Proposal for a COUNCIL REGULATION amending Regulation (EC) No 1267/1999 establishing an Instrument for Structural Policies for Pre-Accession

(presented by the Commission)

EXPLANATORY MEMORANDUM

1. Implementation of the Instrument for Structural Policies for Pre-Accession (ISPA) in 2000 resulted in the grant of Community assistance to a total of around 80 measures, which the Commission approved after consulting the Management Committee set up to this end. The total cost of the approved measures was EUR 2.9 billion, with ISPA providing EUR 1.9 billion, a little over EUR 1 billion of which was committed under the 2000 budget. The budget commitments entered into in 2000 are split evenly between the two sectors concerned, transport infrastructure and the environment.

2. Pursuant to the Council Regulation establishing the Instrument for Structural Policies for Pre-Accession, measures eligible for Community assistance under this instrument must be of a sufficient scale to have a significant impact in the field of environmental protection or in the improvement of transport infrastructure networks. Experience acquired by the Commission in appraising applications for financing submitted by the beneficiary countries shows that these countries often have difficulties part-financing such measures from available public resources. Accordingly, to ensure that ISPA has the greatest possible economic impact in the beneficiary countries, as much funding as possible must be obtained from the EIB or other international financial institutions (EBRD, World Bank, NIB, NEFCO, etc.) and, where appropriate, from the private sector. In 2000, ISPA obtained funding from international institutions in around 40% of approved measures and was thus able to achieve a multiplier effect of around 25%.

3. The growth of financial contributions from international financial institutions or the private sector is moreover an aspect which must be taken into account in granting Community assistance under ISPA, in accordance with the above Regulation. By increasing cooperation with other sources of financing, the Community hopes to increase the resources used in the sectors at which pre-accession aid is directed, improve the financial packages available to each measure and increase ISPA's multiplier effect in the years to come.

4. However, finding such funding is proving difficult due to the absence, in the Regulation establishing ISPA, of specific provisions allowing a derogation from the rule laid down in Article 114(1) of the Financial Regulation applicable to the General Budget of the European Communities. Pursuant to this provision, which applies to external aid, invitations to tender for contracts financed by the Community are open only to natural and legal persons in the Member States of the European Union and ISPA beneficiary countries.

5. Since international financial institutions may be required to comply with different tendering rules from those laid down in the Financial Regulation, the application of Article 114(1) is in some instances an insurmountable barrier to the funding by these institutions of measures eligible for financial assistance under ISPA. Article 114(2) of the Financial Regulation lays down that, in exceptional cases and with proper justification, nationals of third countries may be allowed to participate in tenders. However, application of this derogation to the rule laid down in paragraph 1 is subject to two conditions: firstly, specific conditions must be laid down in the basic instruments, in this case the Council Regulation establishing ISPA, and secondly those conditions must be in accordance with the appropriate authorisation procedures.

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6. In view of these circumstances, and in order to facilitate access by the beneficiary countries to the financial resources which could be supplied by international financial institutions or by the private sector, it is proposed to include in the ISPA Regulation specific provisions allowing for a derogation from the tendering rules under Title IX of the Financial Regulation. It is also proposed that these new provisions replicate the wording of the provisions already laid down in the Phare Regulation. The Commission could therefore, for technical or financial reasons essential to the implementation of a measure supported under ISPA, authorise beneficiaries, exceptionally and on the basis of a case-by-case examination, to open all or some of the invitations to tender to nationals of third countries.

7. Where a measure is co-financed by financial institutions on the basis of their own tendering rules (and not those in Title IX of the Financial Regulation), the expenditure incurred by these institutions must be included in the total expenditure eligible under ISPA. When this share of financing is included by the Commission in the list of approved costs, it must be available as a supplement to ISPA assistance and therefore form part of the calculation of expenditure eligible under ISPA. This new definition of eligible expenditure in no way alters the application of the provisions of Title IX of the Financial Regulation with respect to the implementation of the share of the measure directly supported by ISPA.

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Measure in receipt of ISPA assistance

Financing by an international financial institution

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Financing by ISPA

It is therefore proposed that the Council adopts the attached proposal for a Regulation.

Proposal for a COUNCIL REGULATION amending Regulation (EC) No 1267/1999 establishing an Instrument for Structural Policies for Pre-Accession

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular Article 308 thereof,

Having regard to the proposal from the Commission [1],

[1] OJ L

Having regard to the opinion of the European Parliament [2],

[2] OJ C

Having regard to the opinion of the Economic and Social Committee [3],

[3] OJ C

Having regard to the opinion of the Committee of the Regions [4],

[4] OJ C

Whereas:

(1) The first measures to benefit from Community assistance under the Instrument for Structural Policies for Pre-Accession (ISPA) established by Council Regulation (EC) No 1267/1999 [5] were appraised and approved by the Commission in the course of 2000.

[5] OJ L 161, 26.6.1999, p. 73.

(2) Certain provisions of Regulation (EC) No 1267/1999 should be amended in the light of experience acquired in appraising and approving measures to be financed under ISPA.

(3) Co-financing of measures together with international financial institutions in particular and the use of private financing are key elements of the functioning of ISPA. In certain cases, access to sources of financing other than Community assistance is essential to allow the beneficiary countries to co-finance measures which fully meet the conditions for eligibility and the objectives of ISPA.

(4) In order to allow or facilitate co-financing together with international financial institutions and/or private sources, provision must be made for the possibility of derogating, after examination on a case-by-case basis, from the general rules on participation in invitations to tender and contracts co-financed under ISPA.

(5) Article 114(2) of the Financial Regulation of 21 December 1977 applicable to the general budget of the European Communities [6] stipulates that in exceptional cases and with proper justification, it may be decided, on the basis of the specific conditions laid down in the basic instruments governing cooperation and in accordance with the appropriate authorisation procedures, to allow nationals of third countries to tender for contracts. Regulation (EC) No 1267/1999 is such a basic instrument.

[6] OJ L 356, 31.12.1977, p. 1. Regulation as last amended by Regulation (EC, ECSC, Euratom) No 2673/1999 (OJ L 326, 18.12.1999, p. 1).

(6) In this connection, inspiration may usefully be drawn from certain provisions applicable under the PHARE programme established by Council Regulation (EEC) No 3906/89 of 18 December 1989 on economic aid to certain countries of Central and Eastern Europe [7].

[7] OJ L 375, 23.12.1989, p. 11. Regulation as last amended by Regulation (EC) No 2666/2000 (OJ L 306, 7.12.2000, p. 1).

(7) A more precise definition of the concept of eligible expenditure is required to allow co-financing of ISPA measures by other sources of external aid.

(8) The provisions of Regulation (EC) No 1267/1999 should moreover be adapted to take account of Council Decision 1999/468/CE of 28 June 1999 laying down procedures for the exercise of implementing powers conferred on the Commission [8].

[8] OJ L 184, 17.7.1999, p. 23.

(9) The Treaty does not provide, for the adoption of this Regulation, powers other than those of Article 308.

HAS ADOPTED THIS REGULATION:

Article 1

Regulation (EC) No 1267/1999 is hereby amended as follows:

(1) The following Article 6a is inserted:

"Article 6a

Award of contracts

1. In the case of measures for which the Community is the sole source of external aid, participation in invitations to tender and contracts shall be open on equal terms to all natural and legal persons of the Member States and of the countries referred to in the second subparagraph of Article 1(1).

2. Paragraph 1 shall also apply to co-financing.

In the case of co-financing, however, the participation of third countries in invitations to tender and contracts may be authorised by the Commission, after examination on a case-by-case basis."

(2) The following paragraph 8 is added to Article 7:

"8. Where a measure is co-financed together with international financial institutions, expenditure meeting the rules for eligibility referred to in paragraph 7 but carried out in accordance with procedures appropriate to external sources of financing other than Community assistance and borne by those financial institutions may be used in calculating total eligible expenditure for that measure."

(3) Paragraphs 1, 2 and 3 of Article 14 are replaced by the following:

"1. The Commission shall be assisted by a committee, composed of representatives of the Member States and chaired by the representative of the Commission (hereinafter referred to as "the Committee"). The European Investment Bank shall appoint a non-voting representative.

2. Where reference is made to this paragraph, the management procedure laid down in Article 4 of Decision 1999/468/EC shall apply, in compliance with Article 7 thereof.

3. The period provided for in Article 4(3) of Decision 1999/468/EC shall be one month."

Article 2

This Regulation shall enter into force on the third day following that of its publication in the Official Journal of the European Communities.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels,

For the Council

The President