Chapter 2: Czech Republic

(continued)

2.4 Project Opportunities

Major Environmental Problems

Table 2.8 presents the major environmental problems the survey respondents expect to face in the coming years. The information is based on answers to the question on major environmental problems in the Czech Republic. It is interesting to note many respondents interpreted the term "environmental problem" in a broad way, and included not only specific environmental issues (e.g. "contamination of groundwater and soil in refineries in Ostrava, Pardubice etc.") but also mentioned system issues with an impact on solving environmental problems (e.g. low prices for landfill waste disposal, low financing of environmental activities etc.). It is important to note that both businesses and state bodies only responded according to the environmental fields they were active in.

Air

On-site measurement of air emissions is not yet a pressing issue, as legislation does not force polluters to install devices for continuous monitoring. Also, small stationary sources of pollution are not regulated at this time /69, 67/.

Air emissions from mobile sources have a strong negative impact on air quality, and aggravate local air pollution problems, especially in large cities. For instance, Prague introduced a partial vehicle ban, and some towns in north Bohemia experience heavy pollution from traffic as well. Car service checks are not stringent, and the technical state of the country's vehicle fleet is poor. Even if the Czech Republic were to introduce exhaust emissions controls and tried to ensure that fuels and regulations conformed with EU standards, enforcement would be difficult. During fall 1996, the government extended the permit for the import of used cars that do not meet the strictest Euro-limits II emission standards /legislation, 67/.

Water

Contamination of groundwater resources (especially by oil-based substances, organic solvents, and heavy metals) is a potential threat that can, and should be, reduced in some areas (e.g. former military bases, gas stations). The Czech Republic is heavily industrialized, with a number of sites having already suffered from environmental negligence. Thus the danger of groundwater contamination is ever present.

Problems with poor quality potable water are acute in some regions of the country, where up to 90 percent of the wells that provide water do not meet the potable water standards. However, country-wide, the quality of drinking water from public water supply systems (85.5 percent of population) is generally acceptable /67, 52, 76/.

Waste

Waste management practices will be significantly affected by the new Waste Law which should be introduced in 1997. The new legislation will address the most critical issues in waste management, including waste categorization, waste recycling, disposal of packaging waste, distribution of waste disposal fees, and other issues.

Energy

Priority areas in the sector include the conversion of most of the current small and medium-sized heating stations from coal-burning to gas use; the reconstruction of larger heating stations in order to also use them for electricity generation; and modernization and construction of new small energy sources. The latter group includes the implementation of water hydroturbines, solar energy use (on a small scale), landfill gas utilization, wind mills, and other energy sources.

As fees for energy (electricity, heat, gas, other fuels) steadily rise, energy saving issues should become more important within the forthcoming two or three years /67, 69, 3, 70/.

Noise and Vibration

Noise and vibration issues in industrial companies are generally addressed on an individual basis, and were not perceived as a major project opportunity area.

Significant Environmental Projects in Progress

Current projects, with a duration of three or more years:

• conversion of coal-fired energy plants to gas-fired (medium-sized and small heating stations in major towns, especially in heavily polluted areas, and individual family houses in residential districts); and co-generation in large heating stations (big towns, some large industrial companies) /69, 70, other sources/;
• construction of new and modernization of existing wastewater treatment plants throughout the country /2, 3, 49, all respondents active in water management/;
• remediation of contaminated sites (throughout the Czech Republic, mainly at large enterprises and former military bases) /74/.

Projects of longer duration, and introduced on a smaller scale:

• waste recycling technologies;
• waste minimization;
• energy saving measures;
• alternative energy sources;
• introduction of environmental management systems (ISO 14000 and EMAS).

Most of the above activities are market-driven, with limited state support. A majority of interviewed parties who were willing to answer the question on current projects in progress gave examples that belonged to the above groups. Some concrete examples mentioned in interviews included:

• remediation work at the former Soviet military base at Milovice - Jirice /20, 41/;
• remediation work at the Trebovice power plant, and at the Nova Hut steel works /4/;
• site investigation for newly designed highways, and for an express railway corridor through the Czech Republic /40/;
• investigation of ecosystem changes in the Krusne Hory mountains /43/;
• groundwater and soil clean-up at the large chemical plant Chemopetrol Litvinov /4, 14, 20/;
• construction and/or modernization of wastewater treatment plants on the Vltava and the Elbe rivers (Decin, Usti nad Labem, Melnik) /7, 22/;
• introduction of environmental management systems (rare, but throughout the country)/13, 30/;
• waste minimization programs (rare, but throughout the country) /8, 32, 39/;
• creation of a comprehensive solid waste management system in the town of Ostrava /21/.

It is important to note that, in answering the question on project opportunities, highly specialized firms and some state bodies and R&D institutions tended to stress the need for projects relating to their specific field of activities or interest, rather than to focus on major environmental problems in the Czech Republic which would better reflect actual market needs.

Major Sources of Information on Business Opportunities

Other sources included referrals from associates, and to a smaller extent, trade fairs and exhibitions, and information obtained from local authorities. Daily press and periodicals were not considered by respondents as an effective information channel.

Interestingly, about a quarter of interviewed businesses expressed a strong need for a periodical presenting environmental business opportunities. The weekly Obchodni Vestnik, is supposed to announce public tenders; however, as many opportunities are missed announced late or not at all and don't make it into the publication, the Vestnik is not considered useful. Other periodicals were considered helpful in presenting a general picture of the environment but do not include information on business opportunities. The periodicals mentioned included Planeta, Odpady, Eko-magazin, and Vestnik MOE.

It was often noted that the Ministry of Environment should play a more important role in providing information on project opportunities than it does at present. The majority of businesses expressed frustration with the inefficiency and lack of clear structure within the Ministry (e.g. changes in departmental responsibilities, structure, changes of posts, etc.).

For comparison, Table 2.9 presents the breakdown of major information sources based on a 1995 survey of 150 environmental businesses in the Czech Republic carried out by the Regional Environmental Center.

The role of environmental and trade associations in the Czech Republic is very limited - half of the survey respondents were found not to belong to any association.

Table 2.11 presents the most important environmental trade fairs in the Czech Republic.

There is a general trend among environmental firms to reduce the number of exhibitions participated in and to only take part in the larger events that attract more visitors. Several large environmental technology producers expressed interest in the International Engineering Fair at Brno, the largest fair in the Czech Republic, with a 39-year tradition. The Fair covers most industries and in fact, is one of the largest of its kind in Central Europe. The range of products presented is not limited to the environment /27, 28/.

For the foreseeable future, the number of fairs, shows, and conferences is expected to decrease. Some exhibitions will be canceled as they are no longer found to be profitable. For a potential foreign participant, it is advisable to carefully review existing events in the Czech Republic with an experienced local advisor and to focus on those events which offer the best return on the required effort and resources.

Public Procurement Law and the Tender Process

The law applies to the acquisition of goods, construction, and services by all government agencies, including local governments, associations, and other bodies which use state financial means. The law also applies to all private legal entities and individuals using state funds for the acquisition of goods, construction, and services.

The law requires the formal announcement of tenders for all planned acquisitions, with the following exceptions:

• financial support of R&D activities covered from the state budget;
• tenders the subject of which is protected according to the Law on Authorship, and laws on industrial and intellectual property rights;
• acquisitions undertaken by Czech embassies abroad;
• acquisitions related to official visits of representatives of foreign states and governments in the Czech Republic.

A tender must be announced, if the price of a planned acquisition of technologies and/or of real estate (with the exception of property lease) is higher than 20 million crowns (USD 727,000). In all other cases the tender must be called if the price is higher than 5 million crowns (USD 182,000). All prices quoted are without the VAT tax of approx. 22 percent.

If the price of a planned acquisition (technologies and/or real estate, with the exception of a property lease) is higher than 2.5 million crowns (USD 91,000), and in all other cases if the price is higher than 500,000 crowns (USD 18,000), at least five competitors (bidding parties) must be approached.

Where the price of a planned acquisition is higher than 100,000 crowns (USD 3,600) and lower than 2.5 million crowns (USD 91,000), and in all other cases with a value below 500,000 crowns (USD 18,000), at least three competitors must be approached. Finally, if the value of a planned acquisition is below 100,000 crowns (USD 3,600), the acquisition may be carried out directly without tender.

Tender calls must be announced in Obchodni Vestnik (Official Weekly), and should include project specifications, selection criteria, and deadlines. Obchodni Vestnik is available from Economia a.s. /84/. Additionally, the most significant tenders are announced in the daily newspaper Hospodarsky Noviny. An annual overview of the major planned projects is published in the Catalogue of Municipal and Regional Projects for Tenders, published by the Ministry of Economics.

Both local and foreign legal entities and individuals can generally participate in a tender. Sealed bids must be delivered either personally or by mail. No competitor may submit more than one bid. The deadline for submitting bids may vary but the time offered for proposal preparation should not be shorter than 36 calendar days from the date of the announcement in Obchodni Vestnik.

The body that announces the tender may also specify other conditions, for example, that local, or foreign participation is restricted. Even if a tender is open to both local and foreign competitors, local bidders are preferred if the price offered is the same or up to 10 percent higher than the price offered by foreign competitors, when the products offered are of a similar technological quality. Interestingly, if a joint bid is submitted by a foreign and local entity, it is considered a foreign entity bid.

Note: The Public Procurement Law is long and complicated. For interested parties, it is recommended to obtain a professional translation of the whole document.

Useful Contact Points

While the Ministry of Environment is not considered to be a major information provider, it may serve as a good source (although willingness to provide information varies from department to department). Some officials are very helpful, while others are only capable of referring an applicant to another department or state body (e.g. to the Czech Environmental Institute /72/). The assistance that can be expected from other ministries is more limited, although for instance the Ministry of Industry and Trade has a very helpful environmental department.

In the first few years following the socio-political changes in the Czech Republic, most foreign environmental companies tried to approach ministries as the first source of information. In most cases, the businesses were not able to obtain the information they were looking for. Many ministerial officials stated they still take part in so many meetings with foreign firms that they cannot find time for their own work.

Overall, relying on governmental contacts as the sole information source for project opportunities is not a recommended method. While almost every ministry has a designated person responsible for environmental issues within the ministry's scope of activity, in reality, they often do not offer any environmental projects. The Ministry of Agriculture, and Ministry of Education are good examples of this situation.

Listed below are the most relevant points of contact, with a short description. The number given in slashes refers to the full contact information provided in Sections 2.8, 2.9, 2.10.

Useful Governmental Contacts

• Ministry of Defense; Mr. Bukva, Chief of the Environment; clean-up of former military bases, other environmental issues /78/Tel: (420-2) 2021-2503, (420-2) 2021-2505;

• Ministry of Agriculture, Mr. Fantys, Chief of the Dept. of Ecology; summaries, overall statistics on environmental issues /79/Tel: (420-2) 2181-2377 (Note: neither this Department nor the Ministry manage environmental projects, however, the Ministry may provide guarantees on environmental projects);

• Ministry of Industry and Trade; Ms Sticha; environmental technology research projects; a list of projects for 1997 /77/Tel: (420-2) 2485-1111;

• Ministry of Environment; Mr. Dlouhy, Economic Dept.; projects under the Program for Care of the Environment /2/Tel: (420-2) 672-853.

Additionally, information on some environmental projects may be available from specific departments of the Ministry of Environment. Contact points include:

• Department of Water Protection; Mr. Redinger /80/ Tel: (420-2) 6712-2998

• Department of Air Protection; Mr. Jilek /81/ Tel: (420-2) 6712-2671

• Division of Air Emissions; Mr. Weiss, Chief of Division /81/ Tel: (420-2) 6712-2240

• Department of Waste; Mr. Kopecky, Chief /82/ Tel: (420-2) 6712-2216

• Department of Environmental Damages; Ms Tylova, Deputy-chief /83/ Tel: (420-2) 6712-2069

Since last year, individual departments at the Ministry of Environment have also prepared and coordinated small support projects. As grants for these projects are typically low, in most cases the departments are not obliged to announce a tender officially. Such projects are launched more or less at random throughout the year. For instance, in 1996 the Department of Air Protection announced support projects that included Long Distance Emission Transfer (administrative support to the international program), and Emission Data Collection and Monitoring. As mentioned, projects of this kind are new, few and far between, and the sums involved are low.

Overall, to identify project opportunities in the Czech Republic, it is best to investigate the situation through personal contacts, and, to a lesser extent, by contacting directly industrial producers and local administrations. For a foreign firm to compete effectively, it is almost essential to enter the market through a Czech business partner.

Sources of Information on Available Environmental Technologies

Municipalities are obliged to announce open tenders if they intend to purchase technology worth 5 million crowns or more (or 20 million if a complex technology is to be considered). Tenders must be announced in the weekly Obchodni Vestnik at least 36 days before the tender deadline. In cases where the required technologies cost 500,000 crowns or more (or 2.5 million if a complex technology is to be considered), the municipality must announce the tender to at least 5 competitors. In cases where the technology is worth 100,000 crowns, three competitors must be approached. (All the prices above are without VAT, which is usually 22 percent) /38, 75, 2/.

The short time offered for bidding means that foreign technology producers and/or suppliers are not always able to participate in a tender. Additionally, local suppliers have priority when their offer is of a similar technological level compared to foreign competitors, and the proposed price is equal, or up to 10 percent higher.

Most municipalities, particularly if they announce smaller tenders, contact local firms which they already know (through personal and professional contacts), or approach well-known technology providers in the country. Less frequently, municipalities may also be influenced by information and promotional materials provided by technology producers/providers, either during a personal visit to a municipal office, or by mail. Some municipalities also visit relevant trade fairs and shows, especially if they expect to purchase environmental technologies in the near future (e.g. prior to the construction of a wastewater treatment plant).

Businesses can be divided into two categories - state enterprises, and private firms. Acquisitions made by state enterprises are subject to the requirements of the Public Procurement Law and the tendering process (see above).

Private firms purchasing environmental technology products usually use information they have gained from meetings with technology providers. Some firms have an appointed person responsible for environmental issues who has the knowledge (and sometimes the authority) to decide which technology is best for their company /24/.

Businesses also learn about environmental technologies through personal contacts (very common in small and medium-sized enterprises), or through associates working in the same industry.

Some businesses send their representatives to environmental fairs and conferences to investigate existing products available on the market.

Environmental firms are most familiar with the available technologies. Their purchasing decisions are based on their knowledge of a given field (through colleagues, personal contacts, associates, and own experience). From survey interviews it appears that price is not the major factor determining what products environmental firms buy - the key determinant is their specific need. Main technology buyers in this category include environmental service providers, analytical labs, providers of remediation services, and firms investigating and/or measuring pollution etc. /36, 35, 29, 19/.

Other bodies include universities, state R&D institutes, other state institutions, and interest groups. The common characteristic for all parties in this category is the lack of venture capital - many are uncertain whether they will be able to continue operations, and often do not even consider purchasing equipment. Universities generally possess a much better knowledge of the market than other bodies thanks to their local and international contacts /37, 43, 49/.

Conclusions

Many businesses, R&D centers, universities, and state bodies (ministries) collect information from professional magazines, including foreign periodicals. Obtaining information about project opportunities from official sources (the weekly Obchodni Vestnik, the Ministry of Environment, and other state bodies) is usually unsuccessful

Collecting information for purchasing environmental technology is somewhat similar - the most common way to acquire information is through personal contacts at fairs, meetings with environmental specialists at firms, as well as meetings of municipal officials with company representatives. Interestingly, it emerged from the survey that many firms and municipalities have recently solved some of their most pressing environmental issues by introducing relevant equipment, and show little interest in new technologies, assuming the existing products are satisfactory.