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| # Country or Region: Croatia                                          |
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| # Wastewater and Sewage Market Report - 2008                          |
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| Dalila Uzelac                                                         |
|                                                                       |
| 2008                                                                  |
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####### Summary

![](media/image3.png){width="2.6034722222222224in"
height="2.448611111111111in"}

Due to its complexity, environmental protection has been recognized as
one of the most demanding areas in the process of approximation to the
EU *acquis communitaire*.[^1] The Republic of Croatia was granted the
status of candidate country for EU membership on 18 June 2004. Accession
negotiations with the EU were launched in 2005 and Croatia is looking
forward to becoming a newcomer in 2010.

Croatia is a relatively sparsely populated European country with 4.5
million inhabitants. . Coverage of water supply services ranks high
compared to other countries in the region. In Croatia, 76% of the
population has access to water through a publicly owned, operated and
maintained water supply network. The rest of the population has access
through local or individual water supply facilities. However, coverage
for sewage is only around 40 %, and less than 12 % of all collected
wastewater is being treated. Only 6% of wastewater is given full
treatment . Sanitation is provided through a publicly owned, operated
and maintained sanitation network, while the rest receives services
through local or individual sanitation facilities.. Under existing
conditions, wastewater management is deficient and water pollution
constitutes a problem in a number of Croatian coastal municipalities.
The fact that 5,400 settlements are inhabited by fewer than 500 persons
each represents a unique challenge for our country. The above mentioned
facts restrict a choice of policy options and specific actions that can
be implemented in a cost-effective way.

The major direct environmental investments so far have focused on water
protection issues and include the construction of sewage systems and
wastewater treatment facilities. It is expected that approximately US \$
2 billion will be invested in wastewater sector until 2020 to be brought
in line with the EU standards and requirements. Croatia is currently a
beneficiary of the EU pre-accession instruments (IPA), with projects
financed from EU funds, international financial institutions and
co-financing from the Croatian government budget.

**1. Water and Wastewater Management**

The total waste-water volume discharged in surface and coastal waters is
equivalent to that of

about 10.5 million inhabitants (including domestic and industry
discharges). Industrial waste water is often discharged into the
municipal sewage system, in many cases without adequate pre-treatment.
The degradation of seawater quality in some parts of the coast due to
discharges of raw sewage has resulted in visible problems, including
localized eutrophication (water pollution caused by excessive plant
nutrients) and phytoplankton bloom, as well as less-visible
contamination of the marine life by organic and non-organic
micro-polluting substances. General objectives for **water and
wastewater** **management** in Croatia in the coming years include:

• Bringing Croatian water management regulations in line with relevant
EU regulations.

• Creation and maintenance of Water Information System (WIS).

• Extending public water supply to 90% of the population (73% at
present).

• Providing wastewater collection, treatment and disposal systems for a
population

equivalent of 10.5 million.

• Implementation of further flood control and multi-purpose projects.

• Monitoring of surface and groundwater quality / water pollution
control.

• Seven major and 350 medium and small coastal harbours require
substantial modernization, mainly through giving concessions to domestic
and foreign investors. The following harbors have highest investment
priority: Rijeka Harbor, and the harbors in Ploce, Split, Zadar,
Dubrovnik, Sibenik and Pula. Special care is given to the development of
infrastructure for the transport of passengers in the Dalmatian harbors,
due to the poor present condition and estimated large number of future
passengers (especially tourists).

• The inland waterways of the Danube, Sava, Drava and Kupa rivers are in
a need of renovation and rehabilitation. (The total length of inland
waterways for ships up to the tonnages of 150 tons totals 922 km, of
which 502 km are usable for ships up to the tonnage of 1,500 tons.)

• There is a need to reconstruct and modernize river harbors and piers,
especially Sisak, Slavonski Brod, Osijek and Vukovar.

In general, it is difficult to get an accurate picture of the scale of
the pollution discharged in

Croatia's water bodies. However, it is clear that in terms of treatment
facilities, Croatia is

under-equipped and the bulk of its waste waters is treated only
mechanically. In recent years a number of municipal facilities have been
or are being built.

Within the framework of the Danube Convention, pollution hot spots on
the Danube's tributary

rivers have been identified in each country that participates in the
Danube Strategic Action Plan.

In Croatia this has happened along the Sava, Drava, Kupa and Danube
rivers.

On the Adriatic coast, waste-water treatment plants have been upgraded
considerably in the

resorts to improve the quality of bathing water. In general, along the
coast, efforts focus on

building sewage networks to further reduce individual discharges and
develop collective sewage

systems, primary waste-water treatment and deep injection into the sea.

On the islands, there are reportedly very few sewage systems and
treatment facilities. This

results in waste water still being disposed of in the same way as in the
past, i.e. discharged into

the sea through the sewage system after simple mechanical pre-treatment.
Biological facilities are rare, and the quality of their operations
questionable. Settlements along the coast have direct individual
discharges. The increase in tourists and tourism activities and
settlements adds to the problem.

####### 

####### 2. Institutional and Legislative Framework

**2.1. Institutional Framework**

The water management activities in Croatia are divided into: legal
(competence of the Croatian

Parliament and the Government of the Republic of Croatia),
administrative (competence of the

Ministry of Agriculture, Forestry, and Water Management -- Water
Management Directorate,

and other units of State and local and regional authorities), and
operative water management

activities (competence of Croatian Waters).

**The Ministry of Agriculture, Forestry, and Water Management**

is the primary agent of administrative, legal, and professional
activities of implementation of the water management policy ensuring:

\- Preparation of acts and other regulations, international and
bilateral contracts and agreements

\- Implementation of acts and regulations, international and bilateral
contracts and agreements

\- Compliance of regulations with the regulations of the European Union

\- Monitoring and analysis of the state and coordination of water
management development with the requirements of economic development

\- Development of water management plans

\- Protection of water and sea from pollution from land-based sources

\- Planning and coordination of development of public water supply and
sewerage systems

\- Establishment, monitoring and improvement of the water information
system and document management

\- Administrative and professional supervision of water management
activities of Croatian Waters and water management bodies of county and
local/regional authorities

**Croatian Waters / Hrvatske vode (HV)** is a government agency
responsible for overall water resource management in Croatia, as well as
for the initiation and implementation of related investment projects.
Croatian Waters operates in the entire area of the Republic of Croatia.
Major operational activities of Croatian Waters are:

\- Preparation of water management master plans, water management plans
for river basins, and water management schemes

\- Development of terms of reference, conceptual designs, studies,
investment programs, and revision of project documents

\- Organization of construction and maintenance of water management
facilities

\- Investment activities related to realization of plans

\- Planning and collection of funds for financing of water management
activities.

Unlike budgetary funding, Croatian Waters provide municipal users with a
direct professional,

technical, economic, and legal help for defining, preparation, and
implementation of projects of

various degrees of complexity. A segment of activities related to water
management is under the authority of other ministries and state
administrative organizations, such as:

**Ministry of Environmental Protection, Physical Planning, and
Construction** -- performs

administrative and other tasks related to the general environmental
protection policy for creation

of conditions for sustainable development, and overall protection of
air, water, sea, flora and

fauna.

**Ministry of the Sea, Tourism, Transportation, and Development** --
performs administrative, professional, and other activities related to
the organization of strategic infrastructure projects and investment
programs of special importance to the Republic of Croatia (water supply,
wastewater sewerage, etc.) which are entirely or partially financed from
the State Budget, coordinates the activities of other subjects in the
construction of such facilities, monitors and controls the investments,
and performs professional activities related to the commencement,
coordination, and monitoring of activities regulated by acts and
regulations that govern the development of islands.

## 

**Local and regional authorities** -- perform activities from their
domain in accordance with the

Law on Local and Regional Self-government (NN 33/01) and in accordance
with special acts

that determine individual activities and tasks that the units of local
and regional authorities are

obliged to organize within their activities

**2.2. Legislative Framework**

Water management in Croatia operates within the legal framework of: the
Constitution of the

Republic of Croatia, the Water Act (NN 107/95), Law on Amendments to the
Water Act (NN 150/05) and the Act on Financing Water Management
(NN107/95, NN 88/98).

####### 3. Current status and opportunities

Household wastewater disposal falls under the administrative competence
of the local

government authorities (municipalities). All major Croatian towns have a
sewage system for

the collection of municipal wastewater in place, wastewater treatment
plants are present and

functioning to varying degrees. Studies of Croatian Waters (Hrvatske
Vode ) [www.voda.hr](http://www.voda.hr/)

describe the current situation and the needs for the development and
construction of a wastewater treatment facilities in Croatia. In the
process of achieving EU standards in the field of household wastewater
treatment, additional funds need to be raised and allocated .

Industrial wastewater treatment and the condition of treatment plants
are not at the same level of

development in the Croatian industry. Major companies have more
developed wastewater

treatment facilities, but the majority of industry lacks the necessary
funds for investments in

modern equipment. In this field, future investments in the development
and construction of

equipment in accordance with EU standards will be needed.

Priorities of the Croatian Government and plans for development and
construction of

wastewater treatment plants have not been defined entirely yet but they
will be completed in the

process of accession to the EU and harmonized with EU standards.

**3.1. Projects:**

**3.1.1. Adriatic Project / The Coastal Cities Pollution Control
Project**

In 2004, Croatian Government signed an agreement with the World Bank for
a partial financing of a \$250 million worth project of coastal city
pollution control. The project's target is the upgrade of municipal
sewage systems and wastewater treatment facilities on the coast. A
number of tenders for wastewater treatment equipment/facilities have
been out since the beginning of 2005 and many more are expected in the
years ahead. Responsible institutions are: Croatian Waters, Ministry of
Agriculture, Forestry and Water Management and Ministry of Environmental
Protection, Physical Planning and Construction.\
\
The on-going Coastal Cities Pollution Control Project is designed to
improve the quality of Croatia's Adriatic coastal waters to meet
European Union environmental requirements under the *acquis
communautaire.*

The Government of Croatia has selected the Adaptable Program Loan (APL),
the first time that this instrument is being used in the country. The
APL provides a framework for the phased implementation of pollution
control programs and implementing the medium-term investment program
needed to comply with requirements for EU accession by helping Croatian
Waters, the implementing agency for the project, to take a phased
approach to planning and identifying funding sources, while building the
necessary regulatory, monitoring, and control capacity. The World Bank
loan is the first phase of a medium term investment program that is part
of a wider 10-year investment program designed to bring Croatia in line
with EU wastewater treatment requirements. With respect to the
wastewater treatment, twenty facilities are planned to be built by the
year 2010, and there are plans for additional wastewater facilities for
towns of 2,000-15,000 inhabitants by the year 2025.

Contact information:

HRVATSKE VODE

Hrvatske vode Jadranski projekt d.o.o.

Dinko Polic, B.Sc.C.E., Project Director

Vukovarska 220

10000 Zagreb

Croatia

Tel.: +(385 1) 630-7548

E-mail: <pdinko@voda.hr>

[www.voda.hr](http://www.voda.hr/)

### 3.1.2. Karlovac Wastewater Management Project

The municipal water company owned by the City of Karlovac, Vodovod I
Kanalizacija (ViK), has received a loan from the European Bank for
Reconstruction and Development (EBRD) to implement a program of
investment to improve its wastewater management.  The proposed project
has an estimated total cost of US \$ 38 million. The project is
co-financed by the EU ISPA program.. The project has commenced in 2006
and it is expected to be completed by 2010.

The procurement of the following goods, works and services is required:

-   Consultancy and Technical Assistance (Project Implementation
    Consultants and Supervision Consultants);

-   Supply of Technical Support Equipment;

-   Supply Sewer Maintenance Equipment;

-   Construction and refurbishment of wastewater collectors, pumping
    stations and water pipes (FIDIC Red Book);

-   Construction of WWTP (FIDIC Yellow Book).

All contracts under the project will be implemented consistent with the
EBRD's Procurement Policies and Rules and will be open to firms from any
country.

Contact information:

Vodovod i kanalizacija d.o.o.

Mr. Kresimir Veble

General Manager

Gazanski trg 8, 47000 Karlovac, Croatia

Phone: +385 47 648 017

+385 47 649 100

Fax: +385 47 649 154

Mobile:+385 98 246 244

E-mail: <kresimir.veble@ka.t-com.hr>

### 3.1.3. Inland Water Project(s)

Inland Water Project is in preparation, financed by the World Bank and
IBRD in the amount of US \$ 18 million. It will cover flood, sewage and
wastewater treatment problems in the continental part of Croatia.

Contact information:

HRVATSKE VODE

Mr. Miroslav Steinbauer

Vukovarska 220

10000 Zagreb

Croatia

Tel.: +(385 1) 630-7303

E-mail: <steinbauer@voda.hr>

[www.voda.hr](http://www.voda.hr/)

####### 4. Institutional and Legislative Framework

**4.1. Institutional Framework**

The water management activities in Croatia are divided into: legal
(competence of the Croatian

Parliament and the Government of the Republic of Croatia),
administrative (competence of the

Ministry of Agriculture, Forestry, and Water Management -- Water
Management Directorate,

and other units of State and local and regional authorities), and
operative water management

activities (competence of Croatian Waters).

**The Ministry of Agriculture, Forestry, and Water Management**

is the primary agent of administrative, legal, and professional
activities of implementation of the water management policy ensuring:

\- Preparation of acts and other regulations, international and
bilateral contracts and agreements

\- Implementation of acts and regulations, international and bilateral
contracts and agreements

\- Compliance of regulations with the regulations of the European Union

\- Monitoring and analysis of the state and coordination of water
management development with the requirements of economic development

\- Development of water management plans

\- Protection of water and sea from pollution from land-based sources

\- Planning and coordination of development of public water supply and
sewerage systems

\- Establishment, monitoring and improvement of the water information
system and document management

\- Administrative and professional supervision of water management
activities of Croatian Waters and water management bodies of county and
local/regional authorities

**Croatian Waters / Hrvatske vode (HV)** is a government agency
responsible for overall water resource management in Croatia, as well as
for the initiation and implementation of related investment projects.
Croatian Waters operates in the entire area of the Republic of Croatia.
Major operational activities of Croatian Waters are:

\- Preparation of water management master plans, water management plans
for river basins, and water management schemes

\- Development of terms of reference, conceptual designs, studies,
investment programs, and revision of project documents

\- Organization of construction and maintenance of water management
facilities

\- Investment activities related to realization of plans

\- Planning and collection of funds for financing of water management
activities.

Unlike budgetary funding, Croatian Waters provide municipal users with a
direct professional,

technical, economic, and legal help for defining, preparation, and
implementation of projects of

various degrees of complexity. A segment of activities related to water
management is under the authority of other ministries and state
administrative organizations, such as:

**Ministry of Environmental Protection, Physical Planning, and
Construction** -- performs

administrative and other tasks related to the general environmental
protection policy for creation

of conditions for sustainable development, and overall protection of
air, water, sea, flora and

fauna.

**Ministry of the Sea, Tourism, Transportation, and Development** --
performs administrative, professional, and other activities related to
the organization of strategic infrastructure projects and investment
programs of special importance to the Republic of Croatia (water supply,
wastewater sewerage, etc.) which are entirely or partially financed from
the State Budget, coordinates the activities of other subjects in the
construction of such facilities, monitors and controls the investments,
and performs professional activities related to the commencement,
coordination, and monitoring of activities regulated by acts and
regulations that govern the development of islands.

## 

**Local and regional authorities** -- perform activities from their
domain in accordance with the

Law on Local and Regional Self-government (NN 33/01) and in accordance
with special acts

that determine individual activities and tasks that the units of local
and regional authorities are

obliged to organize within their activities

**4.2. Legislative Framework**

Water management in Croatia operates within the legal framework of: the
Constitution of the

Republic of Croatia, the Water Act (NN 107/95), Law on Amendments to the
Water Act (NN 150/05) and the Act on Financing Water Management
(NN107/95, NN 88/98).

**4.3. Legal framework for foreign investments**

Foreign investments in Croatia are regulated by the Company Act.
According to this Act,

foreign investors have the same rights, obligations and legal status
within an enterprise as

domestic investors, provided the condition of reciprocity is met.
Foreign investors can acquire

rights to additional guarantees, which are not given to domestic
investors. The Croatian

Constitution states that rights acquired through capital investments
cannot be withdrawn by law

or any other legal act. It also insures free repatriation of profits and
free repatriation of capital.

.

Types of investment allowed for foreign legal entities include:

• Investment of capital on a contractual basis;

• Investment of capital in a company;

• Investment of capital in a bank or an insurance company;

• Starting up as a sole trader or a craftsman;

• Acquiring the right to exploit natural resources or other assets of
interest to Croatia;

• Taking part in Build-Operate-Transfer (BOT) deals and in
Build-Own-Operate-Transfer

(BOOT) deals.

####### 5. Financing

## According to the rough estimates of the Ministry of Environmental Protection, Physical Planning and Construction (MEPPPC) [**www.mzopu.hr**](http://www.mzopu.hr/) and the World Bank [**www.worldbank.hr**](http://www.worldbank.hr/) Croatia will need to invest up to US \$ 10 billion in the environment sector prior to the European Union (EU) accession. Rough estimates anticipate that the total environmental investment needed to meet average EU standards (waste, water and air) will be at least US \$ 1.300 per capita. After studies conducted, wastewater treatment needs have been estimated at US \$ 5 billion.

## 

## 5.1. Domestic sources

The Act on Financing Water Management regulates the sources of funding
for activities within the water management system, the manner of
determining individual responsibility and collection of charges, and
other issues concerning the allocation of funds. As water and wastewater
projects are strategic capital investments, it is necessary to provide
partial financing from the national budget and the budgets of units of
local self-government, from other domestic sources and from abroad. To
this end, Croatian government established **The Environmental Protection
and Energy Efficiency Fund** ([www.fzoeu.hr](http://www.fzoeu.hr/)) in
2004. The Fund is established to finance the preparation, implementation
and development of programs, projects and similar activities concerned
with the preservation, sustainable utilization and improvement of the
environment, as well as with energy efficiency and the use of renewable
sources of energy. The Fund grants funds to legal entities and persons
for programs, projects and other activities as defined in the
Environmental Protection and Energy Efficiency Fund Act. The financing
takes the form of loans, subsidies, financial aids and grants. Fund is
distributed on the basis of invitations for proposals. The Fund
resources for financing of projects and programs are collected from
permanent sources, i.e. the charges and contributions paid by the
polluters and users of environment, interest on loans, donations, money
from international bilateral and multilateral co-operation in onshore
joint ventures, as well as the revenues from the national budget,
budgets of the local self-government and local administration and
self-government units for specific programs and purposes, from
donations, service fees, sales of shares, equity capital, rights and
things owned by the Croatian Privatization Fund i.e. the Republic of
Croatia and from other sources.

**Croatian Waters** ([www.voda.hr](http://www.voda.hr/)), a public
utility company plays very important role in financing water supply,
sewage and wastewater treatment projects. There is a series of public
revenues from waters, i.e. water management contribution, charge on
water use, charge for water protection, charge for sand and gravel
extraction, basin water management charge, and a special charge
investing in land improvement and drainage systems (to local
authorities). The wastewater and sewage non-compliance fees are imposed
for non-compliance with the conditions prescribed to protect water
against pollution. All water charges are collected by the water agency,
Croatian Watetrs. The overall revenue from these charges is around 70
per cent of Croatian Waters total revenues.

## 5.2. International financing

International institutions have financed projects, programs and various
other environmental activities in Croatia through returnable or
non-returnable funding. The environmental and infrastructure projects
are in the first place financed by loans of international financial
institutions, such as the **World Bank** (
[www.worldbank.hr](http://www.worldbank.hr/)), the
**IBRD**-**International Bank for Reconstruction and Development**
([www.ibrd.hr](http://www.ibrd.hr/)), the **EBRD-European Bank for
Reconstruction and Development** ([www.ebrd.com](http://www.ebrd.com/))
and the **EIB-European Investment Bank**
([www.eib.org](http://www.eib.org/)).

Currently, the most important co-financing sources for sewage and
wastewater treatment projects are the World Bank and the IPA (Instrument
for Pre-Accession Assistance), the EU pre-accession fund.

#### 

Since Croatia joined the **World Bank** in 1993, the Bank has funded
projects totaling over US\$1.2 billion. The ongoing project funded by
the World Bank in the amount of US \$ 150 million is the Croatian
Adriatic Coastal Pollution Control Project (Adriatic Project). The
Project of upgrading municipal sewage systems and wastewater treatment
facilities along the Adriatic coast, commenced in 2004 and it is
expected to last for approximately 10 years.

##### The Instrument for Pre-accession Assistance (IPA), 2007 - 2013

A new instrument of EU assistance available to the Republic of Croatia
in the period from 2007 until Croatia's accession to the EU.
Environmental projects are covered in the Component III - Regional
Development for co-financing infrastructure environmental projects. In
2008, 24.00 million EUR has been allocated for the environmental
protection projects.

####### 

####### 6. Wastewater Treatment Systems & Sewage Systems used in Croatia

**6.1. Wastewater treatment systems:**

-   Mechanical

-   Biological

-   Membrane

-   Plant Lagoons

**6.2. Sewage systems**

-   Mixed

-   Separate

The typical sewage system is mixed (faecal and precipitation waters
together). Only a few smaller cities and residential districts of bigger
towns have separate or split sewage systems (faecal and precipitation
waters are split)

####### 7. Type of Projects

Currently, wastewater treatment projects and sewage projects are mainly
Turnkey projects on a

Build Operate Transfer (BOT) basis with the planned Design Build Operate
(DBO) projects in future.

####### 8. Competition

German, Austrian and French companies have got long history of
cooperation with the Republic of Croatia in major infrastructure
projects.

####### 9. Current Wastewater Sector Market Demand

water pumps, separators, pipes, filters, bio-filters, sludge treatment
equipment

####### 

####### 10. Useful Contacts

[Croatian Waters](http://www.voda.hr/) - Hrvatske Vode, HV - www.voda.hr

[Ministry of Agriculture, Forestry and Water
Management](http://www.mps.hr/eng/ministarstvo) -
www.mps.hr/eng/ministarstvo

[Ministry of Environmental Protection, Physical Planning and
Construction](http://www.mzopu.hr/) - www.mzopu.hr

[Ministry of the Sea, Tourism, Transport and
Development](http://www.mmtpr.hr/) - www.mmtpr.hr

[Agency for Environmental Protection](http://www.azo.hr/) - www.azo.hr

[Fund for Environmental Protection and Energy
Efficiency](http://www.fzoeu.hr/); www.fzoeu.hr

####### For More Information

The U.S. Commercial Service in Zagreb, Croatia can be contacted via
e-mail at: <dalila.uzelac@mail.doc.gov> ; Phone: +(385 1) 661-2224; Fax:
+(385 1) 661-2446, or visit our website:
[www.buyusa.gov/your_office](http://www.buyusa.gov/your_office)

####### The U.S. Commercial Service --- Your Global Business Partner

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*Disclaimer: The information provided in this report is intended to be
of assistance to U.S. exporters. While we make every effort to ensure
its accuracy, neither the United States government nor any of its
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reserved outside of the United States.*

[^1]: Environmental acquis communitaire is a collective term for all the
    policies, laws, directives and goals in the area of environment
    agreed with the EU