Did you know that you will soon lose ownership over your waste? Beginning January 1, 2012 all waste in Poland will be managed by local municipalities and a new "waste tax" will be introduced.

Poland has already failed to meet the obligations of the European Commission's waste storage directive, according to which, by December 31, 2010, Poland should have reduced the amount of stored biodegradable waste to a maximum of 75 percent of the amount produced in 1995.

Currently, the country is not complying with the allowable volume and could face more fines from the European Commission. By December 31, 2013, Poland is supposed to decrease the storage of biodegradable waste to 50 percent and by December 2020 to 35 percent of the waste volume produced in 1995, according to the EC's directive.

However, in 2011 Poles produced 12 million metric tons of waste while Warsaw alone created 800,000 metric tons. Most of this ended up in landfill sites.

Facing time pressures and the possibility that the EU will impose further fines, the Polish parliament finally adopted an amendment on July 1, 2011 that aims to involve all municipalities in achieving their waste management targets.

The amendment is currently awaiting the signature of President Bronisław Komorowski.

Currently, foreign companies control almost 60 percent of the waste-related market and have entered into millions of agreements with waste producers, such as individual real estate owners or production facilities. The new rules are set to have a direct impact on their business.

How will it work?

Under the new law, municipalities will become the owners of waste produced by households and in turn, will have to control the waste management on their territory. In practice, this means that the collection of waste will now become the responsibility of the municipalities. As such, a potential redistribution of business among private companies will likely take place in the waste-collection sector.

Using a public tender process, municipalities will have to appoint a waste-collection and treatment company to be in charge of disposing and managing their waste. If a municipality chooses to participate in such a tender they will need to transform their waste-collection department into a commercial company.

The new tax

Owners of real estate will be charged a waste-management fee by the municipality. This will cover collection, transportation, recovery and recycling costs. The municipalities will determine if businesses within their borders will be subject to such services against the waste-management fee or whether they can enter directly into agreements with waste-management companies.

The provisions of Poland's tax ordinance will apply to the waste fee, meaning municipalities will benefit from strong legal instruments to collect the new tax.

The amount of the "waste tax" will be fixed by each municipality taking into consideration: (i) the number of inhabitants or (ii) the house/apartment living space or (iii) the volume of water used. The idea is to pay for the actual amount of the waste produced in a household, rather than for some theoretical or declared volume.

But what happens if the service of waste collection is performed improperly or not at all? Should the real estate owner claim compensation from the municipality or waste-collection company? These questions remain unanswered.

Infrastructure issues

A municipality or group of municipalities listed in the voivodship waste management plan (yet to be drafted) will build and maintain waste-treatment plants. The same plan will also contain the location of new waste treatment plants. Municipalities, waste-collection companies and the marshall of a particular voivodship will be required to deliver reports describing the performed responsibilities which should help eliminate illegal dumping.

The municipalities, as the owners of the waste, will be able to secure enough raw materials for waste-treatment plants combined for example with heating facilities. This isn't currently the case and it is considered by experts as one of the key reasons why public-private partnership (PPP) projects in the waste-management industry are unpopular.

Again, the municipalities will choose, by way of a public tender, the investor for the waste-management facility. But there is an obligation to organize only one tender procedure. If it is unsuccessful, the municipalities will be free to invest in such a facility.

This leaves us with another unanswered question: Will the appeal of structuring waste treatment plants under the PPP model significantly increase or will the municipalities prefer to keep this activity with a potential "privatization" option in the future?

In any case, there is no more time to waste.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.