lines and boulevard greenery and street washing.
These conditions indicate that measures and activities taken by public enterprises for reducing water losses are insufficient and result in less calculated and reported revenues of public enterprises, less calculated value added tax, less calculated, collected and paid water rights fees in the Budget as well as inadequate financial result of public enterprises.
The auditors concluded that the Ministry of Environment has not taken specific measures for reviewing and amending the National Water Strategy. The Strategy still does not contain specific strategic goals and priorities or measures and activities for implementation thereof, and therefore it cannot achieve its legally established role as a basic planning document for defining, planning and developing water management.
It was also concluded that Methodology for calculating the unit of harmfulness of discharge in waters is not in place yet, thus the public enterprises do not calculate variable value of compensation for discharge in waters.
In addition, the auditors found out that Water Agency has not yet been established, even though the Work Program of the Government of the Republic of Macedonia 2017-2020 envisages establishment of Water Agency that will integrate all data on water resources collected by competent institutions using a single water management system.
Concerning the manner of determining and collecting water rights fees, the audit ascertained that the Ministry of Environment has not taken necessary activities for reviewing the existing legal solution on the manner of determining and collecting water rights fees and for providing solution for control, monitoring and efficient collection of the same. In addition, Ministry of Environment and Ministry of Finance have not taken activities for drafting legal solution for regulating water rights fees as a public duty.
In the period covered by the audit, inspection supervision over the water right users and the obligations from issued water right permits was performed only by the State Inspectorate of Environment i.e. by the water economy inspectors, even though the Law on waters provides for competencies for inspection supervision of other inspection services as well.
In the course of 71 inspection supervisions of public utility enterprises in the period January 2018-March 2020, identified irregularities most often refer to the following:
- public enterprises have not obtained permits for water abstraction and discharge of wastewater and have not submitted request thereof to the Ministry of Environment;
- public enterprises do not measure or exceed the maximum determined quantities of water abstraction in line with issued permits;
- public enterprises have not prepared elaborates and have not passed decisions for defining boundaries of protected zones;
- in water service bills, public enterprises inadequately show tariffs for separate water services and water rights fees, and do not pay these funds in the treasury account.
Despite tasks given by water economy inspectors, public enterprises do not take sufficient activities to eliminate identified irregularities, but also there are not enough mechanisms in the legal solutions to ensure the same.
Press contact:
Mijalche Durgutov +389 70 358 486
[email protected]
Martin Duvnjak +389 75 268 517
[email protected]