Opinion of the Committee of the Regions on the 'Proposal for a Council Regulation (EC) amending Regulation (EC) No 2236/95 laying down general rules for the granting of Community financial aid in the field of trans-European networks` (1999/C 93/05)

THE COMMITTEE OF THE REGIONS,

having regard to the Proposal for a Council Regulation (EC) amending Regulation (EC) No 2236/95 laying down general rules for the granting of Community financial aid in the field of trans-European networks (COM(1998) 172 final - 98/0101 SYN) ();

having regard to the decision taken by the Council on 19 May 1998 to consult the Committee of the Regions on this matter in accordance with Articles 129d and 198c, first paragraph, of the Treaty establishing the European Community;

having regard to the decision taken by its Bureau on 15 July 1998 to entrust the preparation of the opinion to Commission 3 for Trans-European Networks, Transport and Information Society;

having regard to the draft opinion (CdR 217/98 rev.) adopted by Commission 3 on 27 November 1998 (rapporteurs: Mr Gustâv and Mr Valcárcel Siso),

adopted the following opinion unanimously at its 27th plenary session (meeting of 14 January).

1. Introduction

1.1. The development of the trans-European networks is of high priority for the Union. This was stated in the Maastricht Treaty and in the 1993 Commission white paper, which pinpointed the development of the TENs as one of the key instruments for growth, competitiveness and employment. In Agenda 2000 the importance of the networks is once again stressed.

1.2. The further expansion of the trans-European networks contributes to sustainable development and the creation of stronger links between the different regions. The networks also create links with the candidate countries in central and eastern Europe.

1.3. The trans-European advantages of the project are the reason why the Union should continue to support its realization.

1.4. The programmes chosen should be given increased resources where they contribute in a significant way to growth, employment and the spread of new technology. This applies especially to trans-European networks, research and innovation, education, development of environmentally-friendly technology and support to big and small companies.

1.5. In 1995 the Council adopted Regulation (EC) No 2236/95 laying down general rules for Community financial support in the field of trans-European networks.

With the experience acquired so far, the Regulation could be improved in several ways. The Commission therefore proposes limited revision.

1.6. According to the current regulation, the Council should decide before the end of 1999 whether and under what circumstances measures can continue after 1999. The legal procedure takes a long time and this is one reason why the proposal is presented now.

1.7. It is also considered appropriate that the revision be coordinated and implemented at the same time as the revision of the Structural Funds and the Cohesion Fund. This will enable TENs to benefit from improved coordination between the financial instruments.

1.8. The COR believes that the development of the trans-European networks is one of the most obvious and active ways of tying the regions of the Community closer together. Insofar as it is based on national, regional and local networks, it creates a climate for favourable economic development in all parts of the Union and contributes therefore to a high and evenly distributed prosperity in all Member States.

1.9. The COR also considers that it is important that the current revision of the Regulation will be carried out in coordination with the revision of the Structural Funds and the Cohesion Fund.

2. Experience with the functioning of the Regulation

2.1. Prior to revision, the Commission has prepared a short report on how the Regulation has worked so far. The evaluation is based on the practical experience of the Commission, the Member States and private operators during the last three years.

2.2. The usefulness of the existing financial instruments and the problems that create obstacles for PPP within the transport sector were also discussed thoroughly in 1996 and 1997 by Neil Kinnock's 'high level group`.

2.3. Experiences with the Regulation has been very good. There is still scope for improvement in some aspects. The results of the evaluation can be summarised in five points. The report concludes that facts and figures would seem to:

(1) justify, in the light of expected future investment, a corresponding increase in the future reference amount of the revised Regulation;

(2) point to the need to verify the cost-effectiveness of granting relatively small amounts of financial support to a large number of projects;

(3) bring out the administrative drawbacks of the annual programming approach laid down by the Regulation, and suggest the introduction of multiannual planning;

(4) justify a higher rate of Community aid for projects where broad trans-European interest and network advantage are demonstrably very high;

(5) draw attention to the need to further facilitate and encourage PPPs, in particular by extending the range of aids to cover contributions to risk-capital funds.

2.4. The report goes on to give details of expenditure and activity, the various methods of financial intervention, and criteria for the selection and evaluation of projects in the three areas of transport, energy and telecommunications TENs.

2.5. The COR believes that enlarged budget frames are fully justified by the great importance of the TENs for cohesion within the Union and for increasing competitiveness and creating employment.

2.6. The COR also appreciates the fact that the large number of applications means a heavy workload for the administration of financial support under the Regulation.

2.7. Judging from experience, relatively small projects may also be justified from a socio-economic point of view. When evaluating the cost-efficiency of administering a large number of small projects, the beneficial effects and costs of the projects should be the determining factor.

2.8. Indicative multiannual planning is a tried and tested instrument in many Member States. The COR welcomes the inclusion of a provision on multi-annual planning in the Regulation.

2.9. The COR considers it justified, in certain cases, to increase the level of subsidies for preparing studies and carrying out projects, as provided for in Article 4 of the proposed regulation.

2.10. The COR considers that the PPP-principle has not been developed satisfactorily and that for various reasons it is justified to increase the number of projects co-financed by public and private operators.

3. Suggested revision

3.1. One of the most important purposes of the revision is to take advantage of the experience acquired by the Commission, the Member States and the private operators in order to improve, simplify and adjust the application of the Regulation where justified.

3.2. Indicative multiannual planning

3.2.1. Based on its experience, the Commission thinks that there are reasons to develop a new strategy that stretches over several years. It is suggested that this be achieved by developing indicative multiannual programmes for certain sectors (Article 5a).

3.2.2. The projects being financed within the TENs budget, especially in the transport sector, are in general large-scale and long-term. National authorities responsible for infrastructure planning have regularly expressed the wish to have a medium-term projection of Community financing.

3.2.3. This can be even more important for projects financed by the private sector or through public-private partnerships, since establishing financing packages for such projects requires firm long-term undertakings from all participants.

3.2.4. The proposal implies that it would be possible to manage the Community financial support of a project as a single multiannual allocation, rather than as a series of annual project proposals.

3.2.5. In appropriate cases it would be possible to treat budget commitments for long-term projects in the same way as under the Structural Funds, which means annual tranches of commitments, based on the initial Commission decision to finance the project.

3.2.6. It is the opinion of the COR that implementation of an 'indicative multiannual programme` is the most important revision and will bring big advantages for the applicants and at the same time facilitate administration of the applications.

3.2.7. The COR would also point out that it is important for the Commission to take into consideration how local and regional interests should be consulted during the planning process.

3.3. Forms and amount of Community assistance

3.3.1. Since 1995 the Commission, the Member States and private-sector promoters have been involved with 1 145 applications for support totalling ECU 3 232 million. The Commission and the TEN Committee have approved 448 grants for a total of ECU 983 million. The support to the energy and telecom sectors has so far been limited to studies.

3.3.2. Against the background of these activities, the Commission proposes: that the Community financial participation provided for under the Regulation may exceed the limit of 50 % for studies undertaken on the initiative of the Commission (Article 4.1a);

3.3.3. that the five-year limitation with regard to interest rate subsidies be removed;

3.3.4. that support can be given in the form of grants or risk-capital participation in investment funds or financial undertakings with a priority focus on providing risk capital for TEN projects (Article 4.1 e);

3.3.5. that the Commission seek to maximize the multiplier effect of the financial resources provided for by the Regulation by promoting recourse to private sources of financing [Article 4 (3)];

3.3.6. that the ceiling on investment support be raised from 10 to 20 % of the total investment cost for projects involving more than one Member State or which contribute strongly to the broader trans-European interest, including projects which have an important environmental dimension [addition to Article 5(3)].

3.3.7. The COR also wants to stress that different parts of the network have different characteristics and are therefore of varying relevance for the Union, for the Member States and especially for local and regional interests. It seems fully justified, in certain cases where the interests of the Union are particularly strong, to increase the level of subsidy up to 20 % of the total investment cost. One example of this is the 'missing links`, often cross-border projects.

3.3.8. Other weak links in the TENs are the 'overheated links` in congested regions, where trans-European traffic is stuck in queues, caused by regional traffic. In these regions measures have to be taken to separate the through-traffic from the local traffic. This can be done with new by-passes or regulatory measures. New links in densely exploited areas where the competition for land is keen tend to become more and more expensive. These exclusive links are often difficult to finance with ordinary means available at national and local level. Extra incentives in the form of increased subsidies from the Union would make it easier to find regional co-financing solutions for such projects. The COR assumes that this type of project could be covered by the expression: of significant trans-European interest.

3.3.9. TENs infrastructure must complement the development of regional and local infrastructure and transport systems which connect with it; this will promote intermodality and public transport systems which are sustainable, efficient and environmentally friendly.

3.3.10. It should be stressed that the Commission is justifiably concerned to establish the best possible conditions for attracting private capital to finance TENs.

3.3.11. The economic and financial situation of the Member States has meant that the rate of public investment has fallen, with transport infrastructure being one of the worst affected sectors. At the same time as this fall in public investment, traffic and vehicle numbers have continued to rocket.

3.3.12. This imbalance between supply and demand has highlighted and intensified the externalities in the transport sector, especially the social cost of congestion, the environmental impact and accidents.

3.3.13. The parameters of the current debate are therefore: (i) European competitiveness and cohesion require more interlinked and better transport networks to absorb the growth in traffic and facilitate mobility; (ii) environmental protection imposes limits on this and makes investment more expensive.

3.3.14. In view of these circumstances and the need to tap new financial resources to make good the infrastructure deficit, we must seek new and more flexible financing formulas and schemes, creating conditions which will attract the participation of the private sector and mobilize capital.

3.3.15. The COR would also like to point out that the explanatory memorandum to Regulation 2236/95 repeatedly refers to the objectives listed in Article 129b and to the guidelines mentioned in Article 129c for achieving the objectives set out in Articles 7a and 130a. Some of these references are removed in the draft Regulation; the regions - especially remote, rural and less developed regions - would not want to see these guidelines overlooked as they are a means of gauging whether the proposed revision of the Regulation is consistent with the targets established in the Treaty.

3.3.16. The Committee considers that TENs can make a vital contribution to cohesion and harmonious and balanced development in the regions. Hence the aim of the proposed Regulation should remain to promote not only interconnection and interoperability between national networks, but also access to these networks and links between island, land-bound, remote and less developed regions in general.

4. Other changes

4.1. The rest of the changes proposed by the Commission are of a complementary and technical nature and basically introduce specific provisions concerning finance, procedure, evaluation, monitoring, information and publicity, including the approval by the Member States of private sector applications for financial aid.

4.2. Thus Article 8 of the proposed Regulation makes it possible for public or private undertakings directly concerned to ask the Commission for financial aid with the agreement of the Member State(s).

4.3. The Committee thinks that a second paragraph should be added to this article enabling local and regional bodies to apply directly to the Commission for financial aid for studies without requiring the prior agreement of the Member State. This would establish separate treatment for applications for studies and for projects. While the agreement of the Member State to the local or regional authority's application is thought necessary in the case of projects, the Committee thinks that such authorities should have greater autonomy in encouraging studies. Since (i) much infrastructure planning is the responsibility of local and regional authorities, and (ii) a boost needs to be given to the role and initiative of the regions in encouraging studies which can affect TENs, it is logical that these authorities should be able to address their requests for studies aid directly to the Commission.

4.4. At all events the Member States will know about the applications submitted by local and regional authorities through their representatives on the committee set up under Article 17 of the present Regulation and can express their views on these applications by means of the opinion provided for in Article 17(3).

5. Enlargement of the Union

5.1. Enlargement of the Union will require a further revision of the Regulation. According to the Commission, however, this cannot be anticipated at this stage.

5.2. The current Regulation already permits the financing of links with third countries.

Brussels, 14 January 1999.

The President of the Committee of the Regions

Manfred DAMMEYER

() OJ C 175, 8.6.1998, p. 7.