Msc.eng. Milan Stevanović, Environmental Investment Expert

The Only Constant in Life is Change

Having served in a local public administration, then moving on to the work in the central Government, and currently being in a position to guide and organise the work in Serbia for some of the world’s most successful companies and funds (and global success stories!) in the area of environmental protection, one of the key things I’ve learnt is that the only everlasting constant in business and life in general is – change

Yet, the ability to accept, predict or even be the change, does not readily appeal to our ways of thinking and working. We are quite reluctant to admit that there is indeed something (and a lot of it, actually!) that we do not know – which often leads to inability to ask: for assistance, guidance, exchange of ideas or simple information. The inability to ask, properly, eliminates the learning curve. Without learning, there is no change. Without change, there can be no progress. And why? Because we stopped ourselves from asking.

Environmental protection, globally speaking, is currently living its progressive revolutionary moments. The no-residue waste management technologies, CO2 reduction, capture and storage mechanisms, water purification, distribution and monitoring, top-notch wastewater treatment technological processes, IT start–ups focused on solving some of the greatest environmental challenges that our civilisation is facing, are booming in every corner of the world!

And while the “zero waste” concept everywhere in the world means that after ction, as a line national policy body, often states that the lack of funds causes the lack of results and progress in the environmental protection field in Serbia. I am very happy to challenge that, on many levels and using various perspectives. For example: how much would be enough, and then, for which purposes? Who would design it, procure it, and implement it, having in mind the lack of administrational capacities, experience and specific human resources needed? Is it just the lack of funds or the issue of management as well? For instance, the success rate of Ministry for the fiscal year of 2018 was 70%, meaning that almost a half of what was intended remained unspent. In absolute numbers? Around €18 million left unspent. To illustrate in practical terms, this amount of money can almost pay off the entire debt to the recycling industry in Serbia; it can build and fully equip one waste management region, or a 100,000 PE wastewater treatment plant for a city the size of Kraljevo. The bottom line is – the Ministry is not the investor, nor the investment fund. It a product becomes waste, the waste gets 100% reused or recycled – we consider it success if the zero waste is being thrown beside waste bins, or organised dumpsites. Fact check: Serbia has around 3,500 organised and non-organised non-compliant non-sanitary plots for waste disposal, and the average collection rate of household waste is 60%. Yes, the other 40% ends up in the waters and/or on land. Somewhere.

Fact check number two: Sewage connection rate varies from 40 to 60%; it’s hard to tell exactly how many compliant wastewater treatment plants there are up-and-running, and nobody knows the exact amount and level of treated wastewater – it is estimated at around 8%. In other words, if the entire Serbian population was connected to the sewage system (which is not the case), 8 litres of water would be returned to our rivers, from which we get our tap water, a crystal sky blue hue, and 92 litres (almost 12 times more!) would be muddy brown. Try picturing that in the glass of water next time you are thirsty.

The Ministry of Environmental Protection, as a line national policy body, often states that the lack of funds causes the lack of results and progress in the environmental protection field in Serbia. I am very happy to challenge that, on many levels and using various perspectives.

Serbia has around 3500 organized and non-organized non-compliant non-sanitary plots for waste disposal, and the average collection rate of household waste is 60%

For example: how much would be enough, and then, for which purposes? Who would design it, procure it, and implement it, having in mind the lack of administrational capacities, experience and specific human resources needed? Is it just the lack of funds or the issue of management as well? For instance, the success rate of Ministry for the fiscal year of 2018 was 70%, meaning that almost a half of what was intended remained unspent. In absolute numbers? Around €18 million left unspent. To illustrate in practical terms, this amount of money can almost pay off the entire debt to the recycling industry in Serbia; it can build and fully equip one waste management region, or a 100,000 PE wastewater treatment plant for a city the size of Kraljevo.

The bottom line is – the Ministry is not the investor, nor the investment fund. It does not have proper human resources, the know-how and the funds. It is the regulatory body whose main purpose is to draft, discuss and adopt regulations and make sure it is properly enforced. It can easily create and open market for investments. And our country is desperately in need of investments in environmental protection.

Two examples of regulations come to mind, which illustrate the potential of such power.

One: the by-law stating that all the municipalities that have not resolved their waste management in a regional manner and with a compliant landfill, will be paying €50 to €100 per ton of communal waste that ends on a local dumpsite. Give them a transition period of four years to find the best possible solution and determine location, project design, funding, procurement, construction and operations. Whether it is a loan, a PPP or their own funds. And sit back, draft the standards of operations and watch the regions come to life! Why? Because it is much cheaper to pay €20 for a compliant landfill than 3-5 times more for a dumpsite! A very simple, environmentally friendly, yet efficient economic instrument that can be applied immediately.

Two: the by-law that prohibits septic tanks as a means of sewage water recipient in an urbanised area (not for the distant and rural) and sets the household connection rate in the urbanised area to the sewage system at 100% (or something in this or only one that implies the highest available standards, efficiency (both construction- and operation-wise) and quality. Why? Simply because those are in the best interest of the contractor. In the past seven years, Serbia has undergone noted and appreciated changes in the business environment as the result of reforms and efforts to attract foreign investments, which is best portrayed by the fact that Serbia has steadily held its position in the top 50 out of 190 on the List of Ease of doing business. Every investor wants efficient administration and permitting, safe and predictable business environment, easy access to infrastructure and finance, legal safety, reliable political and economic surrounding. And, for the dream to come true – a virgin market for its investments. I am grateful to have the opportunity to work with some of the most prominent and amazing people in the area of investments in environment. They have a remarkable, globally-built know-how, technology and experience, and are financially supported by international finance institutions, development banks and global corporations. Alsimilar manner, as the first step towards treatment facilities). The rest is pretty much the same – sit back, draft the standards and watch the investments pour into the sewage network (pun intended). Why? Because the sewage network or connection rate is the major setback when it comes to the investments in wastewater treatment. With these two, relatively simple bylaws, the €1 billion market for investments would be open. Now.

In the past 7 years, Serbia has undergone noted and appreciated changes in the business environment as the result of reforms and efforts to attract foreign investments, which is best portrayed by the fact that Serbia has steadily held its position in the top 50 out of 190 on the List of Ease of doing business

One could argue that the best way to invest in environment is via public funds, instead of loans or PPP, primarily because of repayment and the source of repayment. But, let us not forget that public funds come from the same source, and that instead of being wired immediately, loans and PPP investments are financed through long-term financial instalments. However, in weighing the options, there is another, much more relevant, issue: the trinity of know-how, operations and management. Investments from public funds and loans imply that the cheapest bidder for construction of a facility wins the tender, constructs it and leaves it to some future public body to operate and maintain, while the PPP model is the only one that implies the highest available standards, efficiency (both construction- and operation-wise) and quality. Why? Simply because those are in the best interest of the contractor.

In the past seven years, Serbia has undergone noted and appreciated changes in the business environment as the result of reforms and efforts to attract foreign investments, which is best portrayed by the fact that Serbia has steadily held its position in the top 50 out of 190 on the List of Ease of doing business. Every investor wants efficient administration and permitting, safe and predictable business environment, easy access to infrastructure and finance, legal safety, reliable political and economic surrounding. And, for the dream to come true – a virgin market for its investments.

I am grateful to have the opportunity to work with some of the most prominent and amazing people in the area of investments in environment. They have a remarkable, globally-built know-how, technology and experience, and are financially supported by international finance institutions, development banks and global corporations.

Although it might sound like a cliché, the most relevant criterium for project assessment is still project sustainability: economic, social and environmental. Has the project been wanted, accepted, and supported by all the relevant stakeholders? How can we offer and utilise our rich technical and operational knowledge and experience, for the best possible benefit of the population? How can this investment be on the optimal affordability line? Along with more than 3000 different financial, technical, spatial, administrational, operational, business, project management, legal and other parameters to ensure the sustainable, best possible model and solution as a response to environmental protection needs. The best projects are not the ones that bring quick profit, but the ones that set standards.

In 1955, a Japan-based company delivered, installed and operated the first industrial wastewater treatment facility in the Socialist Federal Republic of Yugoslavia. In the following decades, before its dissolution in 1992, Yugoslavia built around 37 municipal wastewater treatment facilities. life is change. Once Serbia has set its path clear and straight, environmental standards will inevitably change. It’s a moving target that can only go higher up the ladder, especially if we consider the devastating effects of climate change on our civilisation. The future that we have once imagined has come, and we are living it, now. It looks like a powerful and terrifying tsunami, that only the most skilful, result-oriented, change-setting and visionary innovators can navigate. If you have just woken up and remembered that you should apply for swimming lessons – save your time and money – because, under this wave, you have already become a matter of the past. In the past 20 years, roughly six plants were built, primarily financed by EU grants and loans. As an EU candidate country, if accepted into membership in 2025 and granted 15 years of transition period, Serbia will be obliged to build additional 320 wastewater treatment facilities in the next 20 years, all of them fully operational. This is nine times more and 16 times quicker than in former Yugoslavia. Considering the economic standard then and now, such behemoth of an undertaking might be among the biggest challenges that we, as a society, will be facing.

But, one must always keep in mind the beginning of this text – the only constant in life is change. Once Serbia has set its path clear and straight, environmental standards will inevitably change. It’s a moving target that can only go higher up the ladder, especially if we consider the devastating effects of climate change on our civilisation.

The future that we have once imagined has come, and we are living it, now. It looks like a powerful and terrifying tsunami, that only the most skilful, result-oriented, change-setting and visionary innovators can navigate. If you have just woken up and remembered that you should apply for swimming lessons – save your time and money – because, under this wave, you have already become a matter of the past.