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The Connecting Europe Facility Financing the TEN-T infrastructure

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Presentation on theme: "The Connecting Europe Facility Financing the TEN-T infrastructure"— Presentation transcript:

1 The Connecting Europe Facility Financing the TEN-T infrastructure
Stephan Ouaki European Commission DG Mobility and Transport Head of Unit B4 – Connecting Europe, Infrastructure investments strategies Valencia – 24 October 2012

2 Connecting Europe Facility One instrument – three sectors
Transport Guidelines Energy Guidelines Telecom Guidelines Financing framework Sectoral policy frameworks (setting priorities for 2020, 2030, 2050) The "European Infrastructure Package" (European Commission proposal, October 2011) 2

3 Revision of the TEN-T Guidelines
Revised TEN-T map – two layers approach Comprehensive network will cover entire EU, accessibility for all citizens and businesses Core network: a selection of the most important parts of the network to be realised as a priority until 2030 Clear technical requirements and standards with clear implementation deadlines 2030 (core network) and 2050 (comprehensive network) Telematic applications for a fully interoperable network ERTMS, SESAR, ITS, RIS, VTMIS Core network corridors as a means for reinforced coordination of TEN-T infrastructure development 10 core network corridors

4 Today: still a patchwork….
PP's state of implementation 2012 Priority Projects (PP) design

5 By 2030: the network The TEN-T core network (rail freight)

6 Core network Corridors
Governance structures for coordinated implementation Corridor Work Plan - coherent, demand-driven project implementation; - efficient infrastructure use Deployment of interoperable traffic management systems Removal of physical, technical, operational and administrative barriers between and within modes Coordination of infrastructure planning and exploitation: efficient multimodal transport and services Improving administrative and technical capacity « European coordinators » in a pivotal role Development and implementation (investment planning, costs estimation, timeline, measures for deployment of new technologies)

7 10 core network corridors

8 European transport system Investment needs
€1.5 trillion of investment needs by 2030 TEN-T alone: €500 billion by 2020 TEN-T Core Network: €250 billion by 2020 Estimate based on discussions with MS on their project portfolio 8

9 Connecting Europe Facility Budget (EC MFF proposal June 2011)
€31.7 billion (transport funds) €19.7bn: grant component (estimate) With an estimated average co-funding rate of 20% could generate €98.5bn €2bn: innovative financial instruments (estimate of market take-up) With an estimate leverage of up to 15 or 20 could generate total investments of €30bn to €40bn €10bn to be transferred from the Cohesion Fund (grants) To be allocated exclusively to projects in Cohesion Fund eligible Member States With an estimated average co-funding rate of 85% could generate €11.5bn €140bn to €150bn: total amount of investments that could be generated

10 CEF transport budget allocation
80 – 85 % of for pre-identified projects listed in CEF Annex horizontal priorities, sections on 10 core network corridors, other important core network sections 15 – 20 % for other projects on the core and comprehensive networks

11 CEF funds: Centralised management
Project selection and resources allocation (EC) !!but NOT the organisation of public procurement and awarding of contracts Same criteria for project proposals coming from all Member States (quality, maturity, EU added value) Concentration on projects with high EU added value (cross-border missing links, boosting multimodality, ensuring interoperability of networks across borders and modes) Increased efficiency of EU budget spending (competition, "use-it-or lose-it" principle) 11

12 CEF grants (1): Centralised management procedures
Work programmes (multiannual & annual) Calls for projects Info Days (TEN-T EA + EC) Application (paperless via TENtec; TEN-T EA support) Selection (external experts + TEN-T EA + EC) Funding Decisions for selected projects (EC) Monitoring of project implementation (TEN-T EA + EC) "Use it or lose it" €10 bn Cohesion Fund: exclusively dedicated WP and calls, more favourable co-funding rates (≈ CF rates) 12

13 CEF grants (3): Co-funding rates
Types of Projects All Member States Member States eligible for Cohesion Fund (a) Studies (all) 50% 80-85% (b)Works on Rail Cross border 40% Bottleneck 30% Other projects of common interest 20% Inland waterways Inland transport connections to ports and airports (rail and road) Development of ports Development of multi-modal platforms Reduce rail freight noise by retrofitting of existing rolling stock Freight transport services Secure parkings on road core network Motorways of the sea 30% (Council proposal) Traffic management systems ERTMS (rail) (+ RIS & VTMIS – Council proposal) Other modes Cross border road sections none (Council proposed 10%) New technologies and innovation for all modes of transport (Council proposal) 13

14 CEF financial instruments (1): forms
2 types of financial instruments: Equity Risk-sharing instruments to provide loans and/or guarantees (such as LGTT or Project Bonds) Implementation by financial partners, such as EIB, in accordance with Financial Regulation Combination of innovative financial instruments (e.g. Project bonds) and EU direct support (i.e. grants) to optimise the impact of financing Possibility for MS (directly or through Structural Funds), other EU funds and/or investors to top up the CEF financial instruments 14

15 CEF financial instruments (2): implementation
Working with a financial partner such as EIB Details of instruments set up in cooperation agreement with financial partner Budgetary transfer to the financial partner decided every year based on expected project pipeline and needs Work programme but no calls project promoters contact the financial partner directly Financial partner decides on economic and financial viability of project to be supported (first come first serve basis, but efforts should be made to ensure sectoral and gradual geographical diversification) Project bonds: Lessons learned from LGTT and RSFF EIB should be the partner for Project bonds Other financial institutions are not excluded

16 Role of Regional and Local Authorities
Support for: preparation of project pipeline (including as part of Cohesion Policy National Operational Programmes) planning and coordination of project implementation with other TEN-T projects (particularly on core network corridors /"Corridor platforms") synergy exploitation planning (energy, broadband works) mobilisation of project promoters acceleration of work permits granting environmental impact studies communication with the local communities impacted If also project promoters/beneficiaries + adequate planning/commitment of budgetary resources

17 Europe 2020 Project Bond Initiative: A pilot phase in 2012-2013
Project bonds to be an integral part of the CEF Past experience (especially LGTT) shows time lag for banks and project sponsors to incorporate complex new ideas into their financing structures In the case of project bonds also have to allow investors (pension funds, insurers) time to analyse and adapt asset allocation Pilot phase in order to start this phase now rather than in 2014 Funded by reallocating up to EUR 200 million from TEN-T, up to EUR 10 million from TEN-E and up to EUR 20 million from CIP ICT budget lines Aim to support 5-10 projects in transport, energy and/or ICT

18 Project bonds: how does it work?
Project Company will divide its debt into two layers: A Senior tranche, which will be issued as Project Bonds and placed with institutional investors (insurance companies, pension funds, etc.) A (smaller) Subordinated tranche, which would be underwritten by the Commission and the EIB, in a funded (loan) or unfunded (guarantee) form. Subordinated debt maximum 20% of total debt EIB and EU to receive a fee and/or credit margin SPV Project Costs Project Bonds Target rating minimum A- Bond Issue and underwriting Project Bond Investor EIB Sub-debt Equity & Quasi-equity up to 20% of total Bond issue A mechanism to “credit enhance” senior debt and thus attract capital market investors European Investment Bank 18

19 Structural funds: complementary EU financial support for transport infrastructure development
Cohesion Fund (CF) €34 billion (out of which €10 billion within CEF) for transport infrastructure in eligible Member States TEN-T sections (both core and comprehensive) Up to 85% of eligible costs European Regional Development Fund (ERDF/FESR) A part of total ERDF €170 billion to be dedicated to transport infrastructure Connecting secondary and tertiary nodes to TEN-T infrastructure Less developed regions: up to 85% of eligible costs Transition regions: up to 75% of eligible costs

20 Connecting Europe Facility Regulation State of play
19 October 2011 – Commission proposal 7 June 2012 – TTE Council (Transport) adopted a Partial General Approach supportive of the CEF approach; limited number of outstanding issues: amounts (discussed in MFF context), €10 bn to be transferred from the Cohesion Fund, and financial instruments (mostly to align to general Financial Regulation) 18-19 July 2012 – CoR Opinion (Mr Zagar) Generally supportive (constructive amendment on the €10bn) A number of requests for differential treatment of certain categories of regions 10 October 2012 – EP REGI Committee Opinion Generally supportive (amendments on €10 bn to be voted on 26 Nov) 12 October 2012 – EP BUDG Committee MFF Report Clear strong support for providing high CEF budget (€50 bn EC proposal or more) 27 November 2012 – EP TRAN Committee to adopt Reports on CEF (and TEN-T Guidelines) Expected general strong support to Commission's proposals end November 2012 – European Council expected to adopt political orientation for EU budget MFF Budget for CEF will be determined January 2013 – Expected EP first reading on CEF (and TEN-T Guidelines) First half 2013 – trialogues EP, EC, Council Mid 2013/end 2013 – Expected adoption of CEF (and TEN-T Guidelines) Regulation

21 tm
Thank you for your kind attention! tm

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