3 Trans-European Networks
| (a) (26431) 7280/05 COM(05) 75
(b) (26432) 7281/05 COM(05) 76
(c) (26433) 7282/05 SEC(05) 323
(d) (27581) 10089/06 COM(06) 245 |
Commission Communication: European Initiative for Growth — Feasibility report on EU loan guarantee instrument for TEN-Transport projects
Commission Communication: European Initiative for Growth — Concept for the design of an EU loan guarantee instrument for TEN-Transport projects
Commission staff working paper: Annex to the Commission Communication: European Initiative for Growth — EU loan guarantee instrument for TEN-Transport projects
Amended Draft Regulation laying down general rules for the granting of Community financial aid in the field of the Trans-European Transport and Energy Networks and amending Council Regulation (EC) No 2236/95
|
| Legal base | (a)-(c) —
(d) Article 156 EC; co-decision; QMV
|
| Department | (a)-(c) Transport
(d) Trade and Industry
|
| Basis of consideration | Minister's letter of 19 December 2006
|
| Previous Committee Report | (a)-(c) HC 34-i (2005-06), para 16 (4 July 2005)
(d) HC 34-xxxv (2005-06), para 4 (12 July 2006)
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| To be discussed in Council | February 2007
|
| Committee's assessment | Politically important
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| Committee's decision | Cleared
|
Background
3.1 Trans-European Networks (TENs) concern three sectors: energy
(TEN-E), telecommunications (eTEN) and transport (TEN-T). Development
of the TENs is promoted as a key element for the creation of the
single market, reinforcement of economic and social cohesion and
promotion of the Lisbon Strategy. Such development includes the
interconnection and interoperability of national networks as well
as access to them. Funding from the TENs budget is intended to
be catalytic, with maximum levels for support and the greater
part of the funding coming from either the public authorities
of the Member States or, especially in the fields of telecommunications
and energy, from the private sector.
3.2 In July 2004 the Commission proposed a draft
Regulation to:
- increase the maximum rates
of support for TEN-T activities;
- establish a budget for TEN-T and TEN-E for the
period 2007-2013; and
- widen the forms of support available to include
loan guarantees to cover risk for a period after the construction
phase.
3.3 The previous Committee kept this draft Regulation
under scrutiny pending both the outcome of the negotiations on
the Financial Perspectives for 2007-2013 and receipt of further
information about the proposals in relation to loan guarantees.
However, in May 2006 the Commission proposed an amended draft
Regulation, document (d), and so we cleared the original draft
from scrutiny.[3] The amended
draft Regulation was proposed in the light of the decision on
the Financial Perspectives and the European Parliament's first
reading of the original proposal in February 2005. The amended
proposal would:
- set an allocation of €8,168
million (£5,811 million) for TENs for the period 2007-2013,
that is €8,013 million (£5,701 million) for TEN-T and
€155 million (£110 million) for TEN-E. It was expected
that the Commission would propose that €500 million (£356
million) of the TEN-T funding would be for a loan guarantee mechanism;
- incorporate new procedures for the selection
of projects, a loan guarantee mechanism, and a contribution to
the activities of joint undertakings;
- clarify how aid is granted and Commission decisions
are to be implemented; and define more clearly the types of potential
beneficiary;
- establish a number of principles, such as strict
compliance with Community law as a pre-condition for funding;
- require for TEN-T special attention to cross-border
projects, to those implementing traffic management systems for
rail, air and maritime projects and to inland waterway projects;
and
- amend the different maximum intervention rates
for TEN-T projects as follows:
| |
Current |
Post-2006
Original Amended
proposal proposal |
| Studies |
50% |
50% |
50% |
| Priority projects |
10% |
30% |
20% |
| Cross-border sections of priority projects
Inland waterways |
20%
10%
|
50%
10%
| 30%
30%
|
| ERTMS/SESAR[4]
| 10% |
50% | 50%
|
| All other projects | 10%
| 15% |
10% |
When we considered the revised proposal in July 2006
we noted the Government's continuing concerns about the maximum
intervention rates for TEN-T, and especially its opposition to
30% rate for inland waterways projects, and decided to keep the
document under scrutiny pending information about further developments.[5]
3.4 In March 2005 the Commission published, separately
from, but related to, consideration of the original draft Regulation
and the amended version in document (d), three documents about
a loan guarantee mechanism or instrument for TEN-T to facilitate
private sector participation in financing projects through public-private
partnerships. The Commission Communication, document (a), reported
the outcome of the study of the feasibility of a loan guarantee
instrument it had undertaken with the European Investment Bank
(EIB). The other Communication, document (b), outlined a proposal
for such an instrument. And document (c) was a Commission staff
working paper setting out the background to both Communications.
When we considered these documents in July 2005 we:
- noted that progress on the
idea was also subject to the final outcome of the negotiations
on the Financial Perspectives for 2007-2013;
- asked for information as to how the Government's
reservations about the loan guarantee instrument proposal could
be addressed in the draft Regulation; and
- kept the documents under scrutiny pending developments.[6]
The Minister's letter
3.5 The Minister of State for Industry and the Regions
at the Department of Trade and Industry (Margaret Hodge) writes
to tell us where matters now stand on negotiations on the amended
draft Regulation, document (d), particularly in relation to the
maximum intervention rates and to the loan guarantee mechanism.
First, the Minister tells us that the Presidency has proposed
a compromise text which includes a settlement on the issue of
intervention rates. The Government has been unable to retain its
blocking minority opposing further increases in the intervention
rates. But as a trade-off it has been successful in removing the
reference to a 30% intervention rate for inland waterways works-based
projects. Such projects would be examined against selection criteria
focused on how the project would optimise the capacity usage of
the TEN-T network rather than on the mode of transport. So the
maximum rates of intervention would now be:
| |
Current |
2004
draft |
Compromise
proposal
|
| Studies | 50%
| 50% |
50% |
| Priority projects | 10%
| 30% |
20% |
| Cross-border sections of priority projects
| 20%
10%
| 50%
10%
| 30% |
| Inland waterways | —[7]
| 30% |
— |
| Projects including interoperability, security and safety
| 10% |
50% | 50%[8]
20%[9]
|
| All other projects | 10%
| 15% |
10% |
The Minister comments that although the intervention
rates are to increase they are maxima and in practice the Commission
rarely hits the higher rates.
3.6 Secondly, the Minister tells us the Presidency
text has an annex which:
- sets out, in general terms,
the form that support under the loan guarantee mechanism will
take;
- provides that the Community contribution to the
loan guarantee instrument would be committed by 31 December 2013
at the latest, with the approval of guarantees to be finalised
by 31 December 2014;
- provides that guarantees may not be for more
than five, or exceptionally seven, years after the date that projects
are taken into operation;
- limits the Community contribution to the mechanism
to €500 million, with the EIB contributing an equal amount;
- limits the Community input to the loan guarantee
mechanism to its defined contribution and provides that there
would be no further liability on the Community budget;
- provides that, in the case of termination of
the loan guarantee mechanism during the current Financial Perspectives
period, any balances, other than funds committed and funds needed
to cover other eligible costs and expenses, would be returned
to the TEN-T budget line;
- provides that, if the mechanism were not extended
into the next Financial Perspectives period, any remaining funds
would be returned to the revenue side of the Community budget;
- allows funds allocated to the loan guarantee
mechanism to be called upon until either the last guarantee has
expired or the last subordinated debt has been cleared; and
- enables, in order to ensure that risk transfer
remains a reality within TEN-T public-private projects, such projects
to adopt a mechanism whereby payments to the contractor are (in
part) dependent on the availability of the infrastructure to a
contractually agreed standard.
The Minister adds that, although the draft Regulation
sets out the principles of the loan guarantee, much of the operational
detail will be covered in a cooperation agreement between the
Commission and the EIB.
3.7 The Minister concludes that the compromise presents
the best possible outcome for the UK.
Conclusion
3.8 We are grateful to the Minister for this account
of developments on the draft Regulation at document (d). We note
that the Government has been unable to prevent agreement on increased
maximum intervention rates, but has seen off the special rate
for inland waterways and secured a useful clarification of the
loan guarantee mechanism, and has assessed this as the best possible
outcome. In the light of this, and as we have no further questions
to raise, we clear this document.
3.9 As the loan guarantee mechanism arising from
documents (a)-(c) are now satisfactorily addressed in the compromise
text of the draft Regulation we now also clear these documents.
3 (25873) 11740/04: see HC 42-xxxi (2003-04), para
6 (15 September 2004), HC 34-xviii (2005-06), para 9 (8 February
2006), HC 34-xxviii (2005-06), para 5 (10 May 2006) and HC 34-xxxv
(2005-06), para 4 (12 July 2006). Back
4
European Rail Traffic Management System/Single European Sky Air
traffic management research. Back
5
See headnote. Back
6
Ibid. Back
7
Under the existing rules no special attention is given to inland
waterways. Back
8
For projects implementing the European Rail Traffic Management
System (ERTMS). Back
9
For projects implementing other traffic management systems. Back
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