15 Pre-accession funds for environmental
and transport projects
| (26130)
14412/04
COM(04) 735
| Annual Report on the Instrument for Structural Policy for pre-accession
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| Legal base | Article 12 of Council Regulation (EC) No. 1267/1999
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| Document originated | 29 October 2004
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| Deposited in Parliament | 16 November 2004
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| Department | International Development
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| Basis of consideration | EM of 24 November 2004
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| Previous Committee Report | None
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| To be discussed in Council | No date set
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| Committee's assessment | Politically important
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| Committee's decision | Cleared
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Background
15.1 The ECs Financial Instrument for Structural Policies for
Pre-Accession (ISPA) assists the eight Accession States[45]
and the two Candidate Countries[46]
in central and eastern Europe to meet the preparations for implementing
the Cohesion Fund[47]
and helps to familiarise the administrations of the beneficiary
countries with the Commission's procedures on Structural Funds
generally.
The Commission report
15.2 This, the fourth such annual report, is the most important
so far, since 2003 was the last year before the eight Accession
States became Member States, whereupon all ongoing ISPA projects
automatically become Cohesion Fund projects. So, the Commission
says:
"beyond providing financial support for the renewal
and upgrading of the infrastructure base in the environment and
transport sectors, much attention was paid to the preparation
of a pipeline of quality projects as well as to further strengthening
institutional and administrative capacity in those fields where
weaknesses subsist. The challenges regarding the effective management
and implementation of EU funds can be demonstrated by the fact
that, under the Cohesion Fund, allocations for the new Member
states will more than treble: from €0.75 billion per year
under ISPA to €2.8 billion per year for the period 2004-2006.
For their part, Bulgaria and Romania will remain eligible for
ISPA and benefit from gradually increasing allocations until the
end of 2006 as well. Similar efforts are thus required for the
latter countries in order to warrant an adequate programming and
implementation of the ISPA funds."
15.3 Since 2000, grants have been made for 324 large-scale environment
and transport infrastructure investments totalling €7.0 billion,
out of a total investment cost of over €11.6 billion, of
which €10.8 billion was considered as eligible for support,
implying an average grant rate of 65% (the remainder being provided
by the countries themselves and international financial institutions).
212 projects concerned large-scale environment infrastructure,
essentially in water supply, sewerage systems, wastewater treatment
and waste management. In transport, priority was given to 102
projects along the pan-European transport corridors, including
cross-border infrastructure such as railways, roads, airports,
traffic monitoring systems, etc. In 2003 itself, the Commission
decided on 75 new projects for a total ISPA contribution of €1.25
billion, representing more than 68% of a total eligible investment
cost of €1.8 billion.
15.4 From the start, the Commission observed the
principle of distributing ISPA funds equally between the environment
and transport sectors and, within the latter sector, of favouring
rail as a more sustainable transport mode against roads. As a
result, of the €4.3 billion committed thus far, 50% has been
allotted to environment projects and 49.1% to transport projects.
The remainder was committed to a flood relief project and to technical
assistance measures for decentralisation — €167 million
to assist in the preparation of projects and applications and
to enhance the administrative capacity of implementing bodies,
including the capacity for decentralised implementation (EDIS).[48]
15.5 As regards project management, the report states
that improvements have taken place in terms of effective implementation
in the beneficiary countries, although further efforts are required
to overcome weaknesses. Additional financial and human resources
for the planning, preparation and management of ISPA measures
are needed, especially in the environment sector.
15.6 The Report states that the Commission carried
out an audit during the second half of 2003. Preliminary conclusions
suggest that significant progress had been made in most beneficiary
countries but that improvements in internal control and internal
audit are still needed. A recurring problem in many countries
is the lack of trained and experienced personnel.
15.7 The Report also contains detailed statistical
information on the distribution of ISPA funds between each sector
and sub-sector.
The Government's view
15.8 The Explanatory Memorandum from the Parliamentary
Under-Secretary of State at the Department for International Development
(Mr Gareth Thomas) simply summarises key conclusions of the report:
"The report concludes that ISPA has
been successful in accelerating sector and policy reforms in beneficiary
countries. The preparation and implementation of ISPA projects
has: acted as an important tool in helping beneficiary countries
implement key EU legislation and requirements; contributed to
increased awareness of the reforms needed for effective implementation;
and helped develop the capacity for strategic approaches in the
environment and transport sectors…
"The report notes that staff in recipient
countries do not always have the skills required to manage complex
and large-scale projects, and that the Commission has responded
to difficulties in this area by developing technical assistance
activities to increase these skills.
"ISPA has contributed greatly to the
increase in capacity for environmental policy. This is an essential
part of EU membership, and the experience gained through the implementation
of ISPA will be invaluable post-accession.
"ISPA has also contributed to the gradual
implementation and improvement of systems for financial control
and management systems. While the report concludes that this process
is not yet complete, it is accepted that this is a gradual process,
which does not end after accession."
Conclusion
15.9 The Commission has commendably responded
to the skills gap in managing complex and large-scale projects
by developing technical assistance to increase these skills. This
is important. ISPA is part of an inter-related trio of Instruments,
the other two of which — Phare and SAPARD —are considered
in paragraphs 17 and 16 of this Report. The lessons learned
from operating all three need to inform and be embedded in not
only activity during the next three years but, more importantly,
in the successor Instruments the Commission is proposing for 2007-13,
which, if it has its way, would result in a total EU expenditure
on external assistance of €95 billion.[49]
Common features are the challenges posed by lack of institutional
capacity among the recipients and the ability of the Commission
to respond effectively. The experience of these three Instruments
is mixed; essentially positive, but at the end of the period only
very limited implementation of the "learning by doing"
EDIS approach, which is central to moving towards real decentralisation
and local ownership, and of multi-annual programming. As the
Court of Auditors noted in its reports on Phare and SAPARD, this
is where the Commission needs to concentrate in the years ahead.
15.10 In the meantime, we clear this report.
45 Estonia, Czech Republic, Hungary, Latvia, Lithuania,
Poland, Slovakia and Slovenia. Back
46
Bulgaria and Romania.There are currently proposals to extend ISPA
to Croatia in the light of its new candidate status. Back
47
The Cohesion Fund finances environment and transport infrastructure
projects in countries whose GNP per capita is below 90% of the
EU average. Back
48
The Extended Decentralised Implementation System (EDIS), under
which primary responsibility for implementation lies with the
candidate country, the intention being to increase their administrative
capacity by closely following the systems and procedures that
will be faced after EU Accession. Back
49
See (26042) 13687/04 (26043) 13688/04 (26044) 13689/04 (26045)
13690/04; HC 38-i (2004-05), para 13 (1 December 2005). Back
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