Ispa will have until 2006 an annual budget of about 1,040m (expressed in 1999 price).
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1 15 June 2000 The Instrument for Structural Policies for Pre-accession (Ispa) is the European Commission s instrument to help the ten Central European candidate countries to adapt to the environmental and transport conditions in view of accession. nkb
2 Introduction On April 1st 2000 the European Commission s DG Regio-Ispa Directorate officially started its work: to help financially to improve the major environmental and transport infrastructure in the ten Central and East European countries that applied for EU membership. Ispa will have until 2006 an annual budget of about 1,040m (expressed in 1999 price). This brochure gives an overview of the Ispa mandate and a state of play of the projects so far selected for grants in 2000 or later. Michel Barnier Member of the European Commission
3 Ispa? Mandate (1) The Instrument for Structural Policies for Pre-accession (Ispa) has been set up as part of Agenda 2000, and confirmed by the Luxembourg European Council of December 1997 which provided an enhanced pro-accession strategy. With three different pre-accession instruments the Council of Ministers wants to help the candidate countries for a period of seven years ( ) to prepare for accession: Sapard: Phare: Ispa: for the modernisation of the agriculture and for rural development (520 million per year in 1999 prices) for institution building, for developing community programmes, for regional and social development and for industrial restructuring/sme development (1560 million per year in 1999 prices) for supporting of infrastructure projects in the field of transport and environment (1040 million per year in 1999 prices) According to the ISPA Regulation (Council Regulation (EC) N 1267/1999 of 21 June 1999) : "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 [ ]". Important: ISPA is Accession oriented, follows an approach similar to that of the Cohesion Fund, and applies to the and sectors. However, in contrast with the Cohesion Fund, ISPA currently functions with ex-ante approval of tendering and contracting by the Commission. This transitional approach is however meant to disappear progressively and evolve towards a full decentralisation of aid to the beneficiary countries. "The Community assistance granted under ISPA shall contribute to the objectives laid down in the Accession Partnership for each beneficiary country and to corresponding national programmes for the improvement of the environment and of transport infrastructure sectors". Important: the objectives of ISPA projects have their origin mostly in the Accession Partnerships and National ISPA Strategies for and sectors. The Commission prepared Framework documents for ISPA funding in the fields of and, in order to specify the field of intervention of the ISPA instrument and therefore help in the ISPA Strategy drafting process. For the Commission the key orientations are: Community dimension of investments systematic approaches (no isolated ad hoc interventions) concentration on projects with impact on a maximum number of people maximum financial leverage The national strategies, set up by the candidate countries, propose their middle long view on the priorities for the environment and transport sector. 1 For more extended texts about the Ispa mandate :
4 Criteria for support Sectors benefiting from ISPA The environment - bringing the applicants up to EU standards Applicant countries generally have important needs for assistance in the field of environment in order to comply with: EU environment legislation : preserving, protecting and improving quality of environment protecting human health prudent and rational utilisation of natural resources EU environment principles: precautionary principle preventive action damage rectified at source polluter should pay. ISPA assistance will concentrate on the "investment heavy" directives, i.e. Directives that are costly to implement, and, to deal with the worst environmental problems, on: drinking-water supply treatment of waste water solid-waste management air pollution : extending the Trans-European transport Networks (TEN) There is an urgent need to build and rehabilitate transport infrastructure in the applicant countries and to link it to the Union's transport networks, since this is a crucial part of their economic development strategies. Which projects will be favoured? Projects which encourage sustainable forms of moving people and goods, in particular projects which are of Community interest, and projects which enable the countries concerned to meet the objectives of the Accession Partnerships. This will include providing good connections between the Trans-European transport Networks and road and rail corridors (identified at the Helsinki and Crete Conference) in the applicant countries and interconnections between national networks and links from them to the Trans-European transport Networks. This will call for major investments. ISPA will therefore be contributing to funding the development of railways, roads, ports and airports, taking into account requirements for sustainable transport and modal change. Technical assistance - directly related to the projects being funded A small part of ISPA budget may also be used to fund preparatory studies and technical assistance. A clear link must be shown between these measures and the projects funded by ISPA. Technical assistance will have a crucial role in guaranteeing a high level of quality in projects, in terms of both management and impact, and will allow research results to be incorporated in the relevant sector as far as possible.
5 General criteria All Ispa support should be in line with the following general principles: support should act as a catalyst for additional activities related to accession or should help to accelerate these activities all investment projects assisted by Ispa should have a national contribution. Loan repayments can be considered as a national contribution Ispa support should not displace other sources of finance especially from the private sector or from the international financial institutions. It should, on the contrary, attract other sources of finance all projects must comply with EU norms and standards, be coherent with the sector policies of the EU and environmentally sound development as defined by Articles 2 and 174 of the Treaty. All projects must be financially sustainable to cover future operating and maintenance costs Measures (projects) shall be of a sufficient scale to have a significant impact. The Commission s intention is to target investment on the largest population centres as a first priority. Where projects are grouped the Commission will pay particular attention that the group is geared to a precise objective and that appropriate preliminary studies have been undertaken. Financial criteria Project criteria The total cost of each project shall in principle not be less than 5 million. The need to strike a balance between measures in the field of environment and of transport The possibility to finance technical assistance measures linked with project implementation. Grant criteria The rate of Community assistance granted under Ispa may be up to 75% of public or equivalent expenditure, including bodies whose activities are undertaken within an administrative or legal framework by virtue of which they are regarded as equivalent to public bodies. Anincreasetoupto85%maybeproposedifahigherrateisconsideredtobenecessarytorealise projects essential for achieving the general objectives of Ispa. The rate of assistance shall be reduced to take into account: the availability of co-financing the measure s capacity to generate revenues an appropriate application of the polluter-pays principle.
6 Allocation between beneficiary countries: Over the period from 2000 to 2006, a total of million a year (at 1999 prices) is to be divided equally between environmental and transport infrastructure projects. The allocation of ISPA resources among the recipient countries has been decided by the Commission using criteria based on population, per capita GDP (in purchasing power parity terms) and land surface area. In order to encourage the beneficiary countries to propose high quality projects and to have some flexibility in the management of ISPA funding, the allocation is given as a range: Bulgaria 8.0% % Czech Republic 5.5% - 8.0% Estonia 2.0% - 3.5% Hungary 7.0% % Lithuania 4.0% - 6.0% Latvia 3.5% - 5.5% Poland 30.0% % Romania 20.0% % Slovakia 3.5% - 5.5% Slovenia 1.0% - 2.0% (Published in the Official Journal L72, 21 March 2000, p. 21)
7 Decentralisation ISPA, the Structural Instrument for Pre-Accession, is of a hybrid nature, as it is situated between the financial support to third countries (cfr. Phare in the past) and the financial support to member states (cfr. Cohesion Fund). This implies in the first place, that ISPA has some characteristics of both types of assistance, secondly that is due to change over time, resembling more closely the Cohesion Fund as time evolves and the moment of accession comes nearer. This move means the acceptance under certain conditions of the decentralisation of the project implementation. Legal basis The Co-ordination Regulation 1266/99 of 21 June 1999 (art 12.2) opens the possibility for waiving the ex ante approval requirement and for conferring on implementing agencies management of aid on a decentralised basis. This will however only be decided on the basis of a case by case analysis of the management capacity, financial control procedures and structures regarding public finance. This decision will require that minimum criteria are fulfilled and financial agreements with the beneficiary countries contain specific implementation provisions. Conditions & criteria On the basis of the criteria listed in the Annex to the Co-ordination Regulation, the beneficiary countries should ensure that the following conditions are met: "(i) Demonstration of effective internal control including and independent audit function and an effective accounting and financial reporting system which meets internationally accepted audit standards; (ii) A recent financial and operational audit showing effective and timely management of Community assistance or national measures of similar nature; (iii) A reliable national financial control system over the Implementing Agency; (iv) Procurement rules which are endorsed by the Commission as meeting requirements of Title IX of the Financial Regulation applicable to the general budget of the European Communities; (v) Commitment by the National Authorising officer to bear the full financial responsibility and liability for the funds." Support measures (Institution building) In order to speed up the process of acquiring the relevant and necessary project management capacity, a programme for institution building and reinforcement of the implementing agencies will have to be set up. This programme will be based on the assessment of the institutional capacities that will be carried out by the Commission. These activities will be co-ordinated with the support provided under the Special Preparatory Programme (SPP) and the various institutions building measures financed by PHARE.
8 Ispa projects Projects: state of play ISPA has been prepared by a small team of officials since early They succeeded in setting up a project pipeline of about 150 projects. With the start in April 2000 of the ISPA Directorate, this project pipeline was examined by the old and the new team members. They jointly selected about 80 projects, considered to be the most mature priority projects. These are projects consistent with the priorities defined in the ISPA transport and environment investment strategies and sufficiently well defined to allow these projects to be adopted by the Commission this year. This list constitutes a working hypothesis making it possible to plan further activities of the ISPA team, leading to commitment of the full budget (1.058 billion in 2000 price) At present the list is further discussed with the representatives from the other Commission services and with the officials of the countries concerned. In the process and during the ongoing appraisal activities the list will be adapted. The first projects were presented to the Management Committee in June. Later meetings are planned in July, October and November. Based on the Committee s opinion the Commission decides on acceptance of projects.
9 Country Bulgaria Czech Rep. Estonia Hungary Latvia Lithuania Poland Romania Slovakia Slovenia Projects Total of Million Projects projects foreseen Projects in in 2000 pipe-line Million Projects 4 4 Million Projects 3 2 Million Projects 3 2 Million 92,60 64,90 Projects 9 3 Million 431,26 64,18 Projects 6 3 Million 42,65 21,65 Projects/grants in 2000 accepted by Management Committee (MC) Projects 7 3 Million 85,40 29,90 Projects 9 4 Million 518,17 113,17 Projects 6 3 Million 1311,40 416,40 Projects 9 9 Million 87,96 87,96 Projects 7 5 Million 42,55 32,55 Projects 6 4 Million 75,90 40,60 Projects Million 213,42 146,42 24,91 Projects Million 1129,70 806,70 25,90 Projects Million 998,30 343,30 67,88 Projects 8 8 Million Projects 3 3 Million 482,11 482,11 Projects 6 Million 171 Projects 2 1 Million Projects 4 4 Million 69,13 69,13 Projects 2 1 Million 25,70 12,50 Projects accepted at Management Committee reunion of 6 June 2000 project number: name project: country: Lithuania sector: transport 2000/LT/16/P/PT/001 Upgrading of IXB Corridor (Vilnius-Klaipeda) 2000/LT/16/P/PT/002 Development of Via Baltica road in country: Poland sector: environment 2000/PL/16/P/PE/001 Bydgoszcz: Water supply and sewage services development sector: transport 2000/PL/16/P/PT/001 Kleszczow-Sonica A4: construction motorway section KA4E
10 Contact points How to get more information? Marc Franco Director Secretariat: tel: (32)(2) fax: Anders Henriksson Adviser Secretariat: tel: Ispa, or Direction F of DG Regio, has two units. Unit F1 is handling the projects in the Northern countries: Czech Republic, Esthonia, Poland, Latvia and Lithuania. Friedemann Allgayer Head of Unit Secretariat: tel: fax: Unit F2 is working for the countries in the South: Bulgaria, Hungary, Romania, Slovakia and Slovenia. Jean-Marie Seyler Head of Unit Secretariat: tel: fax: For s: the address is like Firstname.lastname@cec.eu.int The Ispa web page is under construction. It will be part of the information provided by DG Regio. nkb 5/2000
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