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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}
EN EN
Contents
1. Introduction .................................................................................................................. 3
2. The trans-European networks: state of play at the end of 2006................................... 4
2.1. The trans-European transport networks ....................................................................... 4
2.2. The trans-European energy networks........................................................................... 6
2.3. The trans-European telecommunications networks ..................................................... 6
3. The aspects covered by the Steering Group................................................................. 7
3.1. Synergies between trans-European networks............................................................... 7
3.2. Respect for the environment and the trans-European networks................................... 9
3.3. Exploiting new technologies in the trans-European transport network ..................... 10
3.4. 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
EN 2 EN
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
Articles 154, 155 and 156 of the Treaty.
2
Guidelines for growth and jobs (2005-2008) No 9, 10, 11 and 16.
EN 3 EN
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.
3
Article 154 of the Treaty.
4
Decision No 1692/96/EC (OJ L 228, 9.9.1996).
5
COM(2007) 32, 31.1.2007
EN 4 EN
During the 2000-2006 financial programming period, 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.
6
Regulation (EC) No 807/2004 of 21 April 2004 (OJ L 143, 30.4.2004).
7
EU-15 (2000-2004): 24 301 million + EU-25 (2005-2006): 6 821 and 6 850 million.
8
COM(2006) 245.
9
Article 19(2)(a) and (c) of Decision No 884/2004/EC (OJ L 201, 7.6.2004).
EN 5 EN
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.
10
Decision No 1364/2006/EC (OJ L 262, 22.9.2006).
EN 6 EN
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
Commission Communication COM(2006) 129, 20.3.2006.
12
Some Member States have introduced a legal obligation to seek synergy, in particular Germany
(Bundesnaturschutzgesetz, paragraph 2, Bündelungsgebot)
EN 7 EN
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.
Valuable ideas could be explored to interconnect electricity networks: laying
high-voltage cables along the banks of canals and rivers, 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.
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.
EN 8 EN
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.
14
Article 8 of the abovementioned Decision No 884/2004/EC.
15
Strategic Environmental Assessment (SEA) Directive (2001/42/EC) for plan and programme
assessment.
16
Environmental Impact Assessment (EIA) Directive (85/337/EEC as amended by Directives 97/11/EC
and 2003/35/EC) for project assessment.
17
Birds Directive (79/409/EEC), Habitats Directive (92/43/EEC) and Water Framework Directive
(2000/60/EC).
EN 9 EN
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.
EN 10 EN
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.
EN 11 EN
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.
EN 12 EN
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
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".
21
A senior loan or "senior debt" is a debt which enjoys specific guarantees and takes priority over other
debts ("junior debts") as regards repayment.
22
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.
23
"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.
EN 13 EN
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.
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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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