[pic] | COMMISSION OF THE EUROPEAN COMMUNITIES |

Brussels, 7.11.2007

SEC(2007) 1467

COMMISSION STAFF WORKING DOCUMENT

Annex to the REPORT FROM THE COMMISSION ANNUAL REPORT OF THE INSTRUMENT FOR STRUCTURAL POLICY FOR PRE-ACCESSION (ISPA) 2006 {COM(2007) 685 final}

TABLE OF CONTENTS

1. New ISPA projects 4

2. Commitments for environment 4

3. Commitments for transport 5

4. Projects funded during 2000-2006 6

5. Payments 7

6. Summary tables 7

7. Forms and delivery of technical assistance 10

8. Technical assistance on the initiative of the beneficiary country 10

9. Technical assistance on the initiative of the Commission 11

10. Activities carried out in 2006 12

11. Project monitoring 19

12. Financial management and control, including EDIS 19

13. Risk assessment 21

14. European Court of Auditors findings 22

15. Co-financing partners – EIB, EBRD and KfW 22

16. Public procurement 24

17. Competition policy 24

18. Environment policy 24

19. Transport policy 25

20. Bulgaria 28

21. Romania 34

22. Croatia 41

Introduction

Following the Brussels European Council in June 2004, which awarded c andidate country status to Croatia, this country benefits from ISPA as of 1 January 2005. Croatia thus joined Bulgaria and Romania which is receiving ISPA assistance since the instrument was launched in 2000. As a result, this report covers the ISPA activities delivered in these three beneficiary countries.

For all of these countries, the year 2006 entailed various challenges. Whereas for Croatia the major goal was the fully committing its ISPA allocation, Bulgaria and Romania had to accelerate and improve further the implementation of ISPA funds while at the same time start preparing future projects for the Cohesion and Structural Funds to which they are entitled upon accession. From this point of view, 2006 could be concluded successfully.

ISPA budget

In accordance with the Commission’s activity based accounting system, the budget for the ISPA instrument is provided for by two budget lines: the functional budget line B13.01.04.02 and the operational budget line B13.05.01.01. The first line contains the means for covering Technical Assistance (TA) administrative expenses (mainly for reinforcing EC Delegations), whereas the second line encompasses the appropriations made available for the effective implementation and operation of ISPA. Therefore, the latter budget line covers all expenses for co-financing infrastructure projects (measures) under decentralised management in the beneficiary countries in the environment and transport domains, as well as for TA measures, irrespective whether these are initiated by the beneficiary country or by the Commission.

For 2006, €585 million was allocated from the Commission budget to the ISPA instrument. The B13.01.04.02 budget line received €4.5 million and the B13.05.01.01 budget line €580.5 million (of which € 80,000 were committed for TA).

Table 1 : ISPA budget in 2006 – in Euro

Budget line | Commitment appropriations | Commitments consumed | Payments implemented |

Functional budget line B13.01.04.02 | 4,500,000 | 2,338,712 | 2,154,419 |

Operational budget line B13.05.01.01 | 580,500,000 | 580,350,000 | 175,579,778 |

Total | 585,000,000 | 582,688,712 | 177,734,197 |

Project funding

New ISPA projects

In 2006, following the positive opinion of the ISPA Management Committee, the Commission adopted a total of 11 new projects. The ISPA contribution to these projects amounted to more than €89.9 million, representing 66.8% of a total eligible investment cost of over €134.5 million. The remainder was financed from national, regional or local resources of the beneficiary countries which, for this purpose, had regularly recourse to loan-financing from international financial institutions ( IFIs ).

Of these projects, 4 concerned environmental protection - 1 project for water and waste water, including treatment and 1 solid waste project, as well as 2 horizontal environmental measures for the preparation of future Cohesion Fund and IPA projects. There were 5 new projects in the transport sector – 1 for improvements to navigation on the Danube River and 4 horizontal transport projects were approved for preparing future IPA and Cohesion fund projects in the transport sector covering, strengthening institutional capacity and providing technical assistance with railway modernisation measures. Finally 2 technical assistance projects were approved for supporting the National ISPA Coordinator in Croatia and ISPA Monitoring Committee meetings in Romania. Nearly 64.5% of the total ISPA contribution was awarded to the environment sector.

Table 2 : New projects approved in 2006 – in Euro

Transport | 5 | 52,732,558 | 31,557,040 | 77 | 31,557,040 |

Horizontal TA | 2 | 312,335 | 312,335 | 100 | 312,335 |

Water and sewerage | 28,954,185 | 10.12 |

Water and/or wastewater incl. treatment | 158,791,629 | 55.46 |

Construction of WWTPs | 44,330,944 | 15.48 |

Solid waste collection | 25,402,124 | 8.87 |

Air pollution | 3,616,500 | 1.26 |

Horizontal TA | 23,216,642 | 8.81 |

Total environment sector | 286,312,024 | 100 |

COMMITMENTS FOR TRANSPORT

As in previous years, ISPA assistance in the transport sector in the ISPA countries continued to focus on the extension and improvement of the TINA ( Transport Infrastructure Needs Assessment ) and SEETO (South East Europe Transport Observatory) networks and their access links with the view to facilitate the connections between the European Union and the candidate countries within the framework of the future trans-European transport network (TEN-T). 16.8% of the budgetary commitments for transport in 2006 were made in favour of combined road/rail projects, involving the construction or reconstruction of road and rail infrastructure. 34.1% of the commitments were allocated for purely road projects and 32.4% for purely railway projects. The remaining funds were assigned to 1 inland waterway projects designed to improve navigation on the river Danube and 13 transport related technical assistance measures. As for environment, TA projects were mainly used to prepare projects for the 2007-13 funding period.

Table 4 : Commitments in 2006 – Transport by sub-sector[2]

Sub-sector | Euro | % |

Road | 100,301,532 | 34.18 |

Rail | 95,235,979 | 32.44 |

Road and rail | 49,332,500 | 16.81 |

Inland waterways | 18,850,410 | 6.42% |

Airports | 0 | 0 |

Horizontal TA | 29,784,220 | 10.15 |

Total transport sector | 293,504,641 | 100 |

PROJECTS FUNDED DURING 2000-2006

Between 2000 and 2006, the Commission approved a total of 107 projects on the basis of proposals submitted by Bulgaria, Croatia and Romania. Of these projects, 69 concerned the environment sector, 33 the transport sector, and 5 horizontal TA measures (1 for EDIS and 4 for the organisation of the statutory monitoring committees and supporting ISPA implementing agencies). The total eligible investment cost of these projects is €4.42 billion, with a total of €2.98 billion, or 67.3% being allocated as ISPA grants. By the end of 2006, the Commission had committed 100% of the ISPA funds set aside for the three beneficiary countries covering the period 2000 to 2006 with the commitments distributed in a balanced manner between the environment and transport sectors.

Table 5 : Projects approved in 2000-2006 – in Euro

Transport | 33 | 2,344,434,543 | 1,482,548,029 | 63.24 | 1,482,548,029 |

Horizontal TA | 5 | 1,945,643 | 1,945,643 | 100 | 1,945,643 |

Environment | 255,243,502.98 | 87,328,724.24 | 342,572,227.22 |

Transport | 302,711,402.35 | 86,490,276.60 | 389,201,678.95 |

TA | 987,324.40 | 482,691.08 | 1,470,015.48 |

Total | 558,942,229.73 | 174,301,691..92 | 733,243,921.65 |

SUMMARY TABLES

Tables 7 and 8 presented below provide an overview of the ISPA interventions for the year 2006 and for the period 2000-2006.

Table 7 : Projects decided in 2006 – in Euro

Sub-sector | N° of projects | Eligible cost | ISPA contribution | Commitments | Payments |

Environment |

Water and Sewage | 0 | 0 | 0 | 0 | 0 |

Water and wastewater incl. treatment | 1 | 52,405,660 | 35,111,792 | 35,111,792 | 2,777,500 |

Wastewater Treatment Plant | 0 | 0 | 0 | 0 | 0 |

Solid waste | 1 | 8,823,601 | 6,000,049 | 6,000,049 | 600,005 |

Air quality | 0 | 0 | 0 | 0 | 0 |

Horizontal for sector | 2 | 20,310,848 | 16,986,042 | 16,986,042 | 193,261 |

Sector total | 4 | 81,540,109 | 58,097,883 | 58,097,883 | 3,570,766 |

Transport |

Road | 0 | 0 | 0 | 0 | 0 |

Rail | 0 | 0 | 0 | 0 | 0 |

Road and rail | 0 | 0 | 0 | 0 | 0 |

Inland waterways | 1 | 37,700,820 | 18,850,410 | 18,850,410 | 0 |

Airports | 0 | 0 | 0 | 0 | 0 |

Horizontal for sector | 4 | 15,031,738 | 12,706,630 | 12,706,630 | 96,426 |

Sector total | 5 | 52,732,558 | 31,557,040 | 31,557,040 | 96,426 |

TA |

Technical Assistance | 2 | 312,335 | 312,335 | 312,335 | 52,467 |

TOTAL | 11 | 134,585,002 | 89,967,258 | 89,967,258 | 3,719,659 |

Table 8 : Projects decided in 2000-2006 – in Euro

Sub-sector | N° of projects | Eligible cost | ISPA contribution | 2006 | 2000 – 2006 |

Water and sewerage | 4 | 159,855,800 | 119,891,850 | 28,954,185 | 0 | 119.891.850 | 23.391.669.66 |

Water and wastewater incl. treatment | 29 | 1,114,871,298 | 806,702,902 | 158,791,629 | 60,909,513.86 | 806,702,902 | 198,601,319.82 |

Wastewater treatment plant | 16 | 423,731,656 | 304,682,634 | 44,330,944 | 10,252,651.69 | 304,682,634 | 52,709,562.05 |

Solid waste | 10 | 221,209,624 | 165,289,567 | 25,402,124 | 10,757,355.48 | 165,289,567 | 45,301,258.66 |

Air quality | 1 | 72,330,000 | 36,165,000 | 3,616,500 | 0 | 36,165,000 | 3,616,500 |

Horizontal | 9 | 87,791,848 | 64,434,542 | 25,216,642 | 5,409,203.21 | 64,434,542 | 18,951,917.03 |

Sector total | 69 | 2,079,790,226 | 1,497,166,495 | 286,312,024 | 87,328,724.24 | 1,497,166,495 | 342,572,227.22 |

Transport |

Road | 9 | 829,892,993 | 617,681,420 | 100,301,532 | 47,509,077.51 | 617,681,420 | 203,794,934.98 |

Rail | 4 | 924,219,358 | 563,132,949 | 95,235,979 | 12,379,456.60 | 563,132,949 | 110,583,727.97 |

Road and rail | 3 | 331,506,452 | 155,050,000 | 49,332,500 | 8,505,000 | 155,050,000 | 15.505.000 |

Inland waterways | 1 | 37,700,820 | 18,850,410 | 18,850,410 | 0 | 18,850,410 | 0 |

Airports | 1 | 121,621,622 | 45,000,000 | 0 | 5,448,751.49 | 45,000,000 | 40,500,000 |

Horizontal | 15 | 99,493,298 | 82,833,250 | 29,784,220 | 12,647,991 | 82,833,250 | 18,818,016 |

Sector total | 33 | 2,344,434,543 | 1,482,548,029 | 293,504,641 | 86,490,276 | 1,482,548,029 | 389,201,678.95 |

Horizontal |

TA | 5 | 1,945,643 | 1,945,643 | 453,335 | 482,691.08 | 1,945,643 | 1,470,015.48 |

Sector total | 9 | 87,791,848 | 64,434,542 | 25,216,642 | 5,409,203.21 | 64,434,542 | 18,951,917.03 |

Transport |

Sector total | 15 | 99,493,298 | 82,833,250 | 29,784,220 | 12,647,991 | 82,833,250 | 18,818,016 |

Horizontal TA |

Sector Total | 5 | 1,945,643 | 1,945,643 | 453,335 | 482,691.08 | 1,945,643 | 1,470,015.48 |

3.1.2 | EC Delegations – SSTA (Bulgaria and Romania) | Extra-muros support | 2,995,000 | completed | 351,562 | 468,901 | 949,069 |

Action Prog. 2005-6 for Croatia | Croatia | 760,000 | completed | 106,350 | 206,535 | 206,535 |

3.2 | - | Support for Monitoring Committee | 200,000 | cancelled |

3.3 | Contract/Ecorys | Support to Bulgaria and Romania to improve the quality of environment and transport projects throughout the Project Cycle | 520,000 | closed | 0 | 281,970 | 469,950 |

3.4.1 | - | Support to Bulgaria and Romania to improve public monitoring and quality control on public service delivery | 300,000 | cancelled |

3.5.1 | Two multiple framework contracts (one for environment and one for transport)/ Scott Wilson Kirkpatrick | Assistance and technical support for the appraisal and quality control of projects received by the Commission's services | 600,000 | closed | 0 | 219,688 | 219,688 |

3.5.2 | Framework contract/EIB | Assistance and technical support from the EIB for the appraisal and quality control of projects received by the Commission services | 150,000 | closed | 80,000 | 0 | 0 |

3.6.1 | Framework contract/DGT | Preparation of printed information material and translation services | 100,000 | No activity | 0 | 0 | 0 |

3.6.2 | - | Information, management tools and website | 120,000 | cancelled |

3.6.3 | - | Seminars and conferences | 200,000 | cancelled |

Romania | Improvement of the water distribution, sewerage and wastewater treatment in Caras-Severin County |

No projects were co-financed by the EBRD or KfW in 2006.

Contribution to Community policies

Public PROCUREMENT

FROM THE START OF ISPA, THE FULFILMENT OF LEGAL REQUIREMENTS FOR SOUND, FAIR AND TRANSPARENT PUBLIC PROCUREMENT AS ENSHRINED IN THE PRAG HAS PROVED TO BE A MAJOR CHALLENGE. IN MANY CASES, ENSURING COMPLIANCE WITH EU PROCUREMENT PRINCIPLES HAS LEAD TO DELAYS IN THE IMPLEMENTATION OF ISPA PROJECTS. COMMISSION SERVICES -ESPECIALLY THE EC DELEGATIONS - HAD TO INTERVENE FREQUENTLY, NOT ONLY TO CHECK THAT PROCEDURES WERE CORRECTLY APPLIED BUT ALSO TO RECTIFY ERRORS, TO LIAISE WITH DISSATISFIED BIDDERS, AND TO EXPLAIN TO IMPLEMENTING AGENCIES HOW THE PROCEDURES CONCERNED WERE TO BE IMPLEMENTED. REGULARLY, THE QUALITY OF THE TENDER DOCUMENTS NEEDED TO BE ENHANCED AND THE EVALUATION OF BIDS TO BE REPEATED, WHEREAS IN SOME INSTANCES –IN CASE OF IRREGULARITIES- TENDERS NEEDED TO BE CANCELLED AND RE-LAUNCHED.

The ex ante approval by the Commission which governs the tendering and contracting of ISPA projects is, therefore, entirely justified until EDIS was granted (see above). Under the ex-ante system of approval, local recipients and final beneficiaries are in the role of contracting authority responsible for project implementation, whereas the Commission endorses each step of the procurement process. It follows that, although the Commission is not a contracting partner, it bears shared responsibility for the procedural correctness of the procurement process (without the Commission’s approval, contracts concluded between beneficiaries and contractors are not valid). This responsibility is entrusted as long as implementing agencies are not edisized to the EC Delegations in the beneficiary countries.

COMPETITION POLICY

As the ISPA assistance is directed primarily to cover public expenditure -or equivalent - concerning utility projects, this does not generally raise problems of incompatibility with the Community rules on competition. Unless the rules on public procurement are infringed, and provided free access to such infrastructure is guaranteed for all operators meeting the necessary technical and legal conditions, such assistance does not confer any special advantage to specific firms.

ENVIRONMENT POLICY

During the year 2006, 4 new ISPA projects for environment were approved, 2 were infrastructure projects and 2 were technical assistance measures. The TA measures were for the preparation of future IPA funded environment projects (integrated water projects, wastewater treatment plants, solid waste projects) in Croatia and the preparation of projects to be funded by the Cohesion Fund and structural funds in Romania. These projects represented a total grant amount of €58.09 million with the corresponding assisted investment amounting to an eligible value of €81.54 million. With a share of nearly 64% of the assistance, it was the water and wastewater sectors that benefited predominantly from ISPA.

By providing direct assistance to priority projects for environment, ISPA also contributes to the implementation of environmental policy and to the compliance with EU standards in the beneficiary countries. Experience gained through project development and implementation reinforces administrative capacity and accelerates sector reform in the environment sector. In particular, administrative capacity has been strengthened in regard to environmental investment planning and prioritization. Steady progress has also been made in the correct implementation of the EIA directive, particularly aspects related to public consultation. Whilst ISPA has in these ways contributed towards significant progress in environmental protection in the candidate countries, there subsists a series of weaknesses which needs to be addressed as a matter of priority by these countries. Indeed, problems still exist in relation to the difficulties of environmental authorities in obtaining adequate funding and staffing - the high turnover of staff cancels out the benefits of received training and gained experience - as well as to a persistent lack of co-ordination between policy fields and of strategic planning.

In this respect, it is important to emphasize that, as far as Bulgaria and Romania are concerned, within the perspective of accession, the binding nature of the transition period targets and final deadlines for directives for which transition periods were awarded require from these countries to reserve adequate financial and human resources for implementation at national level, including for monitoring, inspections, permits and reporting. Anticipated financing should therefore also secure loans from international financial institutions, national budgets and private sector investment.

Transport POLICY

Only 1 new ISPA investment project (representing a total ISPA grant amount of €18.85 million) and 4 technical assistance projects (representing a total grant of €12.70 million) were approved in the transport sector in 2006.

The transport networks in the beneficiary countries, agreed in accordance with TINA (Transport Infrastructure Needs Assessment) and REBIS (Regional Balkans Infrastructure Study) were constructed around the framework of pan-European corridors. Several of them include branches running across the territory of Bulgaria, Croatia and/or Romania, i.e. Corridor IV Dresden-Praha-Bratislava/Wien-Budapest-Arad, Corridor V Venezia-Trieste/Koper-Ljubljana-Budapest-Uzgorod-Lviv, including branches Va, Vb and V.c, Corridor VII the Danube river, Corridor VIII Durres-Tirana-Skopje-Sofija-Varna/Burgas, Corridor IX Helsinki-St.Petersburg-Pskov/Moskva-Kiev-Ljubasevka-Chisinau-Bucuresti-Alexandroupolis and Corridor X Salzburg-Ljubljana-Zagreb-Beograd-Nis-Skopje-Veles-Thessaloniki, including branch Xa. These networks were used as the planning basis for the national transport strategies for ISPA purposes and, therefore, each ISPA transport project needs to form part of the TINA and REBIS networks, i.e. concern the construction or rehabilitation of a section, nodal point or access relating to the networks. As the acceding countries are concerned, these networks will be used as well for future Cohesion Fund purposes and will fulfil a core function in these countries’ National Strategic Reference Frameworks (NSRFs), which will be the planning tool for the future use of the Cohesion and Structural Funds.

Table 14 : ISPA transport investment projects by pan-European transport corridor (approved in 2006)

Corridor | ISPA project |

VII Danube river | Improvement of the navigation conditions on the Danube between Calarasi and Braila and accompanying measures. |

The final TEN-T networks for Bulgaria and Romania are based on the TINA process, and were agreed and included in the Accession Treaty for these countries. The TEN-T networks for Croatia are based on SEETO recommendations.

With the adoption in April 2004 of the revised Community guidelines for the development of the trans-European transport network (TEN-T guidelines) by the Council and the Parliament, the Community disposes of a legal framework governing the development of the TEN-T network in the enlarged EU. The guidelines include a list of 30 priority projects which are declared to be of European interest and are to be realised with the horizon of 2020. The list of projects aims at contributing to a modal shift and more sustainable mobility patterns by focussing investments in rail and waterborne transport. Cross-border projects are similarly present as these are typically the most difficult ones to implement. Of these projects, three concern axes including Bulgaria and Romania, i.e. priority project n° 22 the railway axis Athina-Sofia-Budapest-Wien-Praha-Nürnberg/Dresden , project n° 7 the motorway axis Igoumenitsa/Patras-Athina-Sofia-Budapest and project n° 18 the inland waterway axis Rhine/Meuse-Main-Danube, and one including Croatia, i.e. project n° 6 railway axis Lyon-Trieste-Divaca/Koper-Divaca-Ljubljana-Budapest-Ukrainian border.

Co-ordination among pre-accession instruments

As required by the Coordination Regulation[3], the Commission ensures close co-ordination among the three pre-accession instruments, PHARE, SAPARD and ISPA. In line with the provisions of this Regulation, the PHARE Management Committee plays a special role in general co-ordination of the three pre-accession instruments.

Co-ordination with the (PHARE) Joint Monitoring Committee

The Joint Monitoring Committee is responsible for co-ordinating the monitoring of each pre-accession instrument and for assessing the overall progress of EU–funded assistance in the beneficiary countries. The Committee issues recommendations to the ISPA Committee or to the Commission when relevant.

Co-ordination with EC Delegations

Periodic meetings were organised by the Commission services (DGs Enlargement, External Relations and Regional Policy) with the experts in the Delegations responsible for PHARE and ISPA to discuss programming and implementation issues, in particular those related to tendering and contracting.

Country profiles and tables

BULGARIA

IN 2006, BULGARIA RECEIVED a total commitment of €167,985,505 of which €28,244,236 has been committed to new ISPA projects and the remaining amount has been utilized by the existing projects approved during the period 2000-2005. Of the 2006 allocation, €16,019,736 was assigned to 1 environmental TA project and €12,224,500 to 3 transportation TA projects. Considering the years 2000–2006, the total ISPA allocation in Bulgaria corresponds to €881,608,000, from which the amount of commitments represents €879,908,118. Thus, virtually the whole of the available ISPA allocations for the period were committed in Bulgaria. These commitments were equally balanced between the environment sector, with 49.6%, and the transport sector, with 50.4%.

Programming

A total of 4 new projects were approved in 2005. In the transport sector, 3 technical assistance projects were adopted; one targeting the railway project preparation, the second one relating to roads project preparation and TA funds were also allocated for the capacity building of the Ministry of Transport. In the environment sector the approved TA project targeted the preparation of 10+ water management and 6 solid waste management projects to be in future submitted for the support of CF/ERDF.

Implementation

While during 2000-2006 the available ISPA allocations were fully committed to 38 projects, payments up to end 2006 amounted to €226,798,867, representing 26% of total ISPA grant committed. The payments total has increased each year as projects have reached the implementation stage except of 2006, where the cancellation of 6 works tenders caused downfall of payments to €50,332,156 in comparison with 2005, when total payments amounted to €74,487,355. Therefore the overall pace of project implementation remains slow and still needs to be significantly increased.

During 2006 several projects were completed. In the case of the environment sector, four regional waste management facilities located in Russe, Montana, Sevlievo and Sliven were finalized and put into operation and the first wastewater treatment plant in Gorna Oriahovitza was also completed.

Administrative weakness is the main challenge facing the implementation of ISPA, in particular in procurement, financial and contract management and the capacity of the final beneficiaries. This has been confirmed by the audit missions undertaken by the Commission in Bulgaria in 2006 that resulted into the adverse opinion of the Commission to grant EDIS to the ISPA Implementing Agency at the Ministry of Environment and Waters.

Procurement ratio

Calculated as the total contracted amount against the total eligible cost for the period 2000-2005, the procurement ratio amounted approximately to 30%.

Monitoring and Evaluation

In 2006, the ISPA Monitoring Committee met twice, respectively in June and December. Attention of the Bulgarian authorities was drawn to the need to speed up the implementation of all projects. Nearly every project has acquired a delay of several months before contracting the TA preparing the works tenders. Delays for more advanced projects accumulate in several cases to more than 2 years from the initial plans. With regard to the environment sector in particular, it was emphasised that the insufficient involvement of the final beneficiaries additionally hinder the implementation of projects.

Co-financing with IFIs

Co-financing with the IFIs has been an important feature of the ISPA projects in Bulgaria especially in the transport sector. Considering that the investment needs of the country largely exceed the ISPA allocation, it is anticipated that this co-operation will have to continue over the period ahead. Among the projects approved in 2000-2006, IFI co-financed several transport and environment projects. Specifically EIB is involved in the water projects in Maritsa Basin (Haskovo), Sofia and Sliven and as regards the transport sector EIB loans were approved for Sofia Airport, Transit Roads Rehabilitation, Plovdiv-Svilengrad Railway Electrification and Danube Bridge project. On the other hand the water projects in Bourgas and Russe and fume desulphurisation project in Maritsa East II Thermal Power Plant are benefiting from loans from the EBRD.

EDIS

After a long process the Commission took a decision on 23 November 2006 to grant EDIS accreditation to 3 out of 4 ISPA implementing agencies: the Ministry of Regional Development and Public Works, Ministry of Transport, and the National Road Infrastructure Fund NRIF (formerly Roads Executive Agency). This decision is subject to safeguarding conditions (in the case of Ministry of Transport and NRIF) and recommendations, as well as close monitoring by the Commission. However, the Commission had not considered that the Ministry of Environment and Waters has met the main conditions for EDIS accreditation and drew attention to a number of remaining deficiencies on which urgent action is required by Bulgarian authorities. A response on action taken to meet these deficiencies is required in 2007.

The Commission has emphasised on a number of occasions to the Bulgarian authorities that even though the EDIS accreditation is linked to the pre-accession countries, the thorough follow-up on the findings concerning the EDIS accreditation audit is necessary and will have an impact on the programming period 2007-13.

Lessons Learned

It should be highlighted that the main added value of ISPA in Bulgaria during the whole period of 2000-2006 has been delivered via the original goal of the instrument - to prepare the future EU Member State for the effective utilisation of Structural Funds and the Cohesion Fund.

Other ISPA experiences:

Positive

- The ISPA allocation for the period 2000-06 as a whole (€879 million) was fully taken up.

- A total of 38 measures were approved for a potential investment of €1.5 billion to provide clean water, vital transport links and improved waste facilities.

- The balance between transport and environment was maintained.

- ISPA has provided invaluable “learning by doing” experience in large-scale infrastructure implementation.

- Structure set up for ISPA will be crucial to implementation of important parts of the Cohesion/Structural Funds.

- The financing of a good pipeline of projects for the future in the environment sector in particular, but also rail.

- ISPA has highlighted weaknesses which need to be tackled for successful implementation of future projects regardless of financing source, e.g. procurement, financial management systems, land acquisition and EIA procedures.

Negative

- Administrative capacity weaknesses have impacted on all phases of the project cycle from initial identification and prioritisation through to implementation: the shortage of staff, inexperience, high turnover due to political changes, etc.

- These weaknesses are reflected in over-dependence on EU money to finance all relevant activities, over-dependence on consultants, and difficulties in managing consultants and contractors.

- Inadequate administrative structures and lack of co-ordination – e.g. rivalry between MOEW and MRDPW in water sector, and dependence of Roads Agency on MRDPW rather then MT.

- Highly centralized approach to environmental investment projects which should ultimately be responsibility of regional/municipal actors (though this to some extent even greater weaknesses at local level).

- Difficulties and irregularities in procurement process as well as dependence on ECD to resolve problems: high rejection rate of dossiers, cancellations and re-evaluations, complaints and allegations, irregularities.

- Delay in achieving EDIS reflects lack of preparedness of main actors – EDIS accreditation granted 23/11/2006 for MRDPW and, subject to conditions, MT & NRIF, but not to MOEW.

- Financial management and control weaknesses not fully addressed.

Table 15 : Projects decided in 2006 Bulgaria – in Euro

Sub-sector | N° of projects | Eligible cost | ISPA contribution | Commitments | Payments |

Environment |

Water and sewerage | 0 | 0 | 0 | 0 | 0 |

Water and wastewater incl. treatment | 0 | 0 | 0 | 0 | 0 |

WWTP | 0 | 0 | 0 | 0 | 0 |

Solid waste | 0 | 0 | 0 | 0 | 0 |

Air quality | 0 | 0 | 0 | 0 | 0 |

Horizontal | 1 | 18,846,748 | 16,019,736 | 16,019,736 | 0 |

Sectoral total | 1 | 18,846,748 | 16,019,736 | 16,019,736 | 0 |

Transport |

Road | 0 | 0 | 0 | 0 | 0 |

Rail | 0 | 0 | 0 | 0 | 0 |

Road and rail | 0 | 0 | 0 | 0 | 0 |

Inland waterways | 0 | 0 | 0 | 0 | 0 |

Airports | 0 | 0 | 0 | 0 | 0 |

Horizontal | 3 | 14,290,000 | 12,224,500 | 12,224,500 | 0 |

Sectoral total | 3 | 14,290,000 | 12,224,500 | 12,224,500 | 0 |

Horizontal |

Technical assistance | 0 | 0 | 0 | 0 | 0 |

TOTAL | 4 | 33,136,748 | 28,244,236 | 28,244,236 | 0 |

Table 16 : Projects decided 2000-2006 Bulgaria – in Euro

Sub-sector | N° of projects | Eligible cost | ISPA contribution | 2006 | 2000 – 2006 |

Water and sewerage | 0 | 0 | 0 | 0 | 0 | 0 | 0 |

Water/ wastewater including treatment | 5 | 136,632,000 | 96,054,000 | 23,993,400 | 7,698,000 | 96,054,000 | 9,605,400 |

WWTP | 14 | 305,751,656 | 227,027,634 | 33,045,694 | 10,252,651.69 | 227,027,634 | 42,932,719.20 |

Solid waste | 2 | 69,066,923 | 51,800,193 | 2,182,075 | 0 | 51,800,193 | 24,993,538.18 |

Air quality | 1 | 72,330,000 | 36,165,000 | 3,616,500 | 0 | 36,165,000 | 3,616,500 |

Horizontal for sector | 3 | 36,267,748 | 30,040,736 | 17,309,336 | 573,937.57 | 30,040,736 | 6,636,827.22 |

Sector total | 25 | 620,048,327 | 441,087,563 | 80,147,005 | 18,524,589.26 | 441,087,563 | 87,784,984.60 |

Transport |

Road | 2 | 186,950,000 | 140,212,500 | 24,142,500 | 18,213,855.15 | 140,212,500 | 48,255,000 |

Rail | 1 | 340,000,000 | 153,000,000 | 33,862,500 | 5,353,238.07 | 153,000,000 | 35,953,238.07 |

Road & rail | 1 | 225,806,452 | 70,000,000 | 14,000,000 | 0 | 70,000,000 | 7,000,000 |

Inland waterways | 0 | 0 | 0 | 0 | 0 | 0 | 0 |

Airports | 1 | 121,621,622 | 45,000,000 | 0 | 5,448 751.49 | 45,000,000 | 40,500,000 |

Horizontal for sector | 6 | 34,690,000 | 29,564,500 | 15,692,500 | 2,468,400 | 29,564,500 | 6,466,800 |

Sector total | 11 | 909,068,074 | 437,777,000 | 87,697,500 | 31,484,244.71 | 437,777,000 | 138,175,038.07 |

Horizontal Support |

TA | 2 | 1,043,555 | 1,043,555 | 141,000 | 323,322 | 1,043,555 | 838,844 |

Sector total | 25 | 620,048,327 | 441,087,563 | 80,147,005 | 18,524,589.26 | 441,087,563 | 87,784,984.60 |

Transport |

Sector total | 11 | 909,068,074 | 437,777,000 | 87,697,500 | 31,484,244.71 | 437,777,000 | 138,175,038.07 |

Horizontal Support |

Sector total | 2 | 1,043,555 | 1,043,555 | 141,000 | 323,322 | 1,043,555 | 838,844 |

Environment |

Water and sewerage | 0 | 0 | 0 | 0 | 0 |

Water and wastewater incl. treatment | 1 | 52,405,660 | 35,111,792 | 35,111.792 | 2,777,500 |

Solid waste management | 0 | 0 | 0 | 0 | 0 |

Air quality | 0 | 0 | 0 | 0 | 0 |

Horizontal | 0 | 0 | 0 | 0 | 0 |

Sector total | 1 | 52,405,660 | 35,111,792 | 35,111,792 | 2,777,500 |

Transport |

Road | 0 | 0 | 0 | 0 | 0 |

Rail | 0 | 0 | 0 | 0 | 0 |

Road & Rail | 0 | 0 | 0 | 0 | 0 |

Inland Waterways | 1 | 37,700,820 | 18,850,410 | 18,850,410 | 0 |

Airports | 0 | 0 | 0 | 0 | 0 |

Horizontal | 0 | 0 | 0 | 0 | 0 |

Sector total | 1 | 37,700,820 | 18,850,410 | 18,850,410 | 0 |

Horizontal |

Technical assistance | 1 | 50,000 | 50,000 | 50,000 | 0 |

TOTAL | 3 | 90,156,480 | 54,012,202 | 54,012,202 | 2,777,500 |

Table 19 : Projects decided 2000-2006 Romania – in Euro

Sub-sector | N° of projects | Eligible cost | ISPA contribution | 2006 | 2000 – 2006 |

Water and sewerage | 23 | 943,239,298 | 688,148,902 | 124,598,229 | 50,961,514 | 688,148,902 | 186,745,920 |

Water/wastewater including treatment | 4 | 159,855,800 | 119,891,850 | 28,954,185 | 0 | 119,891,850 | 23,391,670 |

WWTP | 2 | 117,980,000 | 77,655,000 | 11,285,250 | 0 | 77,655.000 | 9,776,843 |

Solid waste | 7 | 143,319,100 | 107,489,325 | 17,220,000 | 10,157,350 | 107,489,325 | 19,707,715 |

Air quality | - | - | - | - | - | - | - |

Horizontal for sector | 5 | 50,060,000 | 33,427,500 | 6,941,000 | 4,642,005 | 33,427,500 | 12,121,829 |

Sector total | 41 | 1,414,454,198 | 1,026,612,577 | 188,998,664 | 65,760,869 | 1,026,612,577 | 251,743,977 |

Transport |

Road | 7 | 642,942,993 | 477,468,920 | 76,159,032 | 29,295,222 | 477,468,920 | 155,539,935 |

Rail | 2 | 508,458,358 | 381,343,769 | 44,884,299 | 41,473,301 | 381,343,769 | 71,751,572 |

Road & rail | 2 | 105,700,000 | 85,050,000 | 35,332,500 | 8,505,000 | 85,050,000 | 8,505,000 |

Inland waterways | 1 | 37,700,820 | 18,850,410 | 18,850,410 | 0 | 18,850,410 | 0 |

Airports | - | - | - | - | - | - | - |

Horizontal for sector | 8 | 64,061,560 | 52,786,620 | 13,609,590 | 10,083,165 | 52,786,620 | 12.254.790 |

Sector total | 20 | 1,358,863,731 | 1,015,499,719 | 188,835,831 | 52,030,688 | 1,015,499,719 | 248,051,297 |

Horizontal |

Technical assistance | 2 | 639,753 | 639.753 | 50,000 | 106,903 | 639,753 | 578,704 |

Sector total | 5 | 50.060.000 | 33.427.500 | 6.941.000 | 4.642.005 | 33.427.500 | 12.121.829 |

Transport |

Sector total | 8 | 64.061.560 | 52.786.620 | 13.609.590 | 10.083.165 | 52.786.620 | 12.254.790 |

Horizontal |

Sector total | 2 | 639.753 | 639.753 | 50.000 | 106.903 | 639.753 | 578.704 |

Environment |

Solid waste | 1 | 8,823,601 | 6,000,049 | 6,000,049 | 600,005 |

Horizontal for sector | 1 | 1,464,100 | 966,306 | 966,306 | 193,261 |

Transport |

Horizontal for sector | 1 | 741,738 | 482,130 | 482,130 | 96,426 |

Horizontal |

Technical assistance | 1 | 262,335 | 262,335 | 262,335 | 52,467 |

TOTAL | 4 | 11,291,774 | 7,710,820 | 7,710,820 | 942,153 |

Table 22 : Projects decided 2005-2006 Croatia – in Euro

Sub-sector | N° of projects | Eligible cost | ISPA contribution | 2006 | 2005 – 2006 |

Water/wastewater including treatment | 1 | 36,000,000 | 22,500,000 | 10,200,000 | 2,250,000 | 22,500,000 | 2,250,000 |

Solid waste | 1 | 8,823,601 | 6,000,049 | 6,000,049 | 600,005 | 6,000,049 | 600,005 |

Horizontal for sector | 1 | 1,464,100 | 966,306 | 966,306 | 193,261 | 966,306 | 193,261 |

Sector total | 3 | 46,287,701 | 29,466,355 | 17,166,355 | 3,043,266 | 29,466,355 | 3,043,266 |

Transport |

Rail | 1 | 75,761,000 | 28,789,180 | 16,489,180 | 2,878,918 | 28,789,180 | 2,878,918 |

Horizontal for sector | 1 | 741,738 | 482,130 | 482,130 | 96,426 | 482,130 | 96,426 |

Sector total | 2 | 76,502,738 | 29,271,310 | 16,971,310 | 2,975,344 | 29,271,310 | 2,975,344 |

Horizontal |

Support to the NIC & CFCU | 1 | 262,335 | 262,335 | 262,335 | 52,467 | 262,335 | 52,467 |

Horizontal for sector | 1 | 1,464,100 | 966,306 | 966,306 | 193,261 | 966,306 | 193,261 |

Sector total | 1 | 1,464,100 | 966,306 | 966,306 | 193,261 | 966,306 | 193,261 |

Transport |

Rail | 1 | 741,738 | 482,130 | 482,130 | 96,426 | 482,130 | 96,426 |

Sector total | 1 | 741,738 | 482,130 | 482,130 | 96,426 | 482,130 | 96,426 |

Horizontal |

Support to the NIC & CFCU | 1 | 262,335 | 262,335 | 262,335 | 52,467 | 262,335 | 52,467 |

CARDS | Community Assistance for Reconstruction, Development and Stabilisation |

CFCU | Central Financial and Control Unit |

EBRD | European Bank for Reconstruction and Development |

EC | European Commission |

EDIS | Extended Decentralised Implementation System |

EIA | Environmental Impact Assessment |

EIB | European Investment Bank |

EU | European Union |

FIDIC | International Confederation of Consulting Engineers |

IFI | International Financial Institution |

ISPA KfW | Instrument for Structural Policy for Pre-Accession Kreditanstalt für Wiederaufbau |

LA | Local Agent |

PHARE | Community programme for assistance for economic restructuring in the countries of Central and Eastern Europe |

PPP | Public Private Partnership |

PRAG | Practical Guide to PHARE, ISPA and SAPARD contract procedures |

SAPARD | Special Accession Programme for Agriculture and Rural Development |

SSTA | Small-scale Technical Assistance |

TEN-T | Trans-European Transport Network |

TINA WFD | Transport Infrastructure Needs Assessment Water Framework Directive |

Useful information sources

ISPA on-line:

http://www.europa.eu.int/comm/regional_policy/funds/ispa/ispa_en.htm

DG Regional Policy on-line:

http://www.europa.eu.int/comm/regional_policy/index_en.htm

Documentation Centre: | The European Commission DG Regional Policy Tervurenlaan 41, B-1040 Brussels Tel: + 32.2.2960634 Fax: + 32.2.2966003 E-mail: regio-info@cec.eu.int |

European Union website: | www.europa.eu.int |

DG Enlargement website: | http://europa.eu.int/comm/enlargement/index.htm |

DG Environment website: | http://europa.eu.int/comm/environment/index_en.htm |

DG Transport and Energy website | http://europa.eu.int/comm/transport/index_en.html |

The EBRD website: | www.ebrd.com |

The EIB website: | www.eib.org |

The KfW website: | www.kfw.de |

ISPA PROJECT DATA TABLE |

2006 | 2000-2006 |

Water and sewerage |

2006 | 2000-2006 |

2006 | 2000-2006 |

No. of projects | Eligible cost | ISPA Grant | Committed in 2006 | Paid in 2006 | Committed 2000-2006 | Paid 2000-2006 |

Environmental Projects |

Water & sewage | 4 | 159,855,800.00 | 119,891,850.00 | 28,954,185.00 | 0.00 | 119,891,850.00 | 23,391,669.66 |

Water & wastewater incl. treatment | 29 | 1,114,871,298.00 | 806,702,902.00 | 158,791,629.00 | 60,909,513.86 | 806,702,902.00 | 198,601,319.82 |

WWTP | 16 | 423,731,656.00 | 304,682,634.00 | 44,330,944.00 | 10,252,651.69 | 304,682,634.00 | 52,709,562.05 |

Solid waste | 10 | 221,209,624.00 | 165,289,567.00 | 25,402,124.00 | 10,757,355.48 | 165,289,567.00 | 45,301,258.66 |

Air quality | 1 | 72,330,000.00 | 36,165,000.00 | 3,616,500.00 | 0.00 | 36,165,000.00 | 3,616,500.00 |

Horizontal – environment related | 9 | 87,791,848.00 | 64,434,542.00 | 25,216,642.00 | 5,409,203.21 | 64,434,542.00 | 18,951,917.03 |

Road | 9 | 829,892,993.00 | 617,681,420.00 | 100,301,532.00 | 47,509,077.51 | 617,681,420.00 | 203,794,934.98 |

Rail | 4 | 924,219,358.00 | 563,132,949.00 | 95,235,979.00 | 12,379,456.60 | 563,132,949.00 | 110,583,727.97 |

Road & Rail | 3 | 331,506,452.00 | 155,050,000.00 | 49,332,500.00 | 8,505,000.00 | 155,050,000.00 | 15,505,000.00 |

Inland waterways | 1 | 37,700,820.00 | 18,850,410.00 | 18,850,410.00 | 0.00 | 18,850,410.00 | 0.00 |

Airports | 1 | 121,621,622.00 | 45,000,000.00 | 0.00 | 5,448,751.49 | 45,000,000.00 | 40,500,000.00 |

Horizontal – transport related | 15 | 99,493,298.00 | 82,833,250.00 | 29,784,220.00 | 12,647,991.00 | 82,833,250.00 | 18,818,016.00 |

Horizontal total – non sector related |5 | 1,945,643.00 |1,945,643.00 |453,335.00 |482,691.08 |1,945,643.00 |1,470,015.48 | | GRAND TOTAL |107 | 4,426,170,412.00 |2,981,660,167.00 |580,270,000.00 |174,301,691.92 |2,981,660,167.00 |733,243,921.65 | |

[1] This includes commitments for projects decided in 2006 as well as tranches committed for projects decided in previous years.

[2] This includes commitments for projects decided in 2006 as well as tranches committed for projects decided in previous years.

[3] Council Regulation (EC)N° 1266/1999 of 21 June 1999 on co-ordinating aid to the applicant countries in the framework of the pre-accession strategy.