This Regulation establishes the Cohesion Fund which part-finances action in the fields of the environment and transport infrastructure of common interest with a view to promoting economic and social cohesion and solidarity between Member States.
Act concerning the conditions of accession of the Czech Republic, the Republic of Estonia, the Republic of Cyprus, the Republic of Latvia, the Republic of Lithuania, the Republic of Hungary, the Republic of Malta, the Republic of Poland, the Republic of Slovenia and the Slovak Republic and the adjustments to the Treaties on which the European Union is founded- Annex II: List referred to in Article 20 of the Act of Accession - 15. Regional Policy and coordination of structural instruments [OJ L 236 of 23.9.2003]
The Cohesion Fund aims to strengthen the economic and social cohesion of the Community through the balanced financing of projects, technically and financially independent project stages and groups of projects forming a coherent whole, in the fields of the environment and trans-European transport infrastructure networks.
The Cohesion Fund also contributes to preliminary studies related to such projects and their implementation, as well as technical support measures such as comparative studies, impact studies, monitoring and, since entry into force of Regulation (EC) No 1264/1999, publicity and information campaigns.
All projects financed must be compatible with the Treaties and instruments adopted under them and with Community policies, especially those concerned with protection of the environment, transport, trans-European networks, competition and the award of public contracts.
Eligible Member States
Eligibility is restricted to Member States whose per capita gross national product (GNP) is less than 90 % of the Community average and which have a programme designed to achieve the conditions of economic convergence as set out in Article 104 of the Treaty establishing the European Community. At the moment Greece, Spain, Ireland and Portugal are eligible to benefit from the Cohesion Fund. Following enlargement, the 10 new EU Member States are also eligible.
Suspension of eligibility
If the GNP of a Member State benefiting from the Cohesion Fund rises above the 90 % threshold, it may no longer receive funding for new projects or new stages of a project. Accordingly, Regulation (EC) No 1264/1999 provides for a mid-term review before the end of 2003, based on per capita GNP. When this review establishes that a Member State is no longer eligible, financial support from the Cohesion Fund ceases. It was established following the 2003 review that Ireland was no longer eligible under the Cohesion Fund from 1 January 2004.
The conditionality procedure has been changed to allow the Commission to alert the Council if a Member State fails to fulfil its obligations under the stability and convergence programme and allows its public deficit to exceed 3 %, without suspending financing pending the return of until the deficit to 3 %.
Where financing is to be suspended, the Council may exceptionally decide to defer suspension in the case of projects directly affecting more than one Member State.
Regulation (EC) No 1264/1999 sets the total resources available for commitments for 2000-06 at EUR 18 billion at 1999 prices. The Act concerning the conditions of accession of the ten new Member States grants a total of EUR 7.59 billion in commitment appropriations at 1999 prices for those countries between 1 May 2004 and 31 December 2006.
How the overall resources of the Fund are allocated among the Member States depends on a number of criteria: each country's population and area, its per capita GNP and socio-economic factors such as the infrastructure it has. However, the total amount that these Member States receive from the Cohesion Fund each year, together with the assistance they receive from the Structural Funds, may not exceed 4 % of their GDP.
FINANCING OF PROJECTS
Approval of projects
The Member States submit their applications for assistance for projects to the European Commission. Applications must contain the information specified in the Regulation (the body responsible for implementing the project, a project description, cost - the total cost may not be less than EUR 10 million -, location, investment timetable, assessment of the impact on employment and the environment, and information on public procurement).
Applications must also comply with certain criteria designed to ensure the quality of projects (generation of medium-term economic and social benefits commensurate with the resources deployed, conformity with the priorities established by the Member States, significant and balanced contribution to Community policies on the environment - including the "polluter pays" principle - and trans-European networks, and consistency with other Community structural measures).
Rate of assistance
The Cohesion Fund contributes a maximum of between 80 % and 85 % of public or equivalent expenditure on projects. However, since 1 January 2000 the Regulation states that it is possible to reduce this rate to take account of any revenue generated by the project and any application of the "polluter pays" principle.
Where projects generate income, as in the case of infrastructure which users pay directly to use and productive investments in the environment sector, the Commission takes account of the income generated when calculating the assistance to be granted by the Cohesion Fund.
Exceptionally, the full cost of preliminary studies and technical support measures may be financed. However, the total expenditure thus incurred may not exceed 0.5 % of the total resources of the Fund.
Overlapping of assistance
No item of expenditure may receive assistance from both the Cohesion Fund and a Structural Fund at the same time. Assistance from the Cohesion Fund, the Structural Funds and other Community aid may not exceed 90 % of the total expenditure on a project.
Appropriations are committed either by committing 80 % in the grant decision and the 20 % balance later - a "single" undertaking - or, in the case of projects receiving assistance of more than 50 million euros, in annual instalments. The Commission may in appropriate cases commit in one year only the total amount of assistance granted in its Decision.
To qualify for reimbursement, expenditure must have been incurred by the Member State after the date on which the Commission receives the relevant application. A 20 % advance (pre-financing) is paid after the signing of substantial public contracts. Interim payments made after the initial advance must also be closely linked to implementation of the project.
Regulation (EC) No 1264/1999 clearly states that the financial control of projects is primarily the responsibility of the Member States. To ensure that the Fund is used in accordance with the principle of sound financial management, they must check that the projects financed are managed correctly, prevent and detect irregularities and recover any amounts lost as a result of irregularities.
The Commission in turn ensures that the Member States' management and auditing systems are functioning smoothly. To that end it may carry out on-the-spot checks, in accordance with the rules on cooperation in Annex II to the Regulation, on systems and projects financed by the Fund. It may also ask Member States to verify the correctness of transactions.
Appraisal, monitoring and evaluation
Before a project is approved, the Commission and the Member States must make an appraisal to assess whether it complies with the Regulation. During its implementation they must make any adjustments needed, and after its completion they must evaluate whether and to what extent the project has achieved its original objectives.
IMPLEMENTATION OF REGULATION (EC) No 1164/94
Council Regulation (EC) No 1265/1999, adopted on the basis of Regulation (EC) No 1164/94, makes a number of changes to the Regulation's implementing rules with a view to improving the use of the Cohesion Fund. The main changes concern the following aspects:
- The definitions of "project", "stages of a project" and "groups of projects" are further clarified
- ex-ante evaluation of projects is made more rigorous in that the Regulation now requires Member States to carry out a more complete study of the alternatives to, and the environmental impact of, the project;
- Financial management: in order to simplify the way in which funds are committed, the Regulation now requires commitments to be made at the start of each financial year. Furthermore, payments must now be made as follows: a single payment in advance of up to 20 % of the assistance from the Fund, followed by interim payments to refund the expenditure certified and actually paid. A balance, usually of 20 %, is paid once the project has been completed;
- Financial corrections: the Regulation sets out clearly the arrangements for financial corrections and introduces various measures to penalise failure to complete projects,
- All Cohesion Fund transactions are to be carried out in euros.
Information and publicity
The Commission must present an annual report on the activities of the Fund and the European Parliament must give its opinion on this report. The Commission must also ensure that Member States give adequate publicity to the measures financed and the possibilities created by the measures.
Review of Regulation (EC) No 1164/94
The Council must review the Regulation by 31 December 2006 at the latest, acting on a proposal from the Commission and on the basis of the assent procedure.
|Act||Entry into force||Deadline for transposition in the Member States||Official Journal|
|Regulation (EC) No 1164/94||26.5.1994||-||OJ L 130 of 25.5.1994|
|Amending act(s)||Entry into force||Deadline for transposition in the Member States||Official Journal|
|Regulation (EC) No 1264/1999||1.1.2000||-||OJ L 161 of 26.6.1999|
|Regulation (EC) No 1265/1999||1.1.2000||-||OJ L 161 of 26.6.1999|
More information on the reform of the structural policy can be found on the website of the Directorate-General for Regional Policy.