EN Official Journal of the European Union C 81/1

SPECIAL REPORT No 1/2008

concerning the procedures for the preliminary examination and evaluation of major investment projects for the 1994-1999 and 2000-2006 programming periods together with the Commission's replies

(presented pursuant to Article 248(4), second subparagraph, EC)

(2008/C 81/01)

CONTENTS

GLOSSARY

I-VII SUMMARY

1-8 INTRODUCTION

1-7 Definitions and approval framework

8 The volume of funds involved

9-13 THE SCOPE OF THE AUDIT AND OF THIS REPORT

14-34 DOES THE COMMISSION PREPARE COMMUNITY FINANCING OF MAJOR PROJECTS ADEQUATELY?

14-16 Preliminary examination framework and audit criteria

17-20 Project examination: improvements in the methodological framework but procedures to be strengthened

21-25 The cost-benefit analysis: varying quality of applications

26-34 Setting Community financial assistance: criteria inconsistently interpreted and applied

35-55 DO EX POST EVALUATIONS OF MAJOR PROJECTS GENERATE RESULTS THAT ARE HELPFUL FOR SUBSEQUENT DECISION-MAKING?

35-39 Evaluation framework and audit criteria

40-41 Several wide-ranging evaluations but very few individual evaluations of major projects

42-49 Factors that impeded the ex post evaluation of major projects

43-46 Incomplete aid applications

47-49 Inadequate monitoring

50-55 The 2000-2006 period: evaluations at risk of being compromised

56-58 THE NEW REGULATIONS FOR THE 2007-2013 PERIOD

59-65 CONCLUSIONS AND RECOMMENDATIONS

59-62 Conclusions

63-65 Recommendations

Annex I Samples I and II by Member State concerned — List of projects examined

Annex II 2000-2006 major projects evaluated — Discount rate and time horizons

The Commission's replies

GLOSSARY Cohesion Fund Instrument designed to promote economic and social cohesion by financing large projects in the fields of the environment and transport in Member States with a per capita GNP of less than 90 % of the Community average. The Cohesion Fund was originally implemented in Spain, Greece, Ireland and Portugal. Since 1 January 2004 Ireland has no longer been eligible. The new Member States have profited from Cohesion Fund support since their accession to the Community. Cost-benefit analysis A technique for comparing all the costs and all the benefits of an intervention to determine whether the benefits outweigh the costs, and if so, by what proportion. Deadweight effect An effect that becomes apparent and would have emerged even if a public intervention had not taken place. Effectiveness Measures the relationship between the results obtained and the objectives set. Efficiency Measures the relationship between the resources employed and the results obtained. ERDF (European Regional Development Fund) Financial instrument designed to promote economic and social cohesion between the countries of the EU by correcting the main regional imbalances and by reconversion of regions whose development is lagging behind. ERDF interventions are mainly implemented through operational programmes encompassing a large number of projects. Impact Socioeconomic consequences that may be attributed to an intervention. IRR (internal rate of return) Rate at which an investment becomes profitable. — Financial IRR: a rate of return calculated exclusively from the amounts of financing relating directly to the project. — Economic IRR: a rate of return calculated taking into account external economic factors. NPV (net present value) Value obtained by indexing at the present time the value of all cash balances which will be generated by a project during its life. This method enables various projects to be compared. Operational programmes A document approved by the Commission, it takes the form of a coherent set of priorities comprising multiannual measures. The priorities may be implemented through recourse to one or more Structural Funds, or, alternatively, to other financial instruments and the EIB. Programming period The multiannual framework within which Structural Fund expenditure is planned and implemented. Risk analysis Study to determine the probability that the value of the underlying variables originally calculated for a project will actually be confirmed. Sensitivity analysis Study of the stability of the expected result of a project when exposed to changes in the underlying variables. Structural Funds Community funds financing actions with the aim of reducing disparities in development between the regions of the EU. ERDF is the main financial instrument for these actions.

SUMMARY

I. The regulations define ‘major’ infrastructure and productive investment projects essentially in terms of the volume of finance involved. In view of the economic significance and potential impact of these projects, they are subject to special preliminary examination procedures prior to approval. For the same reasons, relevant information must be collected so that the effects actually achieved can be assessed in comparison to those which had been expected (see paragraphs 1-8).

II. The Court's audit centred on ERDF major projects and, by analogy, those under the Cohesion Fund for the 1994-1999 and 2000-2006 programming periods. This report is constructed around two main themes: the process of preparation for approval, by the Commission, of major projects and the process of evaluation after their implementation (see paragraphs 9-13).

III. The Court found several weaknesses in the preliminary examination procedure in the two periods in question. Of particular concern were the procedures for project appraisal and for setting the rate of Community co-financing. The quality of the cost-benefit analyses presented by project promoters in support of applications for assistance was extremely variable, and the same was true of the use to which the Commission put those analyses. These findings lead to doubts about the real value added of the special procedure for approving major projects (see paragraphs 14-34).

IV. The Court recommends that the Commission should apply more efficient preliminary examination procedures based on the tools it has itself developed, should ensure that the cost-benefit analysis is rigorously applied, particularly in respect of the data provided, and should continue its efforts to take into account those factors which allow the rate of Community participation to be adjusted (see paragraph 63).

V. As regards the ex post evaluation of major projects from the 1994-1999 period (the only such evaluation that the Commission had been able to carry out at the time of the audit), it proved to be severely handicapped by the lack of pertinent and accurate information on anticipated effects and monitoring. Given these circumstances, the evaluations did not produce any information that was useful from the point of view of decision-making for the following period, with the exception of one case concerning projects cofinanced by the Cohesion Fund. The evaluation of ERDF major projects from the 2000-2006 period, which has yet to be carried out, will be able to rely on stricter rules, especially in the area of monitoring. However, not much has yet been done to apply those rules in practice (see paragraphs 35-55).

VI. The Structural Funds regulations for the 2007-2013 period do not require the Commission to carry out individual ex post evaluations of major projects. However, the Court recommends that, when completed, the major projects should be evaluated individually, in relation to their specific objectives, by the national management authorities and the beneficiaries, for whom the information obtained from this exercise would be useful. To this end, the Commission must ensure that the applications for assistance contain the information required in respect of indicators and the initial situation, and that this information is rigorously monitored. As regards the information provided by the evaluation, which must be forwarded to it, the Commission must analyse its own requirements so as to ensure that it has relevant, reliable data available on the effects produced by the major projects (see paragraph 64).

VII. In the longer term, the Court invites the Commission, the European Parliament and the Council to give thought to the purpose of the special arrangements for major projects (see paragraph 65).

INTRODUCTION

Definitions and approval framework

1. The concept of ‘major projects’ is defined, in essence, in the Community regulations on the ERDF (1), and depends on the volume of finance involved in the projects.

2. For the 1994-1999 programming period, ‘major projects’ were ‘those the total cost of which taken into account in determining the amount of Community assistance is, as a general rule, greater than ECU 25 million for infrastructure investments or greater than ECU 15 million for productive investments’ (2).

3. For the 2000-2006 programming period, the definition of ‘major projects’ covers projects ‘whose total cost taken into account in determining the contribution of the Funds exceeds 50 million euro’ (3). In addition, these projects must comprise an economically indivisible series of works fulfilling a precise technical function and which have clearly identified aims. As in the previous period, these may be investments in infrastructure or productive investments (4).

4. The Cohesion Fund regulations, on the other hand, contain no definition of ‘major projects’ for either one of the periods under consideration (5). However, since, in the cohesion countries, similar transport infrastructure or environment projects may be financed by either the Cohesion Fund or the ERDF, the audit also examined, by analogy, a number of Cohesion Fund projects that were selected on the basis of total cost, applying the same criteria as for the ERDF major projects.

5. As regards the approval framework, ERDF major projects for the 1994-1999 period could be submitted individually or within the framework of an operational programme. In any case, the Commission was informed about major projects, with further details to be supplied (6), but no formal approval decision was required.

6. All ERDF major projects for 2000-2006 were financed within a wider programme of assistance (7). However, the regulations required the Commission to approve them individually, unlike other projects, which were approved only at Member State level (8).

7. Under the Cohesion Fund, in both periods, only individual projects could be financed, each project forming the subject of a specific decision.

Table 1

Definition of ‘major projects’

FUND 1994-1999 period 2000-2006 period EDRF ‘major projects’ (infrastructure and productive investment projects) Total cost greater than: — ECU 25 million for infrastructures — ECU 15 million for productive investments Total cost greater than: 50 million euro for all types of project In addition: indivisibility of work from economical and technical points of view and clearly identified objectives Individual project or project included in larger intervention Project always part of larger intervention Cohesion Fund ‘major projects’ (transport infrastructure and environment projects) No definition in the regulations For the purposes of the audit, total cost greater than ECU 25 million No definition in the regulations For the purposes of the audit, total cost greater than 50 million euro Individual project Individual project

The volume of funds involved

8. Table 2 shows the total cost for the two programming periods of the major projects which received assistance from the EDRF and the Cohesion Fund:

Table 2

Total cost of the ‘major projects’ which benefited from Community intervention

1994-1999 period 2000-2006 period ECU 1 000 million Number of projects 1 000 million euro Number of projects ERDF MPs 36 676 48 279 Cohesion Fund MPs 12 147 23 154 Total 48 823 71 437

THE SCOPE OF THE AUDIT AND OF THIS REPORT

9. Given the impact that single projects of a financial volume exceeding a certain amount may have on regional development, major investment projects are bound by preliminary examination procedures that are more than usually complex. As of the 2000-2006 period, at least, they are also subject to a separate approval decision. For the same reasons, a retrospective appraisal of the actual effects generated by the allocated resources is required in the interest of obtaining guidance for project design and selection in future programming periods.

10. The Court therefore sought replies to the following questions: — Is Community financing of major projects adequately prepared by the Commission? — Does the ex post evaluation of major projects generate results that are useful for future decision-making?

11. The administrative checks and checks carried out in the Member States covered a sample of 20 closed major projects from the 1994-1999 period, and 30 major projects from the 2000-2006 period. In addition, a supplementary sample of 36 major projects from 2000-2006 was taken for administrative checks at the Commission (see Annex I).

12. With regard to the system that was set up for the preliminary examination of major projects, the audit focused on the Commission's procedures for the two periods, 1994-1999 and 2000-2006. The progressive improvements made are indicated. The recommendations in this part will probably have an impact on implementation in the 2007-2013 period, for which the concept of ‘major projects’ has been retained for all the Structural Funds (9).

13. Turning to the subject of ex post evaluation, only those evaluations concerning the projects of the 1994-1999 period could be taken into account, since, at the time of the Court's audit, implementation of the projects of the 2000-2006 period had not yet been completed and the ex post evaluations were still to be done (10). Nevertheless, the report also examines whether improvements can be hoped for in respect of the 2000-2006 period. The observations that were drawn up on conclusion of the audit may have an impact on the evaluations for the 2000-2006 period, which are yet to be carried out, but chiefly on those for the 2007-2013 period which has just begun.

DOES THE COMMISSION PREPARE COMMUNITY FINANCING OF MAJOR PROJECTS ADEQUATELY?

Preliminary examination framework and audit criteria

14. It is the responsibility of the Member States to present major projects for Community co-financing, and this is carried out on the basis of their own preliminary examination procedures and rules, taking into account the stated priorities of the relevant ERDF Operational Programmes and of the Cohesion Fund.

15. The Commission is not expected to make a comparative assessment of the different Member States' projects, as the volumes of finance earmarked for each State are fixed in advance during the preparations for each programming period. Nevertheless, the Commission must examine the quality of the projects to be financed, i.e. whether the projects selected have the potential to achieve results with regard to regional development, and whether financial participation by the Community is required to carry them out and would deliver real added value.

16. The Court scrutinised the Commission's preliminary examination phase, on the basis that the following factors were necessary for this phase to lead to the adoption of worthwhile projects: (a) a common framework for the examination of applications for assistance to ensure that the project has been correctly prepared and contains the information which can form the basis for a decision on whether it merits assistance; (b) a decision process based on well-tried methods, understood and applied in a similar way by the Member States and the Commission; (c) determination of the rate of Community financial assistance on the basis of rules which ensure the public intervention is put to most efficient use.

Project examination: improvements in the methodological framework but procedures to be strengthened

17. The Court's audit demonstrated that, with time, the management tools put in place by the Commission have been refined. Although there are differences between the application forms for assistance for ERDF and Cohesion Fund major projects for the 2000-2006 period, they are more comprehensive and suitable than the forms used in the preceding period. Likewise, the Guide to the cost-benefit analysis (11) made available to the Member States by the Commission has been improved both in terms of its presentation of the theoretical framework and its practical application (12).

18. However, the examination of the applications varied in quality: — as several managing departments are responsible for the preliminary examination (the Commission's geographical units assess the projects as a whole, while the Evaluation Unit examines the cost-benefit analysis), for a long time there was no common approach, for example in the form of a checklist. Apart from the vade mecums and procedural handbooks for Cohesion Fund and ERDF projects in general, it was not until 2003 that appraisal summary tables and checklists for major projects in particular were laid down, — interdepartmental consultation sometimes leads to conflicting views concerning, above all, the appropriateness and level of assistance. The geographical units responsible do not always heed these unless an explanation is put on file. Sometimes, too, requests for additional information from other services are not followed up (see Box 1), — there is no clear rule, in the cohesion countries, for assigning major transport and environment projects to the ERDF or the Cohesion Fund, apart from the fact that the Cohesion Fund must prioritise financing for the Trans-European Transport Networks (TEN-T). As the Cohesion Fund applies higher ceilings to project finance, this has led to cases where similar projects are allocated different financial contribution rates. What is more, the assignment of a project to the ERDF or the Cohesion Fund also has different implications for monitoring and ex post evaluation (see Box 2). Box 1With regard to productive projects, one Commission department had pointed out that the investments were likely to prove extremely profitable and therefore did not require assistance. For one transport infrastructure project, another department had proposed that the requested 60 % contribution rate be reduced because the project was located in the wealthiest region of the Member State and the authorities were applying lower rates in regions that were less well-off. A rate cut was also sought in the case of another project where the investment return was extremely good. In the end, the reduction in the requested contribution rates was not made for any of these projects. In the case of the construction of an underground railway, it was converted into an environmental project under the Cohesion Fund when DG TREN refused to view it as transport infrastructure, despite reservations expressed by DG ENV on the grounds that only 1-3 % of the benefits to be derived from the project would be environmental in nature. Box 2In Greece, assignment to one or the other fund, following consultation with the Commission, depends on the projects' level of preparation and planning and the availability of resources. This has led to the somewhat illogical situation where one extension project for a major transport project was financed by the Cohesion Fund at the rate of 66,3 % and another by the ERDF under an operational programme at 50 %.

19. There were substantial delays in the examination process. The two-month time limit set for Commission approval (13) following the receipt of application forms is usually exceeded. The average time needed for the ERDF and Cohesion Fund projects that were audited on the spot was 187 days, with the approval period ranging from 46 to 1 001 days. These delays are attributable to the fact that the Commission is obliged to seek further details on the vast majority of major projects, largely owing to the poor quality — or absence — of environmental impact studies, which are compulsory in many cases, and to specific aspects of the financial and economic project analyses (14). Furthermore, the Member States are often very slow in replying. The shortcomings which affected project management for a considerable time may, in part, explain these delays (see paragraph 17).

20. The Commission's examination for the approval of projects proved to be too lenient: — projects were approved before they were entirely ready, as indicated by the fact that budgets were overrun and implementation deadlines were missed. Even where it was informed of this problem, the Commission approved them nonetheless, — some projects, on the other hand, were almost completed by the date they were submitted. For some productive projects, the projects were close to physical completion by the date on which the application file was sent to the Commission (although this was ahead of the closure of the accounts). In such circumstances the project could no longer be modified and the Commission could only either approve or refuse the application, — in the case of productive investments, application of the principles relating to justification of public intervention was only rarely verified. Consideration of the criteria relating to compensating for market weaknesses and avoiding the co-financing of deadweight effects did not play a major role in the financing decisions, — some major projects did not satisfy the criterion whereby major projects are supposed to comprise an economically indivisible series of works fulfilling a precise technical function and with clearly identified aims (see paragraph 3). A number of ERDF projects that were adopted as major projects were in fact made up by combining a number of separate individual projects. This is important in view of the fact that submission of an application for a major project grants the de facto right to benefit from extended application of the ‘n + 2 rule’ while the project is being examined, which may take a considerable amount of time (15).

The cost-benefit analysis: varying quality of applications

21. The cost-benefit analysis required by the legislation, in order to substantiate applications for assistance, is the main tool at the Commission's disposal for its decision to grant Community financing or not. Its satisfactory application is essential to evaluate the quality of the projects submitted. Its objective is to compare the resources deployed with the socioeconomic benefits which may be obtained in the medium term from the proposed action (16). The Commission may ask for the analysis submitted in support of the application to be revised or expanded, or may itself carry out an appraisal of the project, seeking the views of independent experts, where necessary, and the assistance of the EIB.

22. Despite publication by the Commission of a Guide to the cost-benefit analysis of major projects (see paragraph 17), great disparity was noted in the quality of the financial and economic analyses presented by the promoters.

23. The Commission takes an equivocal attitude to this. In some cases it tolerates numerous weaknesses and approves projects without requiring further details, while in other cases it suspends approval until it has received essential items of financial information.

24. The Court's audit has brought to light the following shortcomings and inconsistencies which impair the appraisal of the projects: — inadequate information to assess the soundness of the analysis carried out; for a number of projects the financial and economic analyses are nothing more than a statement of the investment amount, costs and revenue, with no breakdown of these figures; for other projects only the results of the analyses are presented, — missing components: in some cases the economic analysis and the cost-benefit report are missing; the contents of the risk and sensitivity analyses are often incomplete; rates and time horizons are not specified (see Annex II); direct environmental impacts are simply described or referred to without being assigned a financial value, or only a partial value. In the case of a number of major transport infrastructure projects that form part of wider projects, no overview of the entire project is provided although this is necessary for evaluation of the part presented for cofinancing (see Box 3). In the case of major industrial projects the results and impact indicators are rarely quantified, with the exception of employment (direct and indirect job creation, maintenance of employment), — conflicting or erroneous practices: different financial and economic discount rates have been applied in the analyses, even in one and the same Member State, either to the public infrastructure projects or the productive investments (see Annex II). It is not always clear whether rate-of-return calculations are inclusive or exclusive of assistance; depreciation is taken into account when calculating the financial IRR and NPV, which is contrary to the generally acknowledged principles of financial analysis. Lastly, a relatively high proportion of the productive investments examined gave identical financial and economic IRR and NPV data. Box 3In the case of the construction of a cross-border tunnel, the application, as a major project, was submitted by one of the two Member States involved. An overview of the entire tunnel project would have been useful for an evaluation of the applicant Member State's section. The same applies to the cross-border motorways. For the national motorways and railways a separate economic analysis was made in many cases for each phase, with each phase constituting a major project, but there was no overall economic analysis. Generally speaking, the quality of the analyses is weaker in the case of major productive investment projects.

25. The poor quality of the analyses accompanying the aid applications shows that, in the examination phase, the Commission did not always carry out an effective examination of the cost-benefit analyses of the projects. Whether infrastructure investments or productive investments, under these circumstances conclusive rejection of a project was a very rare occurrence, as rare as requests for projects to be revised after examination by the Commission.

Setting Community financial assistance: criteria inconsistently interpreted and applied

26. The purpose of the administrative examination undertaken by the Commission is to ‘confirm or amend the rate of Community assistance’ (17). Introduced to ensure that awards are effective, this instrument ensures that the financed project receives the resources needed for its achievement without the beneficiary acquiring any unjustified advantage. This is particularly important where the beneficiaries are private businesses, as Community funding may distort market conditions.

27. Community assistance is subject to certain regulatory ceilings. Lower regulatory ceilings are provided for investments in infrastructure that generate substantial net revenue and for investments in firms (18). In addition, Community rules and State aid ceilings must be complied with.

28. Within the limits of these ceilings the only precise factor used by the Commission to determine the rate of Community assistance has been the financing gap ratio, which is only applied to revenue-generating infrastructure projects. It consists of calculating that part of the discounted initial investment cost of the project which is not covered by the net present value of operating revenues (including the residual value) (19). This calculation allows the maximum level of public intervention to be fixed. In 2003 the Commission introduced an amended method of calculation for major sanitation and solid waste management projects (20), which takes account of revenue generation while seeking to avoid penalising beneficiaries who rigorously observe the ‘polluter pays’ principle (21).

29. In practice, in certain cases examined by the Court, the application of the financing gap ratio principle has either resulted in fixing too high a rate of Community contribution or there is doubt as to the correct application of this principle.

30. Apart from the financing gap method, no guidelines indicate any other factors to be taken into account for the purpose of adjusting Community assistance rates, which helps to explain certain differences in the views expressed during the interdepartmental consultation process (see paragraph 18). In the absence of previously established criteria, the rate of assistance is adjusted in a random manner and its consistent application cannot be verified.

31. The Court's audit has shown that as regards public infrastructure investment projects which do not generate revenue, socioeconomic aspects (‘context’ factors such as the degree of industrialisation of a region or its relative prosperity) are not taken into account for the purpose of reducing assistance rates. The same applies to such criteria as complementarity with other Community operations. The Commission also did not question the structure of the financial arrangement submitted by the project initiator.

32. As regards productive investments, the review of the projects has shown the method of setting assistance rates to be relatively automatic: — in most cases the rate granted is merely the rate applied for, — financial cost-benefit analysis (which is mainly constructed around the financial IRRs and NPVs and risk and sensitivity analyses) was not taken into account for the adjustment of the assistance rate. Some highly profitable projects with a high financial IRR attracted high co-financing even though Commission departments other than the examining geographical unit had emphasised the deadweight effect of assistance. The audit has indicated that in certain cases deadweight effects actually appeared after the projects were implemented (see Box 4), — within the limits of the regulatory ceilings and the maximum levels determined by the rules governing State aid, socioeconomic concepts (such as value added, the creation or maintenance of employment, leverage effects) were not generally taken into account in fixing the assistance rate. Nevertheless, good practice was observed in the case of productive investments in Spain, where the competent national departments also drew on non-financial criteria when specifying the rate, and the co-financing rate was calculated by reference to employment, the use of regional natural resources, value added (especially in terms of increased productivity), technological innovation and knock-on potential, — the Commission's departments did not consider the use of loans rather than grants. However, loans ought to be considered, particularly for productive investments with high financial IRRs or for businesses with good financial ratios. Generally speaking, aspects such as the financial situation of the business or market conditions are not taken into account in determining the level of assistance. Box 4In the case of one company generating substantial profits, the project would have succeeded without Community assistance. The same applies to another industrial production project, for which the business concerned had almost no competitors in the European market. However, in certain cases the effects of locating a project at a particular site might justify subsidies for projects with favourable IRRs. In the case of a major project of another company, which, at the time, had substantial shares of the world market for several projects, the cofinanced investment was at a company site in an Objective 1 region and Community grants played a significant role in the choice of site.

33. The Commission is aware of these weaknesses. In 2004 it made an attempt at rationalisation by seeking to adjust Community assistance rates by reference to certain criteria. This produced indicative assistance rates weighted by each sector's anticipated rate of return, calculated on the basis of financial IRRs from a sample of 200 infrastructure and productive projects. This is a useful tool, although still very limited. In any case, it came too late for examination of the files.

34. The new guidelines published in 2006 (22) propose including in the financing gap calculation factors that are not purely financial, such as the existence of a public-private partnership and equity (that is, the relative prosperity of the region). They also deal with the manner of combining subsidies and loans on the basis of the profitability normally expected per sector. Even though ‘context’ factors are still not fully taken into account, these improvements are in line with the approach favoured by this report of seeking a wider and more objective framework for differentiating the amount of aid. They must be applied consistently and transparently to the financing decisions of the new period.

DO EX POST EVALUATIONS OF MAJOR PROJECTS GENERATE RESULTS THAT ARE HELPFUL FOR SUBSEQUENT DECISION-MAKING?

Evaluation framework and audit criteria

35. Generally speaking, the aim of evaluating a project after completion is to account for the use of resources and the effectiveness and efficiency of the operation undertaken. It is of particular interest to political leaders, managing authorities and beneficiaries. It must allow lessons to be drawn about the need for supplementary or corrective measures to be taken in the future. As the results generated by such evaluations concern the effects produced by a project, they will also be used in quantifying the objectives of future projects.

36. The Structural Funds regulations stipulate that Community interventions shall be subject to such a type of evaluation. It is characterised as an ‘ex post evaluation’ and must be undertaken by the Commission in collaboration with the Member States (23). As an ERDF major project that is submitted outside an operational programme is regarded as an intervention, it is in principle subject to ex post evaluation. There is no explicit regulatory requirement as regards the individual major projects that make up an intervention (24).

37. However, as regards the Cohesion Fund, there is express provision for ex post evaluation of each project (25).

38. The basic data used in the ex post evaluations are mainly collected by the Member States through the monitoring system. During the 1994-1999 period, only Cohesion Fund projects were subject to individual monitoring and annual implementation reports. Structural Funds projects were explicitly monitored at a higher level (measures, priorities, operational programmes, Community support frameworks, etc. (26)).

39. The Court examined the evaluation phase from the point of view that: (a) the evaluation of major projects must serve to guide the implementation of future projects. The national authorities and the beneficiaries are primarily concerned by these evaluations, which provide information for improving the effectiveness and efficiency of operations on the ground; (b) the tools for monitoring project implementation and for comparing their achievement must be defined from the outset; (c) data must be obtained for these tools to be used.

Several wide-ranging evaluations but very few individual evaluations of major projects

40. The Member States only rarely carry out ex post evaluations of major projects (27). Only one of the twenty projects audited by the Court had been evaluated (see Box 5). Naturally, studies of the sectors to which the major projects belong — such as, for example, the port and automotive sectors — may be conducted by beneficiaries, managing administrations or external bodies (universities or research centres). However, such studies do not target the projects directly and are not in the nature of ex post evaluations. Furthermore, they are not always forwarded to the departments responsible for managing the Community funds. Box 5Only one of the projects in the Court's sample had undergone individual ex post evaluation. However, the macroeconomic impact was assessed on the basis of factors which differed from those initially provided for in the ex ante evaluation presented in support of the application. As a result, the impact cannot be compared with the one anticipated. What is more, there was no recalculation of the expected financial return.

41. At Commission level, the evaluations that specifically target the major projects of the 1994-1999 period (the only ones to have been evaluated up to now) (see paragraph 13), or concern some aspect of them, have very heterogeneous aims and methods. They were not used by the national managing authorities and beneficiaries, with one exception (see (d)): (a) a thematic evaluation of the impact of the Structural Funds on transport infrastructures, which essentially considered the strategies per country and per method of transport at programme level. This evaluation provides little data with regard to the efficiency, effectiveness and impact of the individual projects; (b) an ex post evaluation of Objective 1 that includes an examination of sixty major ERDF and Cohesion Fund projects. It used a wide-ranging approach that included an assessment of the appropriateness of the strategy, of effectiveness, efficiency and impact, management and implementation systems and Community value added. However, only a small number of major projects were considered from the point of view of certain aspects of effectiveness; (c) an evaluation of the macroeconomic impact of individual Cohesion Fund projects — the only evaluation to consider this aspect — by means of specially adapted macroeconomic models. However, the real effects of the projects were not examined, as the only data used was that drawn from the ex-ante cost-benefit analyses (28); (d) an ex post evaluation of projects (29) on the basis of a sample of 200 Cohesion Fund projects. The evaluation assessed the adequacy of the strategic planning, project design and project selection procedures, management and implementation systems, effectiveness and efficiency. A sub-group of 60 projects was later given a more in-depth examination from the point of view of socioeconomic impact. Using the Guide to cost-benefit analysis as a benchmark, the internal economic rate of return was recalculated. This study's recommendations were discussed by the Member States concerned and led to improvements in methodology.

Factors that impeded the ex post evaluation of major projects

42. The Court has on several occasions (30) highlighted the weaknesses of the evaluation exercises for the 1994-1999 period, which were particularly marked by the absence of data or its unreliability. The Court's reports invited the Commission to consider the possibility of collecting information on the individual projects, without which the methodologies used are too theoretical or inapplicable. The audit of the major projects of that period corroborated these findings.

Incomplete aid applications

43. The ex post evaluation of major projects was at first hindered by missing information in the aid applications. This was noted both by the studies undertaken of major projects and by the Court's audit.

44. One of the evaluations carried out highlighted, in particular, that: (a) the objectives of the projects were not always quantified; (b) at the level of cost-benefit analysis, benefits which were difficult to evaluate — in particular environmental benefits — were not quantified or were taken into account in the calculation of the ex ante economic internal rate of return without adequate concrete information and justification having been obtained. In numerous cases the anticipated results were not quantified; (c) the distinction was not always drawn between permanent jobs and temporary jobs; the methodological hypotheses for ex ante estimates of impact on employment were not explained or different methodologies were applied.

45. In addition to the inadequacy of the cost-benefit analysis that has already been highlighted (see paragraphs 21-25), the audit carried out by the Court confirmed the shortcomings found in the earlier reports, in particular: (a) the absence, weakness or inadequacy of the indicators; (b) the absence of any reliable information concerning the initial situation, that is, the situation existing before the project was implemented.

46. As these factors are necessary in order to evaluate the operations, the deficiencies discovered impede ex post evaluations.

Inadequate monitoring

47. Even in those cases where a monitoring system was introduced at project level, the studies undertaken and the audit carried out by the Court have shown that the monitoring process did not ensure that adequate data was collected for the purposes of evaluation.

48. One of the evaluations carried out found that: (a) the collection of statistics relating to the use of transport infrastructures did not focus on the economic implications of this use, such as reductions in the cost of travel; (b) analyses of unit costs did not result in a comparison of the projects on the basis of benchmarks; (c) information on the revenue generated and on the application of the polluter pays principle were inadequate in a number of cases; (d) the ex post recalculation of the economic internal rate of return was hampered by a lack of information concerning actual results. It often had to be based on hypotheses and, in the absence of any contradictory information, on the data contained in the ex ante evaluation; (e) information concerning the creation of direct employment and permanent employment was sometimes not available or of poor quality.

49. The Court's audit of major projects for the 1994-1999 period also showed weaknesses in monitoring: (a) as regards investments in infrastructures, with the exception of one project, monitoring focused only on effects that were, technically, easy to trace, i.e. creation of direct employment, goods and passenger traffic, number of connections, areas sold, number of beds per 1 000 inhabitants. Other direct effects that are more difficult to monitor (petrol consumption, comfort, environmental effects, quality of healthcare) were not subject to any follow-up. The same applied a fortiori to indirect and more long-term effects (such as productivity, the creation of businesses and employment, prices, etc.). Furthermore, those aspects used by the beneficiary to calculate the estimated economic return (for example, for road infrastructure: time savings, reduction of the cost of transport, reduction of accidents, effects on the flow of traffic generated and on additional traffic, etc.) were generally not considered to be indicators that needed monitoring; (b) as regards productive investments, monitoring was limited to the physical and financial aspects of the investments and, generally, to the direct creation of employment, since the final reports drawn up in connection with the final payment had to comply with the contractual requirements concerning payment. Generally speaking, the managing body does nothave information about such factors as the creation of enterprises and indirect employment, productivity increases or the environment.

The 2000-2006 period: evaluations at risk of being compromised

50. For the 2000-2006 period, the ERDF legislation stipulates that, in future, for the major projects, the annual implementation reports on interventions must contain a separate chapter on progress made and financing. In addition, financial and progress indicators must be designed to provide separate information for the major projects (31).

51. Nevertheless, although the annual implementation reports contain a chapter on major projects, these chapters are often restricted to a simple description of the projects and do not present the physical progress made, or separate results and impact indicators.

52. In the same way, the priorities and measures concerning major projects do not always include the indicators allocated to them, or the indicators at priority and measure level are not consistent with those for the major projects.

53. At the level of the projects examined on-the-spot, while a number of major projects have an adequate list of implementation, results and impact indicators, other projects either do not refer to any indicator at all, or have only been allocated physical and financial implementation indicators.

54. Sometimes no clear link exists between the overall objectives, the individual objectives and the designated indicators. A number of objectives have not been allocated indicators at all. Likewise, indicators put in place for projects which are similar but cofinanced by the ERDF or the Cohesion Fund respectively are not identical.

55. Future ex post evaluations will be affected for the same reasons as in the preceding period, i.e. the weaknesses found concerning monitoring and indicators. The contribution of major projects to the more global objectives of regional development will therefore remain very difficult to define.

THE NEW REGULATIONS FOR THE 2007-2013 PERIOD

56. The new framework regulation for the 2007-2013 period (32), which applies both to the ERDF and the Cohesion Fund, introduces certain improvements as regards major projects: (a) the concept is redefined (33), with ERDF projects and Cohesion Fund projects being treated equally; (b) the information to be submitted by the Member States is clearly defined. In particular, there must be explicit justification for a public contribution to the funding; (c) there is a clearer definition of revenue-generating projects and how they are to be treated; (d) the annual report and the final report on implementation must provide a clear view of the physical progress and financing of major projects.

57. In addition, in 2006 the Commission published guidelines on the preparation of major projects in the new period, which made a certain number of improvements (see paragraph 34).

58. Finally, the rules provide for ex post evaluations to be carried out by the Commission at programme level only. There is therefore no provision for either EDRF or Cohesion Fund projects to be evaluated individually.

CONCLUSIONS AND RECOMMENDATIONS

Conclusions

59. There are a number of shortcomings in the preliminary examination procedures for major projects: (a) the project examinations varied in quality. Not until 2003 was a common approach provided for the managing departments (see paragraphs 17-20); (b) many weaknesses were tolerated by the Commission. Great disparities exist in the quality of the financial and socioeconomic analyses presented in support of the projects. In particular, the quality of the analyses presented in support of productive investments projects is poor. As a result, major projects are adopted although the data provided do not permit an adequate assessment (see paragraphs 21-25); (c) in spite of the improvements made by the Commission, the factors used to adjust the rate of Community intervention are not yet sufficiently precise. For productive investments the possibility of granting a loan instead of a subsidy was not examined (see paragraphs 26-34).

60. Taking these factors into consideration, the Court entertains doubts concerning the real added value of the approval process for major projects as implemented by the Commission. The exercise is cumbersome and does not exclude projects of inferior quality or adjust the rate of intervention in a satisfactory manner. Neither does it guarantee adequate preparation for the subsequent evaluation. The weaknesses noted in the preliminary examination procedure had repercussions on the ex post evaluation process.

61. Weaknesses were also discovered in the ex post evaluations: (a) hardly any individual ex post evaluations are carried out on the initiative of the Member States. At Commission level there is no global approach to the ex post evaluation of major projects. Those evaluations carried out had very heterogeneous aims and methods (see paragraphs 40-41); (b) the ex post evaluation of major projects for the 1994-1999 period was hindered by substantial shortcomings in the aid applications, in particular concerning anticipated effects, indicators, and the initial situation. These deficiencies prevented an evaluation of the real effects of the interventions and the drawing of lessons from them for subsequent decision-making (see paragraphs 43-46); (c) the manner in which the monitoring was carried out in this period hampered the ex post evaluations, as numerous aspects were neglected (see paragraphs 47-49).

62. The Commission adopted a number of measures in 2003 in the light of the weaknesses found at the end of the ex post evaluation of the 1994-1999 period. However, no substantial progress was made with the adoption and monitoring procedures for the major projects of the 2000-2006 period and the ex post evaluation exercise for this period, which is still to be carried out, is at risk of being compromised (see paragraphs 50-55).

Recommendations

63. As regards the 2007-2013 period, the Community regulations provide that, as in the preceding periods, the Commission should approve the granting of Community assistance for each major project. To avoid financing decisions being reduced to an administrative exercise with no influence on the quality of the projects adopted, the Commission should: (a) apply more efficient preliminary examination procedures based on the tools that it has itself developed; (b) ensure that the cost-benefit analysis is applied rigorously, particularly as regards information that can be used to check the reliability of the hypotheses used; (c) continue its efforts to take into account the socioeconomic factors that allow the rate of Community participation, which at present is based mainly on financial aspects, to be adjusted. Consideration of such factors should be based on explicit and less random rules applied in a consistent manner.

64. The Structural Funds regulations for the 2007-2013 period do not provide for the ex post evaluation of major projects by the Commission. However, the Court considers that the evaluation of major projects after completion is essential for the national administrations and the beneficiaries, who need to verify the real efficiency and effectiveness of the expenditure in order to improve management and for whom the evaluation should provide real assistance with regard to programming. As a result: (a) it is important for major projects to be evaluated individually, against their own objectives, by the national administrations and beneficiaries; (b) as regards the information provided by the evaluation, which must be communicated to it, the Commission must analyse its requirements in respect of the information needed to undertake the evaluation and, in particular, must review the information needed to assess the impact of the major projects on regional development objectives, to which the projects are supposed to make a very substantial contribution. The Court considers that this evaluation could be based on data generated at major project level. To this end, and to ensure the evaluation is feasible, the requirements regarding the information to be collected and the reports to be drawn up should be rationalised; (c) in order to guarantee the quality of subsequent evaluations, the Commission must ensure, when examining the files, that there are no lacunae in the applications submitted as regards indicators and the initial situation; (d) for the same purpose, subsequent to the Commission's examination, monitoring must focus on the objectives and on the implementation and results indicators set out in the applications for assistance.

65. In the longer term, the Court invites the Commission, the European Parliament and the Council to give thought to the purpose of the special arrangements for authorising major projects.

This report was adopted by the Court of Auditors in Luxembourg at its meeting of 14 February 2008. For the Court of Auditors Vítor Manuel DA SILVA CALDEIRA President

(1) The concept already existed in Council Regulation (EEC) No 4253/88 of 19 December 1988 (OJ L 374, 31.12.1988, p. 1). It also applies in the rules for the new period (2007-2013) (Articles 39-41 of Council Regulation (EC) No 1083/2006 of 11 July 2006 (OJ L 210, 31.7.2006, p. 25)).

(2) Article 16(2) of Council Regulation (EEC) No 4253/88 as amended by Regulation (EEC) No 2082/93 of 20 July 1993 (OJ L 193, 31.7.1993, p. 20).

(3) Article 25 of Council Regulation (EC) No 1260/1999 (OJ L 161, 26.6.1999, p. 1).

(4) Article 26 of Regulation (EC) No 1260/1999.

(5) The Cohesion Fund exists to finance larger projects in the fields of transport and environment. Article 10(3) of Council Regulation (EC) No 1164/94 of 16 May 1994 (OJ L 130, 25.5.1994, p. 1) specified, for the 1994-1999 programming period, that ‘the total cost of projects or groups of projects may in principle not be less than ECU 10 million’. For the following programming period, Council Regulation (EC) No 1264/1999 of 21 June 1999 (OJ L 161, 26.6.1999, p. 57) replaces ‘ECU’ with ‘euro’.

(6) Article 5 of Regulation (EEC) No 4254/88 as amended by Council Regulation (EEC) No 2083/93 of 20 July 1993 (OJ L 193, 31.7.1993, p. 34).

(7) Mainly Operational Programmes, Single Programming Documents and Community Initiative Programmes.

(8) Article 26(3) of Regulation (EC) No 1260/1999.

(9) See in particular Articles 39-41 of Regulation (EC) No 1083/2006.

(10) Eight projects adopted between 2000 and 2002 were nevertheless examined in the context of an ex post evaluation carried out on behalf of the Commission (see paragraph 41).

(11) See the Guide to cost-benefit analysis of ERDF major projects in the context of Community regional policy, which was finalised in 1994. A revised Guide published in 1997 also covered Cohesion Fund major projects. For the following period, the former guidance instrument was replaced in 2002 by the Guide to cost-benefit analysis of investment projects under the Structural Funds (ERDF), Cohesion Fund and ISPA. These documents are available on the Commission's website at: http://ec.europa.eu/regional_policy/sources/docoffic

(12) In particular, the Guide published in 2002 specifies the financial and economic rates of return that should be used and the ‘time horizons’ that should be applied in each investment field in order to assess the return on projects. However, it fails to provide any details or forecasting techniques concerning impacts on the environment or job creation.

(13) Article 26(3) of Regulation (EC) No 1260/1999; the time limit is three months if the EIB has to be consulted.

(14) In this connection, see also paragraphs 22-24.

(15) This rule provides for the automatic decommitment of commitments that have not been settled within two years of the date on which the corresponding appropriations were entered in the Community budget. It constitutes an incentive to rapid implementation of the projects.

(16) Article 26(1) of Regulation (EEC) No 4253/88, as modified by Regulation (EEC) No 2082/93 for ERDF projects from the 1994-1999 period, Articles 25 and 26 of Regulation (EC) No 1260/1999 for ERDF projects from 2000-2006. Article 10 of Regulation (EC) No 1164/94 and Regulation (EC) No 1264/1999 for Cohesion Fund projects from 1994-1999 and 2000-2006 respectively.

(17) See Article 26(3) of Regulation (EC) No 1260/1999.

(18) See Article 13 of Regulation (EEC) No 2052/88 as amended by Council Regulation (EEC) No 2081/93 of 20 July 1993 (OJ L 193, 31.7.1993, p. 5) and Article 29 of Regulation (EC) No 1260/1999 for the ERDF; Article 17 of Regulation (EEC) No 4253/88 as modified by Regulation (EEC) No 2082/93 and Article 7 of Regulation (EC) No 1264/1999 for the Cohesion Fund respectively.

(19) The ‘financing gap’ ratio formula is as follows: r = (C-R)/C, where C represents the total cost of the discounted initial investment and R the net present value of operating revenues.

(20) ‘Simplification, transparency and coherence in the evaluation of major public infrastructure projects: application of four elementary rules’, DG Regional Policy, Note of 14.4.2003 formally addressed to the competent authorities of the Member States and accession countries. A note on the new rules for the application of the ‘financing gap’ formulae had already been sent to the Committee for the Development and Reconversion of Regions in July 2002.

(21) For both types of projects the principle that the polluter pays requires setting a higher charging level to cover the operating and investment costs, which reduces the financing gap and consequently the amount of Community assistance. The modifications applied in relation to the traditional formula correct this ‘distortion’ by providing that the formula should not take account of the total net value of operating revenues but only the part calculated as a proportion of the investment assistance granted by the Commission. The formula is slightly different for the Cohesion Fund and for the ERDF.

(22) See Working Document No 4 ‘The new programming period 2007-2013. Guidance on the Methodology for carrying out cost-benefit analysis’, August 2006.

(23) Article 6(2) of Regulation (EEC) No 2052/88 as amended by Regulation (EEC) No 2081/93 and Article 43 of Regulation (EC) No 1260/1999.

(24) Nevertheless, a separate ex post evaluation is possible. Article 27(4) of the 2002 Financial Regulation provides for the evaluation of all programmes and activities which entail significant spending. Meanwhile, Article 21 of the rules implementing the Financial Regulation requires an interim and/or ex post evaluation of any programme or activity that exceeds five million euro. Without prejudice to these provisions, the Commission has asserted its right to chose the level of exclusiveness at which an evaluation is to be carried out, taking into account a certain number of criteria including, in particular, financial size and expected impact (see the recent Communication to the Commission from Mrs Grybauskaitė, Responding to strategic needs: Reinforcing the use of evaluation, SEC(2007) 213 of 14 February 2007, paragraph 2.1).

(25) Article 13 of Regulations (EC) No 1164/94 and (EC) No 1264/1999.

(26) Article 25 of Regulation (EEC) No 2082/93.

(27) By way of example, in Ireland Forfás performs ex post evaluations of a sample of productive investments every year. In Portugal, the Departamento de Prospectiva e Planeamento (DPP) used econometric models to carry out the macroeconomic ex post evaluation of certain infrastructure investments.

(28) The models were applied especially to investments in nine major transport infrastructures in environmental projects in Spain. The application of these models was reviewed in Special Report No 15/2000.

(29) The projects were from the 1994-1999 programming period, with the exception of eight projects adopted by the Commission between 2000 and 2002.

(30) See in particular Special Reports No 15/2000 on the Cohesion Fund, No 12/2001 concerning certain structural measures to improve the employment situation, No 7/2003 on the implementation of assistance programming for the period 2000 to 2006 and No 10/2006 on ex post evaluations of Objectives 1 and 3 programmes for the 1994-1999 period.

(31) Article 36(3) of Regulation (EC) No 1260/1999.

(32) Regulation (EC) No 1083/2006. These aspects are referred to in Articles 39-41, Article 37, Article 55 and Article 67(2)(g).

(33) New thresholds now apply: 25 million euro for environmental projects and 50 million euro for other projects.

ANNEX I SAMPLES I AND II BY MEMBER STATE CONCERNED — LIST OF PROJECTS EXAMINED Checks on files and in the Member States (50 projects) Additional checks on files at the Commission (36 projects) Germany — Buna Sow — project 25153584 — Logistik-Center Rheinhausen ‘Logport’ Infrastruktur — Ausbau der Schienenstrecke (ABS) Berlin-Frankfurt/Oder — Otto GmbH&Co KG — Phönix West Germany / Greece — Athens Metro (OP Urban development 1994-1999) — General hospital of Chania — project 18861 (OP Crete 1994-1999) — Extension of Athens Metro from Panagoulis to the old airport at Elliniko (CF) — Water supply of Irakleion and Agios Nikolaos from the Aposelemi dam (2nd. phase) (CF) — Renewal and extension of the bus and trolley fleet of Athens public transport companies ETHEL-ILPAP (OP SAAS 2000-2006) — Extensions of Athens Metro and transfer stations (OP OALAA) Greece — Développement du tram d'Athènes — C(2003)/122 — Sections d'Egnatia Odos-Ioannina-Metsovo — C(2004)/4367 Spain — Túnel de Somport — 941165005 — Autopista Madrid-Valencia — 961165008 — Linea Valencia-Tarragona-Acond 200-220 km/h entre ppkk 30 y 50-10.6 — CN-VI. Autovia Madrid-A Coruna. Tramo: Villartelin — Nadela — 1.1.1 — Fabricacion de Automoviles Renault Espana S.A. (Construction of an environmentally friendly car engine) — VA/198/P07 — Ceramicas Belcaire, S.A. (Reconstruction of a manufacturing plant) — CS/265/P12 — Ampliación del Puerto de Alicante — C(2003) 4394 (2003 ES 16 CPT 018) — Actuaciones Línea alta velocidad Madrid-Barcelona-frontera francesa: Tramo Madrid-Lleida C(2000) 2939 (2000 ES 16 CPT 002) — Arteria aductora del Campo de Pozos de Guadarrama y estación de tratamiento-2002 C(2004) 3565 (2002 ES 16 CPT 035) — Saneamiento y depuración de diversas zonas de Cantabria — C(2000) 4307 (2000 ES 16 CPT 001) — Ampliación Puerto de Ferrol (puerto exterior) — C(2004) 1862 (2002 ES 161 PR 001) — Ampliación del Puerto de Sagunto — C(2003) 4232 (2002 ES 161 PR010) — Glapilk, AIE — C(2003) 118 (2002 ES 161 PR 016) — Petroquimica Espanola SA — C(2004) 145 (2003 ES 161 PR026) — Tableros Tradema SA — C(2003) 5090 (2003 ES 161 PR 020) — Construcciones aeronáuticas — Cádiz (2004 ES 161 PR 010) Spain — Dupont Ibérica SL — C(2003) 1342 — Fibras del Noroeste SA — C(2003) 180 — Bioetanol Galicia SA — C(2003) 181 — BP Oil Refinería de Castellón — C(2003) 3974 — Biocarburantes de Castilla y León — C(2004) 658 — Intercontinental Química SA — C(2004) 2306 — Airbus España SL, Fabricación automatizada Toledo — C(2003) 4736 — Airbus España SL, centro excelencia montajes Cádiz — C(2003) 4738 — Construcciones Aeronáuticas Sevilla — C(2004) 2441 — Ford España — C(2003) 4229 et C(2004) 2303 — Renault España — C(2004) 2304, C(2004) 3444 et C(2004) 3702 — Autovia de la Plata — C(2004) 275, C(2004) 0141, C(2004) 245 et C(2004) 2440 — Autovia del Mediterraneo — C(2003) 1336 et C(2003) 3809 — Autovia del Cantabrico — C(2003) 209, C(2003) 211 et C(2003) 2594 France — RN 20 — Déviation de Foix — RCEA — Route Centre Europe Atlantique — C(2003) 2265 — Sevelnord — C(2003) 53 — Pilkington — C(2002) 3478 France — Tunnel du Lioran — C(2002) 4154 — Tramway de Clermont-Ferrand — C(2004) 4349 — Grand Halle d'Auvergne — C(2002) 1765 — Electrification des lignes vosgiennes — 2ème tranche — C(2003) 3131 Ireland — Gateway 2000 Ireland Ltd Dublin — N11 Rathnew/Ashford by-pass — M1 Cloghran/Lissenhall (stage 2) Ireland — Luas Line A (Light rail), C(2001)/4330 — N22 Ballincollig By-pass, C(2002)/4617 Italy — ESSO Italiana SpA — SGS-Thomson microelectronics — Produzione di pompe ad altissima pressione per motori diesel — C(2004) 5697 — RFI SpA — Potenziamento infrastrutturale e tecnologico della Caserta-Foggia — C(2005) 1268 Italy — Metropolitana di Napoli — Dante/Garibaldi — C(2005) 5235 — Metropolitana di Napoli — Vantivelli/Dante — C(2005) 5241 — Autostrada Siracusa-Gela — C(2005) 5233 — FRIEL — C(2005) 2839 — IVECO — C(2005) 1481 Portugal — Autoeuropa — Auto-estrada A12 — Sistema multimunicipal de saneamento do Tejo-Trancão — C(2003) 2951 — Porto do Caniçal — C(2003) 4458 — Linha do Algarve II et V — C(2000) 3486 et C(2001) 3590 — Linha do Douro (troço Cête — Caíde) — C(2001) 2124 — Infineon technologies — C(2004) 3220 — Mabor Continental — C(2004) 661 Portugal — IC 10 — Ponte sobre o Tejo em Santarém — C(2001) 2727 — Armazenamento subterrâneo do Canriço — C(2001) 2011 — EPCOS — C(2003) 183 — CIMPOR — C(2003) 5099 — MST — Metropolitano do Sul do Tejo — C(2003) 3078 — Aeroporto Sá Carneiro (2003 PT 161 PR 004) United Kingdom — Phoenix natural gas network — Liverpool Airport — Merseyside Special Investment Fund (MSIF) — C(2001)2059 et C(2003)5386 — Yorkshire and Humber Partnership Investment Fund (Y&H PIF) — C(2003)206 et C(2003)5386 United Kingdom — Frenchgate Interchange, Doncaster — Combined universities in Cornwall (CUC) — Edinburgh Biomedical Research Institute

ANNEX II 2000-2006 MAJOR PROJECTS EVALUATED — DISCOUNT RATE AND TIME HORIZONS Project Sector Financial discount rate Economic discount rate Time horizons Germany Ausbau der Schienenstrecke (ABS) Berlin-Frankfurt/Oder Infrastructure 7,5 3 6 + 30 Phoenix west Infr. 6 et 5 — 15 Otto GmbH 5 5 14 Greece Extension Metro Athens (CF) Infr. 6 6 30 Extension Metro Athens (OP AA) Infr. 6 6 30 Aposelemi dam (CF) Infr. 5 3 45 Bus and trolley Renewal (OP SAAS) Infr. 6 5 12 Extensions Metro Athens (OP OALAA) Infr. Unspecified 6 Unspecified Sections d'Egnatia Odos-Ioannina-Metsovo Infr. 6 6 25 France RCEA Infr. — 8 25 Sevelnord Productif — — — Pilkington Prod. — — — Tunnel de Lioran Infr. — 8 20 Grande Halle d'Auvergne Infr. 4 and 5,2 — 31 Tramway de Clermont-Ferrand Infr. 6 6 35 Electrification lignes vosgiennes Infr. 6 6 31 Déviation Sainte-Marie Infr. — 8 23 Electrification Ligne Tours-Saincaize Infr. 6 8 30 ATMEL II Prod. 5,5 — 5 ATMEL III Prod. 5,5 — 5 Philips France Semi-Conducteurs Pord. 6 6 5 Spain Ampliación del Puerto de Alicante Infr. 6 6 30 Actuaciones de Línea de alta velocidad Madrid-Barcelona-frontera francesa: Tramo Madrid-Lleida Infr. 6 6 20 Arteria aductora del Campo de Pozos de Guadarrama y estación de tratamiento — 2002 Infr.-Env. 5 5 25 Saneamiento y depuración de diversas zonas de Cantabria Infr.-Env. 5 5 25 Ampliación Puerto de Ferrol (puerto exterior) Infr. 6 6 20 Ampliación del Puerto de Sagunto Infr. 6 6 20 Glapilk, AIE Prod. 5 — 25 Tableros Tradema SA Prod. 10 — 10 EADS Petroquimica Española-Andalucia Prod. 5 — 5 EADS Construcciones aeronáuticas — Cádiz Prod. 8 — 10 Dupont Ibérica SL — C(2003) 1342 Prod. 3,5 — Unspecified Fibras del Noroeste SA — C(2003) 180 Prod. 6 — Unspecified Bioetanol Galicia SA — C(2003) 181 Prod. Unspecified — 5 BP Oil Refinería de Castellón — C(2003) 3974 Prod. Unspecified — 10 Biocarburantes de Castilla y León — C(2004) 658 Prod. Unspecified — 5 Intercontinental Química SA — C(2004) 2306 Prod. Unspecified — Unspecified Airbus España SL, Fabricación automatizada Toledo — C(2003) 4736 Prod. Unspecified — Unspecified Airbus España SL, centro excelencia montajes Cádiz — C(2003) 4738 Prod. Unspecified — Unspecified Construcciones Aeronáuticas Sevilla — C(2004) 2441 Prod. Unspecified — Unspecified Ford España — C(2003) 4229 Prod. 4,5 — 11 Ford España — C(2004) 2303 Prod. 4,5 — 10 Renault España — C(2004) 2304 Prod. Unspecified — 7 Renault España — C(2004) 3444 Prod. Unspecified — 10 Renault España — C(2004) 3702 Prod. — — 5 Autovia de la Plata — C(2004) 275 Infr. — 5 30 Autovia de la Plata — C(2004) 0141 Infr. — 5 30 Autovia de la Plata — C(2004) 245 Infr. — 5 30 Autovia de la Plata — C(2004) 2440 Infr. — 5 30 Autovia del Mediterraneo — C(2003) 1336 Infr. — 5 30 Autovia del Mediterraneo — C(2003) 3809 Infr. — 5 30 Autovia del Mediterraneo — C(2003) 209 Infr. — 5 30 Autovia del Cantabrico — C(2003) 211 Infr. — 5 30 Autovia del Cantabrico — C(2003) 2594 Infr. — 5 30 Ireland N11 Rathnew/Ashford By-Pass 5 30 M1 Cloghran — Lissenhall Stage 2 5 30 N22 Ballincollig By-Pass 5 20 Luas Line A 5 30 Italy Produzione di pompe ad altissima pressione Bosch — C(2004) 5697 Prod. 6 5 10 RFI SpA — Ligne Caserta-Foggia — C(2005) 1268 Infr. 6 5 30 Metropolitana di Napoli — Dante/Garibaldi — C(2005) 5235 Infr. 6 6 30 Metropolitana di Napoli — Vanitelli/Dante — C(2005) 5241 Infr. 6 6 30 Autostrada Siracusa-Gela — C(2005) 5233 Infr. 5 5 35 FRIEL — C(2005) 2839 Infr.-Energy 5 5 16 IVECO — C(2005) 1481 Prod. 6 6 4 + 7 Portugal Sistema multimunicipal de saneamento do Tejo-Trancão — C(2003) 2951 Infr.-Env. 6 6 30 Porto do Caniçal — C(2003) 4458 Infr. 6 6 25 Modernização da linha do Algarve II-C(2000) 3486 Infr. 5 5 25 Linha do Algarve V (troço Ermidas-Faro) — C(2001) 3590 Infr. 5 5 25 Linha do Douro (troço Cête-Caíde) — C(2001) 2124 Infr. 5 35 Infineon technologies — C(2004) 3220 Prod. 3 — 10 Mabor Continental — C(2004) 661 Prod. 3 — 10 IC 10 — Ponte sobre o Tejo em Santarém — C(2001) 2727 Infr. — 10 23 Armazenamento subterrâneo do Caniço — C(2001) 2011 Infr.-Energy 8,4 — 30 EPCOS — C(2003) 183 Prod. 10 — 10 CIMPOR — C(2003) 5099 Prod. 8 — 6 MST — Metropolitano do Sul do Tejo — C(2003) 3078 Infr. 7 7 27 Aeroporto Sá Carneiro Infr. 6,62 12 25/27 United Kingdom Merseyside Special Investment Fund (MSIF) Prod. Unspecified Unspecified 9/10 Yorkshire and Humber Partnership Investment (Y&H PIF) Prod. Unspecified 5 10 Frenchgate Interchange, Doncaster 6 6 25 Combined universities in Cornwall (CUC) 5 5 25 Edinburgh Biomedical Research Institute 3,5 3,5 25