The Drisla landfill, located 14 kilometers southeast of
Skopje, near the village of Batinci, represents more
than just an ordinary waste management facility. As the
only legal municipal landfill for the capital and a
central site for the disposal of hazardous medical waste
in the country, it plays a significant role in the
national waste management system. For nearly a decade
and a half, the operation of Drisla has been accompanied
by a series of institutional, regulatory, and
operational challenges, positioning it as a sensitive
point in the broader context of environmental
management.
1. The Agreement (2011-2013)
1.1 Modernization
To understand the failure of the "Drisla" concession, it
is necessary to first perceive the state of waste
management in Skopje before 2013. Inherited from the
Yugoslav era, the "Drisla" landfill was established in
1994 for the needs of a city that was significantly
smaller and had a much lower level of consumption than
Skopje in the 21st century. By 2011, the location was
already receiving over 150,000 tons of municipal solid
waste annually.
However, the infrastructure did not keep pace with this
volume. The capacity lacked the key elements of a modern
sanitary landfill:
-
Leachate treatment: There was no
effective system for treating the toxic liquid
leachate created during waste decomposition, which
posed a direct threat to groundwater and the nearby
Markova River.
-
Gas collection:
Methane, a potent greenhouse gas produced during
anaerobic decomposition, was released into the
atmosphere instead of being collected and used for
energy purposes.
-
Medical waste processing:
The site relied on a rudimentary incineration furnace,
donated by the British government in 2001, which was
rapidly approaching the end of its operational life.
The City of Skopje, faced with budget constraints and a
desire to align with European Union directives, opted
for a Public-Private Partnership (PPP) model. Behind the
strategy stood a clear rationale: to use private capital
and technical expertise to transform "Drisla" into a
regional waste management center, without burdening
municipal debt. But the realization of this strategy
proved problematic.
1.2 The Deal
In 2012, the city administration led by Mayor Koce
Trajanovski announced an international tender. The
criteria were seemingly strict, designed to attract
global leaders in waste management. Bidders were
required to prove:
-
Financial stability: Minimum annual
turnover of 250 million euros over the previous five
years.
-
Technical expertise: Proven track
record in managing landfills of similar scale and
complexity.
-
Investment capacity: A binding
commitment to invest significant capital (set at 73
million euros) for modernization.
Three main bids arrived, reflecting the spectrum of
European waste management capabilities:
-
Scholz AG (Germany): A giant in the
European recycling and waste sector, with verifiable
capital and decades of operational history.
-
ASA International (Austria): A
leading environmental services provider with extensive
operations throughout Central and Eastern Europe.
-
FCL Ambiente (Italy): A consortium
that, upon further analysis, stood out from the other
participants.
The decision to select "FCL Ambiente" in January 2013
surprised the professional public. Unlike its
competitors from Germany and Austria, "FCL Ambiente" was
an unknown name in the global waste management industry.
Investigations by BIRN (Balkan Investigative Reporting
Network) revealed that the firm had been registered only
three days before the tender deadline. Practically, it
functioned as a shell company (SPV) – with no operating
history and no turnover.
To meet the strict financial conditions of the tender,
"FCL Ambiente" used the references of its partner, the
large Italian cooperative "Unieco". However, the legal
construction of the consortium was set up so that "FCL
Ambiente" – the company without substance – retained the
majority stake (80%) and management, while "Unieco's"
role was merely formal, just enough to pass the
qualification threshold.
1.3 Court verdict and institutional obstinacy
The selection of a newly formed firm ahead of proven
global giants immediately cast doubt on the integrity of
the tender procedure. The German company "Scholz AG"
filed a lawsuit with the Administrative Court of the
Republic of Macedonia, claiming that the Law on Public
Procurement had been violated.
The arguments of "Scholz AG" were strong:
-
Lack of qualifications:
"FCL Ambiente" did not independently meet the
conditions for turnover and experience.
-
Invalid bank guarantee:
The guarantee was not issued by a reputable
international bank, but by a small financial
institution connected to the consortium shareholders
themselves. This practically meant that the City of
Skopje had no real risk protection.
In July 2013, the Administrative Court ruled in favor of
"Scholz AG" and annulled the tender, concluding that the
City of Skopje had not performed a proper assessment and
had accepted an inadequate offer.
In a state governed by the rule of law, this would mean
a new tender or disqualification. But the City of Skopje
made a move that critics called a clear example of
"state capture". In November 2013, the Council of the
City of Skopje simply repeated the procedure with the
old bids and re-selected "FCL Ambiente".
1.4 The Agreement: Big promises, weak implementation
The concession agreement of 2013 sounded ambitious. "FCL
Ambiente" was granted the right to manage "Drisla" for
35 years, with a promise of an investment of 73 million
euros. The plan included:
-
Sanitary cells: Protective layers to
prevent toxins from leaking into the soil.
-
Recycling plant:
A modern facility for waste selection.
-
Waste-to-energy: Electricity
production from landfill gas and waste incineration.
-
Medical waste incineration:
A new rotary kiln with filters, replacing the old
MK-80 furnace.
The profit was to be split 80-20 in favor of the
Italians. But since there were no investments to create
new revenue streams (such as electricity sales), the
"profit" actually came solely from the waste disposal
fees paid by the municipalities – that is, from public
funds.
2. The Years of Stagnation
2.1 Illusion of investments
From 2013 to 2019, "Drisla" entered a period of
stagnation. The promised 73 million euros were supposed
to be invested in the early phase, but field inspections
by 2016 indicated that no substantial technological
improvements were observed.
Instead of the announced modernization, interventions
were mainly limited to administrative and
infrastructural works, while key technological processes
remained unchanged.
The concessionaire did not secure financial funds or
regulatory approvals for the realization of the most
important projects. Later analyses showed that
operations were conducted through current turnover,
without significant fresh capital. Despite the City of
Skopje holding a 20% stake and having representatives in
the management bodies, no steps were taken to establish
accountability or terminate the contract due to
non-fulfillment of obligations.
2.2 The danger of medical waste
The biggest problem was the treatment of hazardous
medical waste. "Drisla" is the only place in the country
licensed to destroy infectious waste from hospitals.
Although the contract required a new furnace according
to EU standards, "FCL Ambiente" continued to use the old
MK-80 furnace, donated by Britain in 2001 for
emergencies, not for the needs of a capital city.
For the duration of the concession, FCL Ambiente
continued to utilize the MK-80 incinerator, a donation
from the British government in 2001. This unit was
designed for small-scale, emergency use, not the
industrial load of a national capital.
-
Technical deficiencies:
The furnace did not reach a temperature of 1100°C,
required to destroy carcinogenic dioxins and furans.
-
No filters:
There were no modern filters to purify the smoke from
heavy metals.
-
Breakdowns:
The furnace frequently broke down.
The State Environmental Inspectorate, in the period from
2017 to 2019, regularly noted exceedances of allowed
pollution limits. According to whistleblowers, during
periods when the furnace was not functioning, medical
waste was disposed of directly in the landfill, which
posed a serious potential risk to public health.
2.3 Social consequences
The residents of the village of Batinci, located in the
immediate vicinity of the landfill, were among the most
directly affected. On multiple occasions, they pointed
to intense and unpleasant odors, similar to burning
plastic, especially during night hours.
In the same period, increased health problems were
reported, including respiratory infections, the
appearance of asthma in children, and skin diseases.
Although no comprehensive state health-epidemiological
study was conducted, the perceived link between
emissions and health conditions contributed to increased
civic reaction.
In February 2019, protests escalated, with residents
blocking the entrance to the "Drisla" landfill,
demanding an immediate solution to the pollution
problem. These events questioned the image of a
modernized landfill and directed public attention to the
real conditions on the ground.
The residents of Batinci have lived in the shadow of
"Drisla" for thirty years. The fire in 2025 was just the
latest in a series of insults to this population.
Medical experts, such as Dr. Nenad Lazarov, warned that
the smoke from landfill fires contains a "toxic
cocktail" of carcinogenic substances.
Dioxins and furans: These chemicals,
released when burning plastic (PVC), settle in the soil
and crops. Since Batinci is an agricultural area,
contamination of the food chain represents a silent,
long-term threat.
Heavy metals: Lead and cadmium from
electronic waste become aerosols (airborne particles)
during fires, representing a neurotoxic risk, especially
for children.
Legal proceedings by residents Due to
a perceived lack of adequate institutional protection,
residents of the village of Batinci initiated legal
proceedings to protect their rights. With support from
organizations such as the Macedonian Young Lawyers
Association, lawsuits were filed against the City of
Skopje and the Ministry of Environment.
Connecting with case law from similar cases, including
proceedings initiated in Struga due to illegal
landfills, the plaintiffs argue that the state failed to
provide effective protection of the constitutional right
to a healthy environment. Although domestic court
proceedings move with limited dynamics, these cases are
also being considered as a potential basis for
submitting applications to the European Court of Human
Rights in Strasbourg.
The legal argument is based on the claim that
insufficient enforcement of environmental regulations in
the operation of "Drisla" may constitute a violation of
the right to respect for private and family life,
established in Article 8 of the European Convention on
Human Rights.
3. Termination and Transition (2019–2021)
3.1 Political change and agreement review
The local elections in 2017 brought a change of
leadership in the City of Skopje. The newly elected
mayor, Petre Shilegov, announced in his campaign a
review of existing contractual relations in the city,
including the concession for the "Drisla" landfill,
which was identified as a priority.
The new administration initiated a legal and financial
audit of the partnership. According to the findings, the
concessionaire "FCL Ambiente" had not realized a
significant part of the undertaken investment
obligations.
The legal basis for potential termination of the
contract was based on alleged substantial non-compliance
with contractual obligations. The city argued that the
failure to invest the planned 73 million euros did not
stem from administrative or regulatory delays, as
claimed by the concessionaire, but from the limited
financial capacity of the partner.
3.2 The termination process (January 2020)
In January 2020, after approximately two years of legal
proceedings, the City of Skopje officially finalized the
termination of the concession agreement. The "Drisla"
enterprise was transformed from a Limited Liability
Company (LLC), with private majority ownership, into a
Public Enterprise (PE) fully owned by the City of
Skopje.
This step was publicly presented as an institutional
takeover of the management of critical infrastructure.
The mayor at the time, Petre Shilegov, stated that the
period of concession management was over and that the
city would take responsibility for further
modernization.
3.3 The new autoclave
The return to city administration was followed by
certain operational improvements. In 2021, the Public
Enterprise Drisla procured an autoclave for the
sterilization of medical waste.
-
Price: Approximately 800,000 euros
(about 48 million denars).
-
Function: The autoclave uses
high-pressure steam to sterilize infectious waste,
making it safe for disposal as ordinary municipal
waste. This process creates no emissions compared to
incineration.
4. The Lawsuit
4.1 FCL Ambiente v. Republic of North Macedonia
The termination of the concession did not end the story;
it only moved the battlefield from Skopje to Washington.
In July 2023, "FCL Ambiente" filed a request for
arbitration with the International Centre for Settlement
of Investment Disputes (ICSID), case no. ARB/23/31.
4.2 Legal basis and claims
The lawsuit invokes the Bilateral Investment Treaty
(BIT) between Italy and Macedonia, signed in 1997. Such
agreements are designed to protect foreign investors
from arbitrary state actions, discrimination, or
expropriation without compensation.
-
Expropriation (Article 5 of typical treaties):
"FCL" likely claims that the termination of the
contract represents indirect expropriation of their
investment and future profits.
-
Fair and Equitable Treatment (FET):
The investor could argue that following the change of
local government, they were subjected to actions they
deem politically motivated, which, according to their
allegations, constitutes a violation of the standard
for "fair and equitable treatment" within the
framework of international investment obligations.
4.3 The financial risk
Although the exact amount of potential damages remains
unknown until a final decision is reached, the scale and
value of the original contract indicate a potentially
significant financial exposure. The company FCL Ambiente
could seek compensation on multiple grounds, including:
-
Value of actual investments:
Compensation for what they actually invested (although
that amount is likely low).
-
Lost future profits:
This is often the largest item in such lawsuits. "FCL"
could claim they were deprived of profit rights for
the next 35 years, which could drive the claim up to
tens of millions of euros.
-
Reputational damage: Damages for
harmed business reputation.
The defense is led by the State Attorney's Office of
North Macedonia, in coordination with the Ministry of
Justice and the Ministry of Foreign Affairs. The state
argues that the termination of the contract represented
a legitimate regulatory measure, taken in the context of
non-fulfillment of contractual investment obligations by
the investor and alleged non-compliance with relevant
environmental standards.
However, international tribunals do not always evaluate
contractual and procedural breaches in the same way as
domestic courts. If the tribunal determines the
existence of procedural flaws or discriminatory conduct
by the City, there is a possibility that Macedonian
taxpayers could face significant financial liabilities
in the form of damages compensation.
7. Drisla: A Final Plan?
7.1 The new roadmap
As of January 2026, the administration of Mayor
Gjorgjievski, with the support of the Government led by
Prime Minister Hristijan Mickoski, publicly presented a
new strategic direction for managing the "Drisla"
landfill.
-
Regionalization:
The Government announced a plan to integrate "Drisla"
into a national network for waste management, with the
aim of gradually reducing the load by establishing new
regional centers, including planned facilities in
Novaci (Bitola) and Polog (Gostivar).
-
Waste-to-energy:
A key element of the proposed strategy is stated to be
the construction of a plant for thermal treatment of
waste with energy recovery, as an alternative to the
existing landfill model. This approach represents a
conceptual continuation of previously announced
solutions, but in an altered institutional context.
-
New tender:
The Prime Minister announced the possibility of
launching a new Public-Private Partnership (PPP) to
finance this transformation, with preliminary
estimates suggesting an investment valued at greater
than 100 million euros.
7.2 Structural obstacles
Despite political alignment, the path is full of risks:
-
Arbitration risk
The ongoing arbitration dispute with "FCL Ambiente"
before ICSID represents a factor of legal uncertainty.
Potential future investors, including large European
operators like Veolia, may show reluctance to enter
into concession arrangements while ownership and
contractual rights over the location are the subject
of international arbitration proceedings.
-
Credibility issues
The experience of 2013 had a negative impact on the
perception of investment security in North Macedonia.
To attract a reputable European operator, significant
improvement in transparency, predictability, and
institutional trust will be required compared to
previous practices.
-
Financial constraints
Plants for thermal waste treatment with energy
recovery usually require high gate fees (tipping fees)
to ensure economic viability. It remains uncertain
whether local governments or the central government
have the fiscal capacity to provide the necessary
subsidies, without this leading to a significant
increase in costs for households.
Conclusion
The case of the concession for the "Drisla" landfill
shows that the public-private partnership model, applied
under conditions of limited institutional oversight, did
not result in the planned investments nor the expected
improvement in waste management.
The consequences of this failure were manifested through
long-term environmental and health risks for the
population, as well as significant financial and legal
exposure for the state.
In 2026, resolving the "Drisla" issue requires
simultaneous management of the arbitration procedure,
protection of public finances, and the establishment of
a transparent, technically sound waste management model,
based on public interest and the rule of law.
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