Report from the Commission - Annual Report of the Instrument for Structural Policy for Pre-accession (ISPA) 2000 [SEC(2001) 1726]
Date: 2001-10-31
Institutions: European Commission
Subjects: Central and Eastern Europe, European Union, accession to the European Union, activity report, aid system, cross-border cooperation, economic and social cohesion

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 31.10.2001
COM(2001) 616 final

REPORT FROM THE COMMISSION

ANNUAL REPORT OF THE
INSTRUMENT FOR STRUCTURAL POLICY
FOR PRE-ACCESSION (ISPA) 2000

[SEC(2001) 1726]

   
REPORT FROM THE COMMISSION

ANNUAL REPORT OF THE
INSTRUMENT FOR STRUCTURAL POLICY
FOR PRE-ACCESSION (ISPA) 2000

TABLE OF CONTENTS

1.

Summary ...................................................................................................................... 5

1.1.

Overview of the ISPA Instrument................................................................................ 5

2.

2.1.

2.2.

Principles of Implementation and Assistance Granted .............................................. 10

Strategic objectives .................................................................................................... 10

Environment............................................................................................................... 11

2.2.1. Contribution to the implementation of Community environmental policy................ 11

2.2.2.

ISPA Budget 2000 – Environmental sector by sub-sector......................................... 12

2.3.

Transport .................................................................................................................... 12

2.3.1. Contribution to the implementation of the Community transport policy................... 12

2.3.2.

TINA Corridors.......................................................................................................... 14

2.3.3.

ISPA Budget 2000 – Transport sector by sub-sector ................................................. 15

2.4.

Project preparation, evaluation and assessment ......................................................... 16

2.4.1.

Project preparation and evaluation............................................................................. 16

2.4.2.

Project implementation and ex-post evaluation ......................................................... 17

2.5.

2.6.

2.7.

3.

4.

4.1.

4.2.

4.3.

4.4.

5.

Public procurement .................................................................................................... 17

Implementation of the budget: appropriations, commitments and payments ............ 18

Co-financing............................................................................................................... 19

Summary of Financial Assistance.............................................................................. 21

Coordination and Cooperation ................................................................................... 31

Phare and Sapard........................................................................................................ 31

European Investment Bank (EIB) .............................................................................. 32

European Bank for Reconstruction and Development (EBRD) ................................ 34

Nordic Banks and Institutions.................................................................................... 35

Technical Assistance.................................................................................................. 36

5.1.

Report of use of allocation in 2000............................................................................ 36

2

5.2.

Budgetary allocation for technical assistance contracts............................................. 37

6.

6.1.

6.2.

6.3.

Inter-institutional Dialogue, Information and Publicity............................................. 37

Information to Member States and beneficiary countries .......................................... 37

Dialogue with Non-governmental Organisations (NGOs)......................................... 38

Information and Publicity .......................................................................................... 39

3

Foreword

This  annual  report  on  the  activities  of  ISPA  covers  the  calendar  year  2000.  It  is  the  first
annual  report  of  this  new  pre-accession  instrument,  which  has  been  set  up  as  part  of  the
Agenda 2000.

The reporting format reflects the provisions of the ISPA Regulation, and takes account of the
requirements for presenting the first operational year of a new financing instrument.

It is hoped that it will serve as useful document for those who are interested in the promotion
of the enlarged European Union.

4

1. 

SUMMARY

At the summit in Luxembourg in December 1998 the European Council endorsed a
new  strategy  for  the  preparation  of  applicant  countries  for  enlargement.  It  made
available  substantial  additional  financial  resources  to  assist  membership.  On
26 March 1999, at the Berlin European Council, the Heads of Government or States
concluded  a  political  agreement  on  Agenda  2000.  Agenda  2000  is  an  action
programme whose main objectives are to strengthen Community policies and to give
the European Union a new financial framework for the period 2000-06 with a view
to  enlargement.  In  May  1999,  the  European  Parliament,  the  Council  and  the
Commission  reached a new institutional  agreement which  commits  them  to  respect
the  spending  ceilings.  These  initiatives  laid  the  foundation  for  the  financial
framework  for  the  pre-accession  instruments  which  limit  the  pre-accession  aid  to
applicant countries to € 3,120 million a year for the 2000-6 period (1999 prices).

The  “Instrument  for  Structural  Policies  for  Pre-Accession”,  ISPA,  is  the  European
Community’s  financial  instrument  designed  to  assist  the  ten  Central  and  Eastern
European  beneficiary  countries  meet  EC  requirements  in  the  fields  of  environment
and transport.

According  to  the  “ISPA  Regulation”  (Council  Regulation  (EC)  N°  1267/1999  of
21 June 1999 establishing an Instrument for Structural Policies for Pre-Accession):

“ISPA shall provide assistance to contribute to the preparation for accession to the
European  Union  of  the  following  applicant  countries:  Bulgaria,  Czech  Republic,
Estonia,  Hungary,  Latvia,  Lithuania,  Poland;  Romania,  Slovakia  and  Slovenia
(referred  to  as  “beneficiary  countries”),  in  the  area  of  economic  and  social
cohesion, concerning environment and transport policies […]”.

ISPA is guided by the Accession Partnerships and the National Programmes for the
Adoption  of  the  Acquis,  and  follows  an  approach  similar  to  that  of  the  Cohesion
Fund, operating in the fields of environment and transport.

1.1. 

Overview of the ISPA Instrument

The  year  2000  was  the  first  operational  year  for  ISPA.  Before  projects  (defined  as
“measures”  in  the  ISPA  Regulation)  were  presented  to  the  ISPA  Management
Committee,  beneficiary  countries  were  required  to  prepare  ISPA  investment
strategies  for  the  transport  and  environment  sectors.  These  documents  provide
guidance for the selection of ISPA projects and establish the link between investment
requirements  for  achieving  compliance  with  the  acquis  in  these  sectors  and  the
selected ISPA projects. By autumn 2000, the strategies for all ten countries had been
presented to the ISPA Management Committee.

In  total,  85  projects  received  a  positive  opinion  from  the  ISPA  Management
Committee,  which  met  four  times  in  2000  (in  June,  July,  October  and  November).
They  represent  a  total  ISPA  contribution  of  €  2.09  billion.  For  the  2000  budget,
75 projects  (€  997  million  –  budget  line  B7-020  B)  were  committed;  the  ten  other
projects that received a positive opinion are being committed from the 2001 budget.

5

The  average  value  of  the  projects  approved  for  the  2000  ISPA  budget  is
approximately  €  13  million.  The  average  Community  grant  rate  stood  at  64%  of
project cost, which is lower than the normal ISPA maximum funding level of 75%.
Co-financing  is  provided  either  from  national  sources  (central,  regional  and  local
government),  international  financial  institutions  (IFIs)  or  bilateral  donors.  With  the
exception  of  Slovakia  and  Slovenia,  the  envisioned  mid-point  percentage  range  of
the annual country allocation was reached.

fairly  equally  between 

The  projects  accepted  in  2000,  including  the  technical  assistance  projects,  were
divided 
transport  sectors:
39 environmental  projects  received  over  46%  of  the  2000  budget,  and  36  transport
projects  received  over  53  %  of  the  2000  budget.  The  slight  inequality  between  the
two  sectors  was  a  result  of  the  transfer  of  two  environmental  projects  in  Poland
(valued at over € 41 million) to the 2001 budget.

the  environmental  and 

In the environmental sector, over 64% of the funds in this sector are used for sewage
installations  and  water  treatment  projects.  In  the  transport  sector,  the  focus  was  on
rail projects, which constitute more than half of the budget for this sector. This is in
accordance  with  Community  policy  on  transport  initiatives.  In  addition,  projects
which  addressed  the  need  to  enhance  safety  and  the  separation  of  traffic  were
prioritised. An analysis of the sector by Pan-European Transport Corridor indicated
that more than 30% of the transport budget is concentrated on Corridor IV. Projects
on Corridor III received about 14,2%, with Corridor II receiving 13,5 %.

Thirteen  technical  assistance  (TA)  projects  were  committed  from  the  2000  budget,
four  for  environment  and  nine  for  transport  project  preparation.  These  TAs  are
essential for the preparation of the projects that will be presented to the Management
Committee in 2001 and 2002.

Funds  have  also  been  allocated  in  support  of  the  Community  Contribution  to  the
International  Fund  “Clearance  of  the  Fairway  of  the  Danube”.  €  7.5  million  was
committed  from  the  2000  budget.  Phare  and  Obnova  -  the  Community  programme
related  to  aid  for  Bosnia  and  Herzegovina,  Croatia,  the  Federal  Republic  of
Yugoslavia  and  the  Former  Yugoslav  Republic  of  Macedonia  -  also  contributed
€ 7.5 million and € 7 million respectively to this project.

As far as projects are concerned, approximately € 390 million of the appropriations
for  2001  have  already  been  committed  through  projects  decided  on  in  2000  (as
investment  projects  that  are  financed  through  ISPA  are  implemented  over  several
years, projects generally require a commitment for more than one year).

The priorities for programming in 2001 remain the same as in 2000: presenting high-
quality projects to the Management Committee with the aim to reach the mid-point in
the  percentage  range  of  the  country  allocation,  achieving  a  balance  between
environmental  projects  and  the  transport  sector,  and  between  rail  and  road.  The
objective is also to expand activities to air pollution projects, and to co-operate with
private-sector  partners.  This  will,  however,  crucially  depend  on  the  capacity  of
beneficiary countries to present suitable projects to the Commission.

6

Table 1. ISPA Budget 2000 (Division of budget by country and sector)

Transport/Environment Balance
Percentage of Commitment Appropriations

Beneficiary
Country

Bulgaria

Czech
Republic

Estonia

Hungary

Latvia

Lithuania

Poland

Romania

Slovakia

Slovenia

TOTAL

Transport

Environment

Technical
Assistance

TOTAL

ISPA Funds
€

%

ISPA Funds
€

%

ISPA Funds
€

%

ISPA Funds
€

%

52 000 000

49.98

52 045 600

50.02

0

0

104 045 600

10.43

41 671 864

59.54

27 588 844

39.42

728 000

1.04

69 988 708

7.02

11 331 126

40.15

15 808 281

56.02

1 080 000

3.83

28 219 407

2.83

43 825 000

49.81

42 573 123

48.38

1 592 580

1.81

87 990 703

8.82

19 925 328

42.62

26 568 260

56.83

255 000

0.55

46 748 588

4.69

34 042 528

65.16

18 200 000

34.84

0

0

52 242 528

5.24

173 085 066

56.39

130 258 589

42.44

3 614 000

1.18

306 957 655

30.77

118 627 137

49.59

120 601 333

50.41

30 853 200

72.66

11 606 372

27.34

0

0

0

0

239 228 470

23.98

42 459 572

4.26

7 500 000

38.20

11 175 275

56.91

960 000

4.89

19 635 275

1.97

532 861 249

53.42

456 425 677

45.76

8 229 580

0.83

997 516 506

7

Table 2: ISPA Funds by sector – Commitments for Budget 2000

ISPA Fund Support by Sector – Commitments for Budget 2000

ISPA Budget 2000

ISPA Funds €

% ISPA
funds/
sector

N° of
projects

Drinking Water
Drinking and Waste Water
Waste Water Treatment
Solid Waste Management
Air Pollution
Total 
Environmental Sector

ISPA 

Budget 

ENVIRONMENT

27 535 927
42 568 260
296 696 243
94 020 967
0

460 821 397

of

5.98
9.24
64.38
20.40
0

46.20

of which Technical Assistance (TA) constituted the following:

TA Drinking Water
TA Waste Water Treatment
TA  Environmental  Total  of  ISPA
budget

228 000
4 167 720
4 395 720

0.02
0.42
0.44

Road

Rail

TRANSPORT

224 790 797

41.88

283 584 312

52.84

Airports
Rail/Road
Total  ISPA  Budget  of  Transport
Sector

28 000 000
320 000

5.22
0.06

536 695 109

53.80

of which Technical Assistance (TA) constituted the following:

TA Road
TA Rail
TA Road/Rail
TA Transport Total of ISPA budget

620 000
2 893 860
320 000
3 833 860

0.06
0.29
0.03
0.38

total sector projects

989 286 926

99.17

total technical assistance

8 229 580

0.83

Total support

997 516 506

8

3
4
24
8
0

39

1
3
4

15

19

1
1

36

2
6
1
9

62

13

75

TINA Corridor

I, III, IV, VI, IX,
IXB
II,  IV,  IX-V,  V,
V(10), 
VA,
IXB, E-W
Not assigned
Not assigned

Chart 1: Division of ISPA funds between recipient countries

Slovakia
4,26%

Romania
23,98%

Slovenia
1,97%

Bulgaria
10,43%

Czech Republic
7,02%

Estonia
2,83%

Hungary
8,82%

Latvia
4,69%

Poland
30,77%

Lithuania
5,24%

9

2. 

PRINCIPLES OF IMPLEMENTATION AND ASSISTANCE GRANTED

2.1. 

Strategic objectives

ISPA  finances  individual  projects  which  are  assessed  on  a  case-by-case  basis.
However, effective project identification requires a strategy that defines the priority
objectives and the projects which can best help to attain these objectives. Therefore,
each  beneficiary  country  has  prepared  a  strategy  document  for  the  transport  and
environment  sectors  and  these  strategies  constitute  the  framework  for  ISPA
assistance.

In addition to the strategy documents specific to each country, the Commission has
prepared  framework  documents  for  both  transport  and  environment  that  set  the
general guidelines for the choice of projects (e.g. for environment, concentration on
the investment-heavy directives). For the Commission, the key criteria are:

–  developing the Community dimension of investments;

–  ensuring a systematic long-term approach in line with the environment strategy;

–  concentrating the projects so that they impact the maximum number of people;

and

–  ensuring maximum financial leverage.

The  national  ISPA  strategies  are  intended  to  be  consistent  with  the  Accession
Partnerships and the National Programmes for the Adoption of the Acquis, and they
should also draw on relevant national planning documents. The strategies should also
be consistent  with National  Development  Plans. The  ISPA  strategies  are  a  national
responsibility  but  take  EC  priorities  and  legislation  into  account.  They  are  also
coherent  with  the  position  papers  on  the  environment  presented  by  the  beneficiary
countries, in the framework of the accession negotiations with the EU.

The national ISPA strategies are not intended to be legal documents but should rather
be  seen  as  tools  to  guide  the  selection  of  priority  projects  for  ISPA  support.  The
strategy is not intended to be a fixed document but will be modified over time, and in
the  light  of  changing  circumstances.  In  particular,  the  update  of  these  strategies
should reflect countries' efforts to identify investments needs to comply with the EC
environmental  acquis  and  incorporate  information  from  the  directive  -specific
implementation  plans  that  are  being  prepared  to  substantiate  their  requests  for
transitional periods in the context of accession negotiations.

The ISPA strategies were presented to the ISPA Management Committee, in order to
explain the context within which projects are chosen. The Commission's agreement
to the ISPA strategy does not imply its approval of any project identified as a priority
for  investment.  Each  project  must  be  individually  proposed  and  submitted  to  the
Commission  for  consideration,  in  line  with  the  normal  procedures.  In  all  cases,
project  proposals  are  submitted  by  the  Commission  to  the  ISPA  Management
Committee  for  its  opinion  before  a  Commission  decision  to  support  the  project  is
taken.

10

2.2. 

Environment

2.2.1.  Contribution to the implementation of Community environmental policy

Support  from  ISPA  is  intended  to  contribute  to  the  implementation  of  Community
environment  policy.  ISPA  supports  environment  measures  which  enable  the
beneficiary countries to comply with the requirements of Community environmental
legislation and with the objectives of the Accession Partnerships. Recent estimations
place  the  total  cost  of  compliance  with  EC  environmental  legislation  for  the
beneficiary countries at between € 79 and € 110 billion.

In  order  to  maximise  the  impact  of  Community  assistance  on  achieving  the
objectives  of  the  environmental  legislation,  ISPA  will  concentrate,  in  the  first
instance,  on  the  investment-heavy  environmental  directives  i.e.  the  directives  that
will be most costly to implement. These concern the following four sectors :

–  drinking water supply;

–  waste water treatment;

–  management of solid waste and hazardous waste; and

–  air quality improvement.

The  appraisal  of  proposals  for  ISPA  support  will  take  into  consideration  the
compatibility  of  the  measures  with  Community  policies,  including  Community
environmental  policy.  All  investments  need  therefore  to  comply  with  the  technical
standards and respect the emission limit values or quality parameters that are set up
in  the  main  relevant  environmental  directives  (Directive  91/271/EEC  on  urban
wastewater  treatment,  98/83/EC  on  Drinking  water,  99/31/EC  on  landfill  of  waste
etc.). But implementation and future operation of projects need also to be in line with
the main EC environmental policy principles like preventive action, damage rectified
at  source  or  the  polluter  pays  principle.  This  often  implies  the  need  of  designing
integrated projects in order to avoid partial solutions and the obligation of inserting
the individual infrastructure development within a broader management plan.

There  is  an  important  principle  of  environmental  legislation  that  needs  to  be
respected for both the  environment and transport  ISPA projects  ones. This requires
that  the  assessment  of  the  environmental  impact  of  proposals  for  ISPA  support
should be “similar” to the assessment provided for in Council Directive 85/337/EEC
as amended by Directive 97/11/EC on the assessment of the effects of certain public
and private projects on the environment (EIA Directive).

Most  ISPA  projects  are  covered  by  Annex  I  (requiring  an  environmental  impact
assessment (EIA) to be carried out) or by Annex II (requiring the national authorities
to take  the  responsibility for  deciding if  an  EIA is required, on  the  basis  of  certain
criteria)  of  the  EIA  Directive.  One  important  element  of  the  EIA  procedure  is
consultation  with  the  population  concerned  and  with  the  relevant  environmental
authorities.  The  main  purpose  is  to  ensure,  in  a  transparent  manner,  that
environmental  aspects  are  taking  into  account  during  the  development  consent
procedure  of  infrastructure  projects.  In  the  first  year  of  the  operation  of  ISPA,  the
Commission has assisted in ensuring certain minimum standards in this respect. For

11

projects presented in 2001, the Commission insists that full compliance with public
consultation procedures is achieved.

2.2.2. 

ISPA Budget 2000 – Environmental sector by sub-sector

ISPA Budget 2000
Environmental Sector

ISPA Funds €

% ISPA
funds/sector

N° of
projects

Drinking Water
Drinking and Waste Water
Waste Water Treatment
Solid Waste Management
Air Pollution

Total ISPA Budget of
Environmental Sector

27 535 927
42 568 260
296 696 243
94 020 967
0

5.98
9.24
64.38
20.40
0

460 821 397

46.20

3
4
24
8
0

39

The  majority  of  ISPA  funding  in  the  environmental  sector  for  the  year  2000  (over
60%)  was  dedicated  to  waste  water  treatment,  primarily  to  sewerage  projects  that
either  extended,  replaced  or  repaired  current  systems  in  the  beneficiary  countries.
Over  20%  of  the  funding  in  this  sector  was  applied  to  solid  waste  management,
primarily  to  landfill  projects.  Approximately  15%  of  funding  was  assigned  to
drinking  water  projects,  the  majority  in  conjunction  with  waste  water  treatment
projects. Air pollution did not receive any funding in 2000.

Chart 2: Environmental Funding by Sub-sector

300.000.000
250.000.000
200.000.000
150.000.000
100.000.000
50.000.000
0

ISPA Environmental Funding
2000

Drinking Water

Drinking & Waste
Water

Waste Water
Treatment

Solid Waste
Management

Air Pollution

2.3. 

Transport

2.3.1.  Contribution to the implementation of the Community transport policy

The target of the ISPA transport sector is to build the future trans-European transport
network (Decision 1692/96 of the European Parliament and of the Council of 23 July
1996), as defined in the TINA (Transport Infrastructure Needs Assessment) Report,
which  will  cover  the  beneficiary  countries  of  Central  Europe.  Within  the  TINA
Network,  priority  should  be  given  to  the  integrated  development  of  the  ten  Pan-
European  Transport  Corridors  which  were  endorsed  by  the  third  Pan-European
Transport Conference in Helsinki in June 1997.

12

In Agenda 2000, the Commission also stressed the importance of the transport sector
in the European  Union’s  pre-accession  strategy.  The  Central  and  Eastern  European
Countries  (CEECs)  are  both  a  further  component  of  an  enlarged  Union  and  a  vital
link  between  western  Europe  and  both  the  newly  independent  States  and  the
countries  bordering  the  Mediterranean.  Transport  infrastructure  in  the  region  is
therefore of vital importance for competitiveness, economic growth and employment
in the European Union of tomorrow.

Accordingly, the Commission has asked each candidate country to prepare an ISPA
strategy  for  transport  to  provide  a  framework  for  the  analysis  and  selection  of  the
priorities for assistance from that instrument.

The ten candidate countries completed their strategies in May-June 2000 on the basis
of the following guidelines:

–  improving trans-European networks, principally along the ten Helsinki Corridors,

with priority given there to missing links and bottlenecks,

–  concentration  of  investment  on  the  Corridor  routes  of  highest  priority,  possibly

followed by access to them,

–  respect  for  balance  between  the  various  modes  of  transport,  with  particular
attention to rail infrastructure to check the decline in rail transport over the last ten
years,

–  sustainability  of 

investment 

the
maintenance  of  infrastructure  and  compliance  with  the  main  Community
standards (travel speed, maximum axle weight, signalling), including with respect
to the environment,

through  firm  commitments  as  regards 

–  particular attention to environmental protection through gradual application of the
Council  Directives  on  impact  assessments,  with  special  regard  to  public
consultation and the preparation of measures to remedy any deleterious impact of
infrastructure on the environment and living conditions,

–  need for a financial multiplier effect of ISPA contributions by promoting linkage
with assistance from international financial institutions (especially the EIB and the
EBRD).

At  the  same  time,  the  preparation  of  national  strategies  and  project  selection  rely
heavily  on  the  TINA  (Transport  Infrastructure  Needs  Assessment)  exercise,
especially  its  October  1999  final  report  prepared  by  a  high-level  group  of  experts
from the European Union and the CEECs.

The  first  result  of  this  exercise  was  to  define  a  network  centred  on  the  ten  trans-
European corridors but also including some additional links and all international air
and  sea  ports.  The  rail  network  therefore  extends  to  20  924  km  as  compared  with
18 638 km for the road network.

TINA  also  contributed  to  an  initial  estimate  of  the  costs  of  construction  and
restoration of this network by fixing an investment horizon of 2015 subject to a limit
of 1.5%  of  GNP for each  of  the  candidate  countries.  This  results  in  a  total  amount

13

needed of € 91 595 million for the period, 48% for the road network and 40.5% for
rail.

2.3.2.  TINA Corridors

Transport Sector: projects per TINA Corridor (funded in 2000)

Corridor

N° of
projects

ISPA Funds €

Corridor I
Corridor II
Corridor III
Corridor IV
Corridor IV – V
Corridor V
Corridor V – X
Corridor VA
Corridor VI
Corridor IX
Corridor IXB
Corridor E-W
Corridor Not Assigned*

4
2
2
9
1
1
2
1
1
1
3
3
7

27 819 326
72 282 461
78 431 376
63 193 570
94 860
12 331 000
8 280 000
30 853 200
10 051 734
34 747 696
24 779 328
12 955 328
60 875 225

% total of
ISPA
Transport
Budget 2000

5.18
13.47
14.16
30.41
0.02
2.30
1.54
5.75
1.87
6.47
4.62
2.41
11.34

TOTAL

36

€ 536 695 104

*  For  several  reasons,  a  project  may  fall  into  an  area  not  assigned  to  a  TINA
Corridor. For example, if the project is technical assistance in project management, it
would not fall into a specific TINA Corridor. Furthermore, the airport infrastructure
project has not been assigned to a Corridor.

Chart 3: Transport funding by TINA Corridor

I
II
III
IV
IV-V
V
V-X
VA
VI
IX
IXB
E-W
Not Assigned

80.000.000
70.000.000
60.000.000
50.000.000
40.000.000
30.000.000
20.000.000
10.000.000
0

Project Funding per Corridor

14

2.3.3. 

ISPA Budget 2000 – Transport sector by sub-sector

ISPA Budget 2000
Transport Sector

ISPA Funds
€

% ISPA
funds/
sector

N° of
projects

TINA Corridor

Road

Rail

Aviation

Rail/Road

224 790 797

41.88

283 584 312

52.84

28 000 000

320 000

5.22

0.06

15

19

1

1

I,  III,  IV,  VI,  IX,
IXB

II, IV, IV-V, V, V-
X, VA, IXB, E-W

Not assigned

Not assigned

Total  ISPA  Budget
of Transport Sector

536 695 109

53.80

36

The  ISPA  funds  spent  in  the  Transport  Sector  have  focused  on  the  extension  and
improvement of the TINA network, in order to facilitate the connections between the
European Union and the Accession countries. Over half of the ISPA Budget for the
transport sector in 2000 was dedicated to rail projects, with special attention given to
increased  safety  through  improved  signalling  and  rail  repairs.  The  emphasis  on  the
rail  sub-sector  is  in  accordance  with  the  EC  policy  of  encouraging  rail  use  and
development  as  a  method  of  both  reducing  road  congestion  and  the  air  pollution
caused  by  road  transport.  Over  40%  of  the  funding  was  assigned  to  road  projects,
primarily  on  repairs  and  improvements  related  to  increased  safety.  Approximately
5% of funding was applied to the construction of the Sofia Airport in Bulgaria, which
is  currently  the  only  aviation  project  in  the  beneficiary  countries  to  receive  ISPA
support.  The  Commission  also  conducted  one  technical  assistance  project  in  the
rail/road sub-sector, for a planned project in Poland.

Chart 4: Transport Funding by Sub-sector

300.000.000

250.000.000

200.000.000

150.000.000

100.000.000

50.000.000

0

Road

Rail

Aviation

Road/Rail

ISPA Transport Funding 2000

15

2.4. 

Project preparation, evaluation and assessment

Project  preparation  during  1999  and  2000  was  supported  by  the  Phare  Programme
and  bilateral  aid  from  Member  States.  In  the  framework  of  Phare’s  Large  Scale
Infrastructure  Facility,  Part  4  (LSIF  IV),  €  26  million  were  allocated  for  technical
assistance to prepare ISPA projects in both the environment and the transport sectors.

In  addition,  to  the  activities  financed  by  Phare,  bilateral  donors,  like  the  Danish
Environmental Protection Agency and the UK Know How Fund funded consultancy
services  for  project  preparation  of  the  first  wave  of  ISPA  projects.  From  2000
onward,  ISPA  funds  have also  been  available  for  project  preparation.  A  number  of
the  13  technical  assistance  measures  that  were  decided  in  2000  provide  ISPA
assistance for project preparation in several beneficiary countries. These services will
be contracted in 2001 and will be used for the preparation of project proposals to be
presented to the Management Committee in 2001 and thereafter.

2.4.1.  Project preparation and evaluation

Based  on  the  National  ISPA  strategies,  beneficiary  countries  submitted  project
proposals for approval by the Commission. The project proposals need to pay special
attention to:

–  the  coherence  of  the  project  proposed  with  the  national  ISPA  environmental/

transport strategy;

–  the appropriateness of the cost-benefit or a cost-effectiveness analysis;

–  quality of the financial analysis assessing the financial viability of the project, its

revenue generating capacity and the need for grant assistance;

–  the institutional capacity of the project promoter;

–  the incorporation of any necessary environment integration measure;

–  ensuring the sustainability of the project; and

–  the  compatibility  of  the  measures  with  Community  policies,  in  particular

compliance with competition and public procurement rules.

If an ISPA project application is considered to be acceptable, the Directorate-General
for  Regional  Policy  carries  out  a  thorough  appraisal  of  the  project,  in  close
cooperation  with  other  services, 
the  Directorates-Generals  for
Enlargement, the Environment, and Transport and Energy. For the evaluation of the
technical,  financial  and  economic  components  of  the  project,  the  Commission  is
assisted  on  a  case-by-case  basis  by  the  EIB,  the  EBRD  or  outside  expertise
contracted through two framework contracts (see section 5).

in  particular 

Important considerations during the evaluation of the project are:

–  priorities established in the Accession Partnership and  national  strategies  for  the

respective sectors;

16

–  contribution  to  implementation  of  Community  legislation  and  policies  on
environment  and  trans-European  transport  networks  and  of  common  transport
policies;

–  appropriate balance between environment and transport;

–  economic  and  social  benefits,  taking  account  of  leverage  effects,  including

possible alternative forms of financing; and

–  provisions for adequate maintenance after completion and effectiveness of project

management.

In 2000, in total more than 140 projects were presented by  beneficiary  countries to
the  Commission.  Fewer  than  20  could  not  be  accepted  as  they  did  not  meet  the
funding criteria, and about 40 will be presented in 2001 and later, as these projects
required  some  further  quality  improvement.  In  2000,  the  ISPA  Management
Committee gave a positive opinion on 85 projects. Out of these 85, the Commission
took a decision in 2000 for 77 projects and committed funds in the 2000 budget for
75 of them (two were carried over to the 2001 budget).

2.4.2.  Project implementation and ex-post evaluation

The first activities for project implementation have only started in the second half of
2000  and  will  come  into  full  swing  only  in  2001.  Consequently,  there  was  yet  no
need for ex-post evaluation. However, in spring 2001 the first series of the bi-annual
Monitoring Committees in beneficiary countries started. The documents prepared for
these  periodic  meetings  and  the  information  provided  for  the  completion  of
indicators  to  monitor  the  physical  and  financial  progress,  will  serve  as  useful
statistical  material  to  assess  the  effectiveness  of  implementation,  in  addition  to  the
evaluation  of  the  broader  economic  and  social  impacts  of  the  ISPA  measure.
Technical assistance will be mobilised as needed to assist the Commission in ex-post
evaluation in due course.

2.5. 

Public procurement

Measures  financed  by  the  Commission  under  ISPA  must  be  compatible  with
Community policies; in particular, they must be in compliance with competition and
public  procurement  rules.  This  relates  specifically  to  the  respect  of  the  principles
concerning ‘state aids’ and of tendering rules. In this context, the principles, as laid
down in the provisions of Title IX of the Financial Regulation of 21 December 1977
applicable  to the  general  budget  of  the  European  Communities  must  be  applied.  In
addition , each Financing Memorandum concluded with the beneficiary country for a
specific  project  contains  in  its  annexes  detailed  rules  on  tendering  and  contracting
procedures.

For 2000, the procurement rules that beneficiary countries were obliged to follow for
service,  works  and  supply  contracts  were  outlined  in  the  DIS  Manual  (the  1997
edition, together with notified amendments). Since January 200l, the DIS Manual has
been replaced by the Practical Guide to Phare, ISPA & Sapard Contract Procedures;
this allows, however, for the use of FIDIC contracts for works projects.

At present, the procedures for managing measures financed under ISPA require ex-
ante control, i.e. decisions concerning procurement and award of contracts are taken

17

by the contracting authority and referred for endorsement to the Commission (i.e. the
Commission  Delegations  in  beneficiary  countries).  Given  the  early  phase  of
implementation,  no  contracts  for  projects  have  been  signed  in  2000,  although  the
tendering of some contracts has started in the second half of 2000, in particular for
service contracts to assist in project implementation and supervision.

All  TA  measures  on  the  Commission  initiative  have  to  respect  the  Commission
procurement  procedures  with  the  applicable  thresholds  for  direct  agreement,
restricted tenders and  open tenders, as well as  applicable rules  for  consultation and
information.

2.6. 

Implementation of the budget: appropriations, commitments and payments

With the three pre-accession instruments Phare, Sapard and ISPA, total pre-accession
aid to the ten candidate countries of Central and Eastern Europe more then doubled
in 2000 in comparison with 1999. For ISPA, € 1.058 million was planned for 2000.
Budgetary  appropriations  for  2000  were  €  1.039  million  under  B7-020  and
€ 19 million  under  B7-020A  (technical  assistance  carried  out  on  the  Commission’s
initiative  or  on  behalf  of  the  Commission,  which  cannot  exceed  2%  of  the  total
allocation  of  ISPA).  The  annual  budget  provisions  are  adjusted  to  allow  for  the
annual increases in prices.

In  order  to  determine  the  distribution  of  the  allocation  of  ISPA  funds  among  the
beneficiary  countries,  the  Commission  used  the  following  criteria:  population,
surface area and GDP per capita, and allows for a margin.

Table 3: Allocation margin per beneficiary country in 2000

Country

Margin as %

€ low

€ high

€ median

Bulgaria
Czech Republic
Estonia
Hungary
Latvia
Lithuania
Poland
Romania
Slovakia
Slovenia

8.0% - 12.0%
5.5% - 8.0%
2.0% - 3.5%
7.0% - 10.0%
3.5% - 5.5%
4.0% - 6.0%

83 108 600
57 137 200
20 777 200
72 720 000
36 360 000
41 554 300
30.0% - 37.0% 331 657 300
20.0% - 26.0% 207 771 500
36 360 000
3.5% - 5.5%
10 388 600
1.0% - 2.0%

124 662 900
83 108 600
36 3600 000
103 885 800
57 137 200
62 331 500
384 377 300
270 103 000
57 137 200
20 777 200

103 885 800
70 122 900
28 568 600
88 302 900
46 748 600
51 942 900
348 017 300
238 937 200
46 748 600
15 582 900

(The  %  ranges  were  taken  from  the  Commission  Decision  of  7  March  2000,  published  in  the  Official  Journal  L72,
21 March 2000, p. 21)

ISPA  commitment  appropriations  from  budget  line  B-7020  were  used  mainly  for
75 ISPA  measures  (€  997  516  506).  Thirteen  of  these  measures  are  for  technical
assistance, including project preparation and implementation support. € 41 243 301,
the difference between the budget commitment appropriations and the commitments
implemented, was carried  forward to 2001  and committed in 2001  (see  section  3  –
Poland).

18

Budget Line

B-7020A
B-7020
Total

Budget
commitment
appropriations

19 044 000
1 038 956 000
1 058 000 000

Commitment
appropriations
implemented

11 270 941
1 005 016 506
1 016 287 447

Payments
implemented

42 026
2 500 000
2 542 026

The  Commission  committed  €  11  270  941  from  the  budgetary  line  B-7020A  for
technical  assistance  projects  (see  section  5).  An  amount  of  €  7.4  million  was
transferred to budgetary line B7-020 and made available for investment measures in
the beneficiary countries, and € 7.5 million of the commitment appropriations were
used  for  the  Community  contribution  to  the  International  Fund  “Clearance  of  the
Fairway of the Danube” (Council Decision of 17/7/2000, OJ L 187, 26/7/2000).

The projects that ISPA finances are large infrastructure projects that are implemented
over  several  years  and  require  a  certain  lead  time  for  preparatory  work  so  as  to
ensure  efficient  and  proper  project  implementation.  The  implementation  phase  of
projects whose funding was decided in 2000 started in 2001, and the signing of the
first  main  (works)  contracts  is  expected  for  2001.  Consequently,  there  were  no
payments to the 75 ISPA measures that were decided in 2000.

In 2000 payment appropriations were used for technical assistance measures carried
out  on  the  Commission’s  initiative  or  on  behalf  of  the  Commission  (described  in
section 5) and € 2.5 million have been paid to the International Fund “Clearance of
the Fairway of the Danube”.

2.7. 

Co-financing

The Co-ordination Regulation indicates that beneficiary states shall contribute to the
financing of investments. This national contribution can be financed in several ways,
namely,  by  national  public  sources,  by  loans  from  the  European  Investment  Bank
(EIB)  or  an  International  Financial  Institutions  (IFI),  or  by  commercial  sources  of
funds.

The ISPA Regulation sets a ceiling for the contribution to ISPA measures. The rate
of Community assistance may be up to75% of the public expenditures. In exceptional
cases  the  assistance  rate  may  be  increased  to  85%.  The  rate  of  assistance  may  be
reduced  to  take  into  account  of  the  availability  of  co-financing,  the  measure’s
capacity  to  generate  revenues,  and  an  appropriate  application  of  the  polluter-pays
principle.

There  are  two  provisions  in  the  ISPA  Regulation  that  allow  for  a  higher  grant  rate
(these do not apply to investment projects):

–  Preliminary studies and technical support measures may be financed exceptionally
at 100%. A clear link must be shown between these measures and the investments
funded  by  ISPA.  Technical  assistance  will  be  very  important  in  ensuring  a  high
level of project quality, in terms of preparation, management and impact.

19

–  Technical  assistance  measures  carried  out  on  the  Commission’s  initiative  or  on
behalf of the Commission is  always  financed at  100%  -  these  activities  are  paid
from the budgetary line B7-020A for administrative management (see section 5).
The ISPA Regulation states that total expenditure carried out at the Commission’s
initiative  or  on  behalf  of  the  Commission  may  not  exceed  2  %  of  the  total
allocation of ISPA.

During  programming  and  project  appraisal,  the  Commission  services  encouraged
beneficiary countries to reduce the grant rate thereby leveraging the ISPA assistance.
In  2000,  the  average  grant  rate  was  about  64%  for  all  projects,  thereby  achieving
significant  leverage  already  in  the  first  operational  year  of  ISPA.  The  actual  co-
financing  rates  for  transport  projects  range  from  less  than  40%  for  an  airport
infrastructure project in Bulgaria (37%) or a rail project in the Czech Republic (39%)
to 75%. For environmental projects, the grant rates range from 44% for a waste water
project  on  Slovenia  to  75%.  There  were  no  projects  for  which  a  grant  rate  of  85%
was applied.

In  line  with  the  principles  for  assessing  the  appropriate  co-financing  rate,  the  rates
are  generally  lower  in  the  relatively  richer  countries  and  for  projects  for  which
revenues could be identified to reduce the grant rate. In particular in environmental
projects,  the  setting  of  the  grant  rate  needs  to  take  account  of  the  affordability  of
consumers to pay for water and waste water services, which is generally lower in the
low-income countries like Romania and Bulgaria.

By increasing cooperation with other sources of financing, the resources used in the
sectors at which pre-accession aid is directed can be leveraged. The contribution of
IFIs has proved an important factor for leveraging ISPA assistance and ensuring the
contribution of the beneficiary (see section 4.2, 4.3 and 4.4). In certain cases, IFI co-
financing  is  essential  to  allow  the  beneficiary  countries  to  fill  the  financing  gap
between  ISPA  grant  and  the  total  eligible  costs,  in  particular  in  those  beneficiary
countries which have difficulties to co-finance ISPA measures from public sources.

For  one  waste  management  project,  the  first  of  this  type  in  Romania,  the  Danish
Ministry  of  Environment  and  Energy  provided  grant  co-financing  through  its
DANCEE-Programme (Danish Cooperation for Environment in Eastern Europe).

20

3. 

SUMMARY OF FINANCIAL ASSISTANCE

This chapter provides a statistical breakdown detailing the distribution of ISPA funds
between  each  sector  and  sub-sector  for  each  recipient  country.  Each  project  was
assigned  to  a  sub-sector  of  either  environmental  programmes  or 
transport
programmes. These sub-sectors include:

(cid:1)  Environment:  drinking  water,  drinking  and  waste  water,  waste  water  treatment,

solid-waste management (landfills, incinerators, etc.);

(cid:1)  Transport:  road,  rail,  airports,  rail/road  projects.  Transport  projects  are  often

assigned a TINA Corridor, as well as a sub-sector categorisation.

Bulgaria

Bulgaria received € 104 982 901 in assistance from ISPA in 2000, with € 52 045 600
assigned to  environmental projects and € 52 000 000  assigned  to transport projects.
This constitutes 10.4% of the ISPA budget for 2000.

Bulgaria

ISPA Funds
€

% total

N° of
projects

ENVIRONMENT

Waste Water Treatment
Solid Waste Management

Total

TRANSPORT

Road

Airport

Total

15 699 092
36 346 508

52 045 600

15.09
34.93

50.02

24 000 000

23.07

28 000 000

52 000 000

26.91

49.98

TECHNICAL ASSISTANCE

TA Total

0

0

Total support

104 045 600

1
1

2

1

1

2

0

4

TINA Corridor

IV,

Corridors 
VIII and IX
Not assigned

21

Czech Republic

The Czech Republic received  €  69  988  708  in  assistance  from  ISPA  in  2000,  with
€ 27 588 844 assigned to environmental projects, € 41 671 864 assigned to transport
projects and € 728 000 assigned to technical assistance projects in both sectors. This
constitutes 7.0 % of the ISPA budget for 2000.

Czech Republic

ISPA Funds
€

% total

N° of
projects

ENVIRONMENT

Waste Water Treatment

Total

TRANSPORT

Road
Rail

Total

TECHNICAL ASSISTANCE

TA Drinking Water
TA Road
TA Total

27 588 844

27 588 844

39.42

39.42

10 051 734
31 620 130

41 635 864

14.36
45.18

59.54

228 000
500 000

728 000

0.33
0.71

1.04

Total support

69 988 708

2

2

1
2

3

1
1

2

7

TINA Corridor

Corridor VI
Corridor IV

22

Estonia

Estonia  received €  28 219 407  in  assistance  from  ISPA  in  2000,  with  € 15 808 281
assigned to environmental projects, € 11 331 126 assigned to transport projects  and
€ 1  080  000  assigned  to  technical  assistance  projects  in  the  transport  sectors.  This
constitutes 2.8 % of the ISPA budget for 2000.

Estonia

ISPA Funds
€

% total

N° of
projects

ENVIRONMENT

Waste Water Treatment
Solid Waste Management

Total

TRANSPORT

Road

Total

TECHNICAL ASSISTANCE

TA Rail
TA Total

Total support

12 142 281
3 666 000

15 808 281

43.03
12.99

56.02

11 331 126

11 331 126

40.15

40.15

1 080 000

1 080 000

28 219 407

3.83

3.83

3
1

4

1

1

1

1

6

TINA Corridor

Corridor I

Corridor IV

23

Hungary

Hungary received € 87 990 703 in assistance from ISPA in 2000, with € 42 573 123
assigned to environmental projects, € 43 825 000 assigned to transport projects and
€ 1 592 580 assigned to technical assistance projects in both sectors. This constitutes
8.8 % of the ISPA budget for 2000.

Hungary

ISPA
Funds €

% total

N° of
projects

ENVIRONMENT

Waste Water Treatment
Solid Waste Management

Total

TRANSPORT

Rail

Total

TECHNICAL ASSISTANCE

TA Waste Water Treatment
TA Road

TA Rail

TA Total

18 918 600
23 654 523

42 573 123

21.50
26.88

48.38

43 825 000

49.81

43 825 000

49.81

1 257 720
120 000
214 860

1.43
0.14
0.24

1 592 580

1.81

2
3

5

3

3

1
1
2

4

Total support

87 990 703

12

TINA Corridor

Corridors 
V

IV,

Not assigned
Corridors  VI,
IV-V

24

Latvia

Latvia  received  €  46 748 588  in  assistance  from  ISPA  in  2000,  with  € 26 568 260
assigned to environmental projects, € 19 925 328 assigned to transport projects, and
€ 255  000  assigned  to  technical  assistance  projects  in  the  transport  sectors.  This
constitutes 4.7 % of the ISPA budget for 2000.

Latvia

ISPA Funds
€

% total

N° of
projects

ENVIRONMENT

Drinking and Waste Water

26 568 260

Total

TRANSPORT

Road
Rail

Total

26 568 260

7 225 000
12 700 328

19 925 328

56.83

56.83

15.46
27.17

42.62

TECHNICAL ASSISTANCE

TA Rail
TA Total

255 000

255 000

0.55

0.55

Total support

46 748 588

3

3

2
2

4

1

1

8

TINA Corridor

Corridor I
Corridor E-W

Corridor E-W

25

Lithuania

Lithuania received € 52 242 528 in assistance from ISPA in 2000, with € 18 200 000
assigned to environmental projects and € 34 042 528 assigned to transport projects.
This constitutes 5.2 % of the ISPA budget for 2000.

Lithuania

ISPA Funds
€

% total

N° of
projects

ENVIRONMENT

Drinking and Waste Water
Waste Water Treatment

Total

TRANSPORT

Road

Rail

Total

16 000 000
2 200 000

18 200 000

30.63
4.21

34.84

24 912 640

47.69

9 129 888

34 042 528

17.69

65.16

TECHNICAL ASSISTANCE

TA Total

0

0

Total support

52 242 528

1
1

2

2

1

3

0

5

TINA Corridor

I,

Corridor 
IXB
Corridor IXB

26

Poland

Poland received € 306 957 655 in assistance from ISPA in 2000, with € 130 258 589
assigned to environmental projects, € 173 085 066 assigned to transport projects and
€ 3 614 000 assigned to technical assistance projects in both sectors. This constitutes
30.8 % of the ISPA budget for 2000.

Poland

ISPA
Funds €

% total

N° of
projects

ENVIRONMENT

Drinking Water
Waste Water Treatment
Solid Waste Management

Total

TRANSPORT

Road

Rail

Total

3 468 677
104 743 576
22 046 336

130 258 589

1.13
34.12
7.18

42.44

100 802 601

23.55

72 282 465

173 085 066

32.84

56.39

TECHNICAL ASSISTANCE

TA Waste Water Treatment
TA Rail
TA Road/Rail
TA Total

2 730 000
564 000
320 000

3 614 000

0.89
0.18
0.10

1.18

1
4
2

7

4

2

6

1
1
1

3

TINA Corridor

III,

Corridor 
NA
Corridor II

Not assigned
Not assigned

Total support

306 957 655

16

While the funds for environment did not reach 50% of the total, account  should  be
taken  of  the  transfer  of  two  projects  approved  in  2000  to  the  2001  budget.  The
inclusion of these two projects into the 2000 budget would have brought the level of
spending on environmental projects to 50% of total funding for Poland.

27

Romania

Romania  received  €  239  228  470  in  assistance  from  ISPA  in  2000,  with
€ 120 601 333  assigned  to  environmental  projects  and  €  118  627  137  assigned  to
transport projects. This constitutes 24.0 % of the ISPA budget for 2000.

Romania

ISPA Funds
€

% total

N° of
projects

ENVIRONMENT

Drinking Water
Waste Water Treatment
Solid Waste Management

Total

TRANSPORT

Road

Rail

Total

23 839 250
88 454 483
8 307 600

120 601 333

9.97
36.97
3.47

50.41

45 847 696

19.16

72 779 441

118 627 137

30.42

49.59

TECHNICAL ASSISTANCE

TA Total

0

0

Total support

239 228 470

1
3
1

5

2

1

3

0

8

TINA Corridor

IV,

Corridor 
IX
Corridor IV

28

Slovakia

Slovakia received € 42 459 572 in assistance from ISPA in 2000, with € 11 606 372
assigned to environmental projects and € 30 853 200 assigned to transport projects.
This constitutes 4.3 % of the ISPA budget for 2000.

Slovakia

ISPA Funds
€

% total

N° of
projects

ENVIRONMENT

Waste Water Treatment

Total

TRANSPORT

Rail

Total

11 606 372

11 606 372

27.34

27.34

30 853 200

30 853 200

72.66

72.66

TECHNICAL ASSISTANCE

TA Total

0

0

Total support

42 459 572

3

3

1

1

0

4

TINA Corridor

Corridor VA

29

Slovenia

Slovenia received € 19 635 275 in assistance from ISPA in 2000, with € 11 175 275
assigned  to  environmental  projects,  €  7  500  000  assigned  to  transport  projects  and
€ 960  000 assigned to  technical  assistance  projects in both sectors. This  constitutes
2.0 % of the ISPA budget for 2000.

Slovenia

ISPA
Funds €

% total

N° of
projects

ENVIRONMENT

Waste Water Treatment

Total

TRANSPORT

Rail

Total

11 175 275

11 175 275

56.91

56.91

7 500 000

7 500 000

38.20

38.20

TECHNICAL ASSISTANCE

TA Waste Water Treatment
TA Rail
TA Total

180 000
780 000

960 000

0.92
3.97

4.89

Total support

19 635 275

2

2

1

1

1
1

2

5

TINA Corridor

Corridor V – X

Corridor V – X

30

4. 

COORDINATION AND COOPERATION

4.1. 

Phare and Sapard

As  required  by  Council  Regulation  (EC)  No  1266/1999,  the  Commission  ensures
close  co-ordination  among  the  three  pre-accession  instruments.  The  Regulation
carefully specifies the field to which each instrument provides assistance:

–  Sapard finances measures to support agriculture and rural development;

–  ISPA finances infrastructure projects costing over € 5 million in the transport and

environment sectors;

–  Phare  deals  with  priority  measures  concerning  the  adoption  of  the  acquis
communautaire,  whether  to  improve  administrative  capacity  or  for  related
investment.  This  instrument  may  also  support  measures  in  the  fields  of  the
environment and transport if they constitute a secondary but essential component
of integrated programmes for regional development or industrial restructuring.

The Phare Management Committee plays a special role in general coordination.

At  programming  level,  the  partnerships  for  accession,  one  for  each  of  the  ten
candidate  countries,  as  revised  by  the  Council  on  6  December  1999,  remain  the
general framework for assistance from the three pre-accession instruments. They are
supplemented,  in  the  case  of  Phare,  by  the  national  development  plans,  and,  in  the
case  of  ISPA,  by  the  national  strategies  for  the  environment  and  transport.  Sapard
projects  will  be  selected  from  the  rural  development  programmes  for  2000-06,  as
prepared  on  the  basis  of  the  candidate  countries’  plans  and  approved  for  each  of
these countries by the Commission in 2000.

In  practice,  programming  is  coordinated  through  extended  interdepartmental
consultations.  In  addition,  a  coordinating  committee  for 
the  pre-accession
instruments has been set up in  the  various Commission  departments involved. This
the  extended
Committee  pays  particular  attention 
decentralisation  (EDIS)  of  Phare  and  ISPA.  Early  in  2001,  the  Commission
published  a  general  report  on  the  implementation  of  pre-accession  aid  (General
Assistance document).

the  preparation  of 

to 

In  the  case  of  project  monitoring,  co-ordination  takes  the  form  of  joint  Monitoring
Committee (JMC), supported, where possible, by the  ISPA Monitoring Committees
and  the  relevant  Phare  sub-committees.  The  first  series  of  ISPA  Monitoring
Committee began in spring 2001.

As regards the preparation of the ISPA projects in 2000, the first year of operation of
this  instrument,  the  contribution  of  the  feasibility  and  preliminary  draft  studies  of
Phare financing begun in 1998-99 should be noted.

31

4.2. 

European Investment Bank (EIB)

A  Cooperation  Agreement  between  the  European  Commission  and  the  EIB  on
Community  structural  assistance  (including  ISPA)  during  the  period  2000-06  was
signed  on  19  January  2000.  The  aim  of  the  agreement  was  to  set  up  the  basis  for
successful  cooperation  between  the  Commission  and  the  EIB,  in  order  to  identify
how  best  to  combine  ISPA  grants  with  the  loans  provided  by  the  EIB.  The  main
objective  was  to  maximise  the  leverage  effect  of  the  EC  grants  and  to  restrict  EC
budget support to those that are strictly necessary.

The results of the first year of cooperation between ISPA and EIB are very positive.
This  cooperation  has  taken  place  at  two  different  levels.  First  of  all,  several
coordination meetings were held during the first year of implementation of ISPA in
order to set up the working framework and make the Agreement operational.

Secondly, at the project level, the exchange of information was carried out at a very
early  stage  in  the  procedure  of  project  identification  in  order  to  identify  possible
proposals  for  co-financing.  Collaboration  with  the  EIB  resulted  in  the  joint  co-
financing of several projects in 2000 (see Table 4).

In such cases, proposals submitted by the beneficiary countries are appraised by both
institutions  and  the  results  shared  by  them  during  the  assessment  process.  In  this
context  it  is  important  to  underline  some  difficulties  in  achieving  efficient
cooperation between ISPA and the EIB. These include the complexity of both ISPA
and  EIB  procedures,  and  the  problem  of  timing  when  the  decision-making
procedures of both institutions do not run in parallel.

In  the  case  of  the  projects  that  are  not  co-financed  by  the  EIB,  the  Cooperation
Agreement foresees that the EIB may be consulted or invited by the Commission to
participate  in  appraising  some  ISPA  projects.  This  benefits  both  institutions  as  the
Commission  retains  recourse  to  the  EIB  technical  expertise  and  the  EIB  receives
remuneration for its evaluations. In order to facilitate this, a Framework contract was
signed  by  both  institutions,  describing  the  implementing  arrangements  of  this
mechanism.  During  2000,  6  "first  reactions"  were  sought  from  the  EIB,  1  for
Bulgaria, 3 for Romania and 2 for Slovakia.

32

Table 4: ISPA Projects co-financed by the EIB

ISPA Projects co-financed by the EIB

Transport Projects

Environmental Projects

Stara  Zagora:  waste  water
treatment plant,
Dimitrovgrad:  waste  water
treatment plant
None

None
Szeged:  waste  water  treatment
plant,  Szeged:  regional  waste
solid
management,  Szolnok: 
waste management, Györ: waste
water 
treatment,  Hajdú-Bihar:
solid waste management
Riga:  water  project,  Ventspils:
improvement  of  water  supply,
treatment, etc.
Vilnius: 
and
extension  of  water  supply  and
collection,  Druskinninkai:  waste
water treatment

rehabilitation 

treatment, 

rehabilitation 

Torun:  modernisation  of  waste
Szczecin:
water 
sewage treatment
Craiova: 
of
sewerage  network  and  waste
water 
in
order 
river
Danube.
None
None

treatment 
to  protect 

facilities 
the 

Country

Bulgaria

Czech
Republic
Estonia
Hungary

Sofia airport reconstruction,
Transit 
Road 
Project III

Rehabilitation

None

Via Baltica Road, Phase II
Budapest-Szolnok-Romania 
rail
upgrading,  Hegyeshalom-Györ-
Budapest rail rehabilitation, Boba-
Zalaegerszeg-Zalalövö 
rail
upgrading

Latvia

None

Lithuania Modernisation 

of 

tele-
communications,  signalling  and
power  supply,  etc.  Global  loans
will  be  applied 
road
projects  (upgrade  and  completion
of  the  major  TINA  Corridors),
supported by ISPA.
Kleszczow-Sosnica:  Road  A4
Motorway construction

the 

to 

Bucharest-Cernavoda:
rehabilitation  and  construction,
sections  4  &  5 
(ISPA)  and
sections 1-3 (EIB)

Poland

Romania

Slovakia
Slovenia

None
None

33

4.3. 

European Bank for Reconstruction and Development (EBRD)

The Commission has developed a good working relationship with the EBRD. There
have  been  regular  exchanges  of  information  and  co-ordination  meetings  since  the
establishment of ISPA, harmonisation of approaches to the appraisal and approval of
projects by both institutions, and also detailed discussions on methodological issues.
As  with  the  EIB,  the  Commission  has  established  mechanisms  for  the  successful
combination of EC grants and EBRD loans, thus maximising  the leverage  effect of
ISPA  grant  finance  and  ensuring  that  ISPA  provides  only  the  amount  required  to
make projects finally viable.

The EBRD brings specialist skills to structuring grant/loan combinations of funding,
including  public-private  partnership  arrangements.  The  EBRD  can  lend  directly  to
municipalities  and  utility  companies  without  a  sovereign  guarantee,  which  adds  an
additional  element  of  flexibility  to  cooperation  with  ISPA.  The  Commission  has
initiated  new  types  of  funding  arrangements  in  EBRD/ISPA  projects  including,  for
the first time, joint financing of large turn-key contracts to implement projects (e.g.
Krakow waste water treatment).

The  number  of  projects  which  ISPA  and  the  EBRD  will  co-finance  differs  greatly
from sector to sector and from country to country. The jointly co-financed projects in
2000  remained  concentrated  on  the  environmental  sector.  For  2000,  the  projects  in
which ISPA and the EBRD co-operated are as follows :

Table 5: ISPA Projects co-financed by the EBRD

ISPA Projects co-financed by the EBRD

Country

Transport Projects

Environmental Projects

Bulgaria
Czech
Republic
Estonia
Hungary
Latvia
Lithuania
Poland

None
None

None
None
None
None
None

Romania

None

Slovakia
Slovenia

None
None

None
None

water 

None
None
Riga Water Project
None
Bydgoszcz: 
supply,
Krakow:  waste  water  treatment,
Wroclaw: waste water treatment,
Wroclaw: solid waste
Iasi: upgrading of water & waste
water system,
Constanta:  sewerage  and  waste
water treatment rehabilitation
None
None

34

4.4. 

Nordic Banks and Institutions

Several coordination meetings were held  during the first  year of implementation  of
ISPA and information at project level was exchanged. In 2000, the collaboration with
the  Nordic  Investment  Bank  (NIB)  and  with  the  Nordic  Environment  Finance
Corporation  (NEFCO)  resulted  in  the  joint  co-financing  of  two  projects  in  Latvia,
entailing  total  expenditure  of  € 36.07  million,  to  which  the  NIB  contributed
€ 1.818 million  and  NEFCO  € 2.294  million.  The  Swedish 
International
Development Corporation Agency (SIDA) also co-financed an environmental project
in Estonia.

Table 6: ISPA Projects co-financed by the NIB and NEFCO

ISPA Projects co-financed by the NIB, the NEFCO or SIDA

Country

Transport Projects

Environmental Projects

Estonia

Latvia

None

None

Tallin landfill, phase 1 (SIDA)

Jelgava  Water  Project  (NIB  and
NEFCO)
Ventspils  Water 
(NEFCO)

Project

35

5. 

TECHNICAL ASSISTANCE

5.1. 

Report of use of allocation in 2000

The  allocation  provided  under  B7  -  020A  for  the  year  2000  amounted  to
€ 19.044.000.  Of  this  allocation,  the  Commission  committed  €  11.270.941  to
TA projects in 2000. An amount of € 7.400.000 was transferred to budgetary line B7-
020  and  made  available  for  investment  measures  in  the  beneficiary  countries.  The
amounts used for the pre-identified actions were as follows:

A.

Local Technical Assistance

€ 7 million was allocated for the reinforcement of the Commission Delegations
with  qualified  technical  staff.  The  commitment  is  designated  to  pay  the  local
staff  reinforcement,  for  a  period  of  up  to  three  years.  The  funds  are
administered  by  the  Directorate-General  for  External  Affairs.  The  Director-
General for Regional Policy has issued the necessary empowerment document
and guidelines. The first local contracts have been concluded.

B.

Framework contract for specific technical tasks

Two framework contracts were signed, one for the transport sector and one for
the environment sector. This commitment amounts to € 4 million split evenly
between transport (€ 2 million) and environment (€ 2 million). Proposals were
received from six companies each for the environmental and transport sectors.
A total of 26 individual assignments were carried out in 2000, of which eight
were related to the environmental sector and 18 to the transport sector.

In  addition,  the  Commission  entered  into  a  short-term  assignment  for  a
financial  appraisal of  a water project in  one  of  the  beneficiary  countries.  The
assignment was necessary to help the Commission determine the ISPA rate of
assistance,  as  financial  appraisal  is  not  covered  by  the  framework  contracts
mentioned  above.  The  budgetary  commitment  for  this  assignment  was
€ 13 050.

C.

Framework contract with the EIB

A  contract  with  the  EIB  was  entered  into  this  year,  securing  the  use  of
expertise knowledge of the Bank technical staff for a duration of six years. The
ERDF and the Cohesion Fund have entered similar parallel arrangements with
the Bank. The yearly number of projects to be presented to the bank is limited.
The budgetary commitment for this assignment was € 210.000.

the  stipulations  of 

Experience  with  applications  demonstrated,  however,  that  the  beneficiary  countries
the  Community  directive  covering
had  problems  with 
Environmental  Impact  Analysis  (EIA)  and  the  required  statements  and  assurances.
Environment  impact  analysis  methods  similar  to  Community  requirements  must  be
applied  for  all  ISPA  assisted  measures.  In  view  of  the  recurrent  weaknesses  and
flaws  which  came  to  light  through  the  applications  for  assistance,  the  Commission
(Directorates-General for Regional Policy and for Environment) decided to organise
specific two-day workshops on EIA in all countries.

36

The  preparation  and  animation  of  the  workshops  and  the  provision  of  supporting
documents  were  organised  under  the  environment  envelope  of  the  framework
contract  mentioned  under  B  above.  The  workshops  were  held  in  the  first  half  of
2001.

5.2. 

Budgetary allocation for technical assistance contracts

Table 7: Budgetary allocation for technical assistance contracts

Contracts for the budget year 2000 under budget line B7 – 020A

Name of Firm

Type of
Contract

Area of
Expertise

Amount of
Contract €

Authorised
Expenditure
in 2000 €

Kampsax
Brown & Root
Tractebel
Halcrow
EIB

Framework
Framework
Framework
Framework
Framework

BCT

TA Contract

TA for the EIA
seminars

Grant

10 Delegations Transfer 

of

Funds

TA Transport
TA Transport
TA Environment
TA Environment
Project
Evaluation
ISPA  Application
of 
Sewerage
Project in Ostrava
in 
Seminars 
the
10 
beneficiary
countries
Personnel training

2 000 000

223 769

2 000 000

226 880

210 000

27 000

13 050

13 050

47 891

7 000 000

0

0

TOTAL

11 270 941

490 699

6. 

INTER-INSTITUTIONAL DIALOGUE, INFORMATION AND PUBLICITY

6.1. 

Information to Member States and beneficiary countries

Information to the Member States is primarily distributed in the  ISPA Management
Committee;  five  meetings  were  organised  in  2000.  Members  of  the  Management
Committee gave a favourable opinion on 85 projects (of which 10 related to budget
commitments  in  2001).  They  also  dealt  with  information  referring  to  the  national
strategies  for  transport  and  environment,  together  with  a  number  of  horizontal
matters, including:

–  framework papers on ISPA assistance to transport and environment projects;

–  presentation of the application forms for projects;

–  implementation of the “polluter pays” principle;

–  co-ordination of the three pre-accession instruments;

–  guidelines for use of technical assistance by the European Commission;

37

–  use of interest earned on ISPA payments in the National Fund; and

–  report on the seminar with beneficiary countries (see below).

The Commission prepared publicity rules related to projects as required by Article 13
of  the  ISPA  Regulation  which  received  a  positive  opinion  from  the  ISPA
Management Committee in June 2000.

Information  to  the  beneficiary  countries  was  provided  through  a  kick-off  seminar
announcing  the  launching  of  ISPA,  which  was  held  on  4  and  5  May  2000.  This
meeting was attended by the National ISPA Co-ordinators (the central national body
for  cooperation  with  the  Commission  under  ISPA),  representatives  of  the  National
Fund  (the  national  vehicle  through  which  Community  assistance  is  channelled),
representatives  of  the  line  ministries  and  of  the  Commission  Delegations  of  the
beneficiary countries.

In the seminar the ISPA manual prepared by the Commission was presented, with a
particular emphasis on programming and appraisal, implementation and follow-up of
projects. This was also on opportunity to discuss issues related to the developing of
strategies  for  dealing  with  such  issues  as  transport  and  environment  projects,
procurement rules, EIA, co-financing with IFIS and Private-Public Partnerships.

During  this  seminar,  bilateral  meetings  took  place  for  each  country  on  the  project
pipelines  and  implementation  arrangements.  It  is  also  worth  mentioning  that  ISPA
was a central topic in the meeting of chairpersons of the ten Pan-European Transport
Corridors, organised on the 7 of December 2000 by the Commission. This allowed a
comprehensive overview of ISPA to be given to representatives of the Ministries of
Transport  of  Member  States  and  beneficiary  countries.  The  Commission  also
prepared a series of seminars on EIA procedures and applications in relation to ISPA.
These seminars were conducted in beneficiary countries in the Spring of 2001.

6.2. 

Dialogue with Non-governmental Organisations (NGOs)

The Directorate-General for Regional Policy participated in the Directorate-General
for the Environment’s NGO Dialogue project, which began mid-1999. It is a series of
meetings  between  Commission  officials  from  several  directorates-general  (but
predominantly  the  Directorate-General  for  Environment)  and  representatives  of
environmental NGOs from Member States and beneficiary countries. The objectives
of  the  dialogue  are  to  inform  the  NGOs  on  the  enlargement  process  and  to  enable
NGOs  to  present  their  opinion  on  the  process  to  the  Commission.  The  dialogue
meetings  are  organised  and  facilitated  by  the  Regional  Environmental  Centre  for
Central and Eastern Europe (REC), which is partly funded by the EC.

To date there have been three meetings of the dialogue group: one held in Brussels in
October 1999, the second held in Szentendre, Hungary in June 2000 and the third in
Brussels in November 2000. One further meeting is planned in 2001.

On  the  occasion  of  the  third  meeting,  the  Directorate  General  for  Regional  Policy
organised a session with NGOs to discuss progress in ISPA programming and policy
issues  related  to  the  environmental  and  transport  sectors.  The  Directorate-General
the  approval  procedures.
to  project  selection  and 
explained 

the  approach 

38

Representatives from NGOs welcomed these open discussions and the opportunity to
receive first hand information on ISPA programming and procedures.

6.3. 

Information and Publicity

The  Directorate-General  for  Regional  Policy  has  organised  several  seminars  and
training  sessions  both  for  its  staff  at  the  headquarters  and  for  the  Commission
delegations in the beneficiary countries involved in ISPA funding. These included a
seminar introducing the ISPA procedure manual in May 2000, with special training
sessions  held  for  ISPA  staff  in  April.  Staff  also  completed  on-site  training  both  in
Belgium and in the countries with which they are directly involved.

Several public and private organisations from the beneficiary countries but also from
within the Member States asked ISPA representatives to explain how ISPA works. In
response, ISPA staff have provided a number of informative sessions.

The  Inforegio  website  of  the  Directorate  General  for  Regional  Policy  is  used  for
publicising the ISPA Instrument. The ISPA pages on the site include the texts of the
regulations,  manuals,  application  forms,  procedures,  a  number  of  brochures  about
ISPA  and  contact  details  within  the  Directorate  General.  In  addition,  the  website
provides information about projects which have received a positive opinion from the
Management  Committee.  There  are  also  links  to  other  websites  dealing  with  the
subject  of  enlargement  and  tendering  for  contracts  to  be  financed  under  ISPA:
http://www.inforegio.cec.eu.int/wbpro/ispa/ispa_en.htm
http://www.europa.eu.int/comm/europeaid/cgi/frame12.pl

Paper versions of all the information on the website are available to the public. Such
brochures include “ISPA in a nutshell” and “How can companies participate in ISPA
projects?”.

39