TRANS-EUROPEAN NETWORKS - ANNUAL REPORT TO THE COUNCIL AND THE EUROPEAN PARLIAMENT - DECEMBER 1995
Date: 1996-05-30
Institutions: European Commission
Subjects: activity report, energy grid, trans-European network, transmission network, transport network

COMMISSION OF THE EUROPEAN COMMUNITIES 

ix 

* 

it 

tir 

Brussels,  30.05.1996 
COM(95)  571  final 

TRANS-EUROPEAN  NETWORKS 

ANNUAL  REPORT 

TO THE 

COUNCIL  AND 

THE  EUROPEAN  PARLIAMENT 

DECEMBER  1995 

CONTENTS 

CONCLUSIONS  AND  RECOMMENDATIONS 

TRANS-EUROPEAN  ENERGY  NETWORK 

Table:  Financing  the  10  priority  energy  projects 

TRANS-EUROPEAN  TELECOMMUNICATIONS  NETWORK 

TRANS-EUROPEAN  TRANSPORT  NETWORK 

Table:  Progress  on  Transport  priority  projects 

Table:  Problems  concerning  transport  priority  projects 

Annexes:  Setting  up  public/private  partnerships  in  the  transport  sector 

I. 

II. 

Financing  : Public/Private  Partnerships 

TEN  and  Competition  in  the  transport  sector 

III. 

Public  procurement  rules  for  transport  TEN 

IV. 

Project  authorities  for  trans-European  network  projects 

CONNECTING  WITH  CENTRAL  AND  EASTERN  EUROPE  AND  THE 
MEDITERRANEAN  BASIN 

JOINT  ENVIRONMENTAL  PROJECTS 

Annexes 

I 

II 

Description  of  some  specific  waste  project  examples 

Description  of  some  specific  water  project  examples 

III 

Criteria  for  Joint  Environmental  Projects 

GENERAL  TABLES: 

Progress  of  TEN  legislative  procedures 

Community  funding  of  TEN 

4 

6 

10 

11 

16 

24 

25 

26 

29 

33 

34 

36 

40 

48 

52 

54 

55 

56 

The  European  Council,  at  its  meeting  in  Brussels  in  December  1993, asked  the 
Commission  to  submit  to  it  each  year  in  December  a report  on  progress  of  the  trans-
European  infrastructure  networks  in  the  spheres  of  transport  and  energy  and  on  the 
implementation  of  the  operation  programmes  in  the  area  of  information  infrastructures. 

The  present  report  is  drafted  in  the  light  of  the  conclusions  of  the 
Essen  and  Cannes  European  Councils. 

CONCLUSIONS  AND RECOMMENDATIONS 

v. 

1. 
in  the 
Trans-European  networks  are  vital  to  jobs,  competitiveness  and  cohesion 
European  Union.  Considerable  progress  has  been  made  since  Essen,  but  there  remain 
substantial  problems  related  to  the  level  of  priority  of  TENs  projects  in  Member  States  and, 
especially  in  transport,  their  financing  requires  greater  effort. 

For  energy  TEN,  the  Commission  considers  that  there  is  a  need  for  Member  States 
2. 
to  speed  up  the  examination  of  requests  for  authorizations.  Similarly,  the  EIB  should 
continue  the  examination  of  requests  for  financing  for  priority  projects.  The  rapid  adoption 
of  the  TEN  energy  guidelines  is  essential  so  that  the  Commission  can  implement  them  soon. 
The  creation  of  the  Internal  Energy  Market  should  also  be  a  priority. 

3. 
As  far  as  telecommunications  TEN  is  concerned,  speedy  adoption  of  the  proposed 
TENs  Telecom  Guidelines  is needed,  together  with  confirmation  of the  importance  of  the  IDA 
Programme  as  an  essential  component  of  TEN-Telecom 

4. 
The  development  of  environmental  network  infrastructure  requires  approval  of  the 
definition  of Joint  Environmental  Projects  (JEPs)  and  their  selection  criteria.  The  Commission 
also  supports  moving  forward  into  an  operational  phase  in  which  a  limited  number  of  pilot 
projects  in  the  waste  and  water  sector  will  be  selected  and  launched.  Provisions  should  be 
considered  so  that  JEPs  could  receive  administrative  and  financial  support  analogous  to  that 
provided  for  trans-European  networks. 

For  the  transport  TEN,  the  Council  and  European  Parliament  should  compromise  in 

5 
order  to  adopt  the  transport  network  guidelines  as  quickly  as  possible 

6. 
Progress  has  been  slower  than  anticipated  on  parts  of  some  priority  projects.  The 
Member  States  concerned  need  to  make  concerted  efforts  to  solve  the  problems  that  are 
holding  up  these  projects,  which  will  require  national  priorities  to be  adapted  in  consequence. 
Unfortunately, 
the  national  authorities  concerned  see  no  potential  for  substantial  cost 
reductions  without  severely  affecting  the  scope  and  viability  of  most  of  the  priority  projects. 
Research  done  for  the  Commission  shows  that  the  socio-economic  return  of  international 
transport  infrastructure  projects  is greater  than  previously  thought.  This  should  be  taken  into 
account  when  adopting  the  necessary  decisions,  requested  by  the  Essen  European  Council,  to 
"top  up"  the  funds  currently  available  for  TENs. 

7 
Although  the  examination  of  individual  priority  projects  shows  substantial  scope  for 
enhancing  the  involvement  of  the  private  sector,  very  few  public-private  partnerships  (PPPs) 
In  order  to  help  in  their  promotion,  the  Commission  has  set  up  a  "One-
are  being  set  up. 
Stop"  Help  Desk  on  the  application  of  Community  public  procurement  and  competition  rules 
in  relation  to  PPPs 
It  urges  Member  States  to  keep  up  political  pressure  to  implement  PPPs 
and,  where  there  are  legal  or  administrative  barriers  to  the  implementation  of  PPPs,  to  make 

.Extract  from  the  Commission's  "Progress  on  TENS"  report  to  the  Madrid 

European  Council  (CSE  (95)  571). 

any  necessary  changes.  There  is  a  need  to  develop  public  support  mechanisms,  including 
public  equity,  particularly  for  projects  involving  mixed  sources  of  financing.  Therefore  the 
Commission  supports~*he widening  of  the  activities  of  the  EIF  to  equity  operations. 

8. 
Unfortunately,  Member  States'  funding  for  the  priority  projects  has  not  always  been 
made  available  as  anticipated,  resulting  in  delays  in  progress.  Clear  financial  shortfalls  are 
revealed  so far  for  two  priority  projects,  for  which  the Member  States concerned  are  seeking 
Community  financing: 

Project 
0995-99) 
PBKAL 

HST  East 

Belgian  section 
Netherlands  section 
UK  section  (CTRL) 

Financial  shortfall 

200  MECU 
120  MECU 
240  MECU 
200  MECU 

The Commission  urges the Member States concerned  to complement  the measures they 
9 
have  already  taken  and  try  to  identify  additional  support  to  help  meet  these  shortfalls.  The 
current  TEN  budget  line  cannot  accommodate  these  requests,  and  if  Member  States'  action 
were  to  fail  to  make  up  the  financial  shortfalls,  this  would  lead  to  serious  delays  to  these 
already  mature  projects  Given  the  strong  element  of  Community  interest  in  these  projects, 
additional  Community  support  would  be  justified. 

The  Commission  welcomes  the  establishment  of  "project  authorities"  in  the  form 
10. 
multi-national  European  Economic  Interest  Groupings  (EEIGs)  for  the  promotion  phase  of 
certain  links to ensure  better  coordination  and  promote  the possibilities  of PPPs.  It  notes  the 
particular  problems  that  have  arisen  in  some  railway  projects  and  urges  the  Council  to  adopt 
a European  Company  Statute,  which  would  provide a legal  vehicle for  cooperation  during the 
construction  phase. 

The  Commission  will  focus  its  own  work  on  TENs  projects  more  sharply  to  help 

11 
accelerate  progress  on  the  ground 

THE  TRANS-EUROPEAN  ENERGY  NETWORK 

I.  Progress  in  the  development  of  the  trans-European  energy  network 

The  regulatory  framework 

for  trans-European  energy  network 

1  Regarding  the  Community  legislation  specific  to  energy  TENs,  the  two  Commission 
proposals  on  the  "Guidelines"  and  "More  favourable  Context"  for  the  development  of 
trans-European  electricity  and  natural  gas  networks2  were  the  subject  of  a  common 
position  of  the  Council  on  29  June  1995  Their  second  reading  by  the  European 
Parliament  was  recently  completed  and  the  final  adoption  of  these  proposals  is  expected 
by  the  end  of  1995  or  beginning  of  1996.  The  "Guidelines" 
identify  43  projects  of 
common  interest  which  represent  a  reference  scheme  for  the  development  of  energy 
networks  in  the  coming  years.  The  10  priority  projects  confirmed  at  Essen  are  included 
in  this  scheme 

2  After  the  adoption  in  September  1995  of  the  regulation  drawing  up  the  rules  for  the 
granting  of  financial  aid  to  the  TEN,  the  Commission  has  been  able  to  decide  the  first 
commitment  of  such  aid  to  energy  TEN  projects,  using  the  1995  budget  allocation. 

3.  Regarding  the  implementation  of  the  Internal  Energy  Market,  progress  has  been 
recorded  in  the  discussion  of  the  Commission  proposal  for  the  electricity  market,  and  it 
is  hoped  that  the  Council  could  adopt  a  common  position  on  this  proposal  before  the  end 
of  this  year.  Such  agreement  would  allow  discussions  on  the  Commission  proposal  for 
the  natural  gas  market  to  resume  as  from  the  beginning  of  1996  The  Treaty  rules, 
including  the  competition  rules  and  procedures,  are  naturally  applicable  to  the  energy 
sector  This  means  in  particular  that  TENS  should  not  lead  to  a  reinforcement  of  any 
dominant  position  of  undertakings  which  control  them. 

Progress  in  building 

the  infrastructure 

for  the  trans-European  energy  networks 

4  The  Essen  Summit  identified  a  list  of  10  priority  projects  in  the  energy  sector,  5  within 
electricity  networks  and  5 within  natural  gas  networks.  These  energy  priority  projects  are: 

Italy-Greece: 
France-Italy: 
France-Spain: 
Spain-Portugal: 

(1) 
(2) 
(3) 
(4) 
(5)  Denmark 

electricity  interconnection 
electricity  interconnection 
electricity  interconnection 
electricity  interconnections 
electricity  connection  East-West 

C OM  (93)  685  f  of  19.1  1994 

(6)  Greece: 
(7) 

Portugal: 

(8) 

Spain: 

(9)  Algeria-Morocco-Spain: 
(10)  Russia-Belorussia-Poland-EU: 

main  gas  pipelines  and  LNG  station 
main  gas  pipelines  and  interconnections  with 
Spain 
interconnections  with  Portugal  and  main  gas 
pipelines  in  Extremadura  and  Galicia 
gas  pipeline 
gas  pipeline. 

5. 

In  connection  with  these  priority  projects,  some  progress  has  been  achieved  during  the 
twelve  months  which  have  passed  since  the  Essen  Summit.  This  progress  concerns 
mainly  the  natural  gas  projects  in  Spain  and  Portugal. 

Out  of  the  10  energy  priority  projects  agreed  at  Essen  Summit: 

• 

• 

• 

• 

though  for 

the  5  natural  gas  projects  are  under  construction, 
the  Russia-
Belorussia-Poland-European  Union  project  only  the  first  phase  is under  way  and  for 
the  Spanish  projects  the  main  pipelines  in  Galicia  and  Extremadura  are  still  subject 
to  definition. 
1 out  of  the  5  electricity  projects  is  under  construction 
interconnection  between  Portugal  and  Spain); 
the  construction  of  3  other  electricity  projects  has  not  yet  started:  the  electricity 
interconnections  between  France-Italy  and  Italy-Greece  because  of  delays  in  the 
authorization  procedures  and  East-West  Denmark  connection,  this  project  being  the 
subject  of  a  reassessment  by  its  promoters; 
as  for  the  last  electricity  project,  the  electricity  interconnection  between  France  and 
Spain,  construction  has  been  suspended  on  the  Spanish  sice,  waiting  for 
the 
authorization  procedures  to  be  completed  on  the  French  side. 

(the  Northern  electricity 

6. 

Regarding  the  remaining  common 
interest  projects  identified  by  the  TEN  Energy 
Guidelines,  construction  work  has  started  in  a  few  cases,  although  in  most  cases,  the 
projects  are  in  their  pre-construction  phase. 

Financing 

the  development  of  the  trans-European  Energy  Networks 

7 

8. 

In  general,  the  financing  of  energy  networks  is  secured  by  the  companies  in  the  sectors 
concerned,  using  their  own  resources  or calling  on  the  capital  market  For  the  10  priority 
projects,  the  Christophersen  Group  considered  that  financing  problems  could  be  solved 
through  the  use  of  existing  Community  financial  instruments. 

total  investment  cost  for  the  10  priority  projects 

The 
is  estimated  at  around  4350 
MECU;  this  estimate  does  not  include  the  cost  of  the  sections  of  priority  projects  to  be 
built  in  third  countries  (in  Algeria  and  Morocco  for  the  Maghreb  gas  pipeline  and  in 
Poland,  Belarus  and  Russia  for  the  new  Russia-EU  gas  pipeline).  A  significant  part  of 
the  investment  cost  for  the  development  of  these  10 priority  projects  will  come  from  the 
companies  of  the  energy  sectors  concerned. 

9. 

Community  funds  available  to  these  priority  projects  are  mainly  aids  from  the  Structural 
Funds  (for  projects  in  Objective  I  regions)  and  loans  from  the  EIB  and  the  Commission 
(under  the  ECSC  Treaty).  Complementary  support  might  be  given  from  the  EIF  (loan 
guaranties)  and  from  the  TEN  Energy  budget  line. 

10.  Since  1993  the  Structural  Funds  have  already  committed  in  favour  of  the  energy 
priority  projects  around  640  MECU  and  are  assessing  demands  for  around  758  MECU. 

1 1.  Likewise  since  1993  Community  Loans  of  the  order  of  1380  MECU  have  been  already 
agreed  to  by  the  EIB  and  the  Commission  (ECSC)  in  favour  of  energy  priority  projects; 
requests  for  loans  of  more  than  500  MECU  are  still  being  examined  by  the  EIB  and 
Commission  Services.  It  is  worth  noting  that  included  in  the  figure  of  1380  MECU 
mentioned  above  are  loans  of  about  540  MECU  the  EIB  has  committed  for  the  sections 
of  the  Maghreb  gas  pipeline  to  be  build  in  Algeria  and  Morocco. 

12.  Regarding  the  granting  of  financial  support  from  the  TEN  Energy  budget  line,  an 
amount  of  12  MECU  has  been  recently  committed  with  the  aim  of  promoting  feasibility 
and  other  studies  concerning  12  projects  of  common  interest  from  the  Guidelines  list, 
of  which  3  are  Essen  priority  projects  (the  France-Spain  and 
the  Spain-Portugal 
electricity  interconnections  and  the  Greek  natural  gas  project) 

13.  Regarding  the  activity  of  the  EIF,  loan  guarantees  for  an  amount  of  207.7  Mecu  were 
signed  for  2  key  gas  projects  (the  Trans-Mediterranean  II  gas  pipeline  to  Italy  and  the 
natural  gas  project  in  Portugal)  the  last  project  being  in  the  Essen  priority  list  This 
represents  about  40%  of  the  total  amount  guaranteed  by  the  Fund  during  the  first  year 
and  a  half  of  operation  (1994,1995) 

( Connecting the  trans-European  energy  networks  to  third  countries 

14.  Priority  projects  and  other  common  interest  projects  do  take  account  of  the  need  of  the 
energy  networks  of  the  Community  to  be  interconnected  with  those  of  third  countries 
The  TEN  Energy  Guidelines  also  provide  for  a  procedure  to  be  followed  in  order  for 
such  projects  to  be  recognised  as  "mutual  interest  projects"  by  the  third  country(ies) 
concerned. 

15  Connection  of  the  CENTREL  (Poland,  Czech  Republic,  Slovakia  and  Hungary)  and 
UCPTE  electricity  grids  is  scheduled  for  the  last  quarter  of  1995  This  will  represent 
air important  stage  in  the  integration  of  the  European  electricity  grids.  Further  extension 
of  the  UCPTE  grid  towards  the  Balkan  countries  and  the  interconnection  of  the 
extended  UCPTE  grid  with  the  CIS  countries  are  the  subject  of  studies  under  the 
PHARE  and  TACIS  programmes 

16.  Studies  of  East-West  gas  interconnections  in  Europe  and  of  regional  projects  of 
interest to Central  and Eastern  European  and/or  Union  countries  have been  and are being 
made under the PHARE  programme.  These  studies complement  actions to be taken  from 
1995  in  connections  with  projects  of  common  interest  identified  by  the  Community 
guidelines. 

II 

Problems  remaining  to  be  solved 

17.  The  implementation  of  several  priority  projects  is  still  facing  problems,  owing  to  the 
difficulty  of obtaining  the authorizations  for  the construction  and /or  of gathering  finance 
for  the  investment. 

18.  Projects  still  encountering  authorization  problems  delaying  the  beginning  of  their 

construction  are: 

• 
• 
• 

the  Italy-Greece  electricity  interconnection; 
the  France-Italy  electricity  interconnection; 
the  France-Spain  electricity  interconnection 

19  Projects  still  encountering  economic  appraisal  and/or  financing  problems  are 

• 

• 

• 

• 

• 

• 

the  Italy-Greece  electricity  interconnection 
(loan  requested  from  the  EIB); 
the  Denmark  East-West  electricity  connection 
(the  electricity  companies  concerned  are  reassessing  the  project). 
the  Greek  natural  gas  project 
(EIB  and  Commission  (ECSC)  services  have  laid  down  certain  conditions  for  the 
granting  of  loans); 
the  Portuguese  natural  gas  project 
(loan  requested  from  the  Commission  (ECSC)); 
the  natural  gas  projects  in  the  Spanish  regions  of  Extremadura  and  Galicia 
(redefinition  of  the  projects,  Structural  Funds  (ERDF)  commitments  need  to  be 
redefined  accordingly); 
the  Spanish  section  of  the  Maghreb  natural  gas  pipeline  project  (Structural  Funds 
(ERDF)  aid  has  been  sought  and  an  EIB  loan  is  envisaged) 

TABLE 1 

TRANS-EUROPEAN  ENERGY  PROJECTS:  FINANCING  OF  THE  10  PRIORITY 
PROJECTS 

(a) 

EUROPEAN  UNION 
LOANS 
d e c i d ed 
[or  under  a p p r a i s a l] 

TOTAL 
COST 

ELECTRICITY  NETWORK  PROJECTS 

EIB 

ECSC 

(in 

MECU) 

FINANCIAL 
CONTRIBU 
TION  FROM 
THE  ERDF(b| 
d e c i d ed 

R E M A R KS 
ON  THE 
FINANCING 
S C H E ME 

a4 

Italy  -  G r e e ce  interconnection 

b6 

F r a n ce  -  Italy  interconnection. 

b7 

France  -  Spain  interconnection. 

b10  Spain  -  P o r t u g al  interconnections 

c2 

D e n m a r k:  East-West  connection. 

N A T U R AL  G AS  NETWORK  P R O J E C TS 

e6 

G r e e ce 

Main  pipeline  system 
and  LNG  terminal 

304 

170 

115 

110 

57 

170 

[100] 

35 

Not  finalized. 

Not  eligible 

Finalized. 

Not  eligible 

Finalized. 

Finalized 

Not  eligible 

Not  finalized 

1285 

7  +  [219] 

83  +  [97] 

683 

Not  finalized 

e5 

P o r t u g al 

Main  pipeline  system 

462 

354 

(e) 

f6 

S p a i n - P o r t u g al 

Interconnections  Portugal-Spain 

Main  pipeline  systems  in 
Extremadura  and  in  Galicia 

h4 

A l g e r i a - M o r o c c o - S p a in 

Section  from  Tangier-,  (MO)  to 
Cordoba  (SP) 

h7 

P u s s i a - B e l a r u s - P o l a n d - E .U 
Section  in  Germany 

(e) 

224 

(e) 

386 

72 

446 

100 

(c) 

830 

(e) 

[102] 

(e) 

173 

156 

Not  finalized 
EIF  loan 
guarantee 

Finalized. 
EIF  loan 
guarantee 

Not  finalized. 

Not  finalized 

( • ') 

Not  finalized 

TOTAL 

4350 

742  +  [319] 

83  +  [199] 

1047 

(a)  Same  project  code  as  in  Guidelines  (OJ  No  C 216  of  21/8/1995) 
(b)  Under  the  Community  Initiatives  REGEN  (89-93)  and  INTERREG  II  (94-99)  and  under  the  Community  support 

frameworks  for the  periods  89-93  and 94-99. 

(c)  Total  EIB  loans  decided  for  the  "Maghreb  pipeline"  amount  to  641  MECU,  for  works  in Algeria,  in  Morocco  and 

for  the  Gibraltar  crossing  (Tangiers  - Tarifa). 

(d)  Sections  in the  Eastern  Lander  of  Germany  might  be  eligible  to  assistance  from  the  ERDF. 
(e)  EIB  or  ECSC  loans  are  referred  to the  global  project  which  is  larger  than  the  priority  project  concerned. 

Telecommunications  Trans-European  Networks 

I.  Progress  to  Date  in  This  Field 

1.  The  trans-European  Telecommunications  networks  (TEN-Telecom)  have  been  subject  since 
1993  to  a  number  of  actions  with  a  view  to  define  the  proposals  to  be  made  to  the  Council  and 
European  Parliament,  in  particular  for  the  adoption  of  a  series  of  guidelines  as  foreseen  in  the 
Title  XII  of  the  EU  Treaty.  Already  in  1993, two  initial  proposals  of  guidelines  were  sent  to  the 
Council  and  Parliament:  one  concerning  trans-European  networks  for  communication  between 
Administrations  (TNA-IDA)1;  one  covering  a  subset  of  TEN-Telecom, 
i.e.  TEN-ISDN2. 
Furthermore,  in  July  1993,  the  Commission  submitted  a  communication  on  TEN-IBC3  to  the 
other  Institutions. 

2.  The  Council  of  Ministers  and  the  European  Parliament  have  adopted 

the  TEN  Financial 
Regulation  and  the TEN-ISDN  guidelines.  Moreover,  the  Proposal  concerning  the general  TEN-
Telecom  guidelines  is  being  examined  by  the  Council  and  Parliament,  and  a  policy  debate  is 
expected  for  the  Telecommunications  Council  on  27  November  1995.  The  TNA-IDA  initiative 
gave  way  to  the  proposal  for  an  IDA  Programme  This  was  adopted  at  the  Industry  Council 
meeting  on  6  November  1995. 

3.  However,  despite  the  progress  mentioned  above,  previous  European  Council  meetings  (e.g. 

Essen)  expressed  themselves  only  in  general  terms  about  TEN-Telecom.  It is therefore  suggested 
that  upcoming  European  Council  meetings  should  consider  TEN-Telecom  in  a  similar  way  as 
other  TEN  sectors  such  as  transport  or  energy  for  which  specific  projects  have  been  identified. 

Certain  specific  aspects  of  the  Telecommunications  sector,  which  lead  to  act  in  this  sector  in  a 
partially  different  way  as  in  the  other  TEN  sectors,  have  to  be  recalled: 

i)  the  bottle-neck  in  the  field  of  telecommunications  is associated  mainly  with  the  development 
of  applications  and  with  problems  of  interoperability  of  generic  services  at  European  level  (cf. 
the  Bangemann  Group  report), 

ii)  any  action  has 
telecommunication  sector. 

to 

take  account  of 

the 

increasingly 

liberalized  context  of 

the 

TEN-TELECOM  IN  THE  CONTEXT  OF  THE  LIBERALIZED  MARKET 

4  The  liberalization  of  telecommunications  implies  in  particular  that  the  projects  to  be  supported 
have  to  be  identified  following  a  procedure  which  allows  competition  between 
initiatives 
stemming  from  market  or  social  needs  rather  than,  as  in. the  other  TEN  sectors,  on  the  basis  of 
In  this  context,  the  role  of  the 
proposals  made  by  the  Administrations  of  the  Member  States 

TNA-IDA  concerns  iclcinalics  applications  for  information  exchange  between  Administrations 

ISDN  (Integrated  Services  Digital  Network)  is  a  network  allowing  transmission  under  an  integrated  and  digilali/.cd 
form  of  voice,  data  and  fixed  images,  al  medium  speed  rates  (Mkb/s). 

IBC  Inieuraicd  Broadband  Communication 

public  authorities  is  to  select  the  priority  fields  in  which  projects  may  receive  support. 
Community  support  should  be  awarded  to  projects  in  areas  of  public  interest  which  will  bring 
immediately 
strong  socio-economic  benefits  and  for  which 
sufficient. 
in  the  framework  of  public  /  private 
partnerships  including  in  particular  local  or  regional  authorities.  The  support  awarded  has  to  be 
compatible  with  competition  law  and  state  aid  regulations. 

These  projects  should  be  implemented 

the  financial  viability 

is  not 

5.  In 

this  perspective,  supporting 

the  development  of 

trans-European 

applications,  generic  services  and  networks  will  bring  an  important  contribution 
exploitation  of  the  benefits  of  the  information  society. 

telecommunications 
the 

to 

SCOPE  OF  THE  IDA  PROGRAMME 

6.  The  IDA  Programme  concentrates  on  maximizing  interoperability,  with  specific  reference  to 
increasing  the  efficiency,  effectiveness  and  transparency  of  public  services  in  the  context  of  the 
internal  market. 

7.  Member  State  Administrations  and  European  Institutions  are  implementing 

interoperable 
telematic  networks  and  services,  in  accordance  with  the  Council  decision,  in  order  to  exchange 
information  by  means  of  activities  "in  the  following  specific  fields: 

Production  and  promotion  of  architecture  guidelines  and  operational  requirements  to  achieve 
interoperability 

Practical  introduction  of  electronic  mail  on  the  basis  of  X.400 

Practical  implementation  of  trans-European  networks  in  the  following  areasCustoms  and  taxes; 
Fisheries;  Agriculture;  Social  security;  Public  procurement;  Health;  Statistics;  Commercial 
policy;  Competition  policy;  Culture;  Telematic  projects  aiming  at  facilitating  the  Community 
decision  making  process;  Support  to  agencies  (Environment,  Internal  market,  Public  health, 
Translation  centre). 

Horizontal  activities  (provision  of  generic  services,  progress  in  the  legal  and  contractual 
framework 

) 

II.  Results  (1993-1995) 

TELECOMMUNICATIONS  -  GENERAL 

8.  The  preparatory  phase  for  TEN-ISDN  and  TEN-IBC  involved  budgetary  resources  of  7  MECU 
in  1993  and  14  MECU  in  1994.  During  the  1995  exercise,  where  a  budget  of  22  MECU  was 
allocated,  these  types  of  action  were  further  developed  and  pursued 

9.  These  preparatory  projects  were  either  feasibility  studies  of  pilot  projects,  in  the  domain  of 
EURO-ISDN  and  broadband  communications,  aiming  at  improving  the  understanding  on  the 
type  of  actions  and  on  the  priorities  which  should  be  implemented  in  realising  trans-European 
networks  in  these  areas. 

10.  These  actions  allowed  the  analysis  of  the  principal  obstacles  regarding  the  deployment  and 
usage  of  ISDN  based  solutions  through  a  number  of  feasibility  studies  and  pilot  projects,  in  the 
field  of  health  care,  teleworking,  education,  applications  for  SMEs,  desktop  multimedia 
services.  In  addition,  studies  on  terminal  issues  and  quality  of  service  in  the  field  of  ISDN  were 
performed. 

11.  The  main  objective  of  the  broadband 

related  efforts  (TEN-IBC)  was  to  gain  a  better 
understanding  of  the  potential  demand  and  the  technico-economic  viability  of  broadband 
applications,  eg.  in  the  domains  of  ATM-bandwidth4  on  demand  services,  multimedia  e-mail, 
scientific  networks,  city  information  highways,  transfer  of  radiological 
images  on  ATM 
networks.  These  projects  have  triggered  the  constitution  of  common  interest  groups  and 
consolidated  the  basis  for  launching  viable  trans-European  applications,  in  particular  in  the 
fields  of  public  interest,  during  the  years  to  come. 

IDA  PROGRAMME 

12.  The  following  results  have  already  been  achieved: 

production  of  the  IDA  architecture  guidelines; 

introduction  of  a backbone  X.400  network  offering  services  over  and  above  those  offered 
by  public  Administrative  Domains  (ADMDs)  and  in  all  15  Member  States, 

operational  or  pilot  networks  in  the  context  of  the  following  projects:  Social  security 
(TESS  /  SOSENET);  Employment  (EURES);  customs  &  taxation  (QUOTA,  VIES,  EBTI, 
TARIC):  Agriculture  (PHYSAN,  IDES);  public  procurement  (SIMAP),  fisheries  (FIDES); 
statistics  (DSIS) 

e-mail  connectivity  for  an  initial  group  of  committees  comprising  270  members; 

provision  of  e-mail  services  for  the  European  Institutions 

ATM  (Asynchronous  Transfer  Mode)  is  an  advanced  transmission  and  switching  system  using  very  high 

transmission  speeds,  which  allow  for  instance  the  transmission  of  TV  quality  images 

III.  The-Challenge  for  the  Future 

TELECOMMUNICATIONS-GENERAL 

13.  The  future  work  programme  for  the  trans-European  telecommunications  network  aims  to 
promote  the  implementation  of  trans-European  telematic  applications  of  collective  interest 
based  on  interoperable  generic  services  and  on  interconnected  digital  networks  with  a  view  to 

facilitating  the  transition  towards  the  information  society; 
improving  competitiveness  of  European  enterprises  and  strengthening  the  Internal 
Market; 
strengthening  economic  and  social  cohesion; 
stimulating  new  activities  leading  to job  creation. 

Within  these  broad  objectives,  the  1996  work  programme  will  establish  specific  priorities  for 
each  of  the  three  levels  : 

the  feasibility  study,  the  validation,  and  the  deployment  of  applications  of  collective 
interest,  broad  enough  to  reach  a  critical  mass  of  users  and  generate  a  strong 
participation  of  the  private  sector  in  providing  investment  in  the  context  of 
public/private  partnerships; 

the  promotion  of  interoperable  services  in  Europe,  by  establishing  and  implementing 
common  specifications  based  on  European  and  world-wide  standards,  and  their 
extension  to  a  multimedia  environment; 

the  promotion  and  stimulation  of  access  to  trans-European  interconnexted  and 
standardised  basic  networks,  and  in  particular  the  promotion  of  EURO-ISDN,  the 
development  of  broadband  networks  (mainly  based  on  the  ATM  technology),  and 
their  interconnection  to  mobile  and  satellite  networks 

Lastly,  a  specific  priority  for  Community  action  is  given  to  SMEs  in  two  areas  : 

identification  of  applications  which  have  an  important  impact  on  their  activities; 
a  minimum  presence  of  SMEs  in  the  consortia  responding  to  the  Commission  calls 
for  proposals 

14  These  issues  have  been  considered  in  the  Communication  of  the  Commission  to  the  Council 
and  European  Parliament  presenting  the methodology  for  the  implementation  of the  information 
society  applications  and  proposing  the  TEN-Telecom  guidelines"  The  concrete  implementation 
of  the  guidelines  during  the  year  1996  will  offer  the  opportunity  to  fine-tune  these  principles 
in  concrete  cases 

IDA  PROGRAMME 

The  IDA  Programme  will  obviously  pursue  the  implementation  of  telematic  networks  while  at 
the  same  time  addressing  and  resolving  a  number'of  key  issues 

'Document  COM(V5)224  final  of  .11  Ma\  1W5 

14 

15.  The  legal  problems  affecting  all  electronic  interchange  of  information  /  documents  (such  as 
authentication  of  the  user(s),  electronic  signature,  data  protection  and  data  security)  are 
encountered  by  IDA  projects  as  a matter  of  course.  This  is  particularly  sensitive  within  public 
administrations,  given  the  nature  of  the  information  exchanged.  Member  States  have  quite 
different  legislation  in this  area.  Harmonisation  is urgently  needed.  Some  studies  to this  effect 
have  been  started. 

16.  Commitment  from  Member  States  is  vital  for  the  success  of  IDA  projects  This  has  not 

always  been  forthcoming. 

17.  The  European  Parliament  Opinion  and  the  Council  of  Ministers  have  differing  views  on  the 

legal  basis  for  the  IDA  Programme.  Such  differences  should  not  endanger  the  success  of 
the  Programme,  as,  in  the  past,  they  have  with  respect  to  budgetary  resources. 

IV.  Conclusions 

18.  Telecommunications  networks  are  the  backbone  of  the  future  information  society. 

19. 

the 

for  a 

first  year 

regular  action 

In  the  surge  of  the  increasing  Community  activity  for  the  promotion  of  the  information  society, 
1996  will  be 
trans-European 
telecommunications  networks.  This  action  is  planned  to  be  intensified  during  the  following 
years,  with  a  view  to  bringing  a  substantial  contribution  to  the  fruition  of  the  economic  and 
social  benefits  linked  to  the  development  of  new  services  and  applications  on  the  information 
highways. 
To  allow  for  the  implementation  of  projects  in  all  proposed  domains,  the  Council  and  the 
Parliament  are  requested  to  adopt  as  quickly  as  possible  the  proposed  Decision  on  the 
TEN-Telecom  Guidelines. 

field  of 

the 

in 

20 

IDA  is  a  concrete  programme,  already  delivering  results. 

implementation  of 

The  continued 
telematic  networks  will 
dramatically  improve  the  management  of  the  internal  market  and  bring  direct  benefits 
to  European  citizens.  The  European  Council 
the 
importance  of  the  IDA  Programme  as  an  essential  component  of  TEN-Telecom. 

is  therefore  requested  to  confirm 

these  administrative 

15 

TRANS-EUROPEAN  TRANSPORT  NETWORK 

I  Progress 

The  development  of 

1. 
or  upgrading  of  links  for  the  various  modes  of  transport,  in  particular  for  the  road  and  rail 
network. 

the  Trans-European  Transport  Network  (TEN-Tr)  requires  the  building 

TEN 
Transport 
(common 
position) 

all  railways 

HST 

roads 

existing 

add  or 
upgrade 

existing 

add  or 
upgrade 

existing 

add  or 
upgrade 

Network 

50,300 

23,600 

5,300 

13,600 

48,000 

27,300 

Priority 
Projects 

6,766 

4,044 

5,234 

1 

The  "all  railways"  figures  include  high  speed  (HST)  and  conventional  lines.  In  the  years  1993-
1995  about  2500  km  of  roads  and  about  2000  km  of  railways  have  been  started.  Substantial 
work  has  also  been  done  on  the  airports  of  the  TEN-Tr.  An  important  upgrading  programme  is 
being  prepared  for  the  ports,  which  is  due  to  be  implemented  next  year  and  focuses  particularly 
on  short  sea  shipping. 

Priority  Projects 

Community  resources  have  been  focused  on  the  priority  projects  endorsed  by  the  European 

2. 
Council  at  Essen,  (see  Table  1 for  progress  on  these  projects). 

Community  legislative  framework 

In  October  1995,  a  Common  Position  was  adopted  in  the  Council  on  the  Commission 

3. 
proposal6  on  the  guidelines  for  the  development  of  a  trans-European  transport  network  The 
European  Parliament  will  shortly  complete  its  second  reading. 

The  Council  Regulation  on  Financial  Aid  for  TENs7  came  into  force  on  23  September 

4. 
1995. 

The  Council  adopted  a  common  position  on  the  High  Speed  Train  Interoperability 

5. 
Directive8  in  June  1995.  The  "Association  Européene  pour  l'Interopérabilité  Ferroviaire"  (AEIF) 
has  been  established,to  help  develop  standards  under  this  Directive 

Commission  proposal  No  C O \ l ( 9 4)  106 

7  Council  Regulation  No.  2236/95/fiC. 

K  Commission  proposal  No  COM  (94)  107 

Financing 

6.  An  overview  of  the  present  status  of  financing  for  the  TEN-Tr  and  in  particular  the  14 
priority  projects  is  set  out  in  the  following  table  (all  figures  in  MECU): 

Total 
costs  up 
to  2010 

Total  Expenditure9 

95-99 

95 

EU  grants  up 
1993  to  1995 

EU  loan  operations  up 
1993  to  1995 

Trans 
port 
Budget10 

Structural 
Assistance 
11 

EIB 

EIF 
guarantees 

Network 

400,000 

220,000 

>11,000 

625 

3,962 

6,417 

161 

F'riority 
Projects 
only 

99,000 

45,000 

c.  2,600 

c. 
362.512 

687 

5,800 

71 

The  European  Investment  Bank  (EIB)  has  been  contracting  loans  at  a  rate  of  IBECU  a  year 

7. 
for  priority  and  related  projects,  and  is  likely  to  continue  to  do  so.  EIB  loans  for  TEN  projects 
are  being  extended  in  the  framework  of  a  "TEN  window"  set  up  by  the  Bank  following  the 
Essen  Council13. 
(688  MECU)  and  some  of  the  motorway  projects. 

In  the  course  of  1995,  it  has  concluded  new  lending  operations  for  the  0resund 

Created  at  the  Edinburgh  Summit  in  order  to  cover  specific  financial  needs  in  relation  to 
8 
TENs,  and  formally  established  in  June  1994,  the  EIF  has  already  become  involved  in  several 
priority  TENs. 
extended.  The  Fund  is  pursuing  the  identification  of  suitable  financial  arrangements  for  other 
priority  projects,  notably  CTRL. 

In  the  case  of  Malpensa  airport,  71  MECU  worth  of  guarantees  have  been 

9 
The  Essen  European  Council  confirmed  the  objective  of  facilitating  public-private 
partnerships  (PPPs)  for  TEN-Tr  projects  (see  Annex  I).  PPPs  are  in  place  for  the  Channel 
Tunnel  Rail  Link  and  West  Coast  Main  Line  in  the  UK  and  have  been  introduced  for  three 
sections  of  the  Greek  motorways 

As  reported  In  Member  Stales  to  the  Commission 

11ns  will  include  any  financing  <>i  financial  support  received  from 

Community  sources 

Further  to  the  TFN  budget  line  of  this  year 

it  includes  grants  under  another  budget  line  of-4 (JO  Ml-'.Cl'  between  I WO  and  1994. 

Hie  Community  structural  assistance  comprises  the  Cohesion  and  the  structural  funds  in  particular  I F D F R;  the  figures  are 

estimates 

Hie  priority  proiccts  have  only  been  identified  as  a  group  lor  funding  purposes  since  the  adoption  of  the  TF.Ns  Financial 

Regulation  However.  Community  funding  was  given  to  projects  which  became  priority  proieds.  prior  to  1995 

Loans  extended  under  the  TFN  window  can  be  characterised  by  longer  maturities,  adequate  financial  engineering  and  eail\ 

involvement  m  the  financial  and  contractual  structuring  v\  the  project. 

17 

10.  The  Community  public  procurement  and  competition  rules  are  often  perceived  as  a  barrier 
to  PPPs  by  project  promoters.  Analysis  has  shown  that  the  rules  do  include  flexibility  for  the 
setting  up  of  PPPs.  The  Commission  has  agreed  guidance  on  the  application  of  Community 
public  procurement  and  competition  rules  (see  Annexes  II  and  III).  The  Commission  has  also  set 
up  a  One-Stop  Help  Desk  (fax:  32  2  295  6504)  on  these  matters  encouraging  early  consultation 
by  project  promoters  to  give  better  guidance  and  support  . 

11.  The  Commission  is  drawing  up  a  "Common  Transport  Infrastructure  Promotion 
Programme"  (CTIPP),  within  the  framework  of  Regulation  2236/95,  to  promote  financial 
planning  on  a  multi-annual  basis  for  TEN-Tr  projects.  This  will  also  provide  an  overview  of 
Member  States'  commitments  to  projects  within  the  TEN-Tr. 

Coordination 

12.  The  Commission  has  continued  to  hold  project  seminars  for  most  priority  projects;  monthly 
meetings  keep  the  Commission,  the  European  Investment  Bank  (EIB)  and  the  European 
Investment  Fund  (EIF)  abreast  of  their  respective  activities;  two  high-level  groups  are  ensuring 
better  coordination  of  the  satellite-based  positioning  and  navigation  project  GNSS  and  the 
various  aspects  of  road  transport  telematics  Germany  has  taken  on  the  coordination  of  the 
work  on  a  radio-based  traffic  message  channel  for  road  traffic,  with  the  help  of  1  1 other 
Member  States. 

13.  The  Essen  European  Council  confirmed  the  need  for  cross-border  "project  authorities"  for 
the  larger  international  projects,  reflecting  the  positive  experience  of  such  projects  in  e.g.  the 
0 r e s u nd  project  and  the  negative  impact  of  a  lack  of  such  coordination  e.g.  on  the  PBKAL. 
"European  Economic  Interest  Groupings"  (EEIGs)  are  a  suitable  legal  instrument  to  ensure  cross-
bordei  co-ordination  in  the  planning  phase  of  trans-national  projects.  A  number  of  these  have 
been  established:  "Alpetunnel"  for  the  HST  Lyon-Turin  and  "SEM"  for  the  HST  South 
"ERTMS"  has  been  set  up  by  the  operators  of  the  high  speed  train  services  to  develop  a 
common  European  control  command  system.  The  Austrian  Government  has  created  a  new 
railway  infrastructure  management  company  for  the  Brenner  link,  in  which  they  would  like  to 
include  partners  from  other  Member  States. 

Third  Countries 

14.  The  Commission  considers  the  development  of  TENs  links  to  central  and  eastern  Europe  as 
a  fundamental  part  of  the  pre-accession  strategy  for  these  countries  and  is  therefore 
concentrating  efforts  on  these  tangible  connections  (  see  the  relevant  section  of  this  annual  report 
for  more  details).  Work  continues  on  linking  the  TEN-Tr  to  the  networks  of  third 
countries,coordinated  through  the  regular  meetings  of  the  G24,  chaired  by  the  Commission  A 
Communication  is  being  prepared  on  connecting  TEN-Tr  with  third  countries'  networks 

15  The  Barcelona  Euro-Mediterranean  Conference  is  expected  to  create  a  framework  for 
promoting  infrastructure  projects  in  the  area,  with  support  from  the  newly  established 
Community  assistance  programme  MEDA.  More  details  to  be  found  in  the  relevant  section  of 
this  report. 

18 

II.  PROBLEMS 

Legislation 

^*^ 

16.  The  guidelines  for  the  TEN-Tr  are  only  proceeding  slowly  through  the  legislative  process, 
blocked  by  disagreement  between  the  Council  and  the  European  Parliament  on  whether  to 
include  the  priority  projects  agreed  at  Essen  and  on  whether  to  include  an  article  on  the  need  for 
environmental  assessments.  The  Commission  believes  every  effort  should  be  made  to  resolve 
these  disagreements  as  soon  as  possible. 

Priority  Projects 

17  See  Table  2  for  details.  Problems  have  also  been  encountered  because  of  Member  States' 
reluctance  to  adapt  their  national  priorities  to  take  account  of  the  trans-European  networks. 
While  welcoming  the  concept  of  TENs  and  their  advantages  for  Europe  in  terms  of 
competitiveness,  jobs  and  economic  cohesion,  many  countries  take  the  attitude  that  it  is  up  to 
other  countries  to  develop  the  network,  while  they  concentrate  on  national  priorities  without 
adapting  their  planning. 

18.  Methods  used  by  national  authorities  to  evaluate  the  socio-economic  benefits  of  their 
sections  of  large  scale  cross-border  infrastructures  substantially  underestimate  the  true  gains 
because  they  each  exclude  the  benefits  to  non-nationals.  Such  methodology  may  be  quite 
appropriate  when  deciding  the  level  of  national  subsidy  for  a  national  project,  however  it  means 
that,  taken  together,  the  national  measures  of  socio-economic  benefit  miss  out  at  least  half  of  the 
international  benefits.  For  example,  the  benefits  to  French  passengers  travelling  on  the  English 
section  of  the  London-Paris  High  Speed  Train  are  being  missed,  as  are  the  benefits  to  UK 
travellers  on  the  French  section 

19.  Research  done  for  the  Commission  in  the  context  of  the  Paris-Brussels-Cologne-
Anistcrdam-London  (PBKAL)  High  Speed  Train  working  group  and  endorsed  in  their  report 
shows  that  including  these  neglected  benefits  increases  the  socio-economic  return  of  the  project 
by  a  quarter,  taking  it  up  from  7.2%  to  9.5%. 

20  This  international  element  of  the  socio-economic  return  of  a  particular  priority  project  can 
be  thought  of  as  the  'Community  benefit'.  Work  is  currently  underway  to  measure  how  much  has 
been  neglected  for  other  priority  projects,  alihough  figures  as  large  as  that  found  for  the  PBKAL 
are  unlikely  since  that  project  concerns  so  many  Member  States. 

21 
Failure  to  take  account  of  the  'Community  benefit'  of  the  priority  projects  is  one  aspect  of  a 
recurring  problems  of  low  or  contlicting  national  priorities  for  many  of  the  priority  projects.  This 
is  reflected  in  terms  of  slow  progress  in  defining  projects  (e.g.  Brenner),  contlicting  scheduling 
on  the  part  of  national  authorities  each  side  of  the  border  (e.g.  PBKAL,  HST-East),  failure  to 
resolve  financing  questions  (e.g.  PBKAL,  Brenner,  HST-East)  and  inability  to  form 
multinational  projeci  authorities  to  coordinate  work  on  projects  (e.g.  PBKAL,  Brenner).  See 
below  for  a  more  de 

;led  analysis  of  problems  concerning  the  priority  projects.  The 

Commission  believes  that  Member  States  should  re-examine  the  prioritisation  at  present  given  to 
TENs  projects,  especially  those  endorsed  as  priority  projects  at  Essen. 

22.  The  Commission  believes  that  the  definition  of  several  of  the  priority  projects  should  be 
altered  to  reflect  better  the  needs  of  the  trans-European  transport  network.  In  particular,  the  High 
Speed  Train  East  should  be  extended  to  the  east  and  renamed  the  HST  Paris-Munich-Vienna. 
The  rail/combined  transport  north-south  route  in  Ireland  should  be  extended  to  Londonderry 
in  the  north.  The  Lisbon  -Valladolid  motorway  should  have  a  different  route  as  proposed  by 
the  Portuguese  government.  The  Ireland  -UK-Benelux  road  link  should  be  extended  to  cover 
rail  and  combined  transport.  This  redefinition  should  be  carried  out  in  the  context  of  discussion 
on  the  TEN  guidelines. 

Financing 

23.  As  requested  at  the  Cannes  European  Council,  a  review  of  the  costs  of  the  priority  projects 
has  been  undertaken  to  try  to  identify  possible  reductions.  The  Commission  has  sought 
information  on  costs  from  Member  States  and  has  established  working  groups  to  examine  in 
detail  the  possibility  for  cost  reductions  on  some  particular  projects.  PBKAL,  HST  East,  the 
Brenner  link  of  the  HST  North-South  and  the  Greek  Motorways  The  results  so  far  indicate 
cost  increases  rather  than  savings  and  current  estimated  total  investment  costs  for  the  14  priority 
projects  are  about  99  BECU  (compared  to  92  BECU  mentioned  at  the  Essen  European  Council). 
Reduction  of  these  costs  seems  impossible  without  drastically  reducing  the  feasibility  and  scope 
of  the  projects.  The  Commission  is  prepared,  with  the  help  of  expert  advice,  to  go  more  deeply 
into  the  question  of  cost  reductions  with  Member  States;  however,  it  considers  the  matter 
primarily  a  responsibility  of  the  authorities  in  the  Member  States  concerned. 

24.  The  budgetary  restrictions  in  Member  States  continue  to  have  a  significant  impact  on 
transport  infrastructure  investment  and  appear  likely  to  delay  the  progress  of  the  TEN-Tr. 

25  The  planned  Community  TEN-Tr  budget  for  1995  -  1999  provides  less  than  4%  of  the  total 
required  investment  for  the  14  priority  projects  over  that  period.  Therefore,  although  Council 
Regulation  2236/95  on  Financial  Aid  for  TENs  allows  the  Community  to  fund  up  to  10%  of  the 
total  project  costs,  this  will  not  be  possible.  Member  States  have  bid  for  nearly  three  times  the 
amount  available  this  year 

Problems  with  a  number  of  priority  projects  have  highlighted  the  difficulties  of  not  being 
In  early  1995,  the 

26. 
able  to  make  multi-annual  financial  commitments  from  the  TEN-Tr  budget. 
Commission  requested  information  from  Member  States  on  their  plans  up  to  1999  and  is  now 
drawing  up  a  multi-annual  programme  covering  public,  private  and  Community  funding 
Analysis  based  on  these  figures  shows  severe  financing  problems  for  two  projects  in  particular 
the  HST  East  and  the  HST  PBKAL  For  the  PBKAL,  Member  States  have  requested 
additional  Community  to  help  meet  these  shortfalls  of  200  MECU  for  the  Belgian  section,  120 
MECU  for  the  Netherlands  section  and  240  MECU  for  the  UK  section  (CTRL)  The  French 
Government  has  requested  200  MECU  of  additional  Community  funding  for  the  HST  East 

27.  While  innovative  forms  of  infrastructure  provision  are  emerging,  the  existing  financial 
support  mechanisms  used  by  the  public  sector  are  not  evolving  at  the  same  pace  and  are  too 

20 

often  oriented  towards  traditional  public  financing  schemes.  The  Community  is  making  specific 
efforts  to  adjust  and  reshape  its  financial  support  mechanisms  to  meet  these  emerging  needs,  for 
example  by  creating  the  EIF,  setting  up  the  "TEN  window"  at  the  EIB,  and  developing  new 
forms  of  Community  budget  support.  Member  States  have  not  really  taken  up  the  challenge  of 
finding  alternatives  to  public  finance  for  projects.  The  rather  low  figures  for  the  financial  return 
on  investment  for  many  of  the  projects  make  such  propositions  unattractive  for  the  private 
sector,  unless  public  commitments  are  given  to  raise  the  profitability  or  reduce  risk.  That  many 
Member  States  are  not  moving  to  promote  PPPs  is  shown  by  the  low  proportion  (c  5  %)  of 
In  a 
applications  for  funding  from  the  TEN-Tr  budget  in  the  form  of  interest  rate  subsidies. 
number  of  Member  States  legal  barriers  still  exist,  which  are  at  odds  with  the  European 
Council's  repeated  calls  for  the  promotion  of  PPPs 

28.  Of  the  14  priority  projects,  most  are  purely  public,  but  some  have  left  some  scope  for  the 
involvement  of  private  partners  (Malpensa  airport,  TAV  Turin-Venice,  Netherlands  and  UK 
sections  of  PBKAL,  West  Coast  Main  Line,  Ireland-UK-Benelux  road  links,  PATHE 
motorway).  Of  those  priority  projects  still  at  a  more  conceptual  stage,  the  HST  Lyon-Turin, 
the  HST/combined  transport  Munich-Verona  (Brenner),  the  Lisbon-Valladolid  motorway 
and  HST  South  are  all  serious  potential  candidates  for  public/private  partnerships. 

29.  The  lack  of  appropriate  sources  of  equity  deserves  a  particular  mention,  as  this  creates  a 
"confidence  gap"  related  to  the  risk  of  the  project,  which  acts  as  a  barrier  to  the  development  of 
PPPs.  Public  equity  support  would  attract  investors  and  introduce  new  forms  of  flexibility  in  the 
financial  structure  of  PPPs.  The  EIF's,statute  specifically  provides  for  the  possibility  of  equity 
provision,  however,  a  positive  decision  from  the  EIF's  General  Meeting  is  needed  to  allow  the 
Fund  to  widen  its  activities,  which  are  currently  limited  to  issuing  loan  guarantees.  The 
Commission  strongly  recommends  that  the  necessary  steps  are  endorsed  by  the  Fund's 
shareholders  at  the  next  General  Meeting.  (See  Annex  I) 

30.  Besides  equitv.  other  forms  of  public  support  should  to  be  used  whenever  appropriated  to 
facilitate  the  launching  of  a  particular  project.  The  Commission  is  currently  examining  the 
possible  role  of  several  innovative  means  of  support,  such  as  subordinated  lending  and  other 
forms  of  quasi-equity.  contributions  in  kind,  etc 
of  the  projects  (eg  Brenner  tunnel,  HST  Lyon-Turin)  the  need  for  a  more  diversified  loan 
supply,  possibly  involving  the  borrowing  and  lending  powers  of  the  Community,  could  become 
apparent  and  should  therefore  not  be  excluded  altogether  The  Commission  is  also  examining 
other  ways  of  reducing  the  confidence  gap  by  helping  counter  non-commercial  risk,  since  this  is 
identified  by  the  private  sector  as  a  particular  obstacle  to  its  involvement.  The  Commission  will 
report  on  its  work  in  1996.  (see  also  Annex  I) 

In  view  of  the  large  financing  needs  of  some 

Coordination 

31.  Although  some  European  Economic  Interest  Groupings  (EEIGs)  have  been  established, 
there  is  still  considerable  reluctance  to  create  project  entities  (see  Annex  IV)  The  Commission 
feels  this  is  particularly  the  case  for  the  PBKAL  and  the  Brenner  link.  The  lack  of  such 
entities  is  often  an  additional  barrier  to  the  development  of  PPPs 

21 

32.  The  unlimited  liability  of  EEIGs  makes  them  inappropriate  for  the  construction  phase  of  a 
project.  The  Commission's  proposal  for  a  European  Company  Statute,  on  the  table  in  the  Council 
for  several  years,  would  overcome  this  problem  .  If  agreement  cannot  be  reached  quickly  on  this 
broad-ranging  instrument,  at  least  an  alternative  version,  tailor-made  for  transport  infrastructure 
should  be  adopted. 

Imputation  of  costs 

33.  Despite  the  important  and  constantly  rising  demand  for  transport  infrastructure  and  related 
services,  the  transport  sector  appears  unable  to  generate  sufficient  project  related  revenues.  The 
role  of  direct  user  chaiges  deserves  closer  examination,  since  this  type  of  revenue  would  not 
only  increase  the  scope  for  private  involvement  by  increasing  the  financial  profitability  of  the 
projects  concerned,  but  would  also  help  to  foster  competition  between  transport  modes  on  a 
balanced  basis,  while  improving  economic  resource  allocation  in  general.  User  charges 
moreover  allow  the  internalisation  of  all  or  part  of  the  external  costs  related  to  transport.  This 
will  be  considered  further  in  the  Commission's  Green  Paper  on  the  Internalisation  of  External 
Costs 

?? 

III.  CONCLUSIONS  AND  RECOMMENDATIONS 

34.  The  main  conclusions  and  recommendations  are  to  be  found  in  the  front  part  of  this  report. 
They  are  therefore  not  repeated  here.  However,  some  final  comments  are  added 

35.  The  Council  and  European  Parliament  should  seek  to  adopt  the  transport  network  guidelines 
as  quickly  as  possible.  The  TEN  financial  assistance  regulation  is  based  on  the  assumption  that 
these  guidelines  are  in  place.  Only  for  1995  it  contains  a  transitional  clause  which  allows  to  use 
the  TEN  budget  line  without  guidelines.  The  1996  budget  execution  procedures 
guidelines  for  the  selection  of  projects  to  be  supported. 

require  valid 

36.  The  progress  made  so  far  in  establishing  the  Trans-European  Transport  Network  is 
remarkable  but  the  progress  has  been  slower  than  anticipated  particularly  on  some  priority 
projects.  The  momentum  introduced  by  the  Essen  summit  should  be  increased  in  order  to  bring 
these  priority  projects  back  to  motion.  The  current  methodologies  under-estimate  the  economic 
return  of  international  transport  infrastructure  projects  ;  this justifies  to  top  up  the  Community 
funds  currently  available  for  TENs  but  also  to  top  up  the  current  budget  allocations  of  the 
Member  States  to  these  crossborder  projects. 

37.  Although  the  examination  of  individual  priority  projects  shows  substantial  scope  for 
enhancing  the  involvement  of  the  private  sector,  very  few  public-private  partnerships  (PPPs)  are 
being  set  up.  Member  States  should  reexamine  the  potential  for  PPPs  and,  where  there  are  legal 
or  administrative  barriers  to  the  implementation  of  PPPs,  to  make  any  necessary  changes.  The 
Commission  will  act  as  follows: 

in  relation  to  PPPs 

the  various  ways  to  cope  with  non-commercial  risks. 

Setting  up  of  the  Commission's  "One  stop"  Help  Desk 
Study 
Setting  up  a  multi-annual  framework  for  the  financing  of  TEN-Tr  projects  covering  public, 
private  and  Community  funding  (the  Common  Transport  Infrastructure  Promotion 
Programme"  or  CTIPP). 
Starting  the  discussion  on  the  internalisation  of  external  costs  and  more  balanced 
for 
competition  between  transport  modes  by  forwarding  a  Green  Paper  on  the  subject 
adequate  project-related  revenue  generation,  notably  in  the  form  of  direct  user  charge 

38  The  efforts  to  link  the  Transport  TEN  to  the  networks  of  third  countries  should  be 
continued,  aiming  particularly  to  foster  public-private  partnerships  for  projects  of  mutual  interest. 

23 

Table  1:  PROGRESS  ON  TRANSPORT  PRIORITY  PROJECTS 

the  North-South  High  Speed  Train  (HST)/Comhined  Transport 

For 
Verona)  (450  MECU  spent  in  1995)  work  to  upgrade  for  high  speeds  is proceeding  as  planned  on  a  200 
km  long  section  between  Berlin  and  Nurnberg.  Signalling  work  has  been  undertaken  on  the  Inn  Valley 
section  in  Austria. 

(Berlin-Nurnberg-Mùnchcn-

For  PBKAL  (Paris-Brussels-Cologne-Amsterdam-London  HST)  (500  MECU  spent  m  1995) 
the  high 
speed  train  links  front  Brussels  to  Paris  and  to  the  Channel  Tunnel  are  progressing,  with  the  building  and 
upgrading  of  links  underway  and  proceeding  according  to  the  revised  schedule.  For  the  Channel  Tunnel 
Rail Liitk  (CTRL)  in the  UK, two bidders  have been  shortlisted  and  a winner  is expected  to be  announced 
by  the  end  of  the  year.  A  Commission  chaired  working  group  was  established  for  the  PBKAL  project, 
which  has  drawn  up  a  report  on  the  scope  for  financing  the  projecl. 

The  Spaiush  and  French  Governments  have  concluded  an  agreement  to  build  the  HST  South  (Madrid  -
Montpellier/Dax)  (150  MECU  spent  in  1995)  with  the  possibility  of  involving  the  private  sector  in  the 
cross-border  section  from  Figueras  to  Perpignan.  A  European  Economic  Interest  Grouping  (EEIG)  has 
been  established  for  this,  under  the  supervision  of  an  Intergovernmental  Committee. 

The  Dutch  Parliament  lias  authorised  the  starting  of  the  procedures  necessary  to  obtain  a  building  permit 
for  the  Bctuwe  Railway  Line  for  combined  transport  (80  MECU  spent  in  1995)  This  process  should 
take  about  Iwo  years,  after  which  conslniclion  may  starl. 

The  Italian  and  French  Govenuncnts  have  agreed  to  undertake  the  necessan,  studies  lo  compete 
preparatory  work  for  the  building  of  the cross-border  section of the  HST  Lyon-Turin  (40  MECU  spent  in 
1995).  the  tunnei  between  St-Jean  de  Maurienne  and  Susa.  An  EEIG  has  been  established  to  cam'  ou' 
teclmical  studies  and  an  Intergovernmental  Committee  will  start  work  in  early  1996  on  preparing  a 
concession  for  this  link 

The  Greek  motorways  (290  MECU  spent  in  1995)  have  been  under  constniction  since  1990  and  arc 
progressing  as  scheduled.  Tendering  has  been  completed  for  about  40% of  the  PATHE  branch  and  25% 
of  the  Via  Egnatia.  Work  on  the  200km  Igoumenitsa-Panagia  link  started  this  year.  Several  sections  of 
these  projects  will  be  built  by  private  concessions. 

The  Cork-Dublin-Belfast-Larne-Stranraer  conventional  rail  link  (62  MECU  spent  in  1995) 
schedule  and  should  be  completed  by  1999 

is  on 

The  constniction  of  the  Malpensa  airport  (Milan  (1X0 MECU  spent  m  1995)  is  largely  complete  and  its 
connection  to  the  railwav  network  is  progressing  well 

For  the  0resund  fixed  link.  (450  MECU  spent  in  1995)  work  stalled  on  the  tunnel  under  the  Drogden 
Channel  in July  1995. as  did  dredging  and  reclamation  work.  Work  on  the  high  bridge  across  the  Flinle 
Channel  and  approach  bridges  for  this  is  due  to  stan  in  Novcmher  1995 

For  the  Nordic  Triangle  (.160  MECU  spent  in  1995).  major  work  has  been  carried  out  on  the  Swedish 
Malmo-Goteborg  and  Malmo-Stockholm 
sections 
Malmo-Gôleborg(E6).  Malmo-Stockholm  (E4)  and  Stockholm-Norwegian  border  (E18)  is progressing.  In 
Finland, the  road  sections  east  of  Turku  and  the  Helsinki  bypass  are  progressing.  Major  upgrading  of  the 
rail  line  between  Turku  and  Helsinki  is  underway  and  some  work  has  started  on  other  sections  such  as 
Kereva-Lahti. 

links.  Work  on 

t lie  Swedish 

road 

rail 

For  Traffic  Management  projects,  work  is  in  hand  on  the  civilian  satellite  European  Global  Positioning 
and  Navigation  System  (GNSS)  and  the  first  transponders  have  been  ordered  from  Inmarsat.  The 
implementation  of  the  ground  network  started  in  Summer  1995.  A  bilateral  agreement  with  our  US 
partner, the Federal  Aviation  Administration,  was successfully  concluded  at  the end  of  October.  An  EEIG 
has  also  been  established  by  the  operators  of  the  high  speed  train  services,  which  is  working  on  a 
common  European  Rail  Traffic  Management  System.  A  radio-hased  digital  road  traffic  warning 
system  (RDS-TMC)  is  shortly  to  be  initiated,  cooidinaled  between  1  I  Member  States,  wiih  support  from 
the  TENs  budget  line. 

24 

Table  2:  PROBLEMS  CONf  ERNING  TRANSPORT  PRIORITY  PROJECTS 

Little  progress  has  been  made  on  a  decision  to  build  the  Brenner  base  tunnel  through  the  Alps,  an 
essential  part  of  the  HST/combined  transport  North-South  (Berlin  to  Verona,  via  Miinchen  and 
Brenner).  The  economic  benefits  of  this  project  will  largely  accrue  to  Southern  Germany  and  Northern 
Italy, as  most of the traffic  will  only  transit  through  Austria.  Austria's  overwhelming  interest  is to  promote 
a  switch  from  road  to  rail  for  transit  traffic,  in  order  to  limit  the  negative  impact  on  the  environment, 
however  this  interest  is  not  sufficient  to justify  Austria's  financing  its  share  of  the  costs  of 
the  tunnel 
alone.  Additional  economic  evaluation  is being  undertaken,  wliich will  not  be completed  until  the end  of 
1996.  This will  be  complemented  by  a  Commission  study  on  traffic  forecasting  for  the  whole  Alpine 
region.  The  Austrian  Government  have  created  an  infrastnicture  management  company,  in  which  they 
would  like  to  include  international  partners,  but  this  is also  proving  difficult 

Most  of the  work on  the  PBKAL  (Paris-Brussels-Kôln-Amsterdam-London  HST)  project  is  now  seriously 
behind  original  schedules,  which  is having a significant  financial  impact  on  the completed  French  section, 
causing  estimated  losses  lo  SNCF  of  300  MECU.  The  report  of  the  PBKAL  working  group,  chaired  by 
the  Commission,  identified  significant  problems  with  the  financing  of  the  links  to  the  north  of  Antwerp 
and  east  of  Liege  in  Belgium,  highlighting  a  financing  shortfall  currently  of  the order  of  1 BECU.  Using 
the figures  identified  for  this working  group, after  taking  into account  UK support, there  is also  a  shortfall 
It  is  thus  clear  that  a  lack  of  resources  could  create  major  financial 
of  some  240  MECU  for  CTRL. 
problems  for  this  project.  The  absence  of  European-level  companies  to  build  and  operate  railway 
infrastructure  is emerging  as  a  major  obstacle  to  financing. 

The  HST  East  (Pans-eastern  France-southern  Germany,  including  Luxembourg  link)  remains  a  project 
requiring  substantial  public  support  Under  the  current  French  legal  system  private  sector  involvement  is 
ver>'  difficult,  however  the  French  Government  have  agreed  to  examine  the  possibility  o\' public-private 
partnership  financing  for  the  second  phase.  In  1994. the  French  Government  officially  requested  a  large 
Community  subsidy  for  this  project  (530  MECU  of  which  360  MECU  over  the  period  1995-99).  A 
working  group, established  by  the  Commission  and  French  Ministère  des Transports,  has  reported  that  the 
current  scarcity  of  resources  in  the  TEN  budget  line  will  result  in a  project  financing  gap  in  the  range  of 
200  MECU 

The  Portuguese  Government  has  indicated  that  it  wishes  to  realign  its  section  of  the  Lisbon-Valladolid 
motorway.  On  the  Spanish  side,  progress  is  slow  with  major  technical  studies  lasting  three  years  still 
needed  before  construction  can  start 

Little  progress  has been  made  on  the  Ireland-UK-Benelux  road  link,  in  spite  oi~  its crucial  importance. 

Although  the French  and  Spanish  governments  have agreed  in principle  to  its construction,  no date  has yet 
been  agreed  for  work  to  start  on  the  HST  South  (Madrid  -  Montpcllicr/Dax). 

The  Betuwe  conventional  rail/combined  transport  line  has  been  delayed  because  of  planning  and 
political  problems;  previously  due  to  start  m  1995-96  it  is  now  likely  lo  be  two  years  later 

2S 

Annex  I 

FINANCING  PRIVATE  /  PUBLIC  PARTNERSHIPS 

General 

The  Essen  Council  endorsed 

1. 
the  recommendation  of  the  "Christophersen  Group" 
confirming  the  objective  of  facilitating  private/public  partnerships  and  inviting  Member 
States,  the  Commission,  the  EIB  and  the  EIF  to take  appropriate  measures  to  this  effect.  One 
of 
the 
the  main  reason  for 
implementation  of  TENs. 

the  PPP  model  was  the  need 

to  accelerate 

introducing 

2. 
The  main  obstacles  to  changing  the  current  model  of  constructing  and  operating  the 
priority  TENs  are  the  lack  of  financial  profitability  of  many  projects  as  well  as  a  number  of 
institutional  and  political  barriers.  Moving  away  from  the  traditional  approach  of  public 
funding  for  major  infrastructure  projects  is not  easy.  Project  financing,  the  required  financing 
set-up  for  PPPs,  means  that  debt  is secured  on  the  project  revenues  and  physical  assets,  rather 
than  on  the  credit  support  of  the  project  sponsor.  The  complexity  of  the  legal  and  financial 
basis  of  PPPs,  combined  with  familiarity  with  public  financing  schemes,  put  PPPs  at  an 
initial  disadvantage  in  relation  to  the  latter.  As  the  public  sector  moreover  absorbs  risk  in  a 
non-transparent  way,  financial  failure  does  rarely  come  into  the  open.  This  favours  the 
widely-held  belief  that  the  cost  of  capital  for  state-backed  infrastructure  is  lower  than  for 
comparative  financing  structures  involving  private  risk-taking. 

Limited  financial  profitability  is  a  common  characteristic  of  projects  in  the  transport 
3. 
field.  They  therefore  inevitably  need  substantial  grant  support,  amounting  to  significantly 
more  than  allowed  under  Regulation  2236/95,  which  limits  Community  support  to  10%  of 
the  total  project  costs  The  Community's  Structural  and  Cohesion  Funds  provide  an 
alternative  source  of  support  for  projects  in  areas  which  qualify.  For  other  projects,  the  grant 
contribution  from  the  Community  will  remain  marginal.  National  budgetary  support  is  also 
becoming  an  increasingly  scarce  resource  as  Member  States  exert  strict  control  over 
budgetary  outlays  in  the  run-up  to  monetary  union. 

4 
The  Community  is  gradually  adjusting  its  financial  support  instruments  to  enable  it  to 
support  this  change  in  approach  by  participating  in  the  financing  of  PPP  operations  whenever 
appropriate.  However,  the  decisions  to  set  up  PPPs  are  taken  at  Member  State  level,  where 
it  is  clear  that  the  traditional  inclination  towards  public  financing  is  still  verv  much  alive 

Member  States  should  be  urged  lo  renew  their  efforts  to  increase 
the  involvement  of  the 
private  sector  in major  transport  infrastructure  projects.  The  Commission  has  prepared  a  set 
of  proposals  on  financing 

issues  which  may  help  lo  go  in  this  direction. 

Proposals  for  the  financing  of  PPPs 

5.  Grants  are  the  only  form  of  support  capable  of  filling  the  "profitability  gap"  in  some 
PPPs.  These  grants  should  not  necessarily  take  the  form  of  cash  endowments  They  can  also 
consist  of  transfers  of  assets  (land,  track,  equipment),  on-going  concerns,  or  pre-existing  and 
profitable  links  of  the  same  network  Public  subsidies  should  be  determined  by  the  expected 

20 

socio-economic  benefits  of  a project,  which  for  infrastructure  projects  will  normally  be  above 
their  financial  profitability. 

Slates,  regions, 
proportion 
Union-wide 

local  authorities  and  of  course 

in 
lo  the  benefits  they  expect  to  derive  from  projects.  In  the  Commission's  view  the 
interests  are  not  sufficiently  represented 

should  contribute 

the  Community, 

appropriations. 

in  budgetary 

6. 
Equity  capital  is  the  foundation  of  the  financing  structure  of  any  private  firm,  including 
infrastructure  companies.  Public  equity  does  not  raise  the  profitability  of  a  project  as  such, 
but  helps  to  absorb  risk  and  attract  private  equity.  A  project's  equity  base  is  the  prerequisite 
for  attracting  lending  support  in  sufficient  quantities,  filling  the  "confidence  gap"  between 
investors  and  lenders.  Public  equity  support  also  introduces  new  forms  of  flexibility  in  the 
financial  structure  of  PPPs.  Compared  to  grants,  it  allows  for  a  certain  return  should  the 
therefore,  for  the  possibility  of  recouping  funds  and  re-cycling 
project  perform  well  and, 
them  into  other  projects.  The  public  sector  can  also  set  a  cap  on  its  remuneration,  thus 
enhancing  a  project's  private  profitability. 

Member  States  might  want  to  consider  using  pail  of  the  grants  from  the  TEN  Budget  line  lo 
finance  some  of  their  equity  holdings  in priority  projects.  More  generally,  public  authorities 
should  try  to  increase  their  involvement  as  equity  providers  in PPPs,  hence  establishing 
true 
partnership  relations  with  private  promoters  and 

investors. 

7. 
Subject  to  agreement  at  its  General  Meeting  in  June  1996,  the  EIF  will  soon  be  able  to 
increase  its  role  as  an  equity  provider  to  TEN  projects.  The  EIF's  involvement  in  equity 
operations  at  this  initial  stage  will  remain  limited.  One  opportunity  which  the  Fund  might 
want  to  consider  is  the  investment  of  equity  in  project  development  authorities,  as  the 
embryo  of  future  project  implementing  bodies. 

The  Community  should  strongly  support 
the  need  for  substantial  amounts  of  equity  from  private  and  public  investors  is 
apparent 

this  enlargement  of  the  Fund's  role,  especially  as 
increasingly 

in  the  framework  of  public-private 

partnerships 

8. 
Some debt  instruments  (subordinated  debt in  particular)  should  be mentioned  as  valuable 
means  of  providing  risk-bearing  funds.  Subordinated  loans  (or  quasi-equity  in  general)  allow 
for  greater  risk  exposure  than  senior  debt  and  therefore  are  a  useful  alternative  to  equity  in 
a  number  of  instances.  Subordinated  loans  notably  offer  the  advantage  that  managerial 
control  remains  in  the  hands  of  the  equity  providers  as  long  as  debt  is  serviced  This  can 
be  useful 
if  the  public  sector  wants  to  share  part  of  the  risks  without  interfering  in  the 
management  of  the  project  in  question 

The  use  of  various  forms  of  quasi-equity  should  be  encouraged,  wherever  appropriate, 
to 
favour  particular  forms  of  co-operation  between  the public  and  the private  sector.  The  new 
in  the  form  of  subordinated  debt  and  quasi-equity  m 
favours  support 
T'inancial  Regulation 
general  e.g.  in  the  form  of  interest  subsidies  or  of  subsidies 
the  cost  of 
fees  (whether  extended  by  the  EIF  or  others),  etc. 
guarantee 

towards  meeting 

9 
At  present  the  EIB  is  the  main  loan  finance  provider  for  the  priority  projects.  In  a  few 
specific  instances,  it  might  however  prove  useful  to  seek  a  diversification  of  the  sources  of 

27 

loan  supply.  The  huge  financing  needs  of  some  of  the  mega-projects  (e.  g.  Brenner  tunnel, 
Lyon-Torino,  etc.)  might  provide  a  rationale  for  this  approach. 

In  spite  of  the  mixed  views  expressed  so far  by  the  Council  on  this  option,  the  use  of  the 
borrowing  and  lending  powers  of  the  Community  should  not  be  excluded  altogether  as  a 
complementary  form  of  Community 

loan  support. 

10. 
In  a  PPP,  risks  should  be  borne  by  the  parties  best  able  to  control  them.  Private 
infrastructure  promoters  agree  on  the  crucial  importance  of  administrative  and  public  policy 
risks,  such  as  cancellation  of  the  project,  planning  delays  or  delays  in  passing  legislation, 
legislative  changes,  changes  in  safety  or  other  legal  standards.  Such  risks  in  general  cannot 
be  borne  by  the  private  sector.  The  difficulty  is  compounded  in  the  case  of  cross-border 
projects  by  the  presence  of  different  national  authorities  and  legal  systems. 

The  Commission  acknowledges 
adequate  solution. 
risks  and  possible  ways 
mechanism 
promoters  and  public  authorities, 

the  relevance  of  those  risks  and  the  importa? ice  of finding  an 
non-commercial 
insurance  or  guarantee 
between 

them,  notably  a  Community 
improved 
legislative  steps  at  the  appropriate 

contractual  agi-eemenls 

level,  etc. 

It  will  therefore  undertake  a  comprehensive  study  on 

against  non-commercial 

to  cover 

risks, 

11.  The  frequent  lack  of  financial  profitability  in  transport  infrastructure  projects  is  not  so 
much  because  of  the  particular  nature  of  the  transport  sector  (demand  for  traffic  is strong  and 
on  the  increase)  but  rather  the  apparent  inability  of  the  sector  to  generate  sufficient  project 
related  revenues.  Direct  user  charges  increase  competition  between,  and  within,  transport 
modes  and  allow  for  the  internalization  of  some  of  the  negative  externalities  linked  to 
transport.  More  generally,  they  improve  the  efficiency  of  the  allocation  of  economic 
resources.  The  recommendation  of  the  Cannes  European  Council  on  "establishing  fairer 
competition  between  modes  of  transport"  pointed  this  way  and  the  adoption  of  the  "vignette" 
Directive  93/89/EEC  on  25.10.93  constitutes  another  step  in  this  direction. 

(e.g.  road  tolls,  etc.) 
Charges  based  on  the  actual  use  being  made  of  (he  infrastructure 
should  become  increasingly  used  to  develop  PPPs,  notably  because  project  related  revenue 
greatly 
budgetary 
resources. 

involvement,  while  freeing  scarce 

the  potential 

for  private 

increases 

12.  Risk  evaluation  and  transaction  costs  among  the  different  public  and  private  parties 
involved  in  a PPP  could  be  reduced  by  improving  the  provision  of  factual  knowledge  so  that 
planning  and  negotiations  are  carried  out  on  an  objective  basis. 

this  respect 

hi 
frequently 
observatory. 

up-dated 

the  Commission 

could  consider  ways  of  improving 

the  availability 

of 
statistics 

traffic  statistics,  among  which 

the  setting  up  a 

traffic 

28 

Annex  II 

TENs  AND  COMPETITION  IN  THE  TRANSPORT  SECTOR 

1. 
The  creation  of  the  trans-European  transport  network  will  involve,  at  least  for 
some  of  the  links,  calling  on  private  investors  to  assist,  either  by  themselves  or  together 
with  the  public  authorities,  in  designing,  funding,  constructing  and,  where  appropriate, 
operating  the  infrastructure. 

2. 
Organizing  infrastaicture  access  so  as  to  open  it  up  to  a  range  of  users  offering 
competing  transport  services  or  services  in  different  market  areas  is  one  way  of  helping 
to  obtain  funding  for  the  infrastructure  as  it  will  increase  the  income  derived  from  its  use. 

3. 
The  public  authorities  and  private  operators  involved  in  projects  often  feel  that  the 
application  of  Community  competition  rules  acts  as  an  impediment  to  the  development 
In  order  to  assess  exactly  what  kind  of  difficulties  are  being  faced  by 
of  these  projects. 
the  promoters  of  projects,  talks  were  held  with  representatives  from  railway  companies, 
the  Ministries  of  Transport,  banks,  a  specialized 
lawyer  and  promoters  of  existing 
infrastructure  and  proposed  infrastructure  projects 

4 

These  talks  have  shown  that  there  are  three  types  of  problem 

a  dearth  of  information  on  the  part  of  the  people  concerned, 
concern  about  the  length  of  the  procedures  to  be  followed; 
the basic  question  of  how  to  reconcile  financial  profitability  and  freedom  of  access 
to  infrastructure. 

THE  DEARTH  OF  INFORMATION 

Outline  of  the  problem 

5 
The  talks  held  by  the  Commission  have  above  all  revealed  that  there  is  a  general 
lack  of  information  about  Community  law  on  the  part  of  the  promoters  of  infrastructure 
The  design  of  such  infrastructure  generally  continues  to  be  based  solely  on  the  legislation 
applicable 
to 
Community  legislation  from  the  initial  stages  of  the  projects. 

in  each  Member  State  concerned  and  fails 

to  give  due 

importance 

Another  point  to  emphasize  is  the  general  confusion  between  competition  rules 

6. 
and  Community,  and/or  national,  rules  on  public  procurement 

As  a  result  of  this  state  of  confusion,  some  promoters  wrongly  believe  that 
7 
compliance  with  the  specific  rules  on  public  procurement  suffices  in  order  to  be  in 
conformity  with  Community  law 

Solutions  proposed 

The  Commission  is  prepared  to  help  to  make  more  information  available  for  all 
8 
the  public  authorities,  transport 
parties  concerned  with  the  creation  of  infrastructure 
companies,  banks  and  private  investors  This  information  must  cover  both  the  basic  rules 
1°\ 

applicable  to  the  Member  States  and  to  companies  and  the  procedures  to  be  followed  in 
order  to  be  granted  exemptions. 

The  Commission  departments  concerned 
therefore  need  to  be  involved  as  early  as 
possible  in  the  projects.  Project  promoters  should  therefore  take  the  initiative  to  contact 
these  departments  as  early  as  they  can  to  obtain  all  necessary  information  and  advice. 
The  Commission  guarantees  total  confidentiality  in  its examination  of  these  projects.  For 
any 
leaders  can  contact  Directorate-
General  IV  or  the  Commission's  "One-Stop  Help  Desk"  (Fax  32  2  295  65  04). 

information  about  competition 

rules,  project 

9. 

Project  promoters  should  also  contact  their  national  competition  authorities  who 

will  be  able  to  provide  them  with  all  necessary  information  about  competition  rules 

THE LENGTH OF THE PROCEDURES TO BE FOLLOWED 

10 

Outline  of  the  problem 

Project  promoters  would 
eligibility  of  their  project  within  a  reasonable  period  of  time 

like  to  receive  the  Commission's  formal  position  on 

the 

However,  the  fact  is  that  there  are  certain  procedures  which  have  to  be  followed  by  the 
Commission  before  it  can  adopt  a  formal  decision  and  that  these  take  time. 

1 I. 

Solutions  proposed 

There  are  two  possible  solutions: 

It  is  extremely  useful  if  the  parties  involved  contact  the  Commission  departments 
12 
concerned  before  signing  agreements.  This  is  often  done  when  the  Commission 
is 
handling  important  business  and  should  avoid  difficulties  arising  after  the  notification  of 
the  agreements  and  thereby  slowing  down  the  processing  of  applications 

It  will  also  ensure  that  the  Commission  departments  concerned  are  fully  informed  about 
the  very  start  and  are  therefore  able  to  process  the  applications  more 
projects  from 
rapidly 

13 
It  is  also  necessary  for  the  parties  involved  to  be  able  to  predict,  with  a  reasonable 
the  Commission 
degree  of  certainty,  when  they  can  expect  to  receive  a  reply  from 
Following  the  notification  of  agreements  on  the  funding  of  TENs,  and  provided  the 
parties  have  contacted  the  Commission  departments  before  finalizing  the  agreements,  the 
Commission  will  do  its  utmost  to  take  a  final  decision  within  a  maximum  period  of  six 
months 
information 
available  prior  to  notification  of  the  agreements 

This  presupposes  that  the  Commission  has  all 

the  necessary 

THE  RELATIONSHIP  BETWEEN  FINANCIAL  BALANCE  AND  T HE  RIGHT  OF 
ACCESS  TO  INFRASTRUCTURE 

30 

14. 

Outline  of  the  problem 

The  infrastructure  in  question  requires  a  high  level  of  investment,  repayable  over  very 
long  periods,  and  with  a  generally  low  level  of  profitability. 

Project  promoters  must  therefore  obtain  the  maximum  of guarantees  as regards  the 
this, 

15. 
utilization  of 
infrastructure  operators  can  follow  either  of  two  approaches: 

the  payment  of  user  charges. 

infrastructure  and 

To  do 

the 

either  wait  until  the  infrastructure  is  complete  before  offering  capacity  to 
transport  companies  wishing  to  provide  services  using  the  infrastructure, 

or  reserve  capacity,  at  the  start  of  the  project,  for  transport  companies 
which  for  their  part  undertake  to  pay  user  charges 

None  of  the  people  met  during  the  present  study  expressed  the  wish  for  all  of  the 
16. 
infrastructure  capacity  to  be  reserved  for  a  single  user  This  kind  of  reservation  would 
limit  the  sources  of  income  from  the  infrastructure. 

On  the  other  hand,  all  of  them  stressed  the  fact  that  the  infrastructure  operator 
17 
should  be  able,  if  he  so  wished,  to  reserve  at  least  part  of  the  capacity  for  transport 
companies  which  contribute  to  the  financial  balance  of  the  project  There  is  also  the 
question  of  the  use  of  the  transport  equipment  bought  by  companies  which  are  also 
project  promoters 

18. 
The  project  promoters  are  also  aware  of  the  fact  that  the  reservation  of  capacity 
over  a  long  period  is  contrary  to  the  principles  of  freedom  of  access  to  infrastructure  and 
competition. 

19 

Solutions  proposed 

20. 
Community  legislation  does  not  allow  all  infrastructure  capacity  to be  reserved  for 
a  single  company  or  group  of  companies  but  does  not  prevent  an  operator  reserving 
capacity  for  a  number  of  companies  which  are  able  to  operate  transport  services  in 
competition. 

21. 
The  specific  features  of  each  project  have  to  be  taken  into  consideration  when 
assessing  the  lawfulness  of  the  capacity  reservation  agreement  The  following  general 
criteria  nevertheless  apply 

infrastructure  operator  wishes  to  give  transport  companies 

the 
If  an 
opportunity  of  reserving  capacity  from  the  very  start  of  the  project,  this 
opportunity  should  be  proposed  to  all  Community  undertakings  that  may 
be  interested 

The  capacity  reserved  for  a  company  should  be  proportional  to  the  direct 
or  indirect  financial  commitments  entered  into  by  that  company  and  should 

correspond 
period 

to  the  operational  requirements  planned  over  a  reasonable 

A  new  infrastructure  is  generally  not  congested  as  soon  as  it  is  put  into 
seivice.  A  company,  or  a  group  of  companies  within  the  meaning  of 
Article  3  of  Directive  91/440/EEC,  should  therefore  not  have  all  of  the 
capacity  available  reserved  for  it.  Some  of  the  capacity  should  remain 
available  so  as  to  allow  competing  services  to  be  operated  by  other 
companies. 

The  companies  awarded  user  rights  may  not  object  to  these  rights  being 
withdrawn  if  they  are  not  used 

The  duration  of  capacity-reservation  agreements  must  not  exceed  a 
reasonable  period  of  time,  to  be  agreed  in  each  particular  instance 

32 

Annex  HI 

PUBLIC  PROCUREMENT  RULES  FOR  TRANSPORT  TEN 

At  Community  level,  existing  public  procurement  rules  lay  down  a  framework  for 
(1) 
selecting,  on  a competitive  basis,  the  contractors  for  the  execution  of  a given  piece  of  trans 
port  infrastructure.  Either  of  two  distinct  sets  of  rules  apply,  Directives  93/37  for  public 
authorities  or  93/38  for  the  so-called  utilities.  The  aim  of  the  Directives  is  of  course  not  to 
be  an  obstacle  but  to  ensure  value  for  money  under  the  best  possible  conditions. 

(2) 
In  order  to  clarify  the  possibilities  offered  by  the  existing  legal  texts  with  regard  to 
their  application  in  TENs  and  public/private  partnerships,  the  Commission  examined  the 
compatibility  of  existing  public  procurement  rules  with: 

i) 

the  technique  of project  financing  (concessions)  that  allows  the  participation  of 
the  private  sector  on  a risk  basis  in  building  and  operating  infrastructure  projects 
in  partnership  with  the  public  sector; 

ii) 

the  need  to  associate  the private  sector  as  early  as possible  in  studying  the  fea 
sibility  of  an  infrastructure  project  and  participating  in  its  conception. 

The  conclusion  drawn  is  that  the  Directives  do  permit  such  activities  and  that  conse 
(3) 
quently  no  legal  action  is  required.  The  Commission  view  is  that  existing  provisions  on 
concessions  under  Directive  93/37  are  an  adequate  framework  for  the  participation  of  the 
private  sector  in  the  award  of concessions  by  public  authorities  in the TENs  priority  projects. 
As for  pre-tender  discussions  the  Commission  view  is that,  in  so far  as effective  competition 
is  guaranteed  in  the  tender  phase,  the  principles  of  Community  law  do  allow  such  prelimi 
nary  technical  discussions 

(4) 
In  order to inform  all  parties concerned  about the  possibilities for  public/private  sector 
co-operation  offered  by  public  procurement  rules  more  detailed  analysis  of  this  issue  is  in 
cluded  in  the  Commission's  Communication  to  the  Council  and  to  the  European  Parliament 
on  Public  Procurement  in  the  European  Union  (reference  to  follow).  The  Commission  will 
issue  specific  guidelines  as  appropriate  in  the  course  of  1996. 

In  order  to  reduce  any  misunderstandings  and  delays  in  projects  related  to  public 
(5) 
procurement  rules,  it  is  recommended  that  for  the  priority  projects  Commission  services  are 
consulted  before  the  publication  of  tender  documents.  For  this  purpose  a  "One-Stop  Help 
Desk"  (fax:  00  32  2  295  6504)  has  been  established  in  the  Commission  to  channel  such 
requests. 

Annex  IV 

PROJECT  AUTHORITIES  FOR  TRANS-EUROPEAN  NETWORK 
PROJECTS 

1. 
The  Christophersen  Group  and  the  Essen  European  Council  agreed  that  European 
level  legal  vehicles  would  greatly  facilitate  the  coordination  and  financing  of  complex  trans 
national  infrastructure  projects.  Ideally,  a  company  should  be  created  to  own  the  project  -
at  least  temporarily,  and  to  implement  and  manage  it. 

The  Project  Authority  for  a cross-border  infrastructure  project  should  consist  of  four 

2. 
elements: 

a  project  Agreement  between  the  Member  States  involved 
a  project  Commission  consisting  of  delegates  of  the  Member  States 
a  project  Promoter 
a  project  Company  which  acts  as  infrastructure  manager 

The project  agreement  will  normally  ^e  a memorandum  of  understanding  during  the 
promotion  phase,  but  may  need  to  be  a  treaty  during  construction.  It  should  cover 
the  project  definition  and  details  such  as  a description  of  the  work  to  be  undertaken, 
a  timeschedule,  and  the  financial  and  organisational  arrangements. 

The project  commission  makes  the  day-to-day  decisions  during  the  execution  of  the 
project,  keeping  in  contact  with  the  national  administrations  and  delegates.  It  must 
be empowered  to do the  necessary  for  granting the  concessions  It may  be  appropriate 
to  delegate  part  of  its  power  to  the  project  promoter  and  to  the  project  company  at 
some  stage. 

The project  promoter,  could  be  an  association  or  better  a  EEIG,  involving  at  least 
all  the  public  sector  parties.  Since  large  infrastructure  projects  are  mostly  carried  out 
in the  public  domain,  political  backing  is crucial  for  their  successful  implementation. 
During  the  promotion  phase  the  project  promoter  will 
initiate  first  technical, 
economic  and  environmental  studies,  particularly  on  the  economic  viability  and 
financial  feasibility  of  the  project.  During  the  execution  of  the  project  it  acts  as 
moderator  and  facilitator  for  the  project. 

For  railway 

The  project  company 
is  a  business  undertaking  which  acts  as  an  infrastructure 
in  Directive 
infrastructure  such  an  entity 
manager. 
91/440/EEC  as  "any  public1  body  or  undertaking  responsible  in  particular  for 
establishing  and  maintaining  railway  infrastructure,  as  well  as  for  operating  the 
control  and  safety  system"  The  legal  form  of  the  project  company  may  change  at 
the  different  stages  of  a  project,  it  may  start  as  a  EEIG,  but  for  detailed  design  and 
construction  it  must  be  a  public  company  limited  by  shares,  a  "société  anonyme"  or 
an  equivalent  form,  such  as  that  foreseen  by  the  European  Company  Statute 

is  defined 

"11 îe  C o m m i s s i on  b e l i e v es  thai  p u b l ic  private  p a r t n e r s h ip  entities  cm  be  c o n s i d e r ed  as  p u b l ic  b o d i es  l'or  lins  p u r p o s e. 

;LS  t h ey  fulfil  a 

publie  s e r v i ce  by  p r o v i d i ng  r a i l u ay 

infrastructure 

34 

On  the  more  familiar  national  level,  the  legal  framework  and  the  government  fulfil  the 
role  of  the  agreement  and  the  commission,  while  the  railway  companies  could  undertake 
the  role  of  project  promoters  and project  management  companies. 

3. 
In  most  cases  the  details  of  the  priority  projects  are  set  out  in  a  memorandum  of 
understanding  or  in  a  treaty.  Also,  Intergovernmental  Committees  or  working  groups 
have  been  created  for  most  projects,  so  the  basic  coordination  mechanisms  are  in  place. 
However,  there  are  still  problems  with  these  arrangements  as  the  delegates  have  to  get 
endorsement  from  their  respective  administrations.  The  Committees  or  working  groups 
do  not  have  the  power  needed  to  effectively  manage  the  projects. 

4. 
The Commission  notes with satisfaction  the first signs of cross-border  coordination 
in  the  creation  of  a  series  of  EEIGs  (European  Economic  Interest  Groupings)  for  the 
promotion  of  some  transnational  projects  (see  main  report,  paragraph  15).  Railway 
companies  seem  to  have  recognised  the  advantages  of  cross-border  coordination  and, 
together  with  regional  authorities,  are  taking  advantage  of  the  possibilities  provided  by 
this particular  legal  vehicle for  carrying out preliminary  economic  and technical  feasibility 
studies. 

5. 
The  provisions  of  the EEIGs  do  not  meet  the  requirements  of  the  execution  phase 
of  large  scale  infrastructure  investments  because  of  the  unlimited  liability  of  the  project 
owners  in  such  structures.  This  is  a serious  drawback  as  no  other  legal  vehicle  exists  at 
the  Community 
level  that  could  be  used  in  the  execution  phase  of  trans-national 
investment  projects.  Therefore,  investors  have  to  seek  solutions  through  national  legal 
structures  (as  in  the  case  of  the  Channel  Tunnel)  or  rely  on  inter-governmental  co 
operation  (PBKAL,  Brenner,  most  HST  projects).  However,  such  structures  are  usually 
expensive  to  set  up  and  do  not  meet  all  the  essential  criteria  such  as  protection  for 
shareholders,  limited  liability  of  founders  and  the  legal  security  of  the  instrument. 

To  endow  the  Community  with  effective  tools  for  undertaking  cross-border  investments 
and  for  attracting  private  investors  in  a  public/private  partnership.The  Council  should 
adopt,  without  further  delay,  the  proposal  on  the  European  Company  Statute.  The 
benefits  of  such  a  statute  would  not  only  be  felt  in  transport  projects  such  as  the  high 
speed  train  and  freight  railway  networks,  but  also  in  other  TEN  projects  in  the  area  of 
energy  and  telecommunications. 

35 

CONNECTING  WITH  CENTRAL  AND  EASTERN 
EUROPE  AND  THE  MEDITERRANEAN  BASIN 

A. CONNECTING ENERGY NETWORKS TO THIRD COUNTRIES 

The  role  of  the  Union 

1.  The  energy  sector  has  been  recognised  as  a  major  area  for  economic  cooperation 
with  third  countries,  both  for  reasons  of  European  integration  and  because  the 
Member  States are largely  dependent  on external  energy  sources, particularly  of gas, 
and  it  is  desirable  to  increase  the  number  of  such  sources  in  the  interests  of  the 
Union's  security  of  energy  supply.  Development  of  Union  and  other  European 
energy  production  and transmission  capacities is, indeed,  one of the principles  of the 
European  Energy  Charter. 

2.  TEN  energy  priority  projects  and  other  common  interest  projects  do take account  of 
the  need  of  the  energy  networks  of  the  Union  to  be  connected  with  those  of  third 
in  the  TEN  Energy  Guidelines  for  the 
countries.  There  is  specific  provision 
procedure  to  be  followed  in  order  for  such  projects  to  be  recognised  as  "mutual 
interest  projects"  by the third  countries  concerned,  within  the framework  of  existing 
agreements  between  the  Union  and  such  countries. 
*o* 

3. 

In  both  the  electricity  and  natural  gas  sectors,  the  studies  supported  under  the 
PHARE  and  TACIS  programmes,  in  conjunction  with  those  that  will  be  supported 
from  1995 under the Energy TEN programme where projects of common  interest are 
concerned,  will  lead  to  the  selection  of  priority  network  projects  for  the  third 
countries  concerned. 

Electricity  networks 

4.  The development  of electricity  interconnections  with  third  countries  is a priority  for 
the  Community  Guidelines,  there  are  projects  for  the  interconnection  of  the  Union 
with  the  Countries  of  Central  and  Eastern  Europe  including  the  Baltic  Sea  and  the 
Balkan  regions,  the  CIS,  the  EEA  countries,  Switzerland,  the  countries  of  North 
Africa  and  the  Mediterranean. 

5. 

In  the  wider  European  context,  test  connection  of  the  Centrel  (Poland,  Czech 
Republic,  Slovakia  and  Hungary)  and  (Western  European)  UCPTE  electricity  grids 
was  successfully  carried  out  in  October  1995. This  represents  an  important  stage  in 
the  integration  of  the  European  electricity  grids.  Further  extension  of  the  UCPTE 
grid  towards  the  Balkan  countries  and  the  interconnection  of  the  extended  UCPTE 
grid  with  the CIS  countries  are the subject  of  studies under  the PHARE  and  TACIS 
programmes  In th  Mediterranean  area,  a submarine electricity  connection  between 
Spain and  Morocco is being established,  and in the Eastern  Mediterranean  electricity 
connections  between  Greece  and  Turkey  and  between  Turkey  and  Syria  are  also 
envisaged. 

36 

Natural  gas  networks 

6.  Where  natural  gas  is concerned,  interconnections  have been  or  are being  made with 
third  country  gas grids  so as to allow  either  the transmission  or  the transit  of gas  to 
the  Union.  This  is increasingly  the  case  with  Norway,  the  countries  of  Central  and 
Eastern  Europe  and  the  CIS,  and  those  of  the  Mediterranean,  in  particular  North 
Africa,  with  pipelines  from  Algeria  through  Tunisia  to  Italy  and  from  Algeria 
through  Morocco 
to  France.  Studies  of  East-West  gas 
interconnections  in Europe and of regional  projects  of interest to Central  and Eastern 
European  and/or  Union  countries  have been  and  are being  made under  the PHARE 
programme. 

to  Spain  and  on 

B.  CONNECTING  TRANSPORT  NETWORKS  TO  THIRD  COUNTRIES 

(a)  CENTRAL  AND  EASTERN  EUROPEAN  COUNTRIES 

Infrastructure  development 

1.  Connecting  Trans-Europeah-Networks  to  the  Countries  of  Central  and  Eastern 
Europe  not  only  serves  a  short  and  medium  term  objective  of  stimulating  economic 
growth  and  employment,  but  also  helps  to  integrate  their  economies  with  that  of  the 
Union. 

2.  An essential  element for  the accelerated  improvement  of infrastructure  is the gradual 
harmonisation  of  legislative  and  regulatory  mechanisms  which  are  applied  in  the 
region.The  adoption  by  the  CEC's  of  the  "Acquis  communautaire"  is  moreover  essential 
for  their  integration  into  the  Union.  The  Union  is  tackling  this  process  of  "legislative 
approximation"  through  three  complementary  processes: 

, 

the  implementation  of  the  Europe  Agreements  ; 
the  negotiation  of  sectoral  market  access  agreements  ; 
the  White  Paper  on  the  extension  of  the  Internal  Market  legislation  to  the  Central 
European  countries. 

The aim  of these processes is to establish  structures that  prevent  distortion  of  competition 
to  promote 
in  emerging 
international  trade  and  cooperation. 

telecommunication  and  energy  markets  and 

transport, 

3 
The potential  investment  level  in Trans-European  Networks is enormous.  The  full 
development  of  main  international  road  transport  corridors1  for  Central  and  Eastern 
Europe  is  estimated  to  require  funds  between  30  to  45  billion  ECU.  Upgrading  main 
international  railway  lines' to Western  European  standards is estimated  to require a further 

Community  support  is  geared  lo  the  nine  "Crete  Corridors"  in  line  with  the  conclusions  of  the  second  Tan-European  Transport 

Conference.  Crete  March  1W4 

37 

25  to  30  billion  ECU.  Such  a  level  of  investment  reaches  not  only  beyond  the  absorptive 
financial  and  institutional  capacities  of  the  Central  and  Eastern  European  Countries 
themselves,  but  also  beyond  the  availability  of  external  finance. 

Pressures  on  strained  national  budgets  makes  the  financing  of 

4. 
infrastructure 
increasingly  problematic.  While International  Financial  Institutions are undoubtedly  called 
upon  to  provide  a  major  share  of  the  financial  requirements  for  the  modernisation  and 
upgrading  of  transport  systems,  the  sheer  scope  of the  required  financial  resources  is  such 
that  supplementary  arrangements  and  non-conventional  financing  with  private  sector 
involvement  will  be  required. 

5. 
The  Trans-European  Network  approach  adds a particular  dimension  to this  process 
as  a  significant  part  of  the  economic  viability  of  individual  projects  stems  from  their 
integration  into  the  overall  network.  Individual  links  need  to be  appraised  from  a  network 
perspective,  extending  far  beyond  national  borderlines.  The  network  approach  introduces 
considerable  opportunities  as  the  profitability  of  region-wide  networks  exceeds  the 
profitability  of  the  individual  links  constituting  the  network. 

As  different 

legal  and  regulatory  frameworks  have 

6. 
and  as  a 
supplementary  level  of  coordination ^between  different  countries  arises,  particularly  for 
cross-border  projects,  additional  difficulties  arise.  Thus  transnational  links  often  suffer 
from  different  national  preferences  and  priorities  on  each  side  of  the  border. 

to  co-exist 

Because  of  interrelations  between  projects  belonging  to  the  same  network,  delays  in  the 
realisation  of  certain  key  links  have  a  significant  impact  on  the  revenues  of  already 
existing  links  through  revenue  shortfalls.  A concerted,  coordinated  and  accelerated  build 
up  of  the  network,  minimising  leads  and  lags  in  the  realisation  of  key  links,  is  therefore 
the  economic  benefits  for  all  parties  concerned  thus 
bound  to  improve  significantly 
enhancing  the  possibilities  for  a  fast  realisation  of  the  project. 

7. 
Especially  in  the  light  of  the  economic  situation  in  the  Countries  of  Central  and 
Eastern  Europe  it  is  essential  that  the  planned  infrastructure  should  be  closely  adapted  to 
in  an  optimal  way. 
actual  needs 
Development  of  Trans-European-Networks  in Central  and  Eastern  Europe  must 
therefore 
be  based  on  a  realistic  assessment  of  infrastructure  demand. 

the  scarce  available  resources 

in  order 

to  use 

8. 
Projects  offering  the  highest  rate  of  return  would  rather  involve  the  maintenance, 
rehabilitation  and  upgrading  of  existing  infrastructure  than  the  construction  of  brand  new 
motor  ways  and  high-speed  rail  lines.  There  will  of  course  always  be justification  for  the 
need  to  construct  some  new  infrastructure  for  instance  the  removal  of  bottle-necks  such 
as  urban  by-passes,  border  crossing  points,  a  few  selected  stretches  of  road  where  the 
traffic  is  particularly  heavy  and  where  existing  infrastructure  is  dilapidated. 

The  role  of  the  Union 

The  Treaty  of  European  Union  stipulates  that  in  the  field  of  Trans-European-
9. 
Networks  "the  Community  may  decide  to  cooperate  with  third  countries  to  promote 
projects  of  mutual 
inter-operability  of  networks."  The 
Association  Agreements  with  the  countries  of  Central  and  Eastern  Europe  foresee  that  a 
priority  area  of  cooperation  shall  be  "construction  and  modernization,  on  major  routes  of 
common  interest  and  trans-European  links"  of  transport  infrastructure. 

to  ensure  the 

interest  and 

in  Copenhagen 

The  European  Council 

in  June  1993  emphasised 

10. 
the 
Community  should  support  the  development  of  infrastructure  networks  in  Central  and 
Eastern  Europe  mainly  through  the temporary  lending  facility  of the European  Investment 
Bank.  At  its  meeting  in  Essen  in  December  1994,  the  European  Council  decided  on  a 
comprehensive  strategy  for  preparing  the  associated  Countries  of  Central  and  Eastern 
Europe  for  accession  to  the  European  Union.  The  Pre-accession  Strategy  highlighted  that 
the  integration  of  the  associated  countries  into  the  Trans-European-Networks  is  a  key 
element  in  strengthening  their  economic  and  political  ties  to  the  Union. 

that 

Community  support  is  geared  to  the  nine  "Crete  corridors"  in  line  with  the 

11. 
conclusions  of  the  Pan-European  Conference  in  1994. 

Within 

12. 
the  framework  of  G24  coordination,  Memoranda  of  Understanding 
between  the  various  Governments  and  the  Commission  have  been  signed,  to  promote  the 
coordinated  development  of 
and  Helsinki-St 
Petersburg-Moscow-Kiev-Bucharest-Plovdiv-Alexandroupolis  corridors. 

the  Berlin-Warsaw-Minsk-Moscow 

A  structured  dialogue  between  Transport  Ministers  from  central  and  eastern 
13. 
European  countries  and  the  Council,  initiated  at  a joint  meeting  on  28  September,  will 
continue  to  assess  needs  and  agree  projects  of  mutual  interest. 

PHARE 

The  Council  emphasised 

technical  assistance  and 
14. 
limits  to  provide 
authorised 
additional  funds  for  capital  expenditures  for  the  development  of  infrastructure  of 
community  interest. 

the  Phare  Programme  within 

that  Phare  should  offer 

the  existing  budgetary 

the  Commission 

Following  the  Essen  Council 

has  developed  Phare  in  the 
15. 
direction  of a Multi-annual  financial  instrument  and  significantly  increased  the  investment 
focus.  Today  up  to  25  %  of  the  total  Phare  appropriations  can  be  made  available  for  the 
co-financing  of  infrastructure  projects  notably  related  to  the  development  of  Trans-
European-Networks.  Multi-annual  investment  programmes  for  the development  of  Trans-
European-Networks  covering  the  period  1995  to  1999  have  been  negotiated  with  all  the 
Partner  Countries  with  the  close  involvement  of  the  International  Financial  Institutions 
and  notably  the  European  Investment  Bank. 

16. 
The  Phare  contribution  for  the  co-financing  of  infrastructure  projects  related  to  the 
Trans-European  Transport  Network  is planned  to increase to  around  190 MECU  in  1996. 
The  corresponding  figures  in  1993,  1994  and  1995  were  30  MECU,  75  MECU  and  1  19 
MECU. 

Balkan  Region 

17. 
The  Union  attaches  great  significance  to  improving  the  networks  of  the  successor 
states  to  the  former  Yugoslavia  in  an  integrated  Trans-European  framework  taking  into 
account  Community  priorities  and  to  promoting  cooperation  between  these  states  towards 
that  end,  as  soon  as  political  circumstances  permit. 

39 

(b)  THE  EURO-MEDITERRANEAN  PARTNERSHIP 

At the Essen  and Cannes meetings, the European  Council  proposed  a new  approach 
18. 
to the Union's Mediterranean  partners.  The economic dimension  of the  Euro-Mediterranean 
partnership  provides  for  the  Mediterranean  partners  to  be  integrated  into 
a  Euro-
Mediterranean  economic  area.  The  aim  of  opening  up  the  Mediterranean  countries 
economically  and  integrating  them  into  the  European  (EU  and  non-EU)  economy 
presupposes  that  these  countries  have  efficient  economic  infrastructure  systems,  in 
particular in the transport,  energy and telecommunications  sectors.  The linking of the trans-
European  networks  in these areas to the corresponding  infrastructure  in the  Mediterranean 
Basin  (or  their  joint  development)  is  therefore  at  the  heart  of  the  issue  of  the  Euro-
Mediterranean  partnership. 

The  draft  Declaration  and  work  programme  adopted  at  the  Barcelona  Conference 
19. 
(27-28  November) specifically  refer to this in the sections on transport,  telecommunications 
and  energy.  Although,  because of the level  of development,  the high-speed  train  networks 
do not  have  any  great  potential  in  the  Mediterranean  region,  the  connection  and  extension 
of  the  road  transport  (motorway,  ports),  telecommunications  and  energy  networks  are 
nevertheless  essential  for  the integration  of the Mediterranean  economies  into the European 
economy. 

v 

40 

JOINT  ENVIRONMENTAL  PROJECTS (JEPs) 

AN ENVIRONMENTAL "NETWORK" APPROACH FOR WATER AND WASTE 

1. 

2. 

3. 

4. 

At the  Essen  European  Council  the Heads  of State or Government  have taken  note 
in  selected  sectors  of 
of  the  potential  relevance  of  a  network  approach 
environmental  protection,  have  invited  the  Commission,  the Council  and  Member 
States  to  examine  the  possibility  of  establishing  guidelines  for  environmental 
network  infrastructure  and  the  obstacles  to  environmental  infrastructure,  stressing 
the  use  of  existing  financial  instruments  in  support  of  possible  future  guidelines 
and  priority  projects. 

To  follow  up  the  Essen  mandate,  the  Commission  established  a  High  Level 
Working  Group  with  representatives  of  the  national  environmental  departments. 
The  Group  convened  four  times.  In  addition,  the  Commission  organized 
in 
October  a workshop  on  waste  and  one  on  water  at  which  were  attending  public 
and  private  competent  experts  and  authorities. 

The  network  approach  as  it  was  envisaged  in  the  White  Paper  on  Growth, 
Competitiveness  and  Employment,  was  not  the  result  of theoretical  or  conceptual 
considerations.  It  was  conceived  to  solve  problems  in  a practical  manner.  In  fact, 
the  network  approach 
the  realisation  of  certain 
is  aimed  at  ensuring 
infrastructure  investments  in  which  the  economic  benefits  have  an  impact  which 
is  spread  beyond  their  immediate  geographic  location.  These  are  the  type  of 
investments  which  are  essential  in  order  that  the  potential  of  the  internal  market 
be  attained,  but  which  are  hampered  by  administrative  and  financial  constraints. 

it 

In  the  transport,  energy  and  telecommunications  sector,  these  investments  aim  at 
ensuring  the  interconnection  of  existing  networks  in  order  to  fully  develop  their 
potential.  In  the  case  of  the  environment,  such  investments  are  aimed  at  ensuring 
an  effective  solution  to  the  problem  of  resource  management  and/or  pollution 
which  because  of  its  cross  border  dimension  gives  rise  to  frictions  and  constrains 
productive  activities  or  risks  being  a  direct  or  indirect  obstacle  to  free  exchange 
within  the  internal  market. 

5. 

In  most  of  these  cases,  the  difficulties  which  slow  down  or  constrain  investment 
result  essentially  from: 

-  the  difficulty  of  ensuring  an  equitable  and  balanced  sharing  of  the  costs  and 
benefits  in  relation  to  the  territorial  impact  of  the  problem 

- the difficulties  in  promoting  an operational  and  effective  partnership  between  the 
many  public  and  private  sector  actors  involved 

-  the  difficulty  of  taking  action  at  the  operational  level  in  a context  characterised 
by  significant  administrative,  regulatory  and  cultural  differences 

-  the  difficulty  to  overcome 
the  decentralized  nature  of  responsibilities  for  the 
design,  financing  and  implementing  of  the  relative  small  size  environmental 
projects 

40 CK 

6. 

7. 

8. 

9. 

On  the  basis  of  the  analysis  and  deliberations  on  future  prospects  conducted  by 
the  high  level  group  as  well  as  the  workshops,  the  Commission  considers  that 
environmental  investment  should  benefit  from  a  similar  support  as  that  which  is 
given  to  investment  in  the  transport,  energy  and  telecommunications  fields. 
In 
effect,  environmental  investment  is important  in order to fully  exploit the  potential 
of  the internal  market.  As  well,  the  modalities  applied  in  a  network  approach  are 
equally  applicable  in  the  environment  as  compared  to  the  other  sectors. 

in 

initiatives 

to  define 

level  group  agreed 

Taking  into  account  the  specific  characteristics  of  the  environmental  sector,  the 
high 
this  context  as  "Joint 
Environmental  Projects  (JEPs)  The  latter  is  defined  as  "a  course  of  actions  by 
Member  States acting jointly  or in coordination  to develop  a project  or prepare  the 
development  of  a  project  of  common  interest  for  environmental  protection  and 
improvement  within  the  Union".  These  projects  should  ensure  or  accelerate  the 
realisation  of  investment  which  is  necessary  to  fully  exploit  the  potential  of  the 
internal  market. 
In  this  perspective,  the  approach  aims  at  ensuring  a  more 
efficient  and  effective  use  of both  administrative  and  financial  resources.  In  their 
implementation,  JEPs  will  promote  and  enhance  the  development  of  new  and 
clean  technology. 

The  high  level  working  group  established  selection  criteria  for  JEPs  (see  Annex 
B.2) 

The  two  workshops  came  up  with  concrete  project  proposals,  some  of  which  are 
in  an  advanced  stage  of  preparation  and  could  be  launched  within  a relative  short 
delay  (see  annex  B.2).  Both  the  high  level  group  and  the  workshops  underlined 
that  if the  projects  are to be  successfully  launched  an  administrative  and  financial 
incentive  should  be  provided  . It  involves  not  only  a more  optimal  use  of  existing 
financial  instruments,  but  also  the  inclusion  of JEPs  in  those  which  are  up  to  now 
limited 
transport,  energy  and 
to 
telecommunication. 

infrastructure  projects 

the  field  of 

in 

10 

In  the  opinion  of  the  Commission  the  next  step  in  this  dossier  implies  selecting 
and 
testing 
implementation  modalities. 

implementing  a  certain  number  of  pilot  projects  aimed  at 

RESULTS  OF  THE  ANALYSIS  AND  DELIBERATIONS  ON  FUTURE 
PROSPECTS 

I.  JUSTIFICATION  OF  ACTION 

A.  HORIZONTAL  CONSIDERATIONS 

A joint  approach  will  optimize  the  cost  effectiveness  of  the  investments,  increase 
the  environmental  benefits  and 
the 
investment.  Other  advantages including  acceleration  of the investment,  achievement 
of  higher  standards  and  capacity  harmonisation  can  be  availed  of.  It  will  create  the 
conditions  for  increased  employment  and  coherence  at  the  Community  level  in  the 

thus  the  overall  economic  viability  of 

41 

implementation  of certain  environmental  interests. Joint  Environmental  Projects  are 
not  per  se  aiming  at  the  fulfilment  of  the  obligations  which  derive  from  existing 
Community  environmental  legislation. 

12.  Promoting  JEPs  could  give  rise  to  the  following  more  specific  economic  and 

financial  benefits  which  could  outweigh  economic  costs: 

(a)  Concertation  of  existing  environmental  technology  would  be  encouraged  and, 
therefore,  economies  of  scale  could  be  more  rapidly  available  at  the  research  and 
development/application  stage,  on  the  design  of  projects  and  on  the  suppliers  side. 

(b)  New  environmental  technologies  would  be encouraged,  leading  to the  creation  of 
new  domestic  and  export  markets  (  market  scale  for  the  EU  is  expected  20  billion 
ECU/p.a,  worldwide  200+  billion  ECU/p.a.  by  the  end  of  millennium  ) 

(c)  Reduction  of  financial  costs,  both  capital  and  operating. 

A  coordinated  and  better  planned  investment  reduces  the  risks  of  failures  and 
delays.  A  meaningful  packaging  of 
the 
administration  cost  and  hence  the  spread  required  from  the  financial  institutions. 
Further  cost  reductions  can  be achieved  by  avoiding  duplication,  reducing  logistical 
costs,  developing  markets  for  quality'  recycled  materials  (waste)  etc. 

small  projects 

reduces 

relative 

B.  WASTE. 

13  A  large  and  continually  increasing  quantity  of  the  waste  produced  in  the  EU 
Member  States  (  in  total:  700  million  tonnes  of  which  industry  30%  and  municipal 
waste  17%  )  is  still  discharged  without  any  form  of  recovery  or  environmentally 
friendly  treatment.  Only  some  Member  States  have  developed  some  infrastructure 
to  manage  their  waste.  Many  suffer  from  an  overdependence  on  (older)  landfills 
(70%)  as  a  disposal  route  with 
its  negative  environmental  impacts,  like  pollution 
(methane  emissions). 
of  ground  water  and  surface  water,  greenhouse  effects 
Contrary  to  the  U S A,  there  is  still  limited  experience  in  the  EU  in  providing 
integrated  waste  management  services.  Alternatives,  in  particular  recycling  and 
incineration  with  energy  recovery  ,  will  become  crucial  elements  for  a  greater 
sustainability  in  an  overall  process  of  waste  minimisation. 

14.  During  the  workshop  on  waste  (Brussels,  19/20  October. 1995)  the justification  for 
remedy  a  great 
acting  jointly  derived  from 
the  strong  need 
information  gap  on  both  waste  management  techniques  and  markets  for  the 
recovered  products.  Taking  account  of the different  degrees  of development  in  and 
demand  for  environmental  infrastructure  in  the  different  regions  of  the  European 
Union,  the  implementation  of  JEPS  would  contribute  to  a  reduction  of  these 
differences  and  hence  strengthen  cohesion  between 

the  different  areas. 

to  effectively 

15.  Another justification  for  JEPs  which  is particularly  relevant  in the  field  of  recycling 
is related  to  the  desirability  of  reaching  critical  volumes  of  waste  in  order  to  make 
projects  economic  viable  and  to  reduce  logistics  costs  e.g.  in  waste  collection  by 
developing  networks  of  installations  JEPs  create  an  opportunity  for  developing 
projects  involving  both  the  private  and  public  sector  .  Furthermore  ,  JEPs  will 
stimulate,  on  a voluntary  basis,  a better  integration  of  environmental  considerations 
in  the  various 

industrial  sectors. 

42 

16.  At  the  workshop  four  different  categories  of  waste  flows  (plastic,  electronic 
consumer  goods,  "  end  of  life  "  vehicles  and  the  issue  of  heavy  metals)  were 
selected  for  examination  by  participants  representing  experts  from  private  and 
governmental  bodies. The workshop  identified  some 30 projects within  the  different 
categories.  The  main  conclusion  of  this  workshop  was  that  JEPs  respond  to  a  clear 
need.  It  is  worthwhile 
necessary 
partners/actors  together  and  by  creating  the  means  for  realization. 

to  proceed  with  JEPS  through  bringing 

Annex  I  gives  an  overview  of  the  most  promising  examples  . 

C.  WATER: 

in  economic  growth  due 

17.  To  an  ever  increasing  extent,  different  areas  within  the  European  Union  are 
confronted  with  constraints 
shortages 
(Spain,Islands etc).  Other  areas face  a quality  problem  derived  from  heavy  use  and 
the  (repeated)  problems  of  flooding.  Other 
discharges  or  have  experienced 
technological  and  institutional 
inefficiencies  in  water  management  like  high  levels 
of  water  wastage  (leakage  of  treated  (potable)  water  is  estimated  at  around  15% or 
3  billion  ECU),  relative  low  recycling  rates  in  manufacturing  industry  or  limited 
institutional  capacity  due to a high  degree  of fragmentation  are demanding  different 
and  in  some  cases joint  responses  for  a  more  efficient  use,  control  and  clean-up 
of  water. 

to  water 

18.  Water  policy  is  an  obvious  area  for  international  cooperation  and  therefore  for 
Joint  Environmental  Projects.  Rivers,  lakes  and  ground  water  aquifers  do  not 
respect  international  boundaries  and,  indeed,  rivers,  lakes  and  seas  often  actually 
delineate  such  boundaries.  Pollution  from  one  Member  State  will  often  impact  on 
another  and  water  abstraction  from  one  Member  State  might  lower  water  levels  in 
their  neighbour's  territory.  International  cooperation  should  therefore  be  the  norm 
in  this  policy  area  and,  increasingly,  this  is  so.  A  number  of  international 
conventions  and  agreements  cover  the  management  of  these  joint  resources. 
Additionally,  the  Commission  is  considering  a  more  institutionalised  approach  to 
the  question  of  river  management  which  would  require  cooperation  in  water 
management  (quality  and  quantity)  on  a  river  basin  basis. 

19. 

JEPs  are  mechanisms  with  a joint  approach  to  common  problems.  In  other  words, 
rather  than  have  each  Member  State  work  separately  on  the  solution  to  a  common 
problem  in  the  design  or  construction  of  their  physical  infrastructure,  they  could 
cooperate  in  the  exchange  of  ideas  and  share  in  the costs  in  developing  appropriate 
technologies  and  monitoring  and  setting  up  pilot  projects.  A  wide  range  of  JEPs 
can  be  established  dealing  with  infrastructure  issues.They  will  not  necessarily 
involve  support  for  the actual  construction  of the physical  infrastructure  where  there 
would  appear  to  be  little  to  be  gained  from  a joint  approach.  Rather  JEPs  should 
facilitate  that  the  Member  States  can  undertake  measures  more  quickly,  more 
efficiently  or  reach  more  ambitious  targets. 

20.  The  Water  workshop  (Copenhagen,  October  11/12,  1995)  acknowledged 

the 
importance  of  a  River  Basin  Management  (RBM)  as  an  overall  guiding  principle 
in  water  management.  Covering  more  than  two  Member  States  River  Basin 
Management  falls  naturally  within  the  concept  of  JEPs.  Coordinated  planning  and 
management 
for 
environmental  and  economic  reasons.  The  Rhine  and  the  Elbe  Commission  have 

(quality  and  quantity)  of  shared 

river  basins 

is  essential 

43 

produced  considerable  improvements  in the  water  quality.  As regards  the quantity 
aspects new  arrangements  have to be made. The projects which  were identified  by 
the  Workshop  dealt  with  the  different  aspects  of  rehabilitation,  maintenance  and 
use  of  the  larger  shared  river  basins  in  Europe.  Referring  to  the  floods  in  the 
different  Member  States  a European  " flood  alleviation  and  wetland  restoration  " 
project  could  be considered  as a Joint Environmental  Project.  For the other  shared 
European  river  basins  it  seems  natural  to  learn  from  the  existing  bodies.  The 
formation  of  an  "  umbrella  network  "  of  river  basin  commissions  could  be  the 
cooperative  structure  under  which  relevant  JEPs  projects  could  be  developed  or 
implemented. 

21.  For  the  Water  Workshop  four  different  target  areas  were  selected  :  1)  Water 
(supply)  management  including  reduction  of  water  demand;  2)  Waste  water 
treatment  and  sewage  disposal;  3)  Port  waste  facilities;  and  4)  River  basin  and 
surface  water(resources)  management. 
The workshop  identified  series of projects  distinguishing  two categories  of  projects 
examples: 
a)  Projects  which  include  a distinct  physical  network, 
b)  Projects  which  lead  to  (better,  cost  saving  and/or  faster)  improvements  in 

environmental  infrastructure. 

Annex  U gives  the  most  relevant  project  examples . 

44 

II  CRITERIA  TO  BE  RESPECTED 

22.  As  mentioned  above  the  ad-hoc  Group  has  shaped  and  defined  the  networking' 
approach  into  Joint  Environmental  Projects  in  order  to  better  define  the  needs,  the 
scope  and  the  objectives  of  the  possible  environmental  undertakings.  A  set  of  nine 
guiding  criteria  (  See  annex  EQ  )  provides  a  framework,  in  which  the  various 
objectives  of  JEPs  should  be  achieved.  They  cover  in  part  descriptive,  essential  and 
desirable  factors: 
-  strengthening joint  and  more  coordinated  actions  between  Member  States  (i.e.  a 
minimum  of  two),  possibly  involving  non-Union  countries  when  significant 
benefits  could  be  accrued  within  the  territory  of  the  Union  ,  as  an  answer  to 
important  environmental  problems  in  the  water  and  waste  sectors. 

-  enhancing  the  relationship  between  environmental  effectiveness  and  economic 

efficiency  (added-value). 

-  stimulating  the  development  and  the  implementation  of  new  technology  under 

- 

adequate  conditions  of  scale 
intensifying,  where  opportune,  public/private  partnerships  in  financing  and 
implementing  the  projects  and 

-  Obviously,  assisting  in  achieving  in  a  more  coherent  way  agreed  Community 

policies  and  objectives  . 

23.  The  results  of  the  two  workshops  made  it clear  that  these guiding  principles/criteria 
were  an  appropriate  basis  towards  the  realization  of  JEPs  .  It  became  evident  that 
a  clear  need  -  in  the  waste  workshop  recognized  from  both  the  public  and  private 
sector  -  for  JEPs  and  that  a  range  of  the  environmental  infrastructure  investments 
,  in  view  of  cost-effectiveness  considerations,  should  only  be  envisaged  in  a joint 
approach. 

HI  CONSTRAINTS  TO  BE  ADDRESSED 

24.  There  are  some  constraints  to  the  further  development  of  JEPs.  In  many  of  the 
instances there  are  linked  to the  specific  institutional  and  administrative  situation 
of  the  environmental  sector.  The  main  impediment  which  has  been  experienced  is 
the  decentralized  nature  of 
financing  and 
implementing  of environmental  infrastructure  projects.  In particular,  the water  sector 
which  is  very  fragmented  is  more  reluctant  to  cooperate. 

responsibilities 

the  design, 

for 

25.  With  so  many  different  players  involved,  the  following  difficulties 

could  be 

encountered: 
-  a  lack  of  a  focal  point  for  JEPs  further  development  and  promotion. 
-  a  deficient  structured  flow  of  information  (availability  and  quality  of  data  for 

those  potentially  involved; 
different  levels  of  experience/sophistication  of  the  local/regional  authorities, 
the  organisational  gap  between 
the  central  and  more  regulatory  oriented 
government  bodies  and  the  more  implementation  and  operationally  oriented 
local/regional  authorities; 
different  approaches  between  Member  States  on  the  actual  involvement  and 
potential  role  of  private  operators  and  vice  versa  ; 
a  lack  of  will/incentive  to  act  jointly. 

26  Other  constraints  are  of a more  regulatory  nature  partly  due to existing  regulation 
but  also  in  some  instances  due  to  a lack  of  regulation:  e.g.  different  and  sometimes 

45 

opportunistic  interpretations  of  existing  Community  or  national  waste  regulations 
transboundary  transport.  There  is  a  need  of 
("proximity"  principle)  complicates 
certain  (quality)  standardization  of  waste  treatment  and  recycled  products 
. 
Harmonization  in  waste  handling  ,  standardization  and  certification  will  result  in 
,  secondary  raw  materials  and  final  products 
more  homogeneous 
facilitating  an  increase  in  markets. 

fractions 

27.  Further  examination  might  be  necessary  into  the  question  as  to  whether  price 
differences  between  the  Member  States  for  water  and  waste  disposal  inhibits  the 
cooperation  or  the joint  undertakings  between  the  Member  States. 

28.  On  the  financing  of  JEPs  the  following  can  be  said.  JEPs  are  by  definition  (see 
criteria)  more  likely  to  yield  higher  benefits/profits  than  if  the  same  problems  were 
treated  separately  by  different  national  operators.  In  these  circumstances  it  will  be 
of  continuing 
difficult  a  priori  to  justify  on  economic  grounds  any  element 
for  environmental 
grant/subsidy  per  se 
infrastructure  (Community  and  national)  are  of  course  under  heavy  pressure  from 
the  demands  of  Member  States  implementing  EU  directives.  With  regard 
to 
investment  finance  from  public  sources  there  is  always  an  opportunity  cost  to  be 
reckoned  with,  whatever  the  nature  of  the  investment. 

.The  existing  sources 

of  finance 

29.  The very  organisation  of JEPs  involves inherent  difficulties  which  must  be faced  and 
solved  by  the  partners  if  the  project  is  to  get  off  the  ground.  As  stated  above,  these 
involve  the  added  complications  of  different  standards,  planning  procedures, 
regulations  and  pricing  etc.There  is  therefore  a  case  to  request  some  incentives  to 
offset  these  up-front  constraints 

30. 

to  prompt  and  accelerate  the  process,  an 

It  is  clear  that  if  the  realization  of  JEPs  producing  significant  economic  and 
environmental  benefits  can  be  more  rapidly  mobilized  by  means  of  a  financial 
incentive 
for 
(additional)  up-front  costs  is justified  i.e. by  financing  (pre-) feasibility  studies,  pilot 
projects,  demonstration  plants  etc.  Once 
the  "added  value"  in  terms  of  economic 
efficiency  and  environmental  effectiveness  of the  projects  can be determined  in  more 
precise  terms,  the  necessary  financial  engineering  at  the  subsequent  realization  stage 
will  be  much  facilitated. 

incentive 

financing 

31.  At  EU  level,  several  existing  financing  instruments  could,  in  principle,  kick-start 
the  process  Most  suited  for  the  immediate  necessities  of  JEPs  incentive  financing 
could  be the  financial  instrument  for  the environment  (LIFE),  which  already  allows 
for  demonstration  projects,  awareness  raising  projects  and  technical  assistance 
projects.  LIFE,  though,  imposes  restrictions  as to  the  financing  of  feasibility  studies 
and  "typical  infrastructure  projects".  Besides,  the  overall  amounts  available  and  the 
ceilings  for  the  different  eligible  activities  would  allow  only  for  the  financing  of  a 
few  and  very  small  projects. 

Initiative  programme  INTERREG  II  and 

32  Other  possibilities  consist  of  the  Cohesion  Fund  and  Structural  Funds  inter  alia  the 
Community 
the  so-called  Art  10 
(innovative)  actions  within  the  framework  of  the  European  Regional  Development 
Fund  (ERDF)  However,  these  possibilities  are  limited  because  most  of  the  monies 
are already  earmarked  at the operational  level  for  the  coming  years  and  furthermore, 
the  functional  and  the  geographic  eligibility  criteria  do  not  allow  for  a  horizontal 
application  linked  to  the  implementation  of  JEPs.  There  is  also  the  European 

46 

Investment  Fund  (EIF).  It  could  play  a  more  active  role  as  a  leverage  mechanism, 
either  by  extending  its  guarantees  to  JEPs  or  by  facilitating  equity  participation.  In 
this  perspective,  the  environment  would 
have  to  be  integrated  as  a  separate 
objective  in  the  EIF  Statute 

33  However, 

the 

given 

the 
institutional/administrative  ones,  and  the  necessity  of  a  visible  acknowledgement 
incentive  financing  of  JEPs  should  imply  a  financial  support  analogous  to  that 
provided  for  TENs. 

above-mentioned 

constraints, 

particular 

in 

x-x-x-x-x-x-x-x-x-x 

47 

ANNEX  I  -  EXAMPLES 

DESCRIPTION  OF  SOME  SPECIFIC  WASTE  PROJECT 
from  the  workshop  on  waste  (Brussel,  19/20  October) 

a.  Plastic 

Plastic  is  a  material  which  can  be  found  in  most  consumable  products,  therefore  the 
results  of  the  parallel  session  on  plastic  waste  should  be  seen  jointly  with  those  of  the 
other  3  parallel  sessions. 

The  proposals  which  correspond  best to JEPs,  implying  that  they  are not  only  "ideas"  but 
have  reached  a  more  advanced  maturity  stage  are: 

1.  Building  of joint  plants  for  the  recycling  of  engineering  plastics 

This  is  very  good  example  of  waste  for  which  the  volumes  reached  at  national  level  do 
not  economically  justify  their  recycling.  Therefore  such  plastics  are  at  present  discarded, 
they  could  be  recycled  and  put  on  the 
while,  if  a  common  strategy  was  developed, 
market  again. 

2.  Development  of joint  facilities  to  treat  PVC  cables  containing  heavy  metals 

The presence  of  hazardous  substances,  such  as  heavy  metals,  in waste  is one  of the  major 
concerns  of  the  EU  waste  management  policy. 
This  is  an  example  of  pilot  project,  already  developed  at  laboratory  scale  in  Denmark, 
which  could  be  more  effectively  brought  to  full  operational  scale  by  a  joint  action 
between  several  Member  States. 

3.  Extension  to  other  waste  streams  of  existing  recycling  schemes  and  technology  In 
particular:  end-of-life  vehicles  and  electrical/electronic  waste 

A  recycling  programme  for  the  recycling  of  large  quantities  of  discarded  plastic 
equipment  is  already  initiated,  bringing  together  all  the  actors  of  the  chain,  from  the 
producer,  to the  recycler.  Such  an  experience  could  be transferred  to  other  waste  streams 
with  the  participation  of  several  Member  States. 

4.  Creation  of  EU  wide  or international  data  basis on  recovery  technologies  and  of  market 
opportunities 

One  major  obstacle  for  recycling  in  scarcely  populated  areas  relates  to  the  difficulty  of 
obtaining  the  necessary  information. 
The  possibility  to advertise  recycled  products  at large distances,  in  particular  via  internet, 
and  to  access  to  computerized  information  networks  could  help  solving  this  problem. 

5.  Setting  tip  of  an  integrated  network  for  recycling  PET  bottles 

The  experience  gained  in  the  USA  may  be  of  help.  It  concerns  in  particular  highly 
populated  areas.  New  recycling  technologies  can  be developed  around  this  kind  of  waste. 

48 

b.  Electronic  Consumer  goods 

1.  Recovery  of  Television-sets  and  Personal  Computers-monitors 

After  collection  of TV-sets and PC-monitors, appropriate dismantling  and  de-pollution  are 
required  in order  to optimise  both  separation  of parts and  materials  and  recovery  of these. 
Existing  environmental  and  economy  of scale  problems  for  the recovery  of television  sets 
(screens  and  CRTs  in  particular)  and  PC-monitors,  may  be  overcome  by  the  networking 
of  intermediate  disassembly  units  and  recovery  installations  in  different  Member  States 
of  the  European  Union. 
The  composition  of  CRTs  and  PC-screens  varies  greatly:  the  development  of  a data  base 
for  easing  recovery  processes  is  required. 

2.  Recycling  of  batteries  from  electrical  and  electronic  equipment 

Batteries,  part  of  electrical  and  electronic  devices  and  appliances  vary  in  size  and  type. 
Despite  the  fact  that  they  contain  hazardous  substances,  batteries  are  mostly  disposed  of 
in  landfills  without  precaution. 
Networking  of facilities  which  after  an  appropriate  collection  of old  batteries,  provide  for 
their  efficient  separation  (button  cells,  silver  oxide,  nickel-cadmium,  etc)  as  well  as 
recovery,  would  contribute  to  overcoming  the  problem's  economy  of  scale  as  well  as 
decreasing 

the  environmental  risk. 

3.  Monitoring  of  the  electronic  consumer  goods  waste  stream  and  establishment  of  an 
information  centre 

The optimisation  of  existing  or future  infrastructures  for  the management  of the  electronic 
consumer  goods  waste  stream  requires  an  adequate  knowledge  of the  quantities  and  types 
of  products  put  into  the  market  (per year), customer's  behaviour,  the  flow  of  products  and 
materials,  information  on  refurbishing  the  level  of  recovery  treatments. 
A  joint  european  network  which  could  lead  to  and  information  centre  (of  network  of 
centres)  would  cover  the  constant  request  for  data  of  that  nature  and  serve  the  needs  of 
dismantlers  and  recyclers  of  those  appliances. 

c.  End-of-life  vehicles  (ELV) 

With  a view  to  the  arising  quantity  of  waste  from  end  of  life  vehicles  (ELV)  as  well  as 
its hazardous  characteristics  the JEPS  workshop  has given  due attention  to  possible  means 
to  improve  the  situation  of the  treatment  of ELV.  Given  that  the  metallic  part  of  a car  (70 
-  75%o, with  a  tendency  to  decrease)  apparently  does  not  pose  major  difficulties  in  terms 
of  proper  handling  and  recovery,  the  automotive  group  focused  mainly  on  the  remaining 
part,  which  are  the  shredder  residues 

Four  projects  were  proposed,  based  on  an  analysis  of  the  automotive  life  cycle  from  the 
design  phase  until  the  treatment  of  the  ELV  as  illustrated  in  the  figure  below. 

49 

LIFE  CYCLE  OF 

POSSIBLE 

JEPS 

I  CARS 

Design 

I 

(A)  Feedback  of  recyclers  to: 
(1)  car  makers 
(2)  material  suppliers 

Consumption 

No  projects 

Parts  trade 

No  projects 

I 

Dismantling 

Dismantling 
materials 

(B)  Larger  scale  European  network  for 
material  trade. 
Life  cycle  analysis  (e.g.  what  are  the  costs 
of  transport  ?) 

(C)  Classification  system  of  quality 

Shredder 

NFM 

No  projects 

Fluff 

FM 

(D) 
(l)Larger  scale  for  incineration  with  energy  recovery 
(2)  Larger  scale  for  further  separation  for  material  re-use 

No  projects 

FM  = Ferrous  metals 
NFM  =  Non-ferrous  metals 

50 

The  projects  can  roughly  described  as  follows: 

a)  Infrastructure  for  exchange  of  information  between  car  manufacturers,  material 

suppliers  and  recovery  industry. 

b)  Establishment  of  a  European  network  for  recovery  material  from  ELV. 
c)  Classification  system  of  the  content  of  materials  to  be  recovered  which  can  not  be 

traded  as  parts. 

d)  Establishment  of  an  infrastructure  for  the  treatment  and  valorisation  of  shredder 

residue. 

The  proposals  reflect  the  unsatisfactory  situation  at  present  where  there  is  a  lack  of  both 
an exchange of information  between  the different  economic operators involved  and,  partly 
due  to  this,  economies  of  scale  . 

The  participants  stressed  the  importance  of  approaching  each  project  on  its  own  merits 
and  feasibility.The  group  clearly  felt  that the pursuit  of the proposed  projects  would  yield 
in  considerable  economies  of  scale  and  positive  environmental  impact. 

Possible  confidentiality  of information  was  identified  as an  obstacle  to  open  exchange  of 
information.  The  administrative  burden  arising  out  of  legislation  on  the  shipment  of 
waste  was mentioned  as another  obstacle  to  the establishment  of a European  network  for 
recovery  material  from  ELV  as  well  as  of  an  infrastructure  for  the  treatment  and 
valorisation  of  shredder  residue. 

d.  Heavy  Metals 

1  Treatment  and  management  of  residues  from  waste  combustion 

Waste  incineration  is  an  economic  activity  which  is  of  importance  in  all  EC  Member 
States.  The  treatment  and/or  disposal  of  residues  of  such  incineration  raises  considerable 
problems;  optimal  solutions  have  not  yet  been  found.  The  project  aims  at  developing 
processes  for  the  treatment  of  such  residues,  the  recovery  of  materials  and  the  safe 
disposal  of  residues,  including  demonstration  projects. 

2.  Treatment  of  mercury-containing  wastes 

Mercury-containing wastes are often  small  in volume, but are very  hazardous  and  difficult 
to  treat.  This  leads  to very  high  treatment  costs.  The  project  aims  at creating  a joint  plant 
for  several  Member  States,  which  would  be  economically  attractive  for  participating 
countries. 

3.  Decontamination  of  soil  contaminated  with  heavy  metals 

The  project  aims  at  developing  the  technology  for  a  cost-effective  large-scale  treatment 
of  soil  which  is contaminated  with  heavy  metals.  Its environmental  and  economic  interest 
is  particularly  great  in  urban  agglomerations. 

51 

ANNEX  2 

DESCRIPTION  OF  SOME  SPECIFIC  PROJECT  EXAMPLES 
from  the  Water  workshop  (Copenhagen,  11/12  October  1995) 

a)  Projects  which  include  a  distinct  physical  network; 
b)  Projects  which 

to  (better,  cost  saving  and/or  faster) 

lead 

improvements 

in 

environmental  infrastructure. 

As  regards  the  first  category 

two  groups  of  projects  are  mentioned. 

1)  Port  reception  facilities 

This  relates  to  a  cluster  of  projects  which  if  done jointly  will  improve  the  situation 
of  dumping  waste  at  sea  and  consists  of  three  main  components: 
-  Upgrading  of current  technology  for  reception  and  treatment  of chemical  port waste, 

i.e.  ballast  water,  bilge  water,etc.  to  improve  the  cost  recovery 

-  Construction  and  extension  of  adequate  port  waste  facilities  particularly  in  the 

Mediterranean  and  the  Eastern  Baltic  Sea. 

-  Setting  up  a  tracking  system  monitoring  the  waste  flow  between  the  ports  of 

Europe. 

Development  of  a  cost-effective  surveillance  satellite  to  detect  accidental  spills  and 
illegal  discharges  enabling  a  better  and  quicker  response  from  ground  recovery 
equipment  could  be  considered  within  this  group  of  projects. 

2)  River  monitoring  systems 

In  order  to  enable 
a  coordinated  planning  and  management  for  a  River  Basin  a 
river monitoring  network  is necessary.The monitoring  system  should  both  serve  water 
resources  management  and  contingency  purposes  facilitating  the  involved  countries 
to  predict  and  deal  with  current  water  shortages  and  water  quality  changes.  The 
system 
electronic 
interconnections  between  the  stations  along  the  river  basins.  Such  a  system  could  be 
a tool  for  planning  common  investments  in other  infrastructure  installations  like dams, 
specific  treatment  plants  etc. 

on-line  monitoring 

transboundary 

involve 

should 

and 

second 

category 

parallel 
The 
of 
similar 
pilot/implementation  projects 
infrastructure  problems  with  new  or  available  technologies.  A  range  of  projects  were 
discussed  in  the  workshop  of  which  some  are  mentioned  here  : 

project 
in  various  Member  States,  addressing 

examples 

common 

include 

1)  Use  of  alternative  water  resources  in  future  urban  water  supply. 

A  project  concerning  development  and  implementation  of  a  new  concept  of  urban 
water  management  including  specific  projects  on  substitution  of  drinking  water  with 
secondary  water  sources  of  lower  quality  (rain  water,  slightly  polluted  ground  water, 
treated  waste  water  etc.)  for  specific  purposes. 

52 

2)  Sludge  treatment  and  disposal. 

r 

Projects  dealing with processes for  treatment  of waste water  sludge in  relation  to the 
final  means  of  disposal  and  the  potential  environmental  problems  this  may  cause. 
Processes  for  the  removal  of  heavy  metals  from  waste  water  sludge  prior  to  its 
disposal  on  agriculture  land  is  essential.  In  addition,  the  management  of  industrial 
discharges  in  relation  to  control  of  the  input  of  harmful  substances  into  the  public 
sewer  needs  to be  addressed. 

3)  Nitrogen  removal  at  low  temperatures. 

Development  and  implementation  of facility  modifications  and operational  strategies 
for  safe  and  stable  performance  of  the  temperature  sensitive  nitrification  process  in 
urban  waste water treatment  plants  in  cold  and  temperate  climate. 

4)  Waste  water  treatment  for  specific  areas. 

The establishment  of waste  water  treatment  facilities  in  small  communities  with  e.g. 
large  seasonal  invasions  of  tourists.  Projects  could  include  the  implementation  of 
small  waste  water  treatment  plants  as  well  as  larger  central  facilities,  in  which  the 
space  capacity  out  of  the  tourist  season  is  used  for  treatment  of  septic  sewage  from 
the  local  population. 

5)  Storm  water  treatment  and  reuse. 

The development and establishment  of simple treatment facilities  for  storm  water like 
sedimentation  ponds. Because of the low content of pollutants typical  for storm water, 
the possibility  of reuse for  agriculture or other purposes is obvious.Depending on the 
purpose for  which  the water  is reused,  monitoring of water quality  and  in some cases 
further  treatment  are factors  of  importance. 

ANNEX  3 

-  JEr-S-

CRITERIA  FOR  JOINT  ENVIRONMENTAL  PROJECTS 

DESCRIPTION 

1.  Member  States  acting jointly  or  in  coordination  to  develop  a  project  (or  prepare  the 
development  of  a  project  )  of  common  interest  for  environmental  protection  and 
improvement within the Union. Projects involving non-Union  countries may be treated 
as  JEPS  when  the  significant  benefits  therefrom  accrue  within  the  territory  in  the 
Union. 

2.  JEPS  would  provide  opportunities  for  the  development  of  new  technology  allowing 

for  its  implementation  under  economic  viable  conditions. 

3.  Any  Community  support  for  JEPS  should  not  include  support  for  a  R&D  and 

technology  project  for  which  funds  are  available. 

CRJTERIA 

Essential: 

4  As  compared  to  purely  national  projects,  a JEP-  project  shall  yield  significant  "value 
added"  in  the  sense  of  environmental  effectiveness  and  capital  and  operational  cost 
savings. 

5.  Major  EU  environmental  priority  policy  areas  e.g.  in  the water  and  waste  sector  shall 
be  targeted  and  within  those  and  other  relevant  sectors  JEPS  shall  assist  in  achieving 
agreed  Community  policies  and  objectives. 

6.  The  project  will  concern  significant  physical,  including  monitoring, 

infrastructure 

projects  and  objectives 

Desirable. 

7. 

It  should  lead  to  the  development  of  new  and  improved  structures  of  administrative 
partnership  between  Member  States. 

8.  Desirably, 

the  project  should  promote  the  development  and  use  of  advanced 

environmental  technology. 

9.  The  project  should,  where  appropriate,  involve  the  private  sector 

54 

Annex  1: PROGRESS  OF TEN  LEGISLATIVE  PROCEDURES 

r  «. 

Field 

COM.  Prop. 

ESC  Opinion 

Opinion  of 

EP:  1st  reading 

Common  position 

EP:  2nd reading 

Counciliation 

Adoption 

Committee  Regions 

Financial 
Regulation 

TRANSPORT 

2  March  1994 

28  April  1994 

9  May  1994 

30  November  1994 

31  March  1995 

13  July  1995 

n.a. 

18  September  1995 

Multimodal 

29  March  1994 

23  November  1994 

27  September  1994 

18  May  1995 

2X  September  1995 

pending 

Spring 1996 

mid-1996 

HST 

interoperability 

TELECOMS 

15  Apnl  1994 

23  November  1994 

28  September  1994 

19  January  1995 

28  September 1995 

pending 

n.a. 

end  9 5/ beginning 

96 

Global  approach 

31  May  1995 

pending 

pending 

January  1996 

?  beginning  1996 

?  mid January  1996 

ISDN 
Guidelines 
Actions 

IDA  (3) 

l"NA 

ENERGY 

Gas  and  electricity 
Guidelines 
Connected  measures 

12  March 1993 
12  March  1993 

21  December  1993 
21  December  1993 

17  May  1994 
17  May  1994 

19  Apnl  1994 
19  April  1994 

22  December  1994 
(D 

13  June  1995 

n.a 

11  October  1995 

12  March  1993 
12  March  1993 

7  June  1993 
7  June  1993 

17  May  1994 

17  May  1994 

17  November  1994 
17  November  1994 

21  Dccembei  1994 

20  September  1995 

n.a. 

6  November  1995 

(2) 

r< 

19  January  1994 
19  January  1994 

27  Apnl  1994 
27  Apnl  1994 

17  Mac  1994 

1  7  N lay  1994 

18  May  1994 

18  May  1994 

29  June  1995 

29  June  1995 

26  October 1995 
26  October 1995 

January  1996 
in 

?  Jan  96 
?  Jan  96 

(1)  The  Council  ha.s  suspended  discussion  of  the  "Actions"  proposal  pending  agreement  on  the  financial  regulation 

i2)  Change  of  legal  basis  resulting  in  deletion  of  TN.A  (Article  2.35  in  place  of  129(c)) 

(3)  Tito  TEN  Financial  Assistance  Regulation  does  not  apply  to  IDA 

55 

Annex  2:  EU  FINANCING  of  T E NS  ( M E C U) 

Z 

Field 

Type  of 
assistance 

Instrument 

1993-
1994 

1995 

TOTAL 

TRANSPORT 

Loans 

EIB  (i)(2) 

4 342 

2 075 

6  417 

Guarantees 

EIF (2) 

75 9 

85.2 

161.1 

Aids 

Structural  Fund (i) (3) 

Cohesion  Fund 
TEN  heading 
(14 priority  projects) 

ENERGY 

Loans 

ELB (i)(2) 

Guarantees 

ELF  (2) 

Aids 

Structural  Funds (l) (3) 

TEN  heading 

TELECOMM. 

Loans 

EIB(i)(2) 

Guarantees 

EIF (4) 

Aids 

Structural  Funds  (i)(3) 

TEN  heading 

884 0 

1 827.0 

385 
180 

1 077 

207.7 

675.7 

0 

3 787.8 

156.1 

294.7 

21 

115.0 

1 076.6 
240(4) 
182.5 

304 

0 

87.8 

12(4) 

506.6 

0 

0 

22(4) 

999.0 

2  963.6 
625 

362.5 

1381 

207.7 

763.5 

12 

4  294.4 

156.1 

294.7 

43 

(1)  TEN  and  TEN-related  projects 
(2)  Signed  contracts 
(3)  Appropriations  committed 
(4)  Proposals  approved  by  the TEN  Financial  Assistance  Committee  at  its  meetings  on  10.  11 and  12 October.  9 and  20  November 

last. 

56 

ISSN 0254-1475 

COM(95) 571 final 

DOCUMENTS 

EN 

07  15  11 

Catalogue number  :  CB-CO-95-626-EN-C 

ISBN 92-77-96467-7 

Office  for Official  Publications of the European Communities 

L-2985 Luxembourg 

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