COMMON POSITION (EC) No 4/1999 adopted by the Council on 21 December 1998 with a view to adopting Council Regulation (EC) No . . ./1999 of . . . 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 49/02)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular the third paragraph of Article 129d thereof,

Having regard to the proposal from the Commission (1),

Having regard to the opinion of the Economic and Social Committee (2),

Having regard to the opinion of the Committee of the Regions (3),

Acting in accordance with the procedure laid down in Article 189c of the Treaty (4),

(1) Whereas experience with the application of Regulation (EC) No 2236/95 (5) has demonstrated that a number of amendments need to be made thereto;

(2) Whereas it is necessary to facilitate the financing of certain projects by including, among the possible forms of aid, a contribution to the formation of risk capital; whereas it is desirable to use the financial resources provided under Regulation (EC) No 2236/95 in order to maximise the contribution from private finance;

(3) Whereas a layer of risk capital in the financial package of a project may contribute to setting public-private partnerships in trans-European network projects on their way; whereas the supply of risk capital for trans-European networks, particularly during their early stages, is limited;

(4) Whereas it is appropriate to limit risk-capital participation to investment funds with a priority focus on providing risk capital for trans-European network projects to 1 % of the financial reference amount for the period 2000-2006 in order to gain experience with this new form of financing; whereas it is appropriate to examine its possible future extension in the light of the comprehensive report the Commission will present before the end of 2006 on the experience gained with the application of the mechanisms under this Regulation;

(5) Whereas it is desirable, in order to increase transparency and to meet expectations for projects or groups of projects having important financial needs for a long period, that indicative multiannual programmes in specific sectors or fields should be drawn up; whereas those programmes should indicate the total and annual amount of support which could be allocated for a given period to such project or groups of projects, and which should serve as a reference for the annual decisions to grant financial aid within the yearly budgetary appropriations, when they conform to the relevant indicative multiannual programmes; whereas, however, the annual amounts indicated in these programmes do not amount to budgetary commitments;

(6) Whereas projects of groups of projects should be able to benefit from successive financial assistance decisions;

(7) Whereas, in the application for financial support for a project, a detailed breakdown of estimates is needed concerning the sources of contributions from the Community and from national, regional and local government bodies, as well as the extent of financial contributions from the private sector;

(8) Whereas financial aids granted should be cancelled except in duly justified cases if the actions concerned have not been started by a given date;

(9) Whereas it is necessary to include the activities of the European Investment Fund among the Community financial instruments with which action under Regulation (EC) No 2236/95 is required to be coordinated;

(10) Whereas the Commission should be able to require beneficiaries to provide evaluations of projects supported under Regulation (EC) No 2236/95 or the necessary information to allow the Commission to undertake its own evaluation;

(11) Whereas given the importance of the trans-European networks, it is appropriate to include in Regulation (EC) 2236/95 a financial reference amount within the meaning of point 2 of the Declaration by the European Parliament, the Council and the Commission of 6 March 1995, of one euro for its implementation for the period 2000-2006, without thereby affecting the powers of the budgetary authority as they are defined by the Treaty;

(12) Whereas it is appropriate that the Council examines whether to continue or to amend the measures under Regulation (EC) No 2236/95 in the light of the comprehensive report submitted by the Commission before the end of 2006;

(13) Whereas, throughout the transitional period from 1 January 1999 to 31 December 2001, all references to the euro should be read as references to the euro as a monetary unit as referred to in Council Regulation (EC) No 974/98 of 3 May 1998 on the introduction of the euro (6);

(14) Whereas Regulation (EC) No 2236/95 should therefore be amended accordingly,

HAS ADOPTED THIS REGULATION:

Article 1

Regulation (EC) No 2236/95 is hereby amended as follows:

1. Article 3 shall be deleted.

2. Article 4 shall be replaced by the following:

'Article 4

Forms of aid

1. Community aid for projects may take one or several of the following forms:

(a) co-financing of studies related to projects, including preparatory, feasibility and evaluation studies, and other technical support measures for these studies. Community participation may in general not exceed 50 % of the total cost of a study.

In exceptional, duly substantiated cases, at the initiative of the Commission and with the consent of the Member States concerned, Community participation may exceed the limit of 50 %;

(b) subsidies of the interest on loans granted by the European Investment Bank or other public or private financial bodies. As a general rule, the duration of subsidy shall not exceed five years;

(c) contributions towards fees for guarantees for loans from the European Investment Fund or other financial institutions;

(d) direct grants to investments in duly justified cases;

(e) risk-capital participation for investment funds or comparable financial undertakings with a priority focus on providing risk capital for trans-European network projects and involving substantial private-sector investment, such risk-capital participation shall not exceed 1 % of the budgetary resources under Article 18.

Further modalities of implementation of this risk-capital participation are laid down in the Annex hereto.

The participation may be made directly into the fund or comparable financial undertaking or into an appropriate co-investment vehicle managed by the same fund managers;

(f) Community assistance under points (a) to (d) shall be combined where appropriate, in order to maximise the stimulus provided by the budgetary resources deployed, which shall be used in the most economical way.

2. The forms of Community air referred to under points (a) to (e) shall be used selectively to take account of the specific characteristics of the various types of network involved and to ensure that such aid does not cause distortions of competition between undertakings in the sector concerned.`

3. The following Article shall be inserted:

'Article 5a

Community indicative multiannual programme

1. Without prejudice to the application of Article 6 and in order to improve the efficiency of the Community's action, the Commission may, in accordance with the procedure set out in Article 17, elaborate by sector an indicative multiannual programme for granting budgetary resources under Article 18 (hereinafter called "programme") on the basis of the guidelines referred to in Article 129c of the Treaty. The programme shall be based on applications for financial aid under Article 8 and reflect inter alia information provided by the Member States, in particular the information set out in Article 9.

2. A programme shall exclusively be composed of projects of common interest and/or coherent groups of projects of common interest, as previously identified within the framework of the guidelines referred to in Article 129c(1) of the Treaty, in specific fields having substantial financial needs over a long period.

3. For each project or group of projects referred to in paragraph 2 the programme shall establish the indicative global amounts and the financial plans including envisaged annual amounts for the granting of financial aid for the programme's time period. No more than 75 % of the budgetary resources under Article 18 shall be used for the purposes of indicative multiannual programmes.

4. The programme shall serve as a reference for the annual decisions allocating the budgetary resources under Article 18 within the annual budgetary appropriations. The Commission shall regularly inform the Committee referred to in Article 17 of the progress of programmes and any decisions taken by the Commission in allocating the budgetary resources under Article 18.

The programme shall be reviewed, at least at mid-term and in the year 2005 or in the light of the effective progress of the project(s) or group(s) of projects, and if necessary revised, in accordance with the procedure set out in Article 17. In its opinion on a programme, the Committee shall also deliver an opinion on the parameters of any review. The proper functioning of the programme, in particular in relation to the role of the Committee referred to in Article 17, shall be included as part of the mid-term review.

The programme shall also give an indication of other sources of financing for the projects concerned, in particular from other Community instruments and the European Investment Bank.

5. In case substantial changes in the implementation of the project(s) or group(s) of projects take place, the Member State concerned will inform the Commission without delay.

Modifications to the indicative global amounts established by the programme for the project(s) or group(s) of projects, which may be necessary following these changes, shall be decided in accordance with the procedure of Article 17.`

4. Article 9(1)(a), eighth indent, shall be replaced by the following:

'- a financial plan listing, in euro or in national currency, all the components of the financial package, including the financial aid requested from the Community, in its different forms as mentioned in Article 4, and from local, regional or national government bodies, as well as from private sources, and the aid already granted;`

5. Article 9(2) shall be replaced by the following:

'2. Applicants shall supply the Commission with any relevant additional information which it requires, such as the parameters, guidelines and hypotheses on which the cost/benefit analysis is based.`

6. Article 10 shall be replaced by the following:

'Article 10

Grant of financial aid

The Commission shall decide to grant financial aid under this Regulation according to its assessment of the application in accordance with the selection criteria. In the case of projects identified in the relevant indicative multiannual programme established pursuant to Article 5a, the Commission shall take the annual decisions to grant aid within the indicative financial allocations provided for in that programme. In the case of other projects, decisions to grant aid shall be taken in accordance with the procedure specified in Article 17. The Commission shall notify its decision directly to the beneficiaries and to the Member States.`

7. In Article 11, paragraph 7 shall be replaced by the following:

'7. The Commission shall determine, following the procedures set out in Article 17, the procedures, timetable and amounts for payments of interest-rate subsidies, guarantee premium subsidies and support in the form of risk-capital participation, for investment funds or comparable financial undertakings with a priority focus on providing risk capital for trans-European network projects.`

8. The introductory phrase to Article 12(1) shall be replaced by the following:

'1. In order to guarantee successful completion of projects financed by this Regulation, Member States and the Commission, each in its field of competence, shall take the necessary measures to:`

9. In Article 13, the following paragraph shall be inserted:

'2a. Except in cases duly justified by the Commission to the Committee referred to in Article 17, aids granted to projects which have not started within two years following the date of their expected start, as indicated in the decision granting assistance, will be cancelled by the Commission.`

10. Article 14 shall be replaced by the following:

'Article 14

Coordination

The Commission shall be responsible for coordination and coherence between the projects and the programmes referred to in Article 5a(1) undertaken under this Regulation and projects undertaken with the help of contributions from the Community budget, the European Investment Bank, the European Investment Fund and other Community financial instruments.`

11. Article 15 shall be replaced by the following:

'Article 15

Appraisal, monitoring and evaluation

1. The Member States and the Commission shall ensure that the implementation of projects under this Regulation is subject to effective monitoring and evaluation. Projects may be adapted according to monitoring and evaluation results.

2. In order to ensure that Community aid is used efficiently, the Commission and the Member States concerned shall systematically monitor progress with projects, where appropriate with the cooperation of the European Investment Bank or other appropriate bodies.

3. On receipt of an application for aid, and before approving it, the Commission shall carry out an appraisal in order to assess the project's conformity with the conditions and criteria laid down in Articles 5 and 6. Where necessary, the Commission shall invite the European Investment Bank or other appropriate bodies to contribute to this appraisal.

4. The Commission and the Member States shall assess the manner in which the projects and the programmes have been carried out and evaluate the impact of their implementation, in order to assess whether the original objectives can be, or have been, achieved. This evaluation shall, inter alia, cover the impact of projects on the environment, regard being had to the Community laws in force. The Commission may, after consultation of the Member State concerned, also require the beneficiary to provide a specific evaluation on projects or groups of projects supported under this Regulation, or to provide it with the information and the assistance required to evaluate such projects.

5. Monitoring shall be carried out, where appropriate, by reference to physical and financial indicators. The indicators shall relate to the specific character of the projects and its objectives. They shall be arranged in such way as to show:

- the stage of the project reached in relation to the plan and the operational objectives originally laid down,

- the progress achieved on the management side and any related problems.

6. In vetting individual applications for assistance, the Commission shall take into account the findings of appraisals and evaluations made in accordance with this Article.

7. Procedures for evaluation and monitoring, as provided in paragraphs 4 and 5, shall be established in the Decisions approving the projects and/or in the contractual provisions relating to the financial aid.`

12. Article 16(1) shall be replaced by the following:

'1. The Commission shall submit an annual report on the activities carried out under this Regulation to the European Parliament, the Council, the Economic and Social Committee and to the Committee of the Regions for their appraisal. This report shall contain an evaluation of the results achieved with Community aid in different fields of application, in terms of original objectives, as well as a chapter on the substance and implementation of current multiannual programmes, especially an account on the revisions provided in Article 5a.`

13. Article 18 shall be replaced by the following:

'Article 18

Budgetary resources

The financial reference amount for the implementation of this Regulation for the period 2000-2006 shall be one euro.

The annual appropriations shall be authorised by the budgetary authority within the limits of the financial perspective.`

14. Article 19 shall be replaced by the following:

'Article 19

Revision clause

Before the end of 2006 the Commission shall submit to the European Parliament and the Council a comprehensive report on the experience gained with the mechanisms under this Regulation, in particular with the mechanism under Article 4(1)(e), and the Council, acting in accordance with the procedure laid down in the third paragraph of Article 129d of the Treaty, shall examine whether and under which conditions the measures provided for in this Regulation will be continued or amended after the end of the period referred to in Article 18.`

15. Throughout the text, 'ecu` shall be replaced by 'euro`.

16. The text appearing in the Annex to this Regulation shall be added.

Article 2

This Regulation shall enter into force on the 20th day following that of its publication in the Official Journal of the European Communities.

Point 15 of Article 1 shall apply from 1 January 1999.

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

Done at. . .

For the Council

The President

(1) OJ C 175, 9.6.1998, p. 7.

(2) OJ C 407, 28.12.1998, p. 120.

(3) Not yet published in the Official Journal.

(4) Opinion of the European Parliament of 19 November 1998 (OJ C 379, 7.12.1998), Council common position of 21 December 1998 and Decision of the European Parliament of . . . (not yet published in the Official Journal).

(5) OJ L 228, 23.9.1995, p. 1.

(6) OJ L 139, 11.5.1998, p. 1.

ANNEX

'ANNEX

Implementation modalities referred to in Article 4(1)(e)

1. Conditions for a Community contribution to risk capital

Applications for financial assistance under Article 4(1)(e) of the Regulation shall include the following information, satisfactory to the Committee referred to in Article 17 thereof, as a basis for decisions to grant assistance:

- an information memorandum containing the main provisions of the statutory documentation of the fund including its legal and management structure,

- its detailed investment guidelines including information on target projects,

- information on the involvement of private investors,

- information on geographical coverage,

- information on the financial viability of the fund,

- information on the rights of the investors to take remedial action in the event that the undertakings give to them are not honoured by the fund,

- information on the exit policies of the fund and arrangements for the termination of the fund, and

- rights of representation in the Committees of investors.

Before the decision to grant assistance, the intermediary investment fund or other comparable financial institution must undertake to invest not less than a sum equivalent to two and a half times the Community contribution, into projects:

- previously identified as projects of common interest in accordance with Article 129c(1) first subparagraph, first indent of the Treaty,

and

- at least partially financed by the Member States concerned with in the meaning of Article 2(2) of the Regulation.

Community aid for investment funds or comparable financial undertakings, if granted in the form of a risk-capital participation, shall be granted, in principle, only if the Community contribution ranks pari passu with other investors in the fund.

Recipient investment funds or comparable financial undertakings have to follow sound financial principles.

2. Limits for intervention and maximum investment

Contributions under Article 4(1)(e) of the Regulation shall not exceed 1 % of the total budgetary appropriations for trans-European networks until the end of 2006.

Community assistance under the said Article 4(1)(e) shall not exceed 20 % of the total capital of an investment fund or comparable financial undertaking.

3. Management of the Community contribution

The management of the Community contribution will be ensured by the European Investment Fund (EIF). The detailed terms and conditions for implementing Community assistance under Article 4(1)(e) of the Regulation, including its monitoring and control, shall be laid down in an cooperation agreement between the Commission and the EIF, taking into account the provisions laid down in this Annex.

4. Other provisions

The provisions applying to appraisal, monitoring and evaluation as specified in the Regulation shall apply in full to Article 4(1)(e) thereof, including the provisions on conditions for Community aid, on financial control and the reduction, suspension and cancellation of assistance. This shall inter alia be ensured by appropriate provisions in the cooperation agreement between the Commission and the EIF and appropriate agreements with investee funds or comparable financial undertakings stipulating the necessary controls at the level of individual projects of common interest. Appropriate arrangements will be made to allow the Court of Auditors of the European Community to exercise its mission in particular in order to verify the regularity of payments made.

Payments under Article 4(1)(e) shall be governed by Article 11(7) thereof, notwithstanding Article 11(6) thereof. After the end of the investment period or earlier as the case may be, any balances resulting from a return of invested capital or distribution of profits and capital gains and any and all other distributions due to investors shall be returned to the Community budget.

All decisions to provide risk-capital participations under Article 4(1)(e) of the Regulation shall be submitted to the Committee referred to in Article 17 thereof.

The Commission will report regularly to the said Committee on the implementation of risk-capital participations under Article 4(1)(e) of the Regulation.

Before the end of 2006, the Commission shall, in the framework of Article 15 of the Regulation, provide an evaluation of actions carried out under Article 4(1)(e) thereof, in particular on its utilisation, its effects on the implementation of the trans-European network projects supported and the involvement of private investors in the projects financed.`

STATEMENT OF THE COUNCIL'S REASONS

I. INTRODUCTION

1. On 11 May 1998, the Commission submitted to the Council, in the framework of its proposals relating to the Agenda 2000, the above proposal for a Regulation, based on Article 129d of the EC Treaty, in order to amend Council Regulation (EC) No 2236/95. The procedure of Article 189c of the Treaty is applicable for the adoption of this Regulation.

2. The European Parliament delivered, in first reading, an opinion on 19 November 1998.

On 4 December 1998 the Commission presented an modified proposal pursuant to Article 189a(2) of the Treaty. This modified proposal takes account of the amendments contained in the opinion of the European Parliament and of the results achieved by the Council Working Party on the original proposal.

3. On 21 December 1998 the Council adopted its common position pursuant to Article 189c(a) of the Treaty.

II. OBJECTIVE

The above proposal seeks in particular:

- to replace for most projects the existing annual procedure for allocating trans-European networks funding by a procedure based on indicative multiannual programmes,

- to introduce risk-capital participation for the benefit of financial undertakings with a priority focus on providing risk capital for trans-European network projects as a possible form of Community assistance.

The common position adopted by the Council contains these two important innovations. It specifies the concept of indicative multiannual programmes and outlines furthermore the conditions and the implementation modalities of Community risk-capital participation.

Indicative multiannual programmes are to be elaborated by the Commission on a sector by sector basis. Such programmes will be exclusively composed of projects or groups of projects of common interest and will cover specific fields where substantial financial needs over a long period are identified. Up to 75 % of budgetary resources for trans-European networks are to be used for the purposes of these indicative multiannual programmes. The programmes will serve as a reference for the annual decisions allocating the budgetary resources. Possible modifications to the indicative global amounts established by a programme for the projects or groups of projects will require a Commission decision subject to a Committee procedure.

Risk-capital participation in investment funds or comparable financial undertakings is made subject to a number of conditions and limitations. Undertakings that may qualify for community risk-capital participation must have a priority focus on funding of trans-European network projects and they must involve substantial private-sector investment. Up to 1 % of budgetary resources for trans-European networks will be made available for such risk-capital participation. The Council's common position specifies in an Annex to the draft Regulation a number of implementation modalities which the Council considered necessary and which address in particular the requirements on beneficiaries, the management by the European Investment Fund and the evaluation and control modalities of this form of assistance.

Taking into account the new multiannual approach, the Council's common position contains furthermore a number of other proposed adaptations concerning the granting of aid, of evaluation and monitoring.

The Council could, however, not follow the proposal of the Commission to extend certain limits of the Community's financial assistance. That is why the common position does neither include the proposed increase of the limit for Community aid from 10 % to 20 % of total investment cost, nor the proposed extension of the maximum duration of interest rate subsidies.

The Council agreed to include in the final text of the Regulation a provision with a financial reference amount for the 2000-2006 period. However, the absence of an agreed amount for TENs financing in the context of the new financial perspective prevents the Council from introducing in its common position more than a symbolic financial reference amount of EUR 1.

In this context, the Council and the Commission agreed on the following statement for the Council minutes:

'1. The Council has adopted this common position on the basis of the Commission's proposal.

2. The Council states that the final figure for the TENs' financial reference amount for the 2000-2006 period shall be inserted in Article 18 of this common position, and agrees therefore that the Regulation shall not be adopted before a final agreement is reached on the new financial perspectives in the framework of Agenda 2000 while respecting the Treaty procedures.

3. The Commission considers that this figure is included in its proposal.`

III. ANALYSIS OF THE COMMON POSITION IN RELATION TO THE EUROPEAN PARLIAMENT'S AMENDMENTS

A. The common position of the Council takes into account an important part of the amendments contained in the opinion of the European Parliament, most of which were also included in the modified Commission proposal. Therefore:

- Article 4.1(e) of the common position requires in the context of risk-capital participation that eligible financial undertakings have to involve substantial private-sector investment (amendment 10 of the European Parliament's opinion),

- Article 9(1)(a) and Article 9(2) of the common position specify the information requirements in order to assess the applications, in particular in relation to possible financial aid from other sources and cost-benefit analyses (amendments 3, 16 and 17 of the European Parliament's opinion),

- Article 16(1) of the common position specifies that the substance and the implementation of multiannual programmes shall be included as a chapter in the annual report which the Commission shall submit to the European Parliament, the Council, the Economic and Social Committee and the Committee of Regions (amendment 20 of the European Parliament's opinion),

- the common position contains an Article 18 with a financial reference amount for the period 2000-2006 (amendment 22 of the European Parliament's opinion; however, the amounts differ because of the Council's considerations described under II),

- Article 19 of the common position introduces a revision clause with only a slightly different wording (amendment 23 of the European Parliament's opinion),

- the expected contribution of risk capital to the promotion of public-private partnerships in trans-European network projects is underlined in new recital 3 of the common position (part of amendment 6 of the European Parliament's opinion),

- Article 4.1(a), third subparagraph, of the common position does not contain the proposed privileged treatment of studies undertaken at the Commission's initiative (part of amendment 8).

B. However, the Council has not accepted to include in its common position other amendments contained in the European Parliament's opinion, although they had been accepted by the Commission and this for the following reasons:

- this would go beyond the specific purpose and the legal basis of this Regulation (amendment 1 referring to coordination with PHARE and ISPA),

- this would add an additional and cumbersome criterion for the selection of projects (amendment 4 on the effects in terms of regional planning),

- this would introduce publicity obligations which would be out of proportion to the Community funding involved (amendments 7 and 19),

- this would increase out of proportion the interest rate subsidy element (amendment 9 relating to an extension of the maximum duration for interest rate subsidies from five to seven years),

- this would increase the burden of information requirements on applicants for Community aid in a disproportionate manner (amendments 14, 15 and 18).

The Council's common position does not include other amendments contained in the European Parliament's opinion, which had not been accepted by the Commission, because they:

- would restrict the necessary flexibility for the implementation of the multiannual programmes (amendment 11 suggesting an exact breakdown on funding of different transport modes; amendment 13 suggesting that no more than 50 % of Community subsidies should be used for priority projects),

- would complicate the implementation of the Regulation without real value added (amendment 25 suggesting individual examination of financing alternatives and combinations between private and public sectors),

- would go beyond the specific purpose and/or legal basis of this Regulation (amendment 26 calling for strict coordination between explicitly mentioned Community instruments; amendment 21 suggesting a new committee procedure different from the Council Decision of 13 July 1987; amendment 5 calling for further coordination obligations between Member States),

- would shift certain responsibilities from the Member States to the Commission and, therefore, would not be coherent with the principle of subsidiarity (amendment 27 suggesting a systematic evaluation of individual projects by the Commission; amendment 24 suggesting an environmental impact statement by the Commission).

IV. CONCLUSION

The Council considers that its common position:

- in content and timing, fully complies with the mandate given by the European Council in Cardiff,

- takes into account the opinion delivered by the European Parliament and includes a number of important specific amendments contained therein,

- pays tribute to the exceptional situation whereby only a symbolic and not yet a definitive financial reference amount can be included at this stage and whereby this definitive amount is to be inserted after final agreement on the new financial perspective has been reached.