Public Investment Management in Slovakia

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Public Investment Management in Slovakia

• Ján Maruinec

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Content of the Presentation

• Background information
• Institutional setup
• Role of strategic planning
• Managing investment projects
• Budgetary aspects

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Background information

• Restructuring and privatization
• Utilities are private (up to 50), prices
  deregulated
• Transport companies are joint stock, get
  transfers from state budget
• Budget heavily involved in regional development
  and environment

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Background information

• Total state budget SKK 380bn / EUR
  11,3bn / USD 16,9bn
• CAPEX SKK 40bn / EUR 1,2bn / USD
  1,8bn / ca 10 of total exp.
• 30 purchases, 70 transfers
• EU funds SKK 36bn / EUR 1,1bn / USD 1,6bn
  / ca 10 of total exp.

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Institutional setup

• Ministry of finance sets total CAPEX ceilings
  for line ministries
• Line ministries decide about allocation to
  different priority areas / agencies
• Cabinet of ministers approves investment
  projects above SKK 100m / EUR 3m / USD
  4,5m
• Agencies manage individual projects

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Institutional setup

• TRANSPORT SECTOR
• Railway Company Slovakia
• Railway Company Cargo
• Slovak Railways
• National Motorway Company
• Slovak Road Administration

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Role of strategic planning

• STRATEGIC DOCUMENTS
• Planning documents for Cohesion Fund and
  Structural Funds (72Y)
• Public Works Plan (3Y)
• Medium Term Expenditure Framework (3Y)
• Respective Sector Strategies (3-5Y)

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Role of strategic planning

• EU priorities win over domestic ones because of
  funding
• No unified PIP exists, only register of
  investment projects
• No bottom-up wish lists, rather top-down
  breakdown of available funds into projects
• Both path-dependency and ad hoc political
  decision-making are present

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Managing investment projects

• Land Use Plan
• Project preparation and approval
• detailed project documentation (prepared by
  independent engineer)
• submission of the project documentation for
  state expertise for projects with expected
  value above SKK 200m / EUR 6m / USD 9m, as well
  as EIA
• 2 administrative decisions land use approval
  and construction permit

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Managing investment projects

• Procurement and contracting
• Construction and supervision
• Permit for infrastructure use
• Technical-economic evaluation
• Governed by
• Law on Public Works, Law on Land Planning and
  Building Order

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Managing investment projects

• The expertise (outsourced by MCRD ) is supposed
  to look at
• efficiency of the project
• its consistency with policy, land use, and
  planning documentation
• appropriateness of the technical solution
• expected cost (binding maximum)
• exploration of alternatives

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Managing investment projects

• The expertise can have 3 outcomes
• approval of the project proposal
• approval of the project proposal with conditions
• denial of the project proposal

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Managing investment projects

• Monitoring and evaluation
• monitoring construction is performed by the
  respective investor company / government
  authority or outsourced
• focused on worker safety, proper management of
  construction, consistency of construction with
  project and permits
• monitoring reports are prepared for investor
  companies management and MOT on monthly basis

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Managing investment projects

• Monitoring and evaluation
• National Motorway Company has Department of Audit
  and Control
• Slovak Railways have only Internal Audit
  Department
• Slovak Road Administration has only Internal
  Control Department

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Managing investment projects

• Strengths
• Good quality of construction and limited cost
  overruns (supervision)
• Well defined procedures
• Challenges
• Managing project pipelines
• Improving technical design efficiency to save
  resources

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Budgetary aspects

• CAPEX ceilings for LMs, no shifts allowed without
  approval of MOF
• Automatic carry over for CAPEX and EU funds
  co-financing
• Indexation can be applied for investment projects
• Amounts for investment and operating costs are
  decided by LMs
• Individual projects are not approved by Parliament

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Thank you for your attention