Communication from the Commission - Trans-European networks: Towards an integrated approach {SEC(2007) 374}
Date: 2007-03-21
Institutions: European Commission
Subjects: common transport policy, energy grid, environmental protection, investment protection, public-private partnership, trans-European network, transmission network, transport network

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 21.3.2007 
COM(2007) 135 final 

COMMUNICATION FROM THE COMMISSION 

Trans-European networks: Towards an integrated approach 

{SEC(2007) 374} 

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Contents 

1. 

2. 

2.1. 

2.2. 

2.3. 

3. 

3.1. 

3.2. 

3.3. 

3.4. 

Introduction .................................................................................................................. 3 

The trans-European networks: state of play at the end of 2006................................... 4 

The trans-European transport networks ....................................................................... 4 

The trans-European energy networks........................................................................... 6 

The trans-European telecommunications networks ..................................................... 6 

The aspects covered by the Steering Group................................................................. 7 

Synergies between trans-European networks............................................................... 7 

Respect for the environment and the trans-European networks................................... 9 

Exploiting new technologies in the trans-European transport network ..................... 10 

Financing of the trans-European networks ................................................................ 11 

3.4.1.  Combining funds........................................................................................................ 11 

3.4.2.  Financing of major priority projects .......................................................................... 12 

3.4.3.  Public-private partnerships......................................................................................... 12 

4. 

Conclusion.................................................................................................................. 15 

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1. 

INTRODUCTION 

Developing,  connecting,  better  integrating  and  better  coordinating  the  development  of 
European  energy,  transport  and  telecommunications  infrastructures  are  ambitious  objectives 
and are referred to in the Treaty1 and the Guidelines for growth and jobs2. 

The  trans-European  energy,  transport  and  telecommunications  networks  are  the  lifeblood  of 
our  economies.  If  they  suffer,  competitiveness  suffers.  Their  development  is  vital  to  this 
Commission's agenda on growth and jobs. 

The trans-European networks (TENs) also help to boost the EU’s competitiveness through the 
medium  of  major  industrial  programmes  which  are  strategically  important  for  the  EU’s 
independence  such  as  GALILEO,  ERTMS  and  SESAR.  The  TENs  also  make  it  easier  to 
disseminate  and  make  more  effective  use  of  information  and  communications  technologies 
through  the  telecommunications  networks  and  to  increase  security  of  supply  through  the 
energy networks. Furthermore, the sustainable use of resources is an essential aspect of policy 
on the TENs since the priority projects give privileged status to those modes which are most 
environmentally friendly. 

At the President’s request, on 20 July 2005 the Commission set up a Steering Group made up 
of  the  members  of  the  College  most  closely  involved  in  the  issues  surrounding  the 
trans-European networks. 

The  group,  which  is  chaired  by  the  Commissioner  responsible  for  transport,  includes  the 
Commissioners  responsible  for  the  information  society,  the  environment,  economic  and 
monetary  affairs,  regional  policy,  the  financial  programming  of  the  budget,  the  internal 
market and energy. 

It  was  mandated  to  define  a  joint  approach  in  order  better  to  coordinate  the  various 
Community  initiatives  supporting  work  on  the  trans-European  transport,  energy  and 
telecommunications networks. 

This communication describes the state of play for each of the three trans-European networks: 
transport,  energy  and  telecommunications.  It  then  looks  at  specific  aspects  covered  by  the 
Steering Group during its meetings. 

1 
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Articles 154, 155 and 156 of the Treaty.  
Guidelines for growth and jobs (2005-2008) No 9, 10, 11 and 16. 

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2. 

THE TRANS-EUROPEAN NETWORKS: STATE OF PLAY AT THE END OF 2006 

Development of the trans-European networks is vital for the creation of the internal 
market  and  to  strengthen  economic  and  social  cohesion.  To  this  end,  Community 
action  should  aim  at  promoting  the  interconnection  and  interoperability  of  national 
networks as well as access to these networks3. 

2.1. 

The trans-European transport networks 

Modern  transport  infrastructures  which  enable  goods  and  people  to  move  between 
the  Member  States  faster  and  more  easily  will  help  to  make  the  EU  more 
competitive. 

14 priority projects were identified by the Essen European Council and included in 
the  1st  Decision  of  the  European  Parliament  and  of  the  Council  on  Community 
guidelines for the development of the trans-European transport network (TEN-T) in 
19964. This list was extended in 2004 to take account of the accession of 10 and then 
12  new  Member  States  to  the  EU.  The  TEN-T  now  comprises  30  priority  projects 
which  should  be  completed  by  2020.  Furthermore,  the  Commission  has  recently 
underlined  the  necessity  to  extend  the  trans-European  transport  network  to  the 
neighbouring countries5. 

The  completion  dates  for  these  major  projects  have  fall  behind  the  original 
timetables.  However,  large-scale  projects  have  been  or  will  be  completed  by  2007: 
the  Øresund  fixed  link  (connecting  Sweden  and  Denmark,  completed  in  2000), 
Malpensa  airport  (Italy,  completed  in  2001),  the  Betuwe  railway  line  (linking 
Rotterdam to the German border, completed in 2007) and the PBKAL project (HST 
Paris-Brussels/Brussels-Cologne-Amsterdam-London, completed in 2007). 

Of  these  30  priority  projects,  18  are  railway  projects,  2  are  inland  waterways  and 
shipping projects. High priority has therefore been given to the most environmentally 
friendly transport modes. 

Implementation  of  the  trans-European  transport  networks  requires  substantial 
amounts  of  funding.  Construction  of  the  priority  projects  alone  is  mobilising 
€ 280 billion in investment out of the € 600 billion which the entire trans-European 
network  will  cost.  In  order  to  meet  the  2020  deadline,  € 160  billion  of  investment 
will be needed to finance the priority projects alone during the 2007-2013 financial 
programming period. Two maps, contained in Annex I to this communication, show 
the progress made on the 30 priority projects to date and the progress which should 
be made by the end of the multi-annual financial framework period in 2013. These 
maps clearly  show how  incomplete the network still is and what effort needs to be 
accomplished by 2013 to honour the commitments entered into. 

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Article 154 of the Treaty. 
Decision No 1692/96/EC (OJ L 228, 9.9.1996). 
COM(2007) 32, 31.1.2007 

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the  2000-2006  financial  programming  period, 

During 
the  European  Union 
contributed  financially  to  the  implementation  of  the  TEN-T  through  the  following 
three financial instruments: 

–  the  € 4.2  billion  budget  allocated  to  the  development  of  the  trans-European 
transport  network  for  the  2000-2006  financial  programming  period.  Grants 
awarded on the basis of the current TEN-T Financial Regulation6 have permitted 
co-funding of these projects up to a maximum of 10% on national sections and a 
maximum of 20% on cross-border sections. 

–  the trans-European transport networks have also benefited from € 16 billion under 
the  Cohesion  Fund.  Under  the  European  Regional  Development  Fund  (ERDF), 
€ 34 billion has been invested in transport, some of which (investment in railway, 
road, motorway, port, etc. infrastructure) has benefited the TEN-T. 

–  European Investment Bank (EIB) loans totalling € 37.9 billion 7. 

Under  the  multi-annual  financial  framework  2007-2013,  the  sum  of  € 8.013  billion 
was  allocated  for  the  development  of  the  trans-European  transport  network.  On 
12 December 2006, political agreement was obtained in the Council on the proposal 
for a Regulation8 on financial support arrangements for the trans-European transport 
and  energy  networks  during  the  period  2007-2013.  This  proposal  for  a  regulation 
provides for Community co-funding rates of 50% for studies and maximum rates of 
10 to 30% depending on the type of project. 

The  ERDF  and  the  Cohesion  Fund  will  continue  to  be  the  main  sources  of 
Community  assistance  for  co-funding  of  the  trans-European  transport  network 
projects during the 2007-2013 programming period. 

Cohesion policy resources should be more fully exploited as a large number of the 
priority  projects  are  located  in  territories  which  will  receive  low  levels  of  funding 
under this policy. As for the 2000-2006 period, several tens of billions of euros will 
be  available  for  co-financing  projects  in  the  transport  sector  through  the  various 
financial instruments of European regional policy, including about € 35 billion under 
the  Cohesion  Fund  which  should  chiefly  be  invested  in  the  priority  projects.  The 
incentive  rates  (up  to  85%)  of  these  funds  will  make  it  easier  to  put  together  the 
funding package for these projects and hence to complete these works in accordance 
with  the  timetable  laid  down  in  the  TEN-T  Guidelines.  Member  States  eligible  for 
the  Cohesion  Fund  and  regions  eligible  under  the  Convergence  Objective  of  the 
European Regional Development Fund are invited to make use of these instruments 
in order to complete the priority projects situated within their territory9. 

In  general  terms,  the  Community  contribution  to  the  implementation  of  the 
trans-European  transport  network  should  be  concentrated  on  the  cross-border 
sections and on bottlenecks.  

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Regulation (EC) No 807/2004 of 21 April 2004 (OJ L 143, 30.4.2004). 
EU-15 (2000-2004): € 24 301 million + EU-25 (2005-2006): € 6 821 and 6 850 million. 
COM(2006) 245.  
Article 19(2)(a) and (c) of Decision No 884/2004/EC (OJ L 201, 7.6.2004). 

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The EIB will continue to provide funding for transport infrastructure in the form of 
loans  and  through  a  specific  guarantee  instrument  which  has  a  budget  of  € 500 
million  under  the  EIB's  own  funds  and  € 500  million  under  the  trans-European 
transport network's budget (i.e. 6.25% of the total amount available). 

2.2. 

The trans-European energy networks 

The  Community  recently  adopted  guidelines  updating  the  trans-European  energy 
networks10.  32  electricity  and  10  gas  network  projects  have  been  declared  to  be  of 
European  interest.  These  projects  are  to  be  carried  out  as  a  priority  as  they  are 
essential for the creation of a Europe-wide energy network.  

The capacity of the gas networks should be adapted to secure and diversify imports 
from Norway, Russia, the Black Sea basin, the Mediterranean and the Middle East. 

The  EU  will  need  to  invest,  before  2013,  at  least  € 30  billion  in  infrastructure  (€ 6 
billion  for  electricity  transmission,  €19  billion  for  gas  pipelines  and  € 5  billion  for 
Liquefied  Natural  Gas  (LNG)  terminals),  if  it  wants  to  address  fully  the  priorities 
outlined  in  the  TEN-E  Guidelines.  Connecting  more  electricity  generated  from 
renewable  sources  to  the  grid  and  internalising  balancing  costs  for  intermittent 
generators will for instance require an estimated € 700-800 million yearly. Between 
2000  and  2006,  about  € 140  million  was  invested  in  the  trans-European  energy 
networks under the TEN budget. For the financial framework 2007-2013, the sum of 
€ 155 million is provided for in the TEN Regulation now being approved. This sum 
is very small in view of what is at stake and the actual needs. This budget will mainly 
help to co-finance studies. Additional funding will be necessary under the Cohesion 
Policy and from the European Investment Bank. 

The  priority  interconnection  programme  adopted  on  10  January  2007  describes  the 
progress made on the priority projects and, looking beyond the problems of funding, 
analyses the obstacles to the completion of these projects. The programme outlined a 
strategy  based  on  4  specific  actions:  the  drawing  up  of  an  inventory  of  the  main 
infrastructures  encountering  serious  difficulties,  the  appointment  of  European 
coordinators,  coordinated  planning  at  regional  level  and  the  harmonisation  of 
authorisation procedures. 

The  European  Council  of  9  March  2007  confirmed  this  approach  and  underlined 
notably  the  importance  of  improving  the  interconnection  of  networks.  The  Council 
supported  the  Commission's  proposal  to  appoint  European  coordinators  and 
requested it to come forward with proposals to streamline the administrative decision 
making procedures. 

2.3. 

The trans-European telecommunications networks 

Telecommunications  services  have  been  progressively  opened  to  competition  since 
1988 and the impact has been dramatic. More competition has stimulated investment, 
innovation,  the  emergence  of  new  services  and  a  significant  decline  in  consumer 
prices.  

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Decision No 1364/2006/EC (OJ L 262, 22.9.2006). 

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Since liberalisation, the deployment of telecommunications networks in Europe has 
been  mainly  driven  by  commercial  investment.  Despite  a  slowdown  in  1999-2001, 
investment  has  been  significant.  For  example,  in  2005  capital  expenditure  rose  to 
more than € 45 billion, including 25 billion for fixed infrastructure, representing an 
annual increase of over 5%, the third annual increase running. 

Nowadays, investment is concentrating on the upgrade of existing networks to next 
generation,  in  the  deployment  of  3rd  Generation  mobile  and  other  wireless 
infrastructure,  and  in  bringing  broadband  to  the  rural  areas  of  the  EU.  Investment 
may involve the layout of fibre-optic networks, where civil works and indoor cabling 
represent  70%  of  deployment  costs.  Construction  of  railway  lines,  roads  or  energy 
lines may facilitate the rollout of these networks in under-served areas. 

The Communication "Bridging the Broadband Gap"11 highlights disparities between 
urban  and  rural  areas  and  calls  upon  Member  States  to  undertake  concrete  actions 
and set targets to close the gap by 2010. Public support is encouraged in the presence 
of market failure, in full respect of telecom and state aid rules. The start of the next 
programming  period  for  cohesion  and  rural  development  policies  can  be  a  great 
opportunity for regional and rural areas to invest in broadband. 

A  mapping  of  existing  infrastructures  is  needed  in  order  to  help  competent 
authorities  better  assess  their  infrastructure  needs  and  exploit  ongoing  civil  works. 
Relevant authorities responsible for large transport/energy projects underway should 
take  into  account  the  needs  of  telecommunications  infrastructure  and  make  the 
appropriate planning and budgetary provisions on the basis of existing infrastructure. 
Moreover, a greater coordination of alternative sources of funding (Structural Funds, 
Rural  Development  Fund,  TEN  and  national  funds)  is  needed  to  develop  coherent 
planning and complete the coverage of broadband. 

3. 

THE ASPECTS COVERED BY THE STEERING GROUP 

The Steering Committee of Commissioners for the trans-European networks has met 
6 times since it was set up on 7 December 2005. The group has considered questions 
of synergy between the  trans-European networks, the methods of funding  and their 
spread  across  the  various  Community  financial  instruments.  More  general  issues 
have  also  been  dealt  with  (TEN  and  the  environment,  the  development  of  new 
Community financial instruments). 

3.1. 

Synergies between trans-European networks 

Does  the  EU  have  any  interest  in  promoting  the  construction  of  combined 
infrastructures, in particular in the new Member States where infrastructure needs are 
significant?  

Combining rail and road has proven its merits12: less use of space, joint engineering 
structures, lower visual impact on and less fragmentation of the landscape, measures 

11 
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Commission Communication COM(2006) 129, 20.3.2006. 
Some  Member  States  have  introduced  a  legal  obligation  to  seek  synergy,  in  particular  Germany 
(Bundesnaturschutzgesetz, paragraph 2, Bündelungsgebot) 

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to soften the impact of joint infrastructures (anti-noise protection, viaducts for large 
and small wildlife). Combined infrastructures offer genuine scope for reducing costs 
and environmental impact. 

A study of the scope for developing other combinations (passing a high-voltage line 
through  a  railway  tunnel,  adding  a  telecommunications  cable  to  a  railway  line)  has 
been  carried  out13.  Technical  feasibility,  the  impact  on  project  costs  and  the 
complexity of the procedures have been analysed, with the following conclusions. 

Apart  from  the  possibility  of  combining  gas  pipelines  with  other  infrastructures, 
where  technical  feasibility  seems  difficult  in  view  of  the  extent  of  the  secure  areas 
required, there  are  genuine advantages to be gained from  combining other kinds of 
TENs. Synergies between the telecommunications and transport networks seem to be 
the  most  promising.  Every  transport  network  can  be  optimised  by  having  its  own 
communication network which is used to manage the network. In most cases, rail and 
motorway networks already have such communication networks. In some cases, the 
surplus  capacity  of  these  networks  is  used  for  other  purposes,  e.g.  for  data 
communication.  On  the  other  hand,  it  is  still  rare  for  systematic  synergies  to  be 
sought  between  an  infrastructure  management  network  and  a  telecommunications 
network from the start of construction of the infrastructure. 

the  banks  of  canals  and 

Valuable  ideas  could  be  explored  to  interconnect  electricity  networks:  laying 
high-voltage  cables  along 
low-voltage 
interconnections  (2  x  25  kV)  along  high-speed  railway  lines,  more  systematic 
interconnections of underground high-voltage lines (300 to 700 kV) along transport 
network paths. These suggestions do not replace the immediate need to interconnect 
the  national  high-voltage  networks,  but  are  a  proposal  for  finer  meshing  of  the 
national  electricity  systems  over  a  longer  time  span  matching  the  time  it  takes  to 
complete the major infrastructure projects.  

rivers, 

Synergies  could  also  be  achieved  in  terms  of  procedures:  impact  studies,  planning 
and  budgetary  arrangements  could  be  combined.  However,  the  parallel  planning  of 
two  types  of  infrastructure  governed  by  different  legislation  and  budgetary 
procedure,  or  with  different  life  cycles  and  construction  times,  might  prove  to  be 
complex. 

Conclusion: 

The  group  recommends  continuing  with  work  on  potential  synergies  between  the 
different trans-European networks. A manual combining best practices will be drawn 
up to inform project promoters about potential synergies between infrastructures. 

The synergies between the geothermal energy projects and the tunnels to be built in 
the context of the trans-European transport networks should be explored as a matter 
of priority. 

13 

Synergies  between  Trans-European  Networks,  Evaluations  of  potential  areas  for  synergetic  impacts, 
ECORYS, August 2006. 

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The group considers that a mapping of telecommunications infrastructure is required 
and  that  telecommunications  needs  should  be  taken  into  account  when  building 
transport and energy networks. 

3.2. 

Respect for the environment and the trans-European networks 

The Lisbon Strategy for Growth and Jobs calls for the TENs to be implemented in a 
manner which is compatible with sustainable development. 

The 30 priority projects for the trans-European transport network are mostly projects 
which  promote  the  most  environmentally  friendly  transport  modes  and  which 
consume  less  energy,  such  as  the  railways  and  waterways.  The  completion  of  the 
trans-European transport network will have a positive impact on the environment. If 
transport-generated CO2 emissions continue to increase at the present rate, by 2020 
they will be 38% above present levels. Completing the 30 priority projects will slow 
down  this  rise  by  about  4%,  equivalent  to  reducing  CO2  emissions  by  6.3  million 
tonnes a year. 

By interconnecting the national power systems and connecting the renewable energy 
sources  to  them  it  will  be  possible  to  optimise  capacity  utilisation  in  each  Member 
State and thereby soften the environmental impact. 

Community  environmental  protection  legislation  provides  a  clear  framework  in 
which these major projects have to be implemented. The Community guidelines for 
the development of the trans-European transport network refer to it explicitly14. Each 
new infrastructure programme has to undergo a strategic environmental assessment15 
and each project has to be assessed on an individual basis16. This double obligation 
makes it possible to optimise the implementation of the major infrastructure projects 
from the environmental angle. There is also the possibility of using the assessments 
as a framework for study to find possible synergies. 

Apart from these environmental assessments, each individual project has to comply 
with Community legislation on noise, water and the protection of flora and fauna17. If 
an impact is found on any of these aspects, alternatives will have to be looked for in 
order to guarantee that environmental legislation is complied with as far as possible. 
If  none  of  the  alternatives  to  a  project  declared  to  be  in  the  public  interest  is 
considered  to  be  an  optimum  solution  and  in  line  with  Community  legislation, 
compensatory  measures  may  be  adopted  which  will  allow  the  project  to  be  carried 
out while at the same time compensating for any negative impact. Annex 2 sets out 
the conditions in which such steps might be considered. 

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Article 8 of the abovementioned Decision No 884/2004/EC.  
Strategic  Environmental  Assessment  (SEA)  Directive  (2001/42/EC)  for  plan  and  programme 
assessment. 
Environmental  Impact  Assessment  (EIA)  Directive  (85/337/EEC  as  amended  by  Directives  97/11/EC 
and 2003/35/EC) for project assessment. 
Birds  Directive  (79/409/EEC),  Habitats  Directive  (92/43/EEC)  and  Water  Framework  Directive 
(2000/60/EC). 

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Conclusion: 

Reconciling  the  development  of  the  trans-European  transport  networks  with 
compliance  with  the  European  Union's  environmental  law  obligations  demands 
greater  coordination  between  the  various  Commission  departments  concerned.  A 
reference document has been prepared on this and is annexed to this communication.  

3.3. 

Exploiting new technologies in the trans-European transport network 

The recently approved Mid-term Review of the Commission's 2001 White Paper on 
Transport Policy18 recognises the role that new technologies can play in provision of 
safe  and  sustainable  movement  of  people  and  goods.  Within  the  European  7th 
Framework  Programme  for  Research  and  Development  (2007-2013),  technological 
innovation  in  transport  will  contribute  directly  to  the  European  competitiveness, 
environmental and social agendas. 

Among  the  most  promising  priority  areas  are  Intelligent  Transport  Systems  (ITS) 
integrating  information,  communication,  navigation  and  positioning  technologies 
with transport infrastructure, vehicles and users. 

Investment  in  ITS  should  be  considered  as  a  strategically  important  element  in  all 
new  trans-European  transport  networks  projects,  and  in  projects  for  refurbishing 
existing networks and links. Moreover, ITS offers a set of tools for co-modality and 
environmental sustainability. 

Examples  of  successful  ITS  applications  in  the  transport  networks  include  Road 
Control  and  Management  Systems  (Euroregional  projects  as  part  of  the  TEMPO 
Multi-annual Indicative Programme 2001-2006), Waterway Navigation and Control 
Systems (RIS and SafeSeaNet); and the European Rail Traffic Management System 
(ERTMS). Work has started in the so-called Co-operative Systems based on vehicle-
to-vehicle  and  vehicle-to-infrastructure  communications  and  accurate  positioning 
(i2010  Intelligent  Car  Initiative).  These  systems  will  offer  longer-term  substantial 
benefits  towards  both  safe  and  sustainable  transport.  Finally,  GALILEO,  the 
European  project  on  Satellite  Navigation,  will  offer  substantially  improved 
navigation,  positioning  and  timing  services  for  all  modes  of  transport  when  it 
becomes  operational  in  2010.  ITS  also  encompasses  services  for  the  end  users, 
including  Real-Time  Traffic  and  Travel  Information  (RTTI),  contributing  to 
decreased journey times, improved safety and supporting co-modality. 

In  spite  of  proven  benefits,  ITS  systems  and  services  in  Europe  are  patchy  and 
lacking in many areas. In the time-frame 2007-2013, Europe should focus on large-
scale  deployment.  Public  authorities  should  exploit  the  use  of  new  technologies  to 
address policy objectives thereby creating a sufficiently large market for innovative 
ITS products. 

18 

Keep  Europe  moving  -  Sustainable  mobility  for  the  Europ  -an  continent:  Mid-term  review  of  the 
European Commission’s 2001 Transport White Paper, COM(2006) 314. 

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Conclusion: 

The group considers that for the trans-European transport networks, the use of new 
technologies  offers  effective  tools  for  increasing  safety  and  in  reducing  congestion 
and the environmental impact of transport. 

The  group  recommends  that  investment  in  Intelligent  Transport  Systems  (ITS), 
representing  typically  a  few  percent  of  the  infrastructure  cost,  should  be  included 
from  the  beginning  in  the  planning  of  all  new  TEN-transport  projects,  as  well  as 
considered  as  an  essential  element  for  all  infrastructure  improvement  and 
refurbishment projects. 

3.4. 

Financing of the trans-European networks 

The different budgetary sources have to be coordinated and new mechanisms have to 
be  developed  for  improving  financing  in  general  and  Community  co-financing  of 
these infrastructures in particular. 

3.4.1.  Combining funds 

The question of cumulation of Community funding of various financing sources on 
the same project has been a constant preoccupation of the Commission. The Court of 
Auditors has highlighted this issue in its reports on the Commission's implementation 
of the trans-European networks.  

The Steering Group has concluded that there must be no possibility of cumulation of 
subsidies from several Community funds. In order to ensure budgetary transparency 
and proper financial management, the Financial Regulation and/or basic sectoral acts 
adopted or in the course of adoption rule out the cumulation of different Community 
financial instruments for one and the same action. 

In  the  context  of  operational  programmes  receiving  financial  assistance  from  the 
Structural Funds and/or the Cohesion Fund, other Community funds cannot provide a 
substitute for the required national co-funding. 

Expenditure  within  a  project  that  is  part  of  an  operational  programme  receiving 
financial  assistance  from  the  Structural  Funds  and/or  the  Cohesion  Fund  cannot 
benefit  from  other  Community  funding.  It  follows  that  when  expenditure,  for 
example for  ERTMS  equipment  or  electrification of a  railway  line,  is  not  receiving 
financial  assistance  from  the  Structural  Funds  and/or  the  Cohesion  Fund,  it  could 
benefit  from  TEN-funding.  The  actual  construction  of  the  railway  line  could  be 
funded  by  the  ERDF  or  the  Cohesion  Fund.  Projects  could  also  be  divided  into 
geographical sections, which could be co-financed either by ERFD/Cohesion Fund or 
TEN-funding. 

When  granting  TEN-subsidies,  the  Commission  will  therefore  check  whether  the 
projects have not received funding from the Structural Funds or the Cohesion Fund.  

After  consultation  of  the  Court  of  Auditors,  the  Commission  will  also  issue 
guidelines  to  Member  States  on  how  the  different  funding  instruments  can 
be combined. 

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Such  prohibition  of  duplicate  financing  will  need  to  be  designed  to  make  Member 
States  choose  which  financial  instrument  they  will  call  upon  for  Community 
financial support in accordance with the rate of assistance offered by the instrument 
and  the  prioritisation  of  the  projects  in  question.  Member  States  eligible  for  the 
Cohesion  Fund  and  regions  eligible  for  the  Convergence  Objective  are  therefore 
asked  to  give  preference  to  using  these  instruments  for  the  co-financing  of  large 
infrastructure projects. 

Conclusion: 

The  Steering  Group  has  confirmed  the  need  to  maintain  a  consistent  approach 
through the medium of the various legal instruments. The non-cumulation principle 
is now clearly enshrined in Community legislation, thereby responding directly to the 
comments made by the Court of Auditors. 

3.4.2.  Financing of major priority projects 

Delays  in  implementing  priority  transport  projects  are  due  in  particular  to  the 
difficulty of reconciling the rules for the award of Community grants under the TEN 
budget with the real financial needs of large-scale priority projects. 

The  new  TENs  Regulation  will  facilitate  the  co-financing  of  large  cross-border 
projects which are technically and financially complex. Even if the implementation 
of  these  projects  embraces  a  variety  of  financial  frameworks,  Community  co-
financing  is  entirely  feasible:  a  grant  decision  may  be  taken  within  a  particular 
financial  framework  and  the  payments  may  be  made  outside  the  bounds  of  that 
framework as the work on the project progresses.  

If the solution set out in the new TENs Regulation, permitting multiannual funding in 
annual tranches, should prove inadequate to what is needed, other options would be 
considered.  

3.4.3.  Public-private partnerships 

Public-private partnerships (PPPs) allow public authorities to delegate public service 
missions to private firms. There is much to be gained from using the PPP formula: 
better cost control (construction and operating costs) and a greater likelihood that the 
work will be completed to deadline. But above all, part of the risk is transferred to 
the  private  partner:  besides  the  construction  risk,  the  private  partner  can  assume 
either the operating risk or the availability risk. This transfer of risk is very important 
for  calculating  government  debt  or  deficit.  At  the  start  of  2004  a  Eurostat  decision 
was published on the calculation of "private investments" in a PPP in relation to the 
government debt19. When the private partner assumes the construction risk and either 
the availability risk or the operating risk, the private investments do not have to be 
included in the calculation of the government debt. 

A  consultation  has  been  held  on  the  evolution  of  Community  legislation  on  public 
contracts  in  order  to  take  account  of  the  rapid  development  of  PPPs.  In  2004  the 

19 

ESTAT Decision of 11 February 2004. 

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Commission  adopted  a  Green  Paper  on  PPPs.  In  November  2005  the  Commission 
announced  a  possible  legislative  initiative  to  develop  the  legal  framework  of 
concessions  in  such  a  way  as  to  offer  an  enhanced  level  of  legal  certainty  while 
maintaining sufficient flexibility to cope with the many different forms of PPP which 
exist. 

The  EIB  is  establishing  a  European  PP  Expertise  Centre  (EPEC)  jointly  with  the 
Commission  and  other  interested  parties.  The  idea  is  to  establish  EPEC  as  a  pan-
European public sector source of information,  as  a  means  of  exchange  of  PPP  best 
practice and of developing public sector capacity to implement PPP projects. 

3.4.3.1.  PPPs based on demand risk: guarantee instrument 

In  response  to  a  request  from  the  European  Council  of  December  2003,  the 
Commission  and  the  EIB  have  looked  into  the  possible  benefits  of  developing  a 
European guarantee instrument. At the beginning of 2005, in two communications to 
the  Council20,  the  Commission  confirmed  that  such  an  instrument  would  be  useful 
for  facilitating  and  encouraging  the  funding  of  trans-European  transport  networks 
through PPPs. The principle of such an instrument has in the meantime been inserted 
in a new TENs Regulation for the period 2007-2013. The loan guarantee instrument 
would  support  those  types  of  PPP  which  are  based  on  demand  risk  (such  as 
concession type PPPs) by reducing the risks associated with revenue shortfalls in the 
first years of operation of a project. It would be applied in particular in the case of 
contracts for concessions.  

The EIB grants a guarantee to a financial institution which in turn provides a stand-
by credit line to the financial beneficiary for the ramp-up period of a project in order 
to  assure  the  debt  service  of  senior  credit  facilities.  The  Commission  and  the  EIB 
share  the  financial  contribution  to  the  expected  loss  provisioning  and  capital 
allocation  for  those  guarantees.  The  guarantee  would  be  activated  only  if  revenue 
flow  should  be  insufficient  to  service  senior  loans21.  The  guarantee  would  not 
eliminate the risk to senior creditors but would offer better cover for servicing of the 
senior  debt,  thereby  increasing  the  likelihood  of  private  partners  borrowing  for  the 
project.  

In the event that the guarantee were called into play, the EIB would obtain a financial 
claim  subordinated  to22  senior  claims  but  taking  priority  over  that  of  ordinary 
shareholders.  This  additional  debt,  so-called "mezzanine  debt"23,  should  be  repaid 
with interest as soon as the revenue generated by the project allows it and the claim 
of the senior creditors has been honoured. The level of the guarantee would be set to 
reflect the risk taken and the costs of managing it. 

20 

21 

22 

23 

COM(2005)  75:  "Feasibility  report  on  EU  loan  guarantee  instrument  for  TEN-Transport  projects"; 
COM(2005)  76:  "Concept  for  the  design  of  an  EU  loan  guarantee  instrument  for  TEN-Transport 
projects"; SEC(2005) 323: "Loan guarantee instrument for TEN-Transport projects".  
A senior loan or "senior debt" is a debt which enjoys specific guarantees and takes priority over other 
debts ("junior debts") as regards repayment. 
A  debt  is  "junior"  or  "subordinated"  when  its  repayment  is  subject  to  prior  repayment  of  the  other 
creditors. Of course, in return for the additional risk they assume, junior creditors ask a higher interest 
rate than the other creditors. 
"Mezzanine  debt"  is  the  debt  between  senior  debt  and  capital.  An  investor  in  mezzanine  will  not 
therefore be repaid until after all tranches of senior debt have been fully repaid. 

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The  leverage  factor  of  the  instrument  is  in  the  range  of  4-6  times  the  Commission 
contribution  of  € 500  million  directly  guaranteeing  stand-by  credit  lines  of  € 2-3 
billion. Combined with the equal EIB contribution of € 500 million, this would allow 
underpinning senior debt of more than € 20 billion. This contribution would be made 
as and when necessary according to the number and financial size of the projects to 
be covered by the instrument. 

The actual details of implementation of the instrument are set out in an annex to the 
TEN-T  Financial  Regulation  which  is  currently  under  discussion  in  the  European 
Parliament  and  the  Council.  The  management  agreement  between  the  Commission 
and  the  EIB  is  now  being  prepared,  and  this  will  allow  the  instrument  to  begin 
operating in 2007. 

3.4.3.2.  PPPs based on availability risk: introduction of a form of specific support 

If  in  addition  to  the  construction  risks  the  private  investor  assumes  the  availability 
risk, he provides the initial funding, builds the infrastructure and repays himself by 
charging  long-term  payments  (e.g.  over  30  years).  The  payments  are,  however, 
dependent on the level of availability of the infrastructure: they can be reduced if the 
service provided does not come up to the level set.  

Availability-based PPPs can work in two different ways:  

(1) 

in  a  mixed  form  where  availability  payments  cover  only  a  part  of  the 
investment, the other part being financed in the traditional form of subsidies 
during  the  construction  phase.  This  first  type  of  arrangement  poses  no 
problems in respect of the TENs Regulation since the EU's contribution might 
exclusively concern the direct subsidy part ; 

(2) 

in  the  exclusive  form  of  regular  payment  flows  over  the  period  adopted  for 
repayment of the infrastructure costs to the private investor. 

Numerous countries24 have expressed an interest in this second type of arrangement. 
But  the  time  between  the  co-financing  decision  (prior  to  the  work)  and  the  start  of 
availability payments (in the operation phase) is several years. What is more, these 
payments are considered to have been effected throughout the agreed duration of the 
arrangement (e.g. 20 or 30 years). The Commission, which is reluctant to enter into 
financing decisions that are left open over a large number of years, has hitherto been 
obliged to refuse its support for this type of arrangement. 

In  order  to  resolve  this  problem  while  complying  with  the  General  Financial 
Regulation, the TENs Financial Regulation has been amended in order to concentrate 
Community support on the initial phase of availability payments and thereby ensure 
that  the  Member  State  prioritises  using  Community  support  in  its  availability 
payments. 

24 

Notably the United Kingdom, Finland, the Netherlands, Hungary, the Czech Republic and France.  

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Conclusion: 

The new guarantee instrument should soon be one of the new instruments available 
for promoting the completion of the trans-European networks.  

PPPs based on availability will be one of the indispensable types of subsidy eligible 
for  Community  financial  support  under  the  new  Regulation  for  trans-European 
transport and energy networks. If the Commission follows up the implementation of 
this  new  instrument,  it  may  be  possible  to  extend  it  to  other  Community  financial 
instruments such as those of cohesion policy. 

4. 

CONCLUSION 

The  very  fruitful  cooperation  within  the  Steering  Group  has  quickly  produced 
tangible  results:  legal  instruments,  interdepartmental  cooperation,  transparency  of 
Community measures.  

The discussions within the Steering Group have made it possible to achieve greater 
consistency  between  the  provisions  of  the  various  legislative  instruments  in 
preparation for the new financial programming period 2007-2013, consisting of rules 
applicable  to  combinations  of  different  financial  instruments  and  development  of 
new  and  innovative  financial  instruments.  The  legal  clarification  regarding  not 
allowing  the  cumulation  of  Community  funds  will  lead  to  more  transparency, 
meeting a request made by the Court of Auditors. The Steering Group has also given 
new  impetus  to  the  interdepartmental  cooperation  already  in  place  so  as  to  make 
certain that this principle is applied. 

The  coordination  effort  for  implementing  the  new  financial  instruments  (guarantee 
instrument and availability-based public-private partnerships) must continue. 

The  Steering  Group  has  made  some  concrete  proposals  for  reconciling  the 
construction of infrastructures with respect for the environment. 

At  the  same  time,  the  work  of  the  Steering  Group  has  helped  to  identify  specific 
areas where action is necessary. The Steering Group recommends :  

•  continuing  to  look  for  synergies  between  the  trans-European  networks  with  the 

aim of distributing a manual of best practice; 

•  developing synergies between the objectives of cohesion policy and the priorities 

adopted for the trans-European networks; 

•  assessing the need for any alternative solutions that may be required for covering 
availability  payments  over  several  periods  of  the  financial  framework  and,  if 
necessary, making an appropriate legislative proposal; 

•  closely  following  the  development  of  public-private  partnerships  and  taking  all 

steps necessary to promote these types of financing; 

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•  carrying  out  the  priority  TEN  projects  within  the  deadlines  while  ensuring  that 
environmental law is applied through the mechanisms set up by Community law; 
the annexed guide will provide a useful contribution to this end. 

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