Proposal for a COUNCIL REGULATION (EC) establishing a Cohesion Fund
Date: 1993-12-21
Institutions: European Commission
Subjects: EU financial instrument, European Investment Bank, Single European Act, coordination of aid, environmental protection, transport infrastructure

COMMISSION OF THE EUROPEAN  COMMUNITIES 

COM(93) 699 final 
Brussels,  21 December  1993 

... £-. 

Proposal  for  a 
COUNCIL  REGULATION  (EC) 

establishing  a Cohesion  Fund 

Proposal  for  a 
COUNCIL  REGULATION  (EC) 

laying down  detailed  rules for  implementing  Regulation  (EC) No 

establishing  a Cohesion  Fund 

EXPLANATORY  MEMORANDUM 

1. 

2. 

3. 

4. 

5. 

6. 

7. 

Article  130d of  the Treaty  provides for  the establishment  of  a Cohesion  Fund to provide a 
financial  contribution  to  projects  in  the  fields  of  the  environment  and  trans-European 
transport infrastructure networks. 

The European Council  at Edinburgh specified the scope of this instrument and the conditions 
under which  it is to  operate.  The purpose  of  this  proposal  for  a Council  Regulation  is to 
establish the Cohesion Fund. 

On  December  1992  the  Commission  presented  the  draft  proposal  for  a  Regulation 
establishing the Cohesion Fund, based on Article  130d as amended by the Maastricht Treaty, 
which takes account of the conclusions  of  the European Council. 

This proposal  replaces that text and includes certain amendments intended to take account, 
in  particular,  of  Parliament's  wishes,  certain  appropriate  provisions  of  Regulation  (EEC) 
No 792/93  establishing  the  cohesion  financial  instrument  and  certain  adjustments  which 
appear necessary  in the light  of experience  gained in  1993. 

The Commission will  seek to ensure that the Cohesion Fund can take over from the cohesion 
financial  instrument  as  soon  as  possible  to  provide  funding  for  projects  without  any 
interruptions in the implementation  of the investments  or the flow  of  Community  financial 
assistance. 

The  basic  principles  of  the  proposal  have  already  been  described  in  the  Commission's 
communication COM(92) 339 final  of 31 July  1992. 

At the same time, the Commission  is submitting a proposal  for a Council  Regulation laying 
down detailed rules for implementing the Regulation  establishing the Cohesion Fund. 

Proposal  for a 
COUNCIL REGULATION  (EO 

establishing  a Cohesion Fund 

THE COUNCIL OF THE EUROPEAN UNION, 

Having  regard to  the Treaty  establishing  the  European  Community,  and  in particular the  second 
paragraph of Article  130d thereof, 

Having regard to the proposal  from the Commission, 

Having regard to the assent of the European Parliament, 

Having regard to the opinion of the Economic  and Social  Committee, 

Having regard to the opinion of the Committee of the Regions, 

Whereas Article 2 of the Treaty  includes the task of promoting economic  and social  cohesion and 
solidarity  between  Member  States  as  objectives  essential  to  the  Community's  development  and 
success; whereas  the strengthening  of  economic  and social  cohesion  is  referred  to  at point (j)  of 
Article 3 as one of the activities of the Community  for the purposes set out in Article 2; 

Whereas Article  130a of the Treaty provides for the Community to develop and pursue its actions 
leading to the strengthening of its economic  and social cohesion, and provides in particular that it 
shall  aim at reducing disparities between the levels of  development of the various regions and the 
backwardness  of  the  least-favoured  regions,  including  rural  areas;  whereas  Community  action 
through the Cohesion Fund should support the achievement of the objectives set out in Article  130a; 

Whereas the conclusions of aie European Councils held in Lisbon on 26  and 27 June 1992 and in 
Edinburgh on 11 and 12 December 1992 concerning the establishment of the Cohesion Fund set out 
the principles governing it; 

Whereas the promotion of economic and social  cohesion requires the Community to take action in 
addition to that taken through  the structural  Funds, the European  Investment  Bank  and the other 
financial  instruments  in  the  fields  of  the  environment  and  transport  infrastructure  of  common 
interest; 

Whereas the Protocol  on economic  and social  cohesion  annexed to the Treaty on European Union 
reaffirms the Community's task of promoting economic and social cohesion and solidarity between 
Member States and specifies  that a Cohesion Fund will provide a financial  contribution to projects 
in the fields of the environment and trans-European networks in the Member States with a per capita 
gross national product (GNP) of less than 90% of the Community average which have a programme 
leading to the fulfilment  of  the conditions of  economic convergence  as set out in Article  104c of 
the Treaty; whereas the relative prosperity  of Member  States is  best assessed  on the basis of per 
capita GNP, measured in purchasing power parities; 

Whereas the  special  situation  of  the Member  States concerned  calls for  a determined  effort  if they 
are  to  meet  the  convergence  criteria  which  are  a  precondition  for  moving  to  the  third  stage  of 
economic  and monetary  union;  whereas, in this context, all  of the beneficiary  Member  States have 
submitted  to the  Council  a convergence  programme  designed  to  avoid  excessive  public  deficits; 

Whereas the  second  paragraph  of  Article  130d  of  the Treaty  also  states  that  the  Council  must  set 
up a Cohesion  Fund to provide  a financial  contribution  to projects  in the fields  of the  environment 
and trans-European  transport  infrastructure  networks; 

Whereas  Article  129c(l)  of  the  Treaty  provides  that  the  Community  may  contribute  through  the 
Cohesion  Fund  to  the  financing  of  specific  projects  in  the Member  States  in  the  area of  transport 
infrastructure,  whilst  taking into  account  the  potential  economic  viability  of  the projects;  whereas 
the projects financed  by the Fund should form part of trans-European network guidelines which have 
been  adopted by  the Council  including those approved on the basis of  Article  75 of the Treaty, or 
proposed  by  the  Commission;  whereas,  if  this  condition  cannot  yet  be  fulfilled,  other  transport 
infrastructure  projects contributing to the attainment of the objectives of Article  129b of the Treaty 
may  be  financed; 

Whereas  Article  130r of the Treaty  defines  the  objectives  and principles of  the Community  in the 
field  of the environment;  whereas the  Community  may  contribute, through  the  Cohesion  Fund, to 
actions  designed  to  achieve  those  objectives;  whereas,  in  accordance  with  Article  130s(5)  of  the 
Treaty, the Cohesion Fund is to contribute, without prejudice to the principle that the polluter should 
pay, to the  financing  of  measures  if  the  Council  decides that  such  measures involve  costs  deemed 
disproportionate  for  the public  authorities of  a Member  State; 

Whereas the principles and objectives of sustainable development are established in the Community's 
programme of policy  and action  in relation to the environment  and sustainable  development  as set 
out  in the  Council  resolution  of  1 February  1993(1); 

Whereas  a suitable  balance  must  be  struck  between  financing  for  transport  infrastructure  projects 
and financing  for  environmental  projects; 

Whereas the Commission's Green Paper on the Impact of Transport on the Environment^ reiterates 
the need  to  develop  a more  environmentally  friendly  transport  system; 

Whereas,  in  the  light  of  the  undertaking  by  the  Member  States  concerned  not  to  decrease  their 
investment efforts  in the fields of environmental  protection and transport infrastructure,  the principle 
of  additionality  within  the  meaning  of  Article  9  of  Council  Regulation  (EEC)  No  4253/88  of 
19 December  1988  laying  down  provisions  for  implementing  Regulation  (EEC)  No  2052/88  as 
regards coordination  of the activities of the different  Structural  Funds between  themselves and with 
the operations  of  the European  Investment  Bank  and the  other  existing  financial  instruments(3), as 
amended  by  Regulation  (EEC)  No 2082/93(4),  will  not  apply  to  the Cohesion  Fund; 

(i) 

(2) 

(3) 

(4) 

OJ  NoC  138,  17.5.1993, p.  1. 
COM(92) 46. 
OJ  No L 374, 31.12.1988, p.  1. 
OJNo  L  193, 31.7.1993, p. 20. 

Whereas, in accordance with  Article  I98e of the Treaty, the European Investment Bank  (EIB) is to 
facilitate  the  financing  of  investments  in  conjunction  with  assistance  from  the  other  Community 
financial  instruments; 

Whereas  it  is  necessary  to  coordinate  action  taken  in  the  fields  of  the  environment  and  of  trans-
European transport infrastructure  networks through the Cohesion Fund, the structural Funds, the EIE 
and the other financial  instruments  in order to enhance the effectiveness  of Community  assistance; 

Whereas,  with  a  view,  in  particular,  to  helping  Member  States  in  the  preparation  of  projects,  the 
Commission  should  be  in  a position  to  ensure  that  the  necessary  technical  support  is available  to 
them,  particularly  in  order  to  contribute  to  the  preparation,  implementation,  monitoring  and 
evaluation  of  projects; 

Whereas, particularly  in order to ensure value for  money, a thorough  appraisal  should  precede the 
commitment of Community resources in order to ensure that they yield economic benefits in keeping 
with  the resources  deployed; 

Whereas  assistance  from  the  Cohesion  Fund  must  be  consistent  with  Community  policies, 
particularly with regard to environmental protection, transport, competition and the award of public 
contracts; whereas environmental  protection  includes the assessment  of  environmental  impact; 

Whereas  there  should  be  provision  for  an  indicative  allocation  of  commitment  appropriations 
between  the Member  States in  order to facilitate  the preparation  of  projects; 

Whereas it is necessary, given the requirements of economic and social cohesion, to provide a high 
rate of  assistance; 

Whereas, in the interests of the proper management of the Cohesion Fund, provision should be made 
for  effective  methods of  evaluating, monitoring  and  checking  Community  operations; 

Whereas  adequate information  should be provided  in the form  of  an annual  report; 

Whereas provision  should  be made to give  adequate publicity  to  Community  assistance  from  the 
Cohesion Fund; 

Whereas the present Regulation should replace Council Regulation (EEC) No 792/93 of 30 March 
1993 establishing a cohesion financial  instrument^, 

HAS ADOPTED THIS REGULATION 

Article 1 

Definition  and objective 

1. 

A Cohesion Fund, hereinafter  referred to as "the Fund", is hereby established. 

(5) 

OJNoL79,  1.4.1993, p. 74. 

2. 

3. 

1. 

2. 

The  Fund shall  contribute  to the  strengthening  of  the economic  and social  cohesion  of the 
Community  and shall  operate according to the provisions  set out  in this Regulation. 

For the purposes of this Regulation, the word "project" shall  include the stages of  a project 
which  are technically  and financially  independent, or groups of  projects linked to  a visible 
strategy  which form  a coherent whole. 

Article 2 

Scope 

The Fund shall provide financial  contributions to projects in the fields of the environment and 
trans-European  transport  infrastructure  networks  in Member  States with  a per capita GNP, 
measured in purchasing  power parities, of  less than 90% of  the Community  average which 
have  a  programme  leading  to  the  fulfilment  of  the  conditions  of  economic  convergence 
referred to  in  Article  104c of the Treaty. 

Until  the  end  of  1999,  only  the  four  Member  States  which  currently  meet  the  criterion 
regarding  per  capita  GNP  in  paragraph  1 shall  be  eligible  for  assistance  from  the Fund. 
Those four Member States are Greece, Spain, Ireland and Portugal. 

3.  With  regard to the GNP  criterion  referred  to  in  paragraph  1, the  abovementioned Member 
States shall  continue to be eligible  for  assistance from  the  Fund provided that, after a mid 
term review in 1996, their GNP remains below 90% of the Community average.  Any eligible 
Member State whose GNP exceeds the 90% threshold at that time  shall  lose  its entitlement 
to assistance from the Fund for new projects or, in the case of  important projects split into 
several  technically  and financially  separate stages, for new stages of a project. 

Article 3 

Eligible  measures 

The Fund may provide  assistance  for the  following: 

environmental projects contributing to the achievement of the objectives of Article 13Or 
of  the  Treaty,  including  projects  resulting  from  measures  adopted  pursuant  tc 
Article  130s of  the Treaty; 

transport infrastructure projects of common  interest, financed  by Member States which 
are identified  within the framework  of the guidelines  referred to in  Article  129c of the 
Treaty; where the appropriate guidelines as referred to in Article  129c have not yet been 
adopted by  the Council  or proposed by the Commission, other transport  infrastructure 
projects contributing to the achievement of the objectives of Article  129b of the Treaty 
may be financed. 

Assistance  may  also be granted for: 

preliminary  studies  related  to  eligible  projects,  including  those  necessary  for  their 
implementation; 

technical  support measures, particularly: 

(a)  horizontal measures such as comparative studies to assess the impact of Community 

assistance; 

(b)  measures and studies which contribute to the ex-ante appraisal or ex-post evaluation 
or monitoring of projects  and to strengthening  and ensuring the coordination and 
consistency  of  projects,  particularly  their  compatibility  with  other  Community 
policies. 

(c)  measures  and  studies  helping  to  make  the  necessary  adjustments  to  the 

implementation  of projects; 

Article 4 

Financial  resources 

For the period 1993-99, the total commitment appropriations available for the Fund under this 
Regulation  and Regulation  (EEC) No  792/93  shall be ECU  15.15 billion  at  1992 prices. 

In accordance  with paragraph  1, the  commitment  appropriations  available for  each year of 
the period under the abovementioned Regulations  are as follows: 

1993: ECU  1.5  billion 
1994: ECU  1.75  billion 
1995: ECU 2  billion 
1996: ECU 2.25  billion 
1997: ECU 2.5  billion 
1998: ECU 2.55  billion 
1999: ECU 2.6  billion. 

Article 5 

Indicative  allocation of  funds 

An indicative  allocation  of  the total  resources of  the Fund shall  be made based principally 
on  population, per  capita  GNP  and surface  area; it shall  also take  account  of  other  socio 
economic  factors  such as deficiencies  in transport infrastructure. 

The  indicative  allocation  resulting  from  the  application  of  those  criteria  is  set  out  in  the 
Annex hereto. 

1. 

2. 

1. 

2. 

Articje_6 

Conditional  assistance 

1.  Where the Council decides, or has decided, in accordance with Article  104c(6) of the Treaty, 
that a Member State has an excessive  government  deficit,  and if its decision  is not repealed 
in  accordance  with  Article  104c(12)  within  one  year  or  any  other  period  specified  for 
correcting the deficit  in a recommendation  under Article  I04c(7), no new projects or, in the 
case of large multi-stage projects, no new stages of a project shall be financed from the Fund 
for that Member State. 

2. 

3. 

4. 

Exceptionally,  in  the  case  of  projects  directly  affecting  more  than  one  Member  State, the 
Council,  acting  by  qualified  majority  on  a proposal  from  the  Commission,  may  decide  to 
defer suspension. 

Suspension of financing  shall not take effect  less than two years after the entry into force of 
the Treaty on European Union. 

The suspension  shall  cease when the Council,  in accordance  with  Article  104c(12),  repeals 
its decision  adopted in accordance with  Article  104c(6). 

Article 7 

Rate of  assistance 

1. 

The  rate  of  assistance  granted  by  the  Fund  shall  be  80% to  85% of  public  or  equivalent 
(national,  regional  or  local)  expenditure.  This  shall  include  expenditure  by  bodies  whose 
activities are undertaken within an administrative or legal framework by virtue of which they 
may be deemed to be equivalent  to public bodies. 

The  actual  rate  of  assistance  shall  be  fixed  according  to  the  type  of  operation  to  be 
carried out. 

2.  Where  assistance  is  granted  for  a  project  which  generates  revenue,  the  amount  of  the 
expenditure  on  which  the  calculation  of  the  assistance  from  the  Fund  is  based  shall  be 
established by the Commission, taking account of revenue where it constitutes substantial net 
revenue for the promoters and in close  consultation  with the beneficiary  Member State. 

'Project which generates revenue' means: 

infrastructures  the use of  which  involves  fees  borne by  users direct; 

productive  investments  in the environment sector. 

3. 

Preliminary  studies  and technical  support  measures  may  be  financed  at  100% of  the total 
cost, particularly  when they  are undertaken  at the Commission's  initiative. 

Total  expenditure  carried out  pursuant to this paragraph  may  not  exceed  0.5% of the total 
allocation  to the Fund. 

1. 

2. 

1. 

2. 

1. 

2. 

3. 

4. 

Article 8 

Coordination  and  compatibility  with  Community  policies 

Projects  financed  by the Fund  shall  be  in  keeping  with  the provisions  of the Treaties,  with 
the  instruments  adopted  pursuant  thereto  and  with  Community  policies,  including  those 
concerning environmental protection, transport, competition and the award of public contracts. 

The  Commission  shall  ensure  coordination  and  consistency  between  projects  undertaken 
pursuant to this Regulation and measures undertaken with contributions from the Community 
budget, the European Investment Bank and the other financial  instruments of the Community. 

Article 9 

Combination  and  overlapping 

No item of expenditure may benefit  both from  the Fund and from  the European  Agricultural 
Guidance  and  Guarantee  Fund,  the  European  Social  Fund,  the  European  Regional 
Development  Fund  or the Financial  Instrument  for  Fisheries  Guidance. 

The combined assistance of the Cohesion Fund and other Community  aid for  a project  shall 
not exceed  90% of the total  expenditure  relating to that  project. 

Article  10 

Approval  of  projects 

The projects to be financed  by the Fund  shall be  selected by  the Commission  in  agreement 
with  the beneficiary  Member  State. 

A  suitable  balance  shall  be  struck  between  projects  in  the  field  of  the  environment  and 
projects relating to transport infrastructure.  This balance shall take account of Article  130s(5) 
of the  Treaty. 

Applications for assistance for  projects under Article  3 shall be submitted by the  beneficiary 
Member  State.  Projects,  including groups of related  projects,  shall  be  of a  sufficient  scale 
to have a  significant  impact in  the field  of environmental  protection  or in the  improvement 
of trans-European  transport  infrastructure  networks.  The total  cost of projects  or  groups of 
projects  may  in principle  not be less than  ECU  10 million. 

information: 

the  following 

Applications  shall  contain 
for 
implementation, the nature of the investment and a description thereof, its costs and location, 
including, where applicable, the link-up between projects of common interest situated on the 
same transport  axis,  the  timetable  for  implementation  of  the  work,  a cost-benefit  analysis, 
including  the  direct  and  indirect  effects  on  employment  and  an  indication  of  options  not 
selected, information  concerning the procedures for environmental-impact assessment where 
applicable,  information  on  public  contracts,  the  financing  plan  and  the  total  financing  the 

responsible 

the  body 

Member  State is  seeking  from the Fund and any  other Community  source.  They  shall  also 
contain any  information  necessary  to show that the projects comply  with this Regulation. 

5. 

The following  criteria shall  be applied to ensure the quality  of projects: 

the medium-term  economic  and social  benefits,  which  shall  be commensurate with the 
resources deployed; an assessment shall be made in the light of a cost-benefit  analysis; 

the priorities established by the beneficiary  Member States; 

the contribution which projects can make to the implementation of Community policies 
on the environment  and trans-European networks; 

the compatibility  of projects with Community  policies and their consistency  with other 
Community  structural measures; 

the establishment of  an appropriate balance between the fields of the environment and 
transport infrastructure. 

6. 

Subject to Article 6 and to the availability  of commitment  appropriations, the Commission 
shall decide on the grant of assistance from the Fund generally within three months of receipt 
of the full application.  Commission decisions approving projects, stages of projects or groups 
of related projects shall determine the amount of financial support and lay down a financing 
plan  together  with  all  the  provisions  and  conditions  necessary  for  the  realization  of  the 
projects. 

7. 

The key  details of the Commission's decisions shall  be published  in the Official  Journal  of 
the European Communities. 

Article 11 

Financial  provisions 

1. 

2. 

3. 

4. 

5. 

Budgetary  commitments  shall  be  established  on  the  basis  of  the  Commission  decisions 
approving the measures concerned. 

Assistance  relating to the measures referred  to in  Article 3(1)  may be committed  either by 
annual  instalments or by granting the total  amount of the aid when the Commission  adopts 
the decision  approving the assistance. 

Expenditure  within  the  meaning  of  Article  7(1),  incurred  before  the  date  on  which  the 
Commission  receives  the  relevant  application,  shall  not  be  deemed  eligible  for  assistance 
from the Fund. 

Payments made after an initial  advance must be closely  and transparently linked to progress 
made in the implementation  of the projects. 

Payments shall be made in ecus and shall be subject to the specific  arrangements laid down 
in the implementing  provisions referred to in Article  15. 

10 

Article 12 

Checks 

1. 

In  order  to  guarantee  successful  completion  of  me projects  financed  by  the  Fund, Member 
States shall  take the necessary  measures: 

to  verify  on  a  regular  basis  that  operations  financed  by  the  Community  have  been 
properly  carried out; 

to prevent  and take  action  against  irregularities; 

to recover  any  amounts lost as a result of  irregularity  or negligence.  Except  where the 
Member  State  and/or  the  implementing  authority  provide  proof  that  they  were  not 
responsible  for  the irregularity  or  negligence,  the  Member  State  shall  be liable  in  the 
alternative for  reimbursement  of  any  sums unduly  paid. 

2.  Member  States shall  inform  the Commission  of the  measures  taken  for  those purposes  and, 
in particular,  shall  notify  the Commission  of the description  of the  management  and  control 
systems established to ensure the efficient  implementation of operations. They shall regularly 
inform  the  Commission  of  the  progress  of  administrative  and judicial  proceedings.  In  that 
context the Member States and the Commission  shall take the necessary  steps to ensure that 
the information  exchanged  remains  confidential. 

3.  When  submitting  requests  for  payment,  Member  States  shall  make  available  to  the 

Commission  any  appropriate  national  control  reports on  the projects  concerned. 

4.  Without prejudice to checks carried out by Member States in accordance with national laws, 
regulations and administrative provisions and without prejudice to Article  188a of the Treaty 
or  to  any  inspection  arranged  on  the  basis  of  Article  209(c)  of  the  Treaty,  Commission 
officials  may  carry  out  on-the-spot  checks,  including  sample  checks,  in  respect of  projects 
financed by the Fund, and may examine the control  arrangements established by the national 
authorities, who  shall  inform  the Commission  of  measures taken  to that  end. 

5. 

As soon  as this Regulation  enters  into  force,  the Commission  shall  adopt  detailed  rules  for 
the application  of  this  Article  and  shall  inform  the European  Parliament  thereof. 

Article  13 

Evaluation  and  monitoring 

The  Member  States  and  the  Commission  shall  ensure  that  the  implementation  of  projects 
under  this Regulation  is effectively  monitored  and  evaluated.  Projects  must be  adjusted  on 
the basis of  the results of  monitoring  and  evaluation. 

In  order  to  ensure  the  effectiveness  of  Community  assistance,  the  Commission  and  the 
beneficiary  Member  States  shall,  in  cooperation  with  the  European  Investment  Bank  (EIB) 
where  appropriate,  carry  out  a systematic  evaluation  of  projects. 

II 

3. 

4. 

On receipt of  a request for assistance  and before  approving  a project, the Commission  shall 
carry out a thorough appraisal in order to assess the project's consistency with the criteria laid 
down in Article  10(5). The Commission  shall  invite the EIB to contribute to the apppraisal 
of projects as necessary. 

During the implementation  of  projects and after  their completion, the Commission  and the 
beneficiary  Member States shall  assess the manner in which  they have been carried out and 
the potential and actual impact of their implementation in order to judge whether the original 
objectives  can be or have been achieved. 

5. 

The  detailed  rules  for  monitoring  and  evaluation  shall  be  laid  down  in  the  decisions 
approving projects. 

Article  14 

Information  and publicity 

1. 

The Commission  shall present an annual report on the activities of the Fund for examination 
by  the  European  Parliament,  the  Council,  the  Economic  and  Social  Committee  and  the 
Committee of the Regions. 

The  European  Parliament  shall  deliver  an  opinion  on  the  report  as  soon  as possible.  The 
Commission  shall  report on how  it has applied the observations  contained in the European 
Parliament's opinion. 

2. 

The  Member  States  responsible  for  implementing  an  operation  receiving  a  financial 
contribution from the Fund shall ensure that adequate publicity is given to the measure with 
a view to: 

making the general public aware of the role played by the Community in relation to the 
operation; 

making potential  beneficiaries  and professional  organizations aware of the possibilities 
afforded  by the operation. 

Member  States  shall  ensure,  in  particular,  that  directly  visible  display  panels  are  erected 
showing  the  percentage  of  the  cost  of  a  given  project  which  is  being  financed  by  the 
Community,  together with the Community  logo. 

They  shall  inform  the Commission  of the initiatives  taken  under this paragraph. 

3. 

As  soon  as this Regulation  enters into force,  the Commission  shall  adopt detailed  rules on 
information  and publicity,  shall  inform  the  European  Parliament  thereof  and shall  publish 
them  in the Official  Journal  of the European Communities. 

12 

Article  15 

Implementation 

The  Council,  acting  by  qualified  majority  on  a proposal  from  the  Commission,  shall  adopt the 
operational  provisions necessary  for the implementation of this Regulation. 

Article  16 

Final  and transitional  provisions 

1. 

2. 

3. 

4. 

The Council,  acting on a proposal  from  the Commission  in accordance with the procedure 
laid down in Article  130d of the Treaty,  shall re-examine this Regulation before the end of 
1999. 

This Regulation  shall  replace Regulation  (EEC)  No 792/93, on  I  April  1994. 

This Regulation  shall  not affect  the continuation of measures approved by the Commission 
on the basis of the provisions of Regulation (EEC) No  792/93 applicable before the entry into 
force of this Regulation, which  shall  consequently  apply thereafter to those measures. 

Applications  presented  before  the  entry  into  force  of  this  Regulation  shall  remain  valid 
provided they are supplemented, where necessary,  so as to comply with the requirements of 
this Regulation within not more than two months from the entry into force of this Regulation. 

Article  17 

Entry  into force 

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

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

Done at Brussels, 

For the Council 
The President 

13 

ANNEX 

Indicative  allocation of  the total  resources of  the Cohesion Fund 
among the beneficiary  Member States 

Greece. 

16% to 20% of the total 

Spain: 

52% to 58% of the total 

Ireland: 

7% to  10% of the total 

Portugal: 

16% to 20% of the total 

14 

Proposal  for  a 
COUNCIL  REGULATION  (EC) 

laying  down  detailed  rules for  implementing  Regulation  (EC) No 
establishing  a Cohesion  Fund 

THE COUNCIL  OF  THE EUROPEAN  UNION, 

Having regard  to the Treaty  establishing  the European  Community, 

Having regard to Council Regulation (EC) No 
Article  15 thereof; 

establishing a Cohesion Fund(1), and in particular 

Having regard  to the proposal  from  the Commission(2); 

Whereas Regulation  (EC) No  .../...  instituting the  Cohesion  Fund,  henceforward  referred  to as the 
"Fund",  provides  that  the  Council,  acting  by  a  qualified  majority  on  a  proposal  from  the 
Commission,  is to establish  detailed  rules for  the implementation  of that  Regulation; 

Whereas,  in  order  to  facilitate  the  management  of  assistance  from  the  Fund,  there  should  be 
provision  for  the  identification  of  the  stages of  projects  which  may  be  considered  technically  and 
financially separate; 

Whereas  the  rules  for  assessing  projects  in  respect  of  which  application  for  assistance  is  made 
should be laid  down; 

Whereas it  should  be possible  to  opt  for  assistance  from  the  Fund  either by  annual  instalments  or 
for  the whole of  the  project; 

Whereas, in accordance with the principle laid down by the European Council meeting at Edinburgh 
on  11 and  12 December  1992, payment  instalments following  an initial  advance  should be closely 
and transparently  linked  with  progress towards the completion  of  projects; 

Whereas, in the context of the wider use of the ecu in financial  transactions in the Community, and 
in particular in the implementation  of the Community  budget,  it is important that the Community's 
financial  entitlements  and  obligations  in  respect  of the  Fund  should  be expressed  in ecus; 

Whereas arrangements for monitoring the projects should be laid down as to both form  and details; 

Whereas  the  respective  powers  and  responsibilities  of  the  Member  States  and  the  Commission 
concerning financial  control  over the Fund's operations  should  be  specified; 

Whereas  the  action  to  be  taken  in  response  to  irregularities  or  failure  to  comply  with  one  of  the 
conditions  laid  down  when  assistance  from  the  Fund  was approved  should  be laid  down; 

(1) 
(2) 

O J N oL 
OJ No 

, 

1994, p. 

15 

Whereas the Member States should take all general  or specific  measures to ensure implementation 
of  this Regulation  and should  assist the Commission  in carrying out  its duties; 

Whereas publication in the Official  Journal of the European Communities of calls for public tenders 
concerning projects receiving  assistance from the Fund should mention  that assistance; 

Whereas the Financial  Regulation of 21  December  1977(3) and its subsequent modifications,  and in 
particular Article 36(1) and (2) thereof, stipulate that all measures likely to impose a charge on the 
budget  should  previously  have  been  the  subject  of  a  commitment  proposal  on  the  part  of  the 
competent authorizing  officer, 

HAS ADOPTED THIS REGULATION: 

Article 1 

Designation  of  stages of projects 

1. 

2. 

1. 

2. 

The Commission may, in agreement with the beneficiary Member State, designate technically 
and financially separate stages of  a project for the purpose of granting assistance. 

A  stage  may  also  cover  preliminary,  feasibility  and  technical  studies  needed  for  the 
implementation of a project. 

Article 2 

Appraisal 

The  Commission  shall  examine  applications  for  assistance  to  verify  in  particular  that the 
administrative and financial  mechanisms are appropriate for the effective  implementation of 
the project. 

Pursuant to Article  13(3) of Regulation (EC) No ..., the Commission shall assess projects to 
determine their anticipated  impact in terms of  the objectives of the Fund, quantified  using 
appropriate indicators. The beneficiary Member States shall provide all necessary information, 
as  set  out  in  Article  10(4)  of  Regulation  (EC)  No  ...,  including  the  results  of  feasibility 
studies and ex-ante appraisals, to make this appraisal  as effective  as possible. 

(3) 

OJNoL356,  31.12.1977,  p. 1. 

16 

Article 3 

Commitments 

1. 

Commitments  of  budget  appropriations  shall  be  made  on  the  basis  of  the  Commission 
decisions  approving  the  measures  concerned  (project,  stage  of  a project,  group  of  projects, 
study  or  technical  support  measure).  Commitments  shall  be  valid  for  a period  determined 
by the nature of  the measure  and the specific  conditions  for  its  implementation. 

2. 

Commitments  in  respect  of  assistance  granted  to  projects,  stages  of  projects  or  groups  of 
projects  shall  be  carried  out  in  one of  two ways: 

(a) 

the commitment of assistance may be effected  in annual instalments.  The commitments 
in  respect  of  the  first  annual  instalment  shall  be  made  when  the  decision  granting 
Community  assistance  is  adopted  by  the  Commission.  Commitments  in  respect  of 
subsequent  annual  instalments shall be based on the initial or revised financing plan  for 
the project,  provided the  project  is making  satisfactory  progress  towards  completion; 

(b) 

the  total  amount  of  assistance  may  be  committed  when  the  Commission  adopts  the 
decision  granting  Community  assistance. 

3. 

4. 

In the case of studies and technical support measures referred to in Article  3(2) of Regulation 
(EC)  No  ...,  the  assistance  shall  be  committed  when  the  Commission  adopts  the  decision 
granting  Community  assistance. 

The arrangements for commitments shall be specified  in the Commission decisions approving 
the  measures  concerned. 

Article 4 

Payments 

Payments  of  assistance  shall  be  made  in  accordance  with  the  corresponding  budget 
commitments, to the authority or body designated for the purpose in the application  submitted 
by  the  Member  State  concerned.  Payments  may  take  the  form  either  of  advances  or  of 
intermediate  payments or  payments  of  balances  in  respect  of  expenditure  actually  incurred. 

Where Community assistance is committed in accordance with Article  3(2)(a), payments shall 
relate to the  annual  instalments  of  commitments.  They  shall  be  made  as  follows: 

(a)  an  advance of  up to  50% of the  amount  of the  first  annual  instalment  committed  shall 

be paid  when  the decision  granting  Community  assistance  is  adopted; 

(b) 

intermediate payments may be paid provided that the project is progressing  satisfactorily 
towards  completion  and  that  at  least  two-thirds  of  the  expenditure  relating  to  the 
previous payment  have  been  made. 

Subject  to  (c)  below,  each  such  payment  may  not  exceed  50% of  the  amount  of  each 
annual  instalment  committed; 

17 

(c) 

the total  amount of the payments made under (a) and (b) for  all the instalments may not 
exceed  80% of the total  assistance  granted.  This percentage  may  be increased  to 90 % 
for  major  projects  and  in justified  cases; 

(d) 

the balance  of  Community  assistance  shall  be paid  provided  that: 

the  project,  stage  of  the  project,  or  group  of  projects,  has  been  carried  out 
according  to  its objectives; 

the designated  authority  or body  referred  to in paragraph  1 submits an  application 
for  payment  to  the  Commission  within  six  months  of  the  physical  completion  of 
the project,  stage of  project  or  group  of  projects; 

the  final  report  referred  to  in  Article  6(4)  is submitted  to the  Commission; 

the  Member  State  certifies  to  the  Commission  that  the  information  given  in  the 
application  for  payment  and  in  the  report  is  correct. 

Where the commitment  is made in accordance with  Article  3(2)(b), payments shall be made 
as  follows: 

(a) 

the advance paid following  the decision  may be up to  50% of the assistance  relating to 
planned  expenditure  in  the  first  year  as shown  in  the  financing  plan  approved  by  the 
Commission; 

(b)  further  intermediate  payments  may  be  made  provided  that  the  project  is  progressing 
satisfactorily  towards completion  and that at least two-thirds of the expenditure  relating 
to  the  previous  payment,  and  all  expenditure  relating  to  earlier  payments,  have  been 
made.  Subject  to  (c) below,  each  of  those  payments  may  amount  to  up to  50% of  the 
assistance relating to expenditure planned for the year in question, as shown in the initial 
or  revised  financing  plan  approved  by  the  Commission; 

(c) 

the total  amount  of the  payments  made  under  (a)  and  (b)  may  not  exceed  80% of  the 
total  assistance  granted; 

(d) 

the balance  of  Community  assistance  shall  be paid  provided  that: 

the  project,  stage  of  the  project,  or  group  of  projects,  has  been  carried  oui 
according  to  its objectives; 

the designated  authority  or body  referred  to  in paragraph  1 submits  an  application 
for  payment  to  the  Commission  within  six  months  of  completion  of  the  project, 
stage of project  or group  of  projects; 

the final report  referred  to in  Article  6(4)  is submitted  to the  Commission; 

the  Member  State  certifies  to  the  Commission  that  the  information  given  in  the 
application  for  payment  and  in  the report  is  correct. 

18 

4.  Member States shall  designate the authorities empowered to issue the certificates  referred to 

in paragraphs 2(d) and 3(d). 

5. 

6. 

1. 

2. 

3. 

4. 

Payment shall be made to the authority or body designated by the Member State, as a general 
rule not later than two  months after  receipt of  an admissible  application. 

In  the  case  of  studies  and  other  measures  referred  to  in  Article  3(2)  of  Regulation  (EC) 
No  ..., the Commission  shall  determine the appropriate payment procedures. 

Article 5 

Use of the ecu 

Applications for assistance, together with the relevant financing  plan, shall  be submitted to 
the Commission in ecus or in national currency. 

The  amounts  of  assistance  and  the financing plans  approved  by  the  Commission  shall  be 
expressed  in ecus. 

Declarations  of  expenditure  in  support  of  the  corresponding  payment  applications  shall be 
expressed in ecus or in national  currency. 

Payments of financial  assistance  by the Commission  shall be made in ecus to the authority 
designated by the Member State to receive  such payments. 

Article 6 

Monitoring 

1. 

The Commission and the Member States shall ensure effective  monitoring of implementation 
of  Community  projects part-financed  by the Fund.  Monitoring  shall  be carried out by way 
of  jointly  agreed  reporting  procedures,  sample  checks  and  the  establishment  of  ad  hoc 
committees. 

2.  Monitoring  shall  be  carried  out  by  reference  to  physical  and  financial  indicators.  The 
indicators shall relate to the specific  character of the project and its objectives. They shall be 
arranged in such a way  as to show: 

the  stage  reached  in  the  project  in  relation  to  the  plan  and  objectives  originally  laid 
down; 

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

3.  Monitoring  committees  shall  be set up by  agreement between  the Member State concerned 

and the Commission. 

The  authorities  or  bodies  designated  by  the  Member  State,  the  Commission  and,  where 
appropriate, the EIB shall  delegate  representatives to the committees. 

19 

4. 

5. 

6. 

7. 

For each project, the authority or body designated for the purpose by the Member State shall 
submit progress reports to the Commission  within three months of the end of each full year 
of  implementation.  A final report shall  be submitted to the Commission  within six months 
of  completion  of  the project or stage of  a project. 

On  the  basis  of  the  results  of  monitoring,  the  Commission  shall,  if  necessary,  adjust  the 
amounts and conditions for granting assistance as initially  approved, as well as the financing 
plan envisaged. 

For  the  greater  effectiveness  of  the  Fund,  the  Commission  shall  ensure  that  particular 
attention  is paid to transparency  of  management. 

The monitoring arrangements shall be laid down in the Commission decisions approving the 
projects. 

Article 7 

Checks 

1. 

Before  carrying out an on-the-spot check, the Commission  shall  give notice to the Member 
State concerned with a view to obtaining all the assistance necessary.  On-the-spot checks by 
the Commission without notice shall be subject to agreements reached in accordance with the 
Financial  Regulation.  Officials  of the Member State concerned may take part in the checks. 

The Commission may require the Member State concerned to carry out an on-the-spot check 
to verify  the  correctness of payment applications.  Commission  staff  may take part in such 
checks, and must do so if the Member State concerned so requests. 

The  Commission  shall  ensure  that  any  checks  that  it  carries  out  are  performed  in  a 
coordinated  manner  so  as to  avoid  repeating  checks  in  respect  of  the  same  subject  matter 
during the same period. The Member State concerned and the Commission shall immediately 
exchange  any relevant information  concerning the results of the checks carried out. 

2. 

The  responsible  body  and  authorities  shall  keep  available  for  the  Commission  all  the 
supporting  documents  regarding  expenditure  on  any  project  for  a  period  of  three  years 
following  the last payment in respect of the project. 

Article 8 

Reduction,  suspension  and cancellation of  assistance 

1. 

If during implementation  a measure appears not to justify  either a part, or the whole,  of the 
assistance originally  allocated, the Commission shall  conduct an appropriate examination of 
the case, in particular requesting the Member State or other authorities or bodies designated 
by it to implement the measure to submit their comments within  a specified  period of time. 

20 

Following the examination referred to in paragraph  1, the Commission may reduce or suspend 
assistance  in  respect of  the measure concerned  if the examination  reveals an irregularity or 
a  failure  to  comply  with  one  of  the  conditions  in  the  decision  to  grant  assistance,  and in 
particular any significant  change affecting  the nature or conditions of implementation of the 
measure for which the Commission's approval has not been sought. 

Any  sum to  be  recovered  for  want  of  due  entitlement  shall  be  repaid to  the  Commission. 
Interest on account of late repayment shall be charged in accordance with rules to be adopted 
by the Commission. 

Article 9 

Under the Community  rules on public contracts, notices sent for publication in the Official  Journal 
of  the  European  Communities  shall  include  references  serving  to  identify  a  project  or  projects 
receiving  assistance from  the Fund. 

Article  10 

Information 

The  information  to  be  given  in the  annual  report  provided  for  in  Article  14 of  Regulation  (EC) 
No  ... shall be as set out in the Annex hereto. 

Article 11 

Entry  into  force 

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

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

Done at Brussels, 

For the Council 

The President 

21 

ANNEX 

The annual  report  shall  provide  information  about the  following. 

1. 

2. 

3. 

4. 

5. 

6. 

7. 

8. 

9. 

Financial  assistance  committed  and  paid  from  the  Fund,  with  an  annual  breakdown  by 
Member  State and by type  of  project  (environment  or transport). 

The economic  and  social  impact  of the Fund  in the Member  States. 

Summary  information  on the programmes implemented  in the beneficiary  Member  States to 
fulfil  the conditions  of economic  convergence referred  to in  Article  104c of the Treaty  and 
on the application  of  Article  6 of this  Regulation. 

The contribution  which  the Fund  has made to the  efforts  of the beneficiary  Member  States 
to  implement  Community  environment  policy  and  to  strengthen  trans-European  transport 
infrastructure  networks;  the  balance  between  projects  in  the  field  of  the  environment  and 
projects  relating to transport  infrastructure. 

Assessment  of  the  compatibility  of  operations  of  the  Fund  with  Community  policies, 
including  those  concerning  environmental  protection,  transport,  competition  and  the  award 
of public contracts. 

The measures taken to ensure coordination  and consistency  between  projects financed by the 
Fund  and  measures financed  with  contributions  from  the  Community  budget, the European 
Investment  Bank  and the  other financial instruments  of the  Community. 

The  investment  efforts  of  the  beneficiary  Member  States  in  the  fields  of  environmental 
protection  and transport  infrastructure. 

The  preparatory  studies  and  technical  support  measures  financed,  including  a  specification 
of the types of  such  studies and measures. 

The results of monitoring and evaluation of projects, including information  on any  adjustment 
of projects to  accord with the results of  monitoring  and  evaluation. 

10. 

The contribution  of the European  Investment  Bank  to the  evaluation  of  projects. 

22 

FINANCIAL  STATEMENT 

SECTION  1: FINANCIAL  IMPLICATIONS 

1. 

Title  of  operation 

Cohesion  Fund 

2. 

Budget  heading  involved 

B2.300 

3. 

Legal  basis 

Proposal  for  a Council Regulation  based  on  Article  130d of the Treaty  on European  Union. 

4. 

Description  of  operation 

4.1.  Specific  objectives  of  operation 

To adopt the  Regulation  establishing  a Cohesion  Fund. 

4.2.  Duration 

1994-99. 

4.3.  Target  population 

Greece,  Spain,  Ireland  and Portugal. 

5. 

Classification  of  expenditure 

5.1.  Non-compulsory 

5.2.  Differentiated  appropriations 

5.3.  Not  applicable 

6. 

Type of  expenditure 

Subsidy for joint financing of projects  with other sources in the public and/or private sector 

7. 

Financial  impact 

7.1  Method  of  calculating total  cost of  operation 

The financial  resources of the Cohesion  Fund are the same as those provided  for  in the 
financial  perspective  (ECU  14 728 million  at  1994 prices for  the period  1994-99). 

23 

8. 

9. 

Anti-fraud  measures  planned  in the  proposal  for  the  operation. 

Elements  of  cost-effectiveness  analysis 

9.1  Objectives 

The objective  of the Cohesion Fund  is to contribute funding  to projects  concerning the 
environment  and trans-European  networks  in the  area of transport  infrastructure  in the 
Member  States  whose  per  capita  Gross  Domestic  Product  is  less  than  90%  of  the 
Community  average,  measured  on  the basis  of  purchasing  power  parities,  i.e.  Greece, 
Spain, Ireland and Portugal.  Each of these Member  States has presented  a convergence 
programme  designed  to prevent  an  excessive  public  deficit. 

9.2  Grounds  for  the  operation 

Article  130d  of  the  Treaty  on  European  Union  provides  for  the  Council  to  set  up  a 
Cohesion  Fund  to  provide  a  financial  contribution  to  projects  in  the  fields  of  the 
environment  and  trans-European  transport  networks. 

9.3  Monitoring  and  evaluation  of the  operation 

1.  The Commission  will  carry  out a systematic  evaluation  of the projects  in  collaboration 

with  the beneficiary  Member  States. 

The Commission  will  cooperate with  the EIB in  this evaluation  where appropriate.  As 
soon  as  the  aid  application  is  received,  the  Commission  will  assess  the  projects 
presented  by  the Member  States with  reference  to the following  criteria: 

their medium term  economic and social benefits,  which should be proportionate to 
the resources deployed; this assessment  should be based  on a cost-benefit  analysis 
drawn  up by the Member  States; 

the  contribution  which  the  projects  can  make  to  the  implementation  of  the 
Community's  policies  in  the  fields  of  the  environment  and  trans-European 
networks; 

the establishment  of  an  appropriate balance between  environment  and  transport. 

The  Commission  will  verify  and  quantify  the  expected  impact  of  the  projects  on  the 
basis of  a cost-benefit  analysis. 

The  beneficiary  Member  States  concerned  will  provide  all  the  necessary  information, 
including the  results of feasibility  studies and  ex-ante  appraisal,  so that the  assessment 
can  be carried  out  as effectively  as possible. 

The Commission  will  also  examine  applications  for  assistance,  particularly  in order  to 
ascertain  that  the  administrative  and  financial  mechanisms  can  ensure  effective 
implementation. 

24 

2.  For the  purposes  of  the Regulation,  the Member  States  concerned  will  forward  tc  the 
Commission a description of the management and control arrangements set up to ensure 
the effective  implementation  of the  projects. 

They must also inform the Commission of all cases of irregularities discovered or which 
are the subject  of  legal  proceedings. 

3.  The implementation  of  projects  is to be monitored  by  means  of: 

statements  presented  with  applications  for  payment,  certifying  that  the  project  Is 
progressing satisfactorily towards completion and that expenditure has been carried 
out  in  accordance with  the details in the financing plan; 

reports  drawn  up  in  accordance  with  procedures  agreed  with  the  Member  State, 
showing  the  progress  of  the  projects  financed  in  relation  to  the  physical  and 
financial indicators  specified  in the Commission  Decision  approving the projects; 

Monitoring Committees set up by mutual agreement between the Commission and 
the Member  State. 

4.  The  balance,  amounting  to  20% of  the  assistance  granted  to the project,  will  be paid 

once Member States have presented a report stating that the project has been completed 
in accordance with its objectives. 

25 

ISSN 0254-1475 

COM (93) 699 final 

DOCUMENTS 

EN 

io oi 

Catalogue number : CB-CO-93-753-EN-C 

ISBN 92-77-63168-6 

Office for Officiai Publications of the European Communities 
L-2985 Luxembourg 

26 

**àsw,