Financing Municipal Utility Activities and Local Public Enterprises by Way of Illustrating the Situation in the Republic of Macedonia

Abstract

This paper is about the local utility services in the decentralization process in the Republic of Macedonia. Particular emphasis is placed on the legal framework for financing municipal utility services through the decentralization process. Since the utility service tariffs are relatively low, the Macedonian utility companies want to increase their tariffs up to cost recovery levels to achieve higher standards required by the EU Directives. The paper also deals with financial relations between the central and local authorities versus the utility company management and the current state of providing utility services in light of financial issues. It has been found out that there is a huge potential to improve user charges. However, due to the current economic situation and the unwillingness of customers to pay higher fees, this solution cannot be applied for the time being. KEY WORDS: • public service delivery • financing municipal activities • public enterprise • Macedonia