(7)

the following Annex is added: ‘ANNEX Ia Main terms, conditions and procedures of the risk-sharing instrument for project bonds referred to in Article 6(1)(g) The EIB shall be a risk-sharing partner and shall manage the Union contribution to the risk-sharing instrument for project bonds on behalf of the Union. More detailed terms and conditions for implementing that instrument, including its monitoring and control, shall be laid down in a cooperation agreement between the Commission and the EIB, taking into account the provisions laid down in this Annex. (a) The EIB facility 1. The risk-sharing instrument for project bonds will be designed for each eligible project as a subordinated facility, in the form of a debt instrument or a contingent (guarantee) facility or both, in order to facilitate the issue of a project bond. 2. Should the EIB be or become a creditor to a project, the EIB’s rights under the risk-sharing instrument for project bonds shall rank behind the debt service of the senior debt and ahead of equity and any financing related to equity. 3. The facility shall not exceed 20 % of the total amount of the senior debt issued. (b) Budget TEN-T: — 2012: Up to EUR 100 million — 2013: Up to the cumulated amount of EUR 200 million to be reallocated from the TEN-T budget dedicated to the loan guarantee instrument for TEN-T projects, referred to in Annex I, but unspent. TEN-E: 2013: Up to EUR 10 million. The request for transfer of the 2012 amount shall be issued without undue delay following the signature of the cooperation agreement. The transfer requests in subsequent years shall be issued by 31 December of the preceding year. In all cases the transfer request shall be supported by a forecast of the need for the scheduled Union contribution. If necessary, that forecast may serve as the basis for a demand-based reduction of the amounts which shall be decided in accordance with the procedure referred to in Article 15(2). (c) Fiduciary account 1. The EIB shall set up two fiduciary accounts (one for projects under TEN-T, the other for projects under TEN-E) to hold the Union contributions and revenues resulting from the Union contributions. The fiduciary account for TEN-T may be merged with the fiduciary account set up for the loan guarantee instrument for TEN-T projects, referred to in Annex I, provided such measure does not impede the quality of reporting and monitoring as stipulated under points (j) and (k). 2. Given the limited duration of the pilot phase, the interest earned on the fiduciary accounts and other revenues resulting from the Union contribution, such as guarantee premiums, interest and risk margins on sums disbursed by the EIB, shall be added to the resources of the fiduciary account. However, the Commission may decide, in accordance with the procedure referred to in Article 15(2), that they are to be returned to the TEN-T or TEN-E budget lines. (d) Use of the Union contribution The Union contribution shall be used by the EIB: 1. towards risk provisioning on a first-loss basis for the subordinated facilities of the eligible project portfolio, in accordance with the relevant rules of the EIB and a risk assessment performed by the EIB under its applicable policies; 2. to cover any non-project-related eligible costs associated with the establishment and administration of the risk-sharing instrument for project bonds including its evaluation. (e) Risk and revenue sharing The risk-sharing pattern resulting from point (d) shall be reflected in an appropriate sharing between the Union and the EIB of the risk remuneration charged by the EIB to its counterpart in respect of each facility constituting the portfolio. Notwithstanding the provisions applying to risk sharing for the loan guarantee instrument for TEN-T projects, referred to in Annex I, the risk-sharing pattern for project bonds shall also apply to that instrument including the operations of its existing portfolio. (f) Pricing The pricing of the project bond facilities is based upon the risk remuneration in accordance with relevant standard rules and criteria of the EIB. (g) Application procedure Applications for risk coverage under the risk-sharing instrument for project bonds shall be addressed to the EIB in accordance with the EIB’s standard application procedure. (h) Approval procedure The EIB shall carry out risk, financial, technical and legal due diligence and shall decide upon the use of the risk-sharing instrument for project bonds and select the appropriate type of subordinated facility in accordance with its standard rules and criteria, notably EIB Credit Risk Policy Guidelines, and the EIB’s selection criteria in the social, environmental and climate field. (i) Duration 1. The last tranche of the Union contribution to the risk-sharing instrument for project bonds shall be committed no later than 31 December 2013. The actual approval of project bond facilities by the EIB’s Board of Directors shall be finalised no later than 31 December 2014. 2. In the event of termination of the risk-sharing instrument for project bonds during the current multiannual financial framework any balances on the fiduciary accounts, other than funds committed and funds needed to cover other eligible costs and expenses, shall be returned to the TEN-T, TEN-E budget lines. 3. Funds allocated to the risk-sharing instrument for project bonds shall be reimbursed to the relevant fiduciary account as facilities expire or are repaid provided risk coverage remains sufficient. (j) Reporting Annual reporting methods on the implementation of the risk-sharing instrument for project bonds shall be agreed between the Commission and the EIB. In addition, the Commission shall, with the support of the EIB, report on implementation every six months to the European Parliament and the Council, starting six months after the signature of the cooperation agreement referred to in Article 6(1)(g). (k) Monitoring, control and evaluation The Commission shall monitor the implementation of the instrument, including through on-the-spot controls as appropriate, and shall perform verification and controls in line with Regulation (EC, Euratom) No 1605/2002. The EIB shall manage subordinated facilities in accordance with EIB’s own rules and procedures, including appropriate audit, control and monitoring measures. Furthermore, the EIB’s Board of Directors, on which the Commission and Member States are represented, shall approve each subordinated facility and monitor that the EIB is managed in accordance with its Statute and with the general directives laid down by its Board of Governors. The Commission and the EIB shall submit an interim report on the functioning of the pilot risk-sharing instrument for project bonds to the European Parliament and the Council in the second half of 2013 with a view to optimising the design of that instrument. A full-scale independent evaluation shall be undertaken in 2015 after approval of the final project bond operations. It shall cover, inter alia, the value added, additionality compared to other Union or Member State instruments and other existing forms of long-term debt financing, the achieved multiplier effect, an assessment of the risks involved as well as the creation or correction of distortive effects, if any. The evaluation shall also cover the impact on projects’ financial viability, volume, terms and costs of bond issuance, the effect on the wider bond markets as well as controlling creditor and procurement aspects. It shall also provide, if possible, a cost comparison with alternative means of project finance including bank loans. During the pilot phase, each selected project shall be assessed.’.