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Pocidlini municipal association

From Municipal Cooperation

Pocidlini municipal association
Service Areas: Energy Management
Country: Czech Republic
Municipalities: Žiželice, Lovčice, Převýšov
Contact persons: Antonín Kubů, Radan Eliáš
Legal form: Public law association
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Coordinates: 50° 22' 2" N, 13° 32' 25" E
Photo 1 Good Practice Form for IMC zizelice-FINAL.jpg

Description of the problem/need for IMC

The citizens of the three municipalities used fossil fuel for heating purposes, which was inconvenient and detrimental to the environment. As result, the municipal administrations started considering connecting their municipalities to the gas supply infrastructure. This was met with considerable interest by citizens. However, none of the three municipalities taken individually was large enough to make it economical for the gas company (Východodočeská plynárenská a.s., today RWE) to make the necessary investments.

However, through cooperation, they could ensure the gas company that there would be enough consumers, so it built the high-pressure gas pipelines up to Žiželice, the largest of the three municipalities (Loukonosy settlement), and a gas pressure regulation station for a total of CZK11 million. The rest of the pipelines were built by the Municipal Association, which was created for the purpose.

Description of the IMC practice

Three municipalities – Žiželice, Lovčice and Převýšov decided to cooperate in implementing a gas service in these three municipalities. They signed a Partnership Agreement in 1998 and established a Municipal Association (according to the Law on Municipalities, no. 367/1990; since 2001, the new Law on Municipal Establishment, no. 128/2000 has been applied).

The Association managed to:

  • convince the gas company to build high-pressure pipelines up to one of the member municipalities;
  • receive a grant from the State Environmental Fund, which covered 70 percent of the costs;
  • persuade more than 55 percent (the required limit by the State Environmental Fund) of households to connect to the pipelines.[1]

The Statutes regulate the main bodies of the Association: the President of the Association, the Committee and the Control Committee. The President of the Association is the Mayor of Žiželice; the Committee is formed by the mayors of the three municipalities; and the Control Committee is formed by three municipal councillors (one from each municipality).


The Association does not have any employees; there was a verbal agreement that accounting would be done free of charge by the accountant of Žiželice Municipality. Since only Žiželice has a full-time Mayor (the two other Mayors have other jobs as well), he carried out many related activities for which he was not paid by the Association. He considered it as a part of his job for Žiželice. Municipalities pay a fee of CZK5/inhabitant/year to finance direct administrative costs, such as the bank account fee.

Since its establishment, the cooperation has been perceived as temporary, with only one area of concern, i.e. implementation of gas services. Therefore, they decided to share the costs based on location. First, they decided that pipelines would belong to each municipality. Then, three different construction firms were selected through three separate selection procedures. When an invoice is submitted to a municipality, it is checked and submitted it to the Association together with 30 percent of its amount. The Association then sends it to the State Environmental Fund, which provides the remaining 70 percent of the amount. The Association then pays the invoice. The construction of the pipelines and service connections to individual houses was completed between autumn 2000 and spring 2002.

Although it is definitely a successful case, i.e. the IMC did what it was intended to do, it is interesting to note that the municipalities were very cautious regarding transferring any responsibility or activity to the Association unless it was absolutely necessary. (The municipalities prepared some of the documentation by themselves, did a separate selection procedure and hired different firms, they did not transfer any money.) Therefore there were no problems with accountability – everything was done in the municipalities.

Each municipality’s share of the total amount is the basis for sharing revenues from the planned sale of the pipelines in 2014.

The monitoring was divided into two parts: first, the monitoring of the building process, which was carried out by the municipalities themselves, except in the case of Žiželice Municipality, which was carried out by Antonín Kubů. The second was monitoring the financial aspects, which was conducted regularly by the State Environmental Fund. The Association is subject to a yearly financial audit provided by the Regional Office. (The same rules apply for municipalities.)

As citizens were directly affected by the implementation of the gas service, they were informed extensively in the preparation phase about the purpose. (Special meetings were organized and later the issue was discussed at council meetings, which are public.) It is a small municipality, so people asked the officials whenever they needed something. However, according to both Mr Kubů and Radan Eliáš, only a few people asked general financial questions; most were concerned with the actual construction.

Establishment of the IMC practice

Since the mid-1990s, Žiželice Municipality was interested in implementing a gas service and looked for way to do so. First, it negotiated separately with two gas providers from two regions (the municipality lies just at the border of two regions), since it needed to obtain the above-mentioned high-pressure pipeline, which would be financed by the gas company. Finally, it obtained an approval from Východočeská plynárenská, a.s., on the condition that they would have more consumers than Žiželice could offer. Therefore, Žiželice started to look for a partner municipality/ies. Unfortunately, one nearby municipality (Olešnice and one of its communes, Levín) decided to implement the gas service by themselves, so Žiželice had to look for another partner(s). It finally reached an agreement with the Převýšov and Lovčice Municipalities, and founded the Association. Then, through the services of specialized firms, each of the three municipalities prepared, all the required documentation (spatial plan and building permit), including a budget of the entire project. The municipalities applied for a grant to the State Environmental Fund and received CZK 25 million, i.e. 70 percent of the actual costs.

There were no problems in cooperation among the municipalities; they encountered typical problems during the building process, such as the need for frequent monitoring of the building companies. Mr. Kubů regrets that they did not hire a professional works inspector.

Main success factors:

  1. clear rules of cooperation established in advance;
  2. good preparation, especially communication with citizens who knew the conditions under which the municipality (association) could receive the grant;
  3. well-prepared project;
  4. careful selection of the firms (both building companies and those that prepared the documentation).

Benefits and shortcomings of the IMC practice

Benefits

There are clear benefits for the citizens, such as improved living standards due to gas heating instead of fossil fuel heating. Surprisingly, all of the elderly citizens were connected to the system despite relatively high initial costs (each household had to pay connection fees and for a new gas heating boiler). The benefits for the municipality in a long term may be attracting new inhabitants (as well as other activities such as preparation of building lots and new constructions).

Shortcomings:

Good cooperation was achieved due to good understanding and personal relationships among the officials. There is a new, young female mayor in one of the municipalities who does not always support the flexibility of the others – e.g. concerning how they use any means to solve things as long as it is not illegal, while she wants to do only things that are definitely legal – which may be a strong obstacle to further cooperation among the involved municipalities.

Future plans for the development of the IMC practice

Since the beginning, this cooperation was meant to have one purpose and be temporary. The Association will continue until 2014, because one of the conditions of the State Environmental Fund is that the pipelines must be owned by the Association for ten years.

Mr. Kubů said that he believes such a cooperation would be useful in other areas as well (for example, in the area of water and sewage); however, as Žiželice was able to start, and to date, only partially carry out these projects alone, it did it without waiting for Převýšov to prepare and approve all the required documentation.

Main lessons learned in establishing IMC and making it a success

  • Strong mutual objectives cannot be achieved without cooperation.
  • Clear rules must be established at the very beginning of the cooperation.
  • Equal participation of all partners is important.
  • Good preparation is needed at all stages.

There are similar associations. Mr. Kubů knew of one in Týnec nad Labem, which is approximately 10 km away from Žiželice. However, when they started, they had no useful example to follow.

At the beginning of the cooperation and during the entire gas service implementation process, the municipalities benefited from frequent consultations at the District Office. The District Offices were abolished in 2002 and similar assistance from, for example, the Regional Office was not available. Also, at that time, the mayors in the district had regular contact with each other.

Willingness to support other municipalities to establish IMC

They are prepared to share their knowledge and experience. Since the grant schemes are different now, it is likely not possible to simply duplicate them.


Acknowledgment

The information about this practice was collected and presented by Lucie Sedmihradska.
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