75875 May 2012 PPIAF Assistance in the Slovak Republic Since the Slovak Republic (Slovakia) became a sovereign state in 2003, the country has made great economic progress by implementing ambitious reforms. In particular, reforms to the taxation, healthcare, pension, and social welfare systems helped Slovakia consolidate its budget and get on track to join the European Union in 2004 and to adopt the euro in January 2009. In the early 2000s, Slovakia recognized the importance of reforming its utility sector through private sector participation and requested PPIAF’s technical assistance. Technical Assistance for Slovakia’s Enabling Environment Reform In February 2000 the government requested PPIAF’s assistance to formulate recommendations to develop a sound enabling environment for private sector participation in the utilities sector. At that time, the utility sector was predominantly state-owned, and the government had decided to privatize several state-owned companies. PPIAF assistance consisted in a $75,000 grant to determine what form of institutional arrangements for regulation should be established in Slovakia, and to provide recommendations for their implementation. The first report “Institutional Arrangements for Natural Monopoly Regulation in Slovakia� provided an initial diagnosis of the regulatory issues that were facing the Slovakian government in four sectors: energy (electricity and gas); telecommunications (fixed lines); railways transport; and water and sewage. It also provided recommendations for the institutional design of regulations in Slovakia. The second report provided a detailed implementation plan for the government with regard to establishing new institutional arrangements for regulation, with the energy sector taken as example. It recommended the creation of a single regulatory agency for the energy sector and provided specific recommendations for its organization and staffing. A workshop was held on February 27, 2001 in Bratislava to present the findings of the report and an implementation plan. Hosted by the Ministry of Economy, the all-day workshop was held in the offices of Slovenske Electrarne and cosponsored by PPIAF, the World Bank, and the Japanese Policy and Human Resources Development Fund. Based on the diagnostic report and the implementation plan, the government created a regulatory agency for energy called the Utilities Regulatory Office. The agency began operations in June 2001. Through its mandate the regulatory office contributed to mitigate the risks to investors and set the stage for the successful privatization of three electricity distribution companies and the Slovak Gas Company for a combined total of almost US$3.3 billion. In 2002 in its Program Declaration, the Slovak Government committed to decrease the general budget deficit of public finances to 3% of GDP by the end of its electoral period (2006) to fulfill two preconditions for participating in the European Union. One of the instruments through which public finances can be better managed and economic growth increased, is private sector involvement in financing public infrastructure though public-private partnerships (PPPs). In this context, the government requested PPIAF assistance again in June 2005 to review a Public Procurement Law covering PPP issues, which was being prepared for presentation to the government. In particular PPIAF assistance consisted of the publication of a report “Public Finance Management Reform Project,� which provided: i) comments on a new Public Procurement Law; ii) a medium-term strategy for PPP projects in Slovakia, and iii) an outline for the creation of Technical Assistance Facility for PPP projects. PPIAF also funded a workshop on the concept and implementation of PPPs, which was held at the Ministry of Finance in February 2006. The advisor highlighted that the law prepared did not cover well enough PPP issues and recommended a separate Concession Law to be drafted. At that time, the government still decided to enact the Public 1 Procurement Law despite the comments provided. Nevertheless, as Slovakia joined the European Union, its law on PPPs was later modified and harmonized with those of the rest of the European Union. Results of PPIAF’s Activity for Slovakia’s Enabling Environment Reform Category Outputs Enabling environment reform  Diagnostic report “Institutional Arrangements for Natural Analyses/assessments prepared Monopoly Regulation in Slovakia,� 2000  Report “Public Finance Management Reform Project,� 2006  Implementation Plan for Natural Monopoly Regulation in Plans/strategies prepared Slovakia, April 4, 2001  Workshop to present findings of report and implementation plan Workshops/seminars on natural monopoly regulation, February 27, 2001  Workshop on PPPs for Ministry of Finance, February 2006 Category Outcomes Enabling environment reform  The government created a single sector regulatory agency for Institutions created or energy called the Utilities Regulatory Office, which began strengthened operations in June 2001 2