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The Commision is examining ways in which the Community can support large-scale infrastructure projects of European interest. There are major European projects (Paris-Cologne TGV link, Milan- Ulm rail link via the Spluga tunnel, road and rail link with Scandinavia, broadband telecommuncations network, etc.) which are generally recognized as being beneficial but which have encountered numerous difficulties. In the context of its financial engineering activities (see Memo P-96), the Commission recently submitted to the Council a Communication(1)in which it analyses this problem and presents a range of instruments which the Community could use in order to get these major projects off the ground. The Commission is proposing that the Council should adopt a Decision setting out the broad lines for Community action in this sphere. Large-scale infrastructure projects offer numerous benefits for the Community. They help to contribute to the consolidation of the internal market, the integration of the peripheral regions and, as a result of the snowball effect which they have on the development of these regions, they help to make the Community more cohesive. However, these projects run up against difficulties as a result of the diversity of interests at stake, the high costs and the substantial risks involved. In view of the financial situation in Europe where the national authorities are concerned to limit their budgetary commitments and where private capital is comparatively abundant, efforts are being made to rethink the way in which such projects are financed, and to make greater recourse to the private sector than has been usual hitherto. In this context, with the support it has received from the Member States' Transport Ministers, the European Parliament and both sides of industry, the Commission intends to facilitate the financing of large-scale infrastructure projects of European interest. In so doing, it is responding to the needs expressed by the various parties involved in carrying out such projects. .../... (1) COM(86)722 - 2 - ] The Commission considers that the Community can and must play an important role, and is proposing measures primarily designed : 1. to create the right environment for major projects; 2. to give the Community new ways of intervening. 1. Creating the right environment for major projects Three aspects are involved : a) Contributing to the preparatory phase of projects This phase, which will demonstrate through appropriate studies whether a project is viable, will determine whether or not the private sector becomes involved, and is therefore essential to the success of the operation. It is unlikely that the private sector will wish to pay for this phase completely because of uncertainties which may lead to the abandonment of the project. Through a grant, albeit small, the Community can play a seeding role and act as a level for private finance. The infrastructure concerned may be in the transport, telecommunications, energy or environment sectors. b) Contributing to the financial launching of projects Once a project's viability has been demonstrated, and a decision has been taken to carry it out, the right financial package must be arranged before the work is started. There are many advantages in raising a large volume of equity capital. This signals a project's viability to the banking and financial markets. An equity contribution by the Community, reserved for projects declared to be of European interest, would have a seeding role and act as a lever. c) Publicly demonstrating their benefits : Declaration of European interest A declaration of European interest would give the project concerned, whose viability has been demonstrated, a special character and access to: - a Community contribution to the financial launching of projects, as mentioned above; .../... - 3 - - an improved financial environment. There should be freedom of movement within the Community for securities issued by promoters of major infrastructure projects, in order to make the securities more attractive to the public. (The Directive adopted by the Council on 17 November 1986 liberalizes such operations in Community law); - specific assistance, in particular from the EIB. This declaration would be made by the Commission after examining projects submitted to it either directly or through a Member State. Only projects having substantial recourse to private funds and complying with the objectives and criteria laid down by the Community programmes for the areas which they concern would qualify for such a declaration. 2. Giving the Community new ways of intervening EIB, NCI and ECSC loans require first-class guarantees which neither Member States nor promoters are willing or able to provide in certain cases. The Commission is therefore proposing that the Community should have new ways of intervening in the case of projects declared to be of European interest. It is suggesting in particular that an appropriate guarantee should be given under the Community budget to specific EIB loans in order to enable the Community to provide assistance towards infrastructure projects using a technique partly akin to "project financing". The EIB would be asked to offer non-recourse of limited-recourse loans to the promoters of projects declared to be of European interest. Repayment of the loans would be backed solely by the revenue from the project. The budget guarantee would be limited and conditional. It would be granted case by case by the Commission up to an overall ceiling set by the Council, which would decide to raise it on a proposal from the Commission. A "European Infrastructure Agency" Even if all the proposed measures were adopted, this would not fully overcome the difficulties of coordinating the various parties involved, particularly when a project concerns more than one State. Consequently, it might be necessary to establish an Infrastructure Agency (or Agencies), modelled on the American "Authorities", e.g. the New York and New Jersey Port Authority, responsible for joint decision-making, and for owning and financing major projects. The Commission is not yet proposing an operational arrangement. By putting forward in its paper the idea of a European Agency (or Agencies), it hopes to spark off a wide-ranging debate about the feasibility and advisibility of this. Only once the discussions have taken place and in the light of the initial action in this sphere will it submit, where appropriate, the necessary implementation measures.