Transcript Euroopa Regionaalarengu Fond (ERDF)

ENVIRONMENTAL INVESTMENT CENTRE
Administration of EU funds:
local municipalities projects
Estonia
01.12.2011
RIGA
Hannes Aarma
[email protected]
Content
1.
2.
3.
4.
5.
EU funds: legal and management system
Role of the EIC
What (municipal) projects?
How are they selected & implemented
Administration: what worked, and what not?
Lessons learned –what next?
1. EU funds: legal framework
EU regulations and directives
National Strategic Reference Framework in 2000-2006
National Strategic Reference Framework 2007-2013
Operational Programme for the Development of Living
Environment 2007–2013 (and other OP’s):
Estonian legal Acts:
 Structural Assistance Act (first in 2000, new version in 2007)
 Governmental (horizontal) decrees: (conditions for payments,
audit, publicity, eligibility),
 Ministerial (measure specific) decrees establish legal basis for
projects implementation.
 Grant financing decision for a project (decided by EIC)
EU funds: management system
Ministry of Finance (Managing-, Paying-, Auditing Authority)
Ministry of Environment - Intermediate Body, level 1
(legal framework, supervision over EIC)
EIC- Intermediate Body, level 2
(assistance to FB’s, supervision of FB’s)
Final Beneficiary (e.g. Municipality)
Consultant (supervisor)
Contractor
2.Environmental Investment Centre
• Established by the Ministry of Finance in 2000 as a foundation,
i.e. non-profit organisation, the EIC had only one structural unitthe Environmental Programme Unit (EP), located in Tallinn
• Now also 15 county representatives advise applicants and
control the realisation and eligibility of funded projects.
• In 10 years EP has funded from state budget means over 1300
water management projects with a total budget of 125 million
EUR (+ FB’s self-financing 0-50%)
• EIC is Intermediate Body for CF since 2001 ; from 2004 also for
ERDF and from 2007 - for SF (environmental soft only)
• Since 2009 EIC is on-lending130 MEUR (EIB loan for Estonia,
water & wastewater projects co-financing)
• Since 2010 EIC is Implementing Agency also for projects
funded from CO2 quota sales money
Why is EIC Intermediate body for EU
funds?
• (Well) established management and control system (manual of procedures,
flow-charts, check-lists, forms of documents, etc).
• The system is kept up-dated - EIC does periodically risk assessment of it’s
performance, carries out system and project audits and takes preventive
measures
• Sufficient number of experienced, competent employees responsible for
CF/ERDF/SF projects (13 well-experienced, 14 new employees)
• Efficient personal network within EIC and with partners outside (MoE, MoF,
local authorities)
• Reliable and efficient performance of IB tasks, like:
- appraisal and selection of projects for funding
- ex-ante (ex-post) supervision over public procurement (carried out by FB-s)
- supervision over projects, implementation, incl. on-the-spot checks
- checks of payment requests, execution of payments (through central
operational system of structural funds projects–SFOS
- administration of project modifications/grant decisions
Organisation scheme
Environmental Investment Centre
(as of 01.12. 2011)
Council (9)
Auditing Commmitte
Management Board (2)
Supervision unit (5)
(CF/ERF/ESF projects)
Administration unit
Lawers(3)
Project audit unit (3)
(all EIC funded projects)
IT development manager
Structural assistance unit
(CF/ERF/ESF) (27)
Environmental programs
Unit (Office-8)
Environmental programs unit
Reginal representatives (15)
Internal auditor
Financial unit (8)
(ERF/ESF/CF /state budget)
EIC’s work-load & challenges for 2012
(EU funds +CO2 money)
Year No of EU EU funds (payments Number of
Töötajateprojects
arvu kasvu
prognoos on minimaalne.
and prognoses)
payment
(+CO2)
requests
2010 210 (+40) 42,6 MEUR
1 195
2011 ~300(+40) ~120 MEUR
< 2 400
2012 ~ 300(+40) > 200 MEUR
< 4 000
Average
payment
order
35 500 EUR
50 000 EUR
Simplification of payment procedures, clear division of tasks and
smooth cooperation between SF, Supervision and Financial units
will help!
3. EU support for municipal projects
1. From 9 CF measures (out of 11), e.g.
- water & wastewater infrastructure development (74/74 projects)
- Improvement of status of watercourse bodies (3/10)
- Waste handling (infrastructure development for waste
collection, sorting and recovery (4/17) and closure of old
landfills (4/16).
2. From 2 ERDF measures (out of 9):
- projects aimed at preservation of natural diversity (8/32)
- infrastructure development for environmental education
5/13
Further on only water projects will be explained in more detail!
4. Water management - legal set-up
“Development of water and waste water systems
infrastructure is local authorities responsibility”
(Act on Public water and sewage systems, §4)
“Local authority is obliged to provide for public water
and sewage services”
(Act on local authorities, §6 article 1)
Local authority approves tariffs (> 2000p.e.) for water
services (Act on Public water and sewage systems)
For > 2000 p.e. Competition Board approval is needed
Water projects - legal framework
All public investments must and are targeted at directives requirements:
•
Water Framework Directive (WFD)
•
Urban Wastewater Directive (UWWD)
•
Drinking Water Directive (DWD)
•
Nitrate Directive (ND)
Water projects: general objective
To secure and maintain better condition of surface water bodies
OP allows support for investments in 3 main directions:
1.
2.
3.
Investments in public water and wastewater infrastructure;
Investments for achieving better condition of surface water bodies;
Investments for elimination former residual pollution from soil and
groundwater.
These directions are financed (supported) by the:
EU Cohesion Fund
EIC national environmental programme (EP);
.
Water services: targets & deadlines
Drinking Water Directive (DWD) requires
To guarantee supply of purified water via
Drinking water systems providing water over 2 000 clients - at the end of
2008
Drinking water systems providing water over 50-1999 clients - at the end
of 2013
Baseline and targets in Estonia
In 2006 70% out of connected clients were supplied with drinking water
which corresponded to the quality standards. The goal at the end of
2013 is to guarantee drinking water which meet quality standards for all
clients connected with drinking water systems.
In 2006 86% of the residents were “clients” ie connected to the public
drinking water systems. The goal for 2013 is to guarantee drinking
water connection (opportunity) for 90% of residents.
Wastewater services: targets &
deadlines
Urban Wastewater Directive (UWWD) requires:
to collect and purify all wastewater:
- in WWCA where pollution load is over 10 000 p.e. - by the end of 2009, and
- in WWCA where pollution load is 2000 – 10 000 p.e. - by the end of 2010
Baseline and targets in Estonia:
In 2005 89% of residents in WWCA over 2000 p.e. were connected to public
wastewater system (total in Estonia -72%). The goal at the end of 2010 was to
collect and purify 100% of wastewater in WWCA with pollution load over
2000 pe.
In 2005 60% of WWTP in WWCA over 2000 p.e. worked in compliance with the
law. The goal at the end of 2010 was that 100% of WWTP work according
to the legal requirements.
How to reach these objectives?
What EU funds are available for water and
wastewater projects?
OP- Priority axis 1 – fixed CF support rate is 85%
Measure 1.1. Water and wastewater infrastructure development –
total available is 409 MEUR from CF, (ERDF= 0)
Support is for (net)revenue creating projects only, but it is not
State Aid as private companies are not eligible.
Therefore project owners financing must be 15% (of funding cap)
No additional financial support from the State
After (3) rounds of open call(s) for proposals EIC decided to fund
73 projects (incl. 2 major ones, approved also by the EC).
Total of committed CF support - 392 MEUR
Project owners financing obligation is 70 MEUR , and
projects net revenues - 28 MEUR
EU funds for improvment of the status
of watercource bodies
CF measure: total budget available - 9,6 MEUR.
• Min size of the project’s eligible costs – 16 000 EUR
• Min size of water body’s water-shed, which state is
improved– 25 sq km (except for salmon rivers)
First round (2010) of open call for applications:
budget: 3,2 MEUR CF; approved: 4 (out of 12)
applications for 2,6 MEUR from CF (incl. one
municipality’s project)
Second round (2011), budget ...MEUR, approved 6 (out
of 8) applications for 3,6 MEUR CF (incl. 2
municipalities)
5. EU funds administration - what
works?
1. Legal measures - work!
1.1 Act for SF as amended in 2010 - allows government
to fix (by decree) target levels for spending EU funds
at ministerial level, starting from 2011 (see next
slide)
1.2 grant decisions for projects – also work, because
annual spending amounts (plan for funding of multiannual project) were included into decisions
Target levels for EU funds spending
established by the Government
Priority axis
For 2011
% out of
EU total
Target
(EUR)
2007-13
1. Water & waste infrastructure (CF)
156 583 539
2. Sustainable use of
environment infrastructure (ERDF) 24 158 603
2.Preparedness for
envir.emergencies
(ERDF-MoIntAff)
17 256 145
3. Energy sector
development (ERDF)
4 270 896
State of play (24.11.2011)
Payed out
% out of
(EUR )
total 2007-13
25 114 488 245
18
45
7 032 273
13
45 18 331 871
48
45
31
2 967 449
What works (2)
2. Management measures:
Supervision over project public procurement and
spending plan (N+2/N+3 rule!), incl. quarterly
hearing of annual funding plan progress; (“traffic
lights” system).
Results: from 73 water and wastewater projects at the
moment 30 are “green” (implementation and spending
in schedule), 25 “yellow” (2-3 month delays, but may
be recovered) and 18 “red” (significant delays and
unsolved problems, administrative measures needed,
see next slide)
What works (3)
3.Administrative measures
- warning letter (from EIC to FB, meetings with FB
(municipality) staff;
- precept (if no improvement after warning letter)
- a coercive measure (prescribed amount of penalty
payment -if a precept of EIC is not complied with
during the term indicated in the precept)
- order for partial or full repayment of EU funds,
- abolishment of the grant decision.
What works (4)
4. Financial measures - on-lending (130 MEUR, borrowed
means from EIB) for water infrastructure FB-s only!
 Decision making scheme:
Loan administrator analyses loan application and prepares a creditworthiness
analysis, describing all possible risks and risk mitigation measures
EIC’s Credit committee discusses the given analysis and decides whether to
make a lending proposal to the EIC Board
EIC Board makes a lending decision based on the proposal

Loan characteristics:
Minimum-Interest rates:

Local Governments: Euribor + 1%

Water companies: Euribor +1,25%
Grace period: maximum 2 years after project implementation period.
Payment period: maximum 20 years
Repayment twice a year
What works (5)
5. Supportive measures:
- guidance ( EIC web-page, papers)
- advice,
- training of FB.
What has not worked
1. 2008(!) -2013 projects:
bottom-up development (=consultant based) > low
understanding of the application and implementation
rules> delayed start> still high risk for loosing part of
EU funds (N+2/N+3 rule).
2. Time (and money) consuming methodology (based on
EC Guide for CBA) - to decide and amend grant rates
for revenue creating projects
3. (Some) decrees late, and some - default!
Still problems...
1. Cost increase on construction market (again!) >
additional funding, and / or cuts?!
Scope: 42 (out of 73) may need in total 30-35 MEUR
2. Difficulties to secure/provide own funding (low
borrowing capacity of FB’s, incl. municipalities)
3. Too many and long-lasting public procurement claims!
(Average time (lost/per claim) – 45 days!)
Utilization of EU 2007-2013 funds
1.08.2011
Estonia
Latvija
Finland
Irland
Danemark
Portugal
...
Luksemburg
Malta
Tchek
Italy
Bulgaria
Romania
Total
3456
6885
1716
901
26340
21511
Payed out
1011
2004
449
231
6589
5183
65
855
26929
28812
6853
19668
9
109
3319
2797
550
676
% (out of Current
total)
rank
29,2
1
29,1
2
26,1
3
25,6
4
25,0
5
24,1
6
14,0
12,7
12,3
9,7
8,0
3,4
22
23
24
25
26
27
THANK YOU !
QUESTIONS?
www.kik.ee/en
Background: wastewater collecting
areas (WWCA)
• WWCA and its nominal pollution load serves as a bases for investments
prioritization and projects selection
• WWCA-s were determined in 2007 by the Ministry of Environment in
collaboration with local authorities
• In Estonia there are 505 wastewater collecting areas (WWCA):
– 60 WWCA bigger than 2000 pe;
– 445 WWCA smaller than 2000 pe;
Background: water companies and
WWTP
• Water companies:
– approximately 250 water companies, owned by local municipalities
– Water-company and its operation area must by approved by local
municipality, when company serves over 50 clients.
Estonia has approximately 850 wastewater treatments plants (WWTP):
6 WWTP over 100 000 pe:
Tallinn; Tartu, Narva, Kohtla-Järve, Pärnu, Rakvere
12 WWTP over 10 000 pe (mainly 20 000-50 000 pe):
Võru, Valga, Põlva, Viljandi, Jõgeva, Põltsamaa, Paide, Rapla, Haapsalu,
Kuressaare, Paldiski, Tapa, ;
31 WWTP 2000 -10 000 pe;
800 WWTP under 2000 pe (approx. 70% 200-300 pe, residual are small private
WWTP);
Environmental Programme: 7 branches
1.
2.
3.
4.
5.
6.
7.
Water management (approx. 50% of available funds)
Waste management
Environmental management
Wildlife preservation
Environmental awareness
Forestry
Fishery
+ County projects (approx. 20 000 €)
+ co- financing (3-4 INTERREG projects, annually)
EP for water management...
...is divided into 5 subprograms:
•
•
•
•
•
Drinking water
(approx 1 million €)
Wastewater
(approx 1 million €)
Rehabilitation of water bodies (approx 1 million €)
Residual pollution
R&D