engleski

Financing Communal Services in View of Good Governance: The Case of Zagreb Holding

The influence of European Law on the providing and performance of communal services is of ever growing importance. These instruments, binding or non-binding by nature, aim to set a certain legal standard of performance of communal services, by enticing the introduction of elements of good governance. It is in this view that the founding of Zagreb Holding 2006 must be observed. Namely, in order to regroup around twenty individual municipal service companies operating in Zagreb, which were incurring high operational costs and had excess employees, the City of Zagreb decided to introduce an integrated model of providing communal services - Zagreb Holding ltd. - the first of its kind in the Republic of Croatia. This model was deemed to enhance efficiency and effectiveness and rationalise the business model - in short reinforce certain values close to the good governance paradigm, as promoted by the European legal framework. However, in its eight years of existence Zagreb Holding ltd. provoked many controversies. Therefore, the authors of this article examine the financial performance of Zagreb Holding in order to respond to the main question – has Zagreb Holding achieved its goal and, moreover, what is the possible role of good governance in the area of local financial management? The article is organized as follows. The first part, is consecrated to the analysis of relevant binding and non-binding legal sources framing the providing of communal services in the European and domestic context, as well as the influence of the former on the latter. Special attention was dedicated to good governance and its principles. In the second part, the financial performance of Zagreb Holding ltd. was regarded in the context of the selected good governance principles. The last part is reserved for conclusions and discussion. The analysis confirmed that the relationship between local units and their public utilities deserves special attention, a necessity already realised in financial theory but nowadays also by European bodies (e.g. Council of Europe). Finally, the authors attempted to form recommendations which may serve as a basis for deliberations and future improvements.

local finances, communal services, good governance, Zagreb holding ltd.

nije evidentirano