Formats envisaged in the Common Provisions Regulation for

Formats envisaged in the Common Provisions Regulation for major projects 11 th meeting of the Expert Group on Delegated and Implementing Acts for the ESI Funds 25 June 2013

SECOND DRAFT OF APPLICATION FORM - MAIN CHANGES • GENERAL: • - THE ORDER OF SECTIONS CHANGED AS DISCUSSED AT 1 ST MEETING • A. THE BODY RESPONSIBLE FOR IMPLEMENTATION OF THE MAJOR PROJECT, AND ITS CAPACITY Issue raised MS which raised the issue Re-consider section of capacity PL, EE, RO, CRO, EL, HU of the body responsible, avoid duplications with other parts of the application form (AF) Change in the AF Capacity of the body responsible is specifically mentioned in CPR Re-drafted for better clarity and to ensure no duplication of information requested; more guidance to be provided in application form guidelines

B. A DESCRIPTION OF THE INVESTMENT AND ITS LOCATION Issue raised MS which raised the issue Change in the AF Avoid duplication or requesting unnecessary information General remark 2 questions instead of 5 on project identification See above Categorisation table: clarified and simplified More guidance on what information to provide in project description EL, HU Re-drafted instruction for project description More clarity on how to present CZ, CRO information on projects in phases Clarifications provided, additional questions included to cover for different scenarios Move demand analysis to section on feasibility studies EE, BG, CRO, CZ Agreed; demand analysis now in section D – feasibility studies Add justification of project scope and size in the demand analysis PL Agreed; added in D 2 (demand analysis)

C. TOTAL COST AND TOTAL ELIGIBLE COST Issue raised MS which raised the issue Change in the AF Clarifications needed for project budget (headings and explanation points) EE, PT, CRO, HU Clarifications provided, 10% limit on land purchase added to explanation points, new column added with % of total eligible costs for all budget items, explanation box added for providing additional information; info re: exchange rate and reference moved to section C

D. FEASIBILITY STUDIES CARRIED OUT, INCLUDING OPTION ANALYSIS, AND THE RESULTS Issue raised MS which raised the issue Change in the AF Avoid duplication or unnecessary information requested General Feasibility studies information limited to institutional, technical, environmental and risks NOTE: Instruction to be revised to be in line with information requested in sub-sections Clarify information required for feasibility studies, demand analysis and option analysis PL, EE Clarifications provided in section D

E. A COST-BENEFIT ANALYSIS, INCLUDING A FINANCIAL AND AN ECONOMIC ANALYSIS, AND A RISK ASSESSMENT Issue raised MS which raised the issue Change in the AF Avoid duplication or unnecessary information requested General Instruction for financial and economic analysis clarified and aligned; questions duplicating information requested are deleted Imprecise definitions of financial indicators PL Agreed; definitions provided in E. 1. 3. , footnotes Erase text box concerning financial profitability PL Aligned to Implementing Act on CBA methodology Re-introduce information on jobs created during implementation phase EL Agreed; info maintained in E. 2. 4

F. AN ANALYSIS OF THE ENVIRONMENTAL IMPACT Issue raised MS which raised the issue Change in the AF Remove/clarify the condition 'Projects in construction phase and without development consent at the time of their submission to the European Commission are not admissible by the Commission' PL, PT, EE, LV, CZ Clarification: development consent is needed only if the project is in construction, where building permit is required (requirement of the legislation) If the project is not in construction and there is no development consent the project can be admissible What if more than one development consent is required? The question concerns 'at least one works contract' Add in section F. 3. 2. 2. the information referred to in Article 4. 4 of the Directive on how the determination made by the competent authorities is made available to the public PL Agreed; question added in F. 3. 2. 2. (d) Re-structure F. 5. Additional environmental integration measures to cover both measures resulting from EIA and any additional measures PL Agreed (now two sub-questions in section F. 5. ) In F. 4. 1. 'Is the project likely to have General significant negative effects on sites included or intended to be included in the NATURA 2000 network' add… Question added 'did the competent authority request the performance of an Appropriate Assessment for the project in F. 4. 1.

F. AN ANALYSIS OF THE ENVIRONMENTAL IMPACT, TAKING INTO ACCOUNT CLIMATE CHANGE Issue raised MS which raised the issue Change in the AF Clearer instruction/guidance needed for filling in climate change section PL, EL Agreed; additional guidance provided in section F

G. STATE AID Issue raised MS which raised the issue Change in the AF No reference to SGEI decision PL Agreed; reference provided table in section G

H. THE FINANCING PLAN Issue raised MS which raised the issue Change in the AF Clarify reference to flat rates PL Clarify reference to state aid PL In 'decreased co-financing rate method' add words 'of the priority axis' Time line in the annual financing plan of Union contribution should be extended until 2023 LT New wording 'Net revenue flat rate as specified in the delegated act establishing flat rates for sectors or subsectors' in H. 1. 1. (relevant method) Clarified; the practice of adjusting the co-financing rate according to state aid rules will need to continue Agreed; added in H. 1. 1. (relevant method) EE, LV, LT, EL Title changed to annual plan of total eligible expenditure to be declared to the Commission until 2023 Remove result indicators PL, EE, RO, BG Agreed; table re-structured, result indicators are removed

Format for Notification • - Changes for Application Form made also in Notification (where same information is required) • - Minor wording suggestions taken on board

IMPLEMENTING ACT ON THE GUIDANCE FOR THE METHODOLOGY FOR THE COST-BENEFIT ANALYSIS OF MAJOR PROJECTS 11 th meeting of the Expert Group on Delegated and Implementing Acts for the ESI Funds 25 June 2013

OBJECTIVE OF THE IMPLEMENTING ACT • - Implementing Act • to present a set of working rules to ensure consistency and rigour in preparing CBAs and in their assessment • to set out a methodology for the calculation on discounted net revenue (in accordance with Article 54 CPR) • - Practical guide to CBA (update of 2008 guide) • to provide project promoters with practice-oriented methodological guidance for the preparation of CBA

MAIN ELEMENTS • 1 GENERAL PRINCIPLES • Objectives of CBA • Methodological principles • Elements of CBA • 2 STAGES OF CBA • 1) Presentation of the socio-economic context and definition of objectives; • • • 2) Identification of the project; 3) Results of feasibility studies with demand option analysis; 4) Financial analysis; 5) Economic analysis; 6) Risk assessment.

STAGES OF CBA • 2. 1 Presentation of the socio-economic context and definition of objectives, identification of the project, feasibility of the project with demand option analysis • 2. 2 Financial analysis • • • - Discounted cash flow methodology (5% FDR in real terms) - Other principles: incremental method, reference periods by sector, residual value - Data required: Investment costs, Re-investment costs, Replacement costs, Operating costs, Revenues (plus polluter-pays principle, full-cost recovery, affordability), Source of funding - Results of the financial analysis: evaluation of financial profitability, determination of the contribution from the Funds, financial sustainability - Financial analysis in Public Private Partnership

STAGES OF CBA – cont'ed 2. 3 Economic analysis - Key steps of economic analysis: conversion of market to shadow prices, fiscal corrections, corrections for externalities, discounting of the estimated costs and benefits (social discount rate of 5, 5% and 3, 5%) - Calculation of the economic performance indicators (ENPV, ERR and B/C) - The minimum economic benefits by sector to be considered - Climate change considerations - Application of cost-effectiveness analysis 2. 4 Risk assessment - Sensitivity analysis - Qualitative risk analysis including measures for risk mitigation - Additional: probability distributions and quantitative risk analysis - The minimum risks to be taken into account

Main changes to CBA methodology 2014 -2020 Implementing Act on CBA 2007 -2013 Working Document No. 4 methodology Reason for change Reference periods provided for all main sectors Reference periods missing for some sectors such as research and innovation, broadband Complete sectoral coverage Typical economic benefits per sector to be considered as a minimum No minimum Ensure consistency and rigour in the economic analysis Cost-effectiveness analysis as an option for certain projects No such option Simplification for certain types of projects, mainly those driven by compliance with EU legislation, where benefits are very difficult to measure Compulsory steps of risk assessment: All steps compulsory, less focus on sensitivity analysis and qualitative risk analysis and non-compulsory steps such as probability distributions and quantitative risk analysis Simplification to focus on qualitative analysis and risk prevention Typical risks per sector to be No minimum considered as a minimum Ensure consistency and rigour in the risk assessment and enhance its value in the process