Clases de explotación y sus diferencias con la (bio)piratería

Restructuring in transition

The integration of environmental aspects into socio- economic decision-making processes coincides, in the context of transition, with fundamental re-orientations in social and economic management. In Slovenia, the most relevant of these re-orientations are:

•= Re-channelling economic output, from markets of the former Yugoslavia towards western markets; •= Shifting the management perspective from a

regional to a national economy;

•= Developing economic policy from a predominantly supply-oriented outlook to a management that increasingly takes demand into account;

•= Increasing private at the expense of social ownership, resulting in a higher number of small enterprises;

•= Adapting to the growing importance of the service sector as compared to manufacturing. In 1995, 67 per cent of all exports were directed to the EU. The export of manufactured goods, electrical appliances, transport equipment, machinery, chemicals, metal goods, furniture and other wood products was accompanied by pressure from western clients on Slovene manufacturers to make products more environmentally friendly. The success of corresponding transition efforts, as exemplified by the re-direction of export flows, increased investment opportunities. After May 1996, the upgrading of the country’s credit rating to ‘A’ acted as another investment stimulus.

Independence ‘promoted’ the previously regional level of public administration to the national level. Self-government principles were maintained for the

local level of public administration - of considerable importance in Slovenia, in particular for environmental policy and management - but a ‘vacuum’ was created at the regional level. While it is possible to bridge this gap for the regional implementation of national policies and management (by creating regional offices of national ministries), it does not facilitate coping with issues that require cooperation between several municipal administrations. The integration of different decision- making may create additional problems, as the ad hoc arrangements for dealing with regional decisions may differ between the various ministries or areas of management in the absence of overall formal solutions.

The economic reform caused two major economic problems: unemployment (1993, 14.4%; 1995, 13.9%) and inflation (1993, 201.3%; 1995, 12.6%). To some extent, unemployment is considered to be frictional, and also inflation is likely to be largely caused by supply adaptations to newly expressed demand structures. Both these problems meet with social dissatisfaction. That and interest rates driven by inflation are thought to have had a negative impact on investment in general, and on environmental protection in particular. The Government reacted with legislation facilitating transition and following a step- by-step strategy to insert environmental issues into economic decisions, either at the stage of privatization or by stimulating investment in general. The privatization process was used deliberately for incorporating environmental protection benchmarks into enterprise development (see below). The process led to a considerable growth in the number of SMEs (see chapter 9, table 9.3). While this could be seen as complicating the integration, the growing importance of the service sector as compared to other economic activities partly alleviates environmental problems, thus making the integration of environmental and

economic decisions in some cases less urgent. In fact, some of the most important environmental ‘hot spots’ used to be in mining and manufacturing, which have considerably decreased their activities in recent years - if they did not cease them altogether.

Privatization

Under the Enterprise Ownership Transformation Act (December 1992) about 1,500 socially owned companies were scheduled for privatization. The law applies to all enterprises with the exception of banks, insurance companies, public utilities, transport companies, gambling establishments and cooperatives. By 4 November 1996, 1,307 programmes had been approved, 175 programmes were in progress, and 25 privatization programmes still had to be drawn up.

To start privatization, companies prepared balance sheets of their ‘social capital’ (according to the prescribed methodology for privatization and ownership transfer programmes, originally scheduled to be submitted to the Agency for Privatization and Restructuring by 31 December 1994). Arable land and forests were excluded, as they were declared State property and will be managed and privatized separately later. Foreign investors may participate in the process of ownership transfer by buying shares offered for sale. Once the ownership transfer is complete, there will be a very diverse company ownership structure, as ownership is transferred to employees and their families, and, in the case of public share offerings, to external owners having invested their certificates. Foreigners are expected then to acquire shares and stakes in companies under conditions laid down by law. The policy towards foreign investments is openly defensive right now. On the other hand, the policy seems to be targetting foreign investors at the moment of capital concentration rather than at the moment of capital redistribution.

EU PHARE and EBRD are very active in the privatization and restructuring. For example, EU PHARE is helping the Agency for Privatization and Restructuring screen and draft privatization plans. It is setting up a post-privatization facility to channel training support, educating shareholders and financial-corporate managers. It is supporting the Development Fund, assisting in restructuring companies in difficulties. EBRD is providing direct funding to locally managed privatized companies through a broad range of innovative instruments, with

special emphasis on equity, quasi-equity investments, syndicated transactions and co-financing. It provided an ECU 8.2 million loan for a gas distribution system for six municipalities, structured as a “Built Operate Transfer” project (see also chapter 2).

The privatization scheme encourages new environmentally friendly owners. The legal framework addresses environmental liabilities in a way that stimulates interest in tackling past pollution by making privatization easier. The Environmental Protection Act adds to the legal framework for the privatization of the Slovene economy, since it lays down environmental protection requirements for businesses. As a result, buyers are obliged to assume the burden of past environmental pollution and negligence by their newly acquired enterprise (article 9: Principle of Liability of the Party Responsible for an Environmental Strain).

The privatization regulation (on the methodology for preparing the opening balance sheet, Official Gazette of the Republic of Slovenia, No. 24/93) enables existing companies to reserve long-term funds to deal with past liabilities and invest in environmental improvement. Reserves made as of 1 January 1993 are indexed in the accounts at the end of each financial year and should be spent by 2003 on cleaner technologies or on the sanitation of a site. Companies that are committed to making such investments need to obtain project endorsement from the Nature Protection Authority of MoEPP before submitting their ownership transfer programme to the Agency for Privatization and Restructuring, in order to deduct the investment from their opening balance sheet as an environmental liability. This provision was introduced to create obligations for environmental protection investments. At the same time, it reduces the purchase price of an enterprise in privatization, thereby facilitating the process. As of 4 November 1996, 770 programmes, of which only 111 contained long-term environmental reservations, had obtained the Agency’s and MoEPP approval, clearing them for registration with the court as joint-stock companies (table 8.1).

The Eco-Fund

Currently soft loans from the Eco-Fund are available to municipalities, industry and households for environmental projects. The EPA abolished the Water Fund established in 1963 and the Environmental Protection Fund established in 1990, which were essentially supported by waste-water discharge taxes,

Table 8.1: Funds committed for environment as a result of ownership transfer, 1.3.1997

Source: Report on enterprise ownership transformation, Ministry of Economic Relations and Development. As the liabilities are indexed, the 1 January 1993 exchange rate should be used.

electricity and gas charges. According to the EPA, fees for water use and charges for waste water are now transferred to the State budget. The EPA established the new Eco-Fund as a joint-stock company. It provides loans with an interest rate below commercial rates, rather than giving grants as the former Environmental Protection Fund did.

The Eco-Fund’s share capital consists of budgetary contributions and the transferred loans previously awarded by the MoEPP. The Fund’s revenues could be capitalized as it is a non-profit organization. The repayment of loans and interest paid by borrowers, the concessionary compensations by natural resource users, a part of collected CO2 tax and 8.5% of

privatization proceeds channelled from the Privatization Fund would make up the cash inflows. The shareholders (currently only the State) are not allowed to receive dividends. The Fund’s profit is tax exempt. Its 1994 and 1995 financial accounts were audited by KPMG. The Fund is actually able to function like a commercial bank.

The Fund’s current problems are: under- capitalization and interest rates practised (6% plus rate of inflation) may not be sufficiently attractive for potential clients, especially given the time required for a decision to be taken on an application for credit. The financial statements below show the share capital and the profit generated. The State is expected to inject additional funds in the share capital in 1997. EU PHARE has provided ECU 400,000 for institutional strengthening and for air pollution abatement projects..

Environmental expenditures and their funding

Environmental expenditures in Slovenia are financed from the following sources:

•= The State budget: industry pays its dues to the State budget in the form of charges and fees. The Government distributes the collected funds through the ministries as loans and grants.

Table 8.2: Environmental expenditure from the State budget, 1994-1996

Note: Figures are subject to changes as methodology is under development. Source: State Budget.

Expenditure is explicitly for environmental purposes or has recognizable, primarily favourable environmental effects (such as expenditure for improving energy efficiency). Distinction between environmental protection and nature protection has not been established. Estimate does not include grants in the form of foregone revenue due to tax deductions, allowances, exemptions, credits, or any other means of fiscal stimulation of environmental expenditure. State guarantees for environmental projects are also excluded.

Project value Share Including projects for: Slt million of total Waste

elimination Sanitation programmes Total liabilities 38,990 100% 1,901 37,322 Approved 26,519 68% 1,882 24,637 Applications in progress 4,193 11% 0 4,193 Rejected applications 8,508 21% - 68,508 1994 1995 1996

(in million Slt, current prices)

Value Share Value Share Value Share Total expenditure 4,565 100% 4,107 100% 3,913 100% Capital expenditure 3,074 67% 3,085 75% 1,834 47% Current expenditure 1,491 33% 1,021 25% 2,079 53% of which transfers to enterprises 1,191 26% 406 10% 1,092 28%

Table 8.3: Environmental expenditure from the business and non-business sector, 1990-1996

[million Slt, current prices]

1990 1991 1992 1993 1994 1995 1996 Total expenditure In million Slt 502 1,549 2,034 6,496 14,317 13,727 16,258(1) % of the GDP 0.3 0.4 0.2 0.5 0.8 1.3 0.7 Current expenditure .. .. 485 1,587 1,948 2,615 2,869(1) Investment .. .. 1,549 4,908 12,360 11,111 13,389(1) Environmental investment .. .. 0.8 1.8 3.4 5.5 2.8 as % of gross investment Gross investment In million Slt 36,917 72,013 187,450 268,831 365,040 470,949 555,152 % of the GDP 18.8 20.6 18.4 18.7 19.7 21.2 22.1 GDP 196,139 349,559 1,017,965 1,435,095 1,852,997 2,221,459 2,515,000 Source: Expenditures for environmental purposes in 1990-1991 are taken from an unpublished report. The values are in dinars.

Current expenditures are from IMAD based on Statistical Office, Ministry of Finance, ECO Fund and IMAD estimates. Note: (1) estimates. Growth averages that of investment from the budget, Eco-Fund loans for investment and gross fixed investment in the business sector. Current expenditure for 1996 reflects increase in the retail price index.

•= Local government budgets have been a significant source of environmental investment funding in the past, mainly through investments in public services and infrastructure. To improve environmental conditions, municipalities use funds from the State budget, revenues generated from local environmental taxes as well as donors’ contributions.

•= The National Environmental Protection Development Fund (the Eco-Fund) is a stock- holding company with 100% State ownership. It provides soft loans for environment-related infrastructure development and environmental protection (for details, see above).

•= Enterprises’ funds: during the initial stage of privatization, enterprises put aside funds to deal with environmental issues. The MoEPP endorses the expenditure (for details, see above; see table 8.1 for data).

•= External sources of funding include international financial institutions (IFIs) and support based on bilateral agreements. The World Bank, a major source of funding, granted a loan of some DM 30 million to finance the conversion of domestic and small commercial heaters from coal to natural gas. Funding was channelled through the Eco- Fund. In addition, the World Bank is helping the development of the geographic information system, and the: development of a new management system for one of the major tourist areas, the So£a Valley. Bilateral aid comes primarily from the European Union (EU-

•= PHARE, EIB, EBRD), the United Kingdom, the Netherlands, Austria and France (see chapter 2). At the moment, comprehensive data on environmental expenditures and on their sources of finance are not available. It is thus impossible to provide a reliable and satisfactory picture of all sectoral environmental expenditures. Tables 8.2 and 8.3 are therefore presented separately. Statistical work to remedy the situation has started.