Amended proposal for a Regulation of the European Parliament and of the Council amending the amended proposal for a Regulation of the European Parliament and of the Council amending Council Regulation (EC) No 2236/95 laying down general rules for the granting of Community financial aid in the field of trans-European networks (submitted by the Commission pursuant to Article 250(2) of the EC Treaty)
Date: 2003-10-01
Institutions: European Commission
Subjects: EU financing, common transport policy, energy grid, trans-European network, transport infrastructure, transport network

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 1.10.2003
COM(2003) 561 final

2001/0226 (COD)

Amended proposal for a

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

amending the amended proposal for a

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

amending Council Regulation (EC) No 2236/95 laying down general rules for the
granting of Community financial aid in the field of trans-European networks

(submitted by the Commission pursuant to Article 250(2) of the EC Treaty)

EXPLANATORY MEMORANDUM

To put into action the programme to develop trans-European  transport  and  energy  networks
with  a  view  to  dynamising  the  internal  market,  improving  territorial  cohesion  and,  in  the
process,  boosting  the  competitiveness  and  growth  potential  of  the  European  Union,
appropriate  financial  aid  measures  must  be  taken  in  order  to  complete  the  infrastructure
projects in reasonable time.

After  noting  long  delays  in  building  the  trans-European  transport  network,  particularly  the
cross-border  sections  of  railway  schemes,  in  October  2001  the  Commission  proposed
amendments  to  Council  Regulation  (EC) No 2236/95  laying  down  general  rules  for  the
granting  of  Community  financial  aid  in  the  field  of  trans-European  networks  (the  "TEN
Regulation") with the objective of raising the rate for co-funding by the Community from 10
to  20%  for  cross-border  rail  projects  crossing  natural  barriers  and  cross-border  connections
with the candidate countries.

During the session of 2 July 2002, the European Parliament approved the proposal, subject to
a number of amendments. The Economic and Social Committee also supported the initiative,
whereas the Committee of the Regions has not yet given its opinion.

On this basis the Commission amended its proposal. On 24 January 2003 it sent the Council
and  Parliament  an  amended  proposal  indicating  which  of  the  amendments  proposed  by
Parliament it wished to include.

Up  until  now  the  proposal  has  remained  within  the  relevant  working  party  without  being
forwarded  to  the  Council,1  for  want  of  an  agreement  on  the  substance  of  the  proposal.  In
response to this state of affairs, the Commission decided to take the initiative once again and
propose more ambitious amendments to the TEN Regulation.

In particular, since the proposal was submitted, at the end of 2001,  new  factors  have  added
force to the arguments for revision of the TEN Regulation, particularly for the introduction of
a higher aid rate for certain projects. Accordingly, this proposal is based on the conclusions
and recommendations in the report by the High-Level Group chaired by Mr Karel Van Miert
which worked on the TEN-T guidelines, leading to the parallel proposal to amend  Decision
No 1692/96/EC on the guidelines for the trans-European transport network.

This  proposal  also  takes  account  of  a  number  of  points  raised  by  the  recent  Commission
communication  "Developing  the  trans-European  transport  network:  Innovative  funding
solutions",2 which identifies innovative ways to fund the trans-European transport network.

1. 

AN UNDER-FUNDED NETWORK

Without  high-performance  transport  networks,  economies  cannot  be  competitive.  The
creation and smooth operation of the trans-European transport network, which became official
Community policy 10 years ago, is a key condition for the success of the internal market and

1

2

Despite the recommendation by the  Barcelona  European  Council  to  adopt  the  proposal  by  the  end  of
December 2002.
COM (2003) 132, 23.4.2003.

2

                                                
to  ensure  sustainable  mobility  in  an  enlarged  EU.  However,  traffic  on  the  network  is
continuing to grow apace but unevenly, while at the same time there is growing insistence on
sustainable  development  and  an  imminent  need  to  incorporate  the  networks  of  the  future
Member  States.  Transport  infrastructure  is  still  poorly  used  and  under-financed,  for  lack  of
transparency  in  the  costs  paid  by  users,  lack  of  adequate  funds  and  the  absence  of  a
framework conducive to investment.

Accordingly,  in  its  White  Paper  "European  transport  policy  for  2010:  time  to  decide"3  the
Commission already drew attention to the clear mismatch between the stated objectives and
the  financial  resources  available  to  the  Community.  The  fact  is  that  the  budget  which  the
Member  States  put  aside  for  developing  such  transport  infrastructure  and  the  funds  made
available by the Union are altogether insufficient to meet the transport challenges of this first
decade  of  the  21st  century.  It  is  no  small  paradox  to  note  that  the  Treaty  makes  the
Community responsible for producing guidelines for the development of the trans-European
transport  network  (TEN-T)  without  granting  it  the  financial  resources  to  execute  that  task.
The ambition far outstrips the means available.

2. 

A COMPLEX PROBLEM

Completion  of  the  trans-European  transport  network  is  not  an  end  in  itself:  it  meets  an
objective clearly stated in the transport White Paper - sustainable development. Although the
recent Commission communication on developing the TEN-T explores new funding methods
-  notably  public-private  partnerships  (PPP),  guarantee  funds  to  cover  certain  risks,  such  as
those encountered in operating this new infrastructure, and closer coordination between States
or  promoters  -  the  fact  remains  that  institutional  investors,  States,  the  Community  or  local
authorities will continue to bear the brunt of the financial burden of implementation of major
structural  projects  offering  high  added  value  in  socio-economic  terms  but  low  financial
returns.

A fortiori, implementation of major projects of this kind with the aid of PPP-type mechanisms
demands  a  firm,  substantial  financial  commitment  from  all  parties  concerned  and,  first  and
foremost,  from  institutional  investors.  The  Community  has  been  given  powers  over
development of the trans-European network but must therefore be given the means to put its
policy into action. In this context, the limit of 10% of the total cost set for co-funding by the
Community is not sufficient incentive to  act as  a catalyst during the  start-up  phase  for  such
major cross-border projects, where the rates of return and even benefit for the Member States
remain lower than those offered by other projects on the network.

Moreover, in the case of the priority projects, it should be possible to implement the budget
commitments for long-term projects requiring substantial funding in the same way as projects
qualifying  for  aid  from  the  Structural  Funds,  i.e.  to  meet  the  commitments  in  annual
instalments on the basis of the original Commission decision to finance the project.

To make it possible to complete the priority projects identified in the new proposal by the set
dates, two measures are proposed:

-

3

financing  based  on  a  multiannual  legal  commitment  giving  project  promoters  a
guarantee  that  they  will  receive  funding  from  the  Community  throughout  the
implementation phase;

COM (2001) 370, 12.9.2001.

3

                                                
-

an increase  in  the maximum  aid  rate  for  the  cross-border  sections  of  certain  priority
projects to 30% of the total cost.

3. 

THE VALUE ADDED BY GREATER SUPPORT FOR CROSS-BORDER PROJECTS

The  abovementioned  report  by  the  High-Level  Group4  warned  the  Commission  of  the  risk
that the cross-border projects will not be carried out in time unless Community aid provides a
sufficient incentive to mobilise and coordinate public and private capital.

Cross-border connections of this kind are essential for exchanges between Member States and
for the connectivity along the major trans-European routes. The "border effect" often results
in  lighter  local  traffic,  which  tends  to  make  the  cross-border  projects  less  profitable  than
schemes  located  at  the  heart  of  the  national  networks.  As  a  result,  the  gap  to  be  filled  by
public financing is greater.

However,  the  national  authorities  are  generally  reluctant  to  finance  cross-border  sections
because of the complexities of coordination between Member States to define and implement
projects.  Another  explanation  for  this  reluctance  is  that  budgetary  decisions  often  fall  in
favour  of  infrastructure  matching  the  national  priorities,  taking  no  account  of  the  general
European interest.

Paradoxically,  this  tendency  to  neglect  cross-border  projects  has  an  adverse  effect  on  the
profitability  of  the  investments  made  by  the  Member  States  in  the  sections  in  their  own
country, denying them the benefit of economies of scale.

The  Group  also  stressed  that  the  rate  of  Community  financing  should  be  differentiated,
according  to  the  benefits  to  other  countries,  in  particular  the  neighbouring  countries.  Such
modulation  would  not  be  contrary  to  the  principle  of  territoriality  of  financing  of
infrastructure and should in the first instance benefit the cross-border projects used by long-
distance transport services.

Setting out from this premise the Group recommended that the Community could play a more
active role in promoting the cross-border connections for the priority projects, notably in the
form of a higher aid rate. The Group added that the budgetary impact of such a change would
not  be  exorbitant  and  put  the  cost  of  the  cross-border  sections  of  the  projects  which  it
recommended at some €15 billion for the period 2007-2013.5

In  response  to  the  report,  the  Commission  is  submitting  a  parallel  proposal  to  add  new
projects (list 1 in the report) to Annex III to Decision No 1692/96/EC identifying the priority
projects.  The  same  parallel  proposal  also  proposes  mechanisms  for  closer  operational  and
financial  coordination  between  the  Member  States  on  transnational  projects  or  groups  of
projects.

After  noting  broad  agreement  within  the  Group  on  the  European  interest  of  the  priority
projects  which  the  Commission  proposes  and  on  the  need  for  financial  support  providing  a
greater  incentive  for  the  cross-border  sections,  this  Commission  communication  proposes

4 
5

See http://europa.eu.int/comm/ten/transport/revision/hlg_en.htm
This estimate includes the projects in the countries receiving aid from  the  Cohesion Fund but  not  the
motorways of the sea.

4

                                                
opening  up  the  possibility  of  an  aid  rate  of  up  to  30%  for  the  cross-border  sections  of  the
priority projects, including the motorways of the sea.

4. 

A LIMITED BUDGETARY IMPACT

The Commission estimates the total cost of the projects in the new annex III of the decision,
€220 billion,  of  which  €15 billion6,  over  the  period  2007  –  2013,  would  be  for  the  cross-
border sections (without, however,  counting the aid for the motorways of the sea, since this
amount is not known in advance). Consequently, the budgetary impact of raising the funding
rate to 30% for these sections (capital for project development) will still be modest. The table
set out below shows exactly how much it would cost the TEN-T budget, year by year, if all
the  cross-border  projects  identified  in  the  new  annex  III  were  granted  the  maximum  rate
envisaged:

Maximum aid rate7

10%

20%

30%

Impact on budget8

220 million

440 million

660 million

Over  the  period  2000-2006,  the  amendment  proposed  would  have  no  impact  on  the  total
budget allocated to the TENs.

6
7 
8 

Figures and table subject to confirmation.
Reserved exclusively for the cross-border sections of the priority projects.
By  year,  based  on  a  cost  of  €15  billion  over  the  period  2007-2013  for  the  cross-border  sections  (cf
Van Miert report).

5

                                                
2001/0226 (COD)

Amended proposal for a

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

amending the amended proposal for a

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

amending Council Regulation (EC) No 2236/95 laying down general rules for the
granting of Community financial aid in the field of trans-European networks

(Text with EEA relevance)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community and in particular the first
paragraph of Article 156 thereof,

Having regard to the proposal from the Commission,9

Having regard to the opinion of the European Economic and Social Committee,10

Having regard to the opinion of the Committee of the Regions,11

Acting in accordance with the procedure laid down in Article 251 of the Treaty,12

Whereas:

(1) 

The High-Level Group on the trans-European transport network chaired by Mr Karel
Van Miert expressed concern that the delays in the cross-border sections of the priority
projects on the trans-European transport network were having an adverse effect on the
profitability of the investments made by the Member States in the sections in their own
country,  denying them  the  benefit  of  economies  of  scale,  and  recommended  that  the
rate  of  Community  financing  should  be  differentiated,  according  to  the  benefits  to
other  countries,  in  particular  the  neighbouring  countries,  stressing  that  such
modulation should in the first instance benefit the cross-border projects used by long-
distance transport services.

(2) 

To  this  end  the  Group  recommended  a  higher  rate  of  Community  aid  to  promote
completion of the cross-border connections for the priority projects and added that the
budgetary impact of such a change would be limited.

9

10

11

12

OJ C […], […], p. […].
OJ C […], […], p. […].
OJ C […], […], p. […].
OJ C […], […], p. […].

6

                                                
(3) 

(4) 

The possibility must be given to meet the budgetary commitments by means of annual
instalments, while basing them on a multiannual legal commitment.

The  establishment  of  public-private  partnerships  (or  of  other  forms  of  cooperation
between  the  public  and  private  sectors)  demands  a  firm  financial  commitment  from
institutional investors which is sufficiently attractive to raise private capital. Granting
Community financial aid on a multiannual basis would remove the uncertainties which
are  slowing  down  project  development.  Measures  should  therefore  be  taken  to  grant
financial  support  to  the  projects  selected  on  the  basis  of  a  multiannual  legal
commitment. Regulation (EC) No 2236/95 should therefore be amended accordingly,

HAVE ADOPTED THIS REGULATION:

Article 1

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

(1)

In Article 5, paragraph 3 is replaced by the following:

"3. Regardless of the form of intervention chosen, the total amount of Community
aid  under  this  Regulation  shall  not  exceed  10%  of  the  total  investment  cost.
However, the total amount of Community aid may exceptionally reach:

- 20% of the total investment cost in the following cases:

(a)

projects  concerning  satellite  positioning  and  navigation  systems,  as
provided for in Article 17 of Decision No 1692/96/EC,

(b)

priority projects on the energy networks,

- 30% of the total investment cost in the following cases:

(c)

cross-border  sections  of  the  projects  of  European  interest  identified  in
Annex  III  to  Decision  No 1692/96/EC  with  the  aim  of  eliminating
bottlenecks  and/or  filling  in  missing  sections,  which  promote  safety,
ensure  the  interoperability  of  the  national  networks  and/or  strongly
contribute to the reduction of imbalances between modes of transport, in
favour of the most environment-friendly modes."

(2)

The following paragraph 5b shall be added:

"In  the  case  of  the  projects  referred  to  in  paragraph  3,  within  the  limits  of  this
Regulation,  the  legal  commitment  shall  be  multiannual  and  the  budgetary
commitments shall be met in annual instalments."

(3)

In Article 13, the following paragraph shall be added:

"4. If, ten years after the financial aid was awarded, the operation in question has not
been completed, the Commission may demand reimbursement of the aid  paid,  with
due regard to the principle of proportionality."

7

Article 2

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

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

Done at Brussels,

For the European Parliament
The President

For the Council
The President

8