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  • Blending EU Structural and Investment Funds and PPPs in the

    2014-2020 Programming Period Guidance Note

    European PPP Exper t ise Centre • European PPP Exper t ise Centre • European PPP Exper t ise Centre

    January 2016

  • Blending EU Structural and Investment Funds and PPPs in the 2014-2020

    Programming Period Guidance Note

    January 2016

  • European PPP Expertise Centre Guidance note on blending ESI Funds and PPPs

    January 2016 page 2/93

    Terms of Use of this Publication

    The European PPP Expertise Centre (EPEC) is an initiative of the European Investment Bank (EIB), involving the European Commission, Member States of the European Union, Candidate States and other specified states. For more information about EPEC and its membership, please visit www.eib.org/epec.

    This publication has been prepared to contribute to and stimulate discussions on public-private partnerships (PPPs) as well as to foster the diffusion of best practice in this area.

    The findings, analyses, interpretations and conclusions contained in this publication do not necessarily reflect the views or policies of the EIB or any other EPEC member. No EPEC member, including the EIB, accepts any responsibility for the accuracy of the information contained in this publication or any liability for any consequences arising from its use. Reliance on the information provided in this publication is therefore at the sole risk of the user.

    EPEC authorises the users of this publication to access, download, display, reproduce and print its content subject to the following conditions: (i) when using the content of this document, users should attribute the source of the material and (ii) under no circumstances should there be commercial exploitation of this document or its content.

    http://www.eib.org/epec

  • European PPP Expertise Centre Guidance note on blending ESI Funds and PPPs

    January 2016 page 3/93

    Table of contents

    Executive summary ................................................................................................. 10

    1 Introduction ...................................................................................................... 15 1.1 Background .............................................................................................................. 15 1.2 Purpose and focus of this guidance note ................................................................. 15 1.3 Structure of this guidance note ................................................................................ 16

    2 Overview of EU funding .................................................................................... 17 2.1 The multiannual financial framework........................................................................ 17 2.2 European Structural and Investment Funds ............................................................ 17 2.3 Some key terms and principles ................................................................................ 19 2.4 Partnership Agreements and Operational Programmes .......................................... 19 2.5 Managing Authorities ............................................................................................... 20 2.6 Allocating grants ....................................................................................................... 20

    3 The concept of blending in PPPs...................................................................... 22 3.1 Rationale for blending .............................................................................................. 22 3.2 Blended structures and their limitations under the previous regulations ................. 23 3.3 Past blending activity and implementation issues .................................................... 27 3.4 Impact of the new regulations .................................................................................. 27

    4 Legal and administrative framework for Blended Projects ................................ 29 4.1 Common Provisions Regulation on ESI Funds ........................................................ 29 4.2 Relevant delegated acts ........................................................................................... 30 4.3 State aid issues in the context of EU-supported PPP projects ................................ 30 4.4 Eurostat issues in the context of EU-supported projects ......................................... 31 4.5 Issues related to the procurement of PPPs ............................................................. 32

    5 PPP-specific provisions of the CPR .................................................................. 33 5.1 Beneficiary of ESI Funds for Blended Projects ........................................................ 33

    5.1.1 Who can be the beneficiary of a grant using ESI Funds? ........................... 33 5.1.2 Procuring authority as beneficiary ............................................................... 33 5.1.3 Conditions for the private partner to be the beneficiary .............................. 34 5.1.4 Replacement of the private partner beneficiary .......................................... 34 5.1.5 When can a grant Decision be received? ................................................... 35

    5.2 Eligibility of project expenditure in Blended Projects ............................................... 37 5.2.1 When expenditure is considered eligible ..................................................... 37 5.2.2 Escrow account ........................................................................................... 38 5.2.3 What type of expenditure is eligible? .......................................................... 41

    6 The PPP project blending cycle ........................................................................ 43 6.1 Importance of sound project preparation in the grant application process .............. 43 6.2 Potential sequence of activities in the project blending cycle .................................. 44

    6.2.1 Overview of the PPP project cycle .............................................................. 44 6.2.2 Expected blending activities in the PPP project cycle phases .................... 44

    7 Key provisions of the CPR relevant to revenue-generating Blended Projects ... 52 7.1 Main factors that determine the amount of grant funding ........................................ 52 7.2 Revenue-generating projects and determining the funding gap .............................. 53

    7.2.1 Relevant regulations .................................................................................... 53 7.2.2 What is a revenue-generating project? ....................................................... 53 7.2.3 How is the net revenue impact on eligible costs determined? .................... 55

  • European PPP Expertise Centre Guidance note on blending ESI Funds and PPPs

    January 2016 page 4/93

    7.2.4 The flat-rate method .................................................................................... 55 7.2.5 The decreased co-financing rate method .................................................... 56 7.2.6 The discounted net revenue method ........................................................... 56 7.2.7 Determining the EU grant ............................................................................ 61

    8 Practical considerations in planning, procuring and managing a Blended Project 64

    8.1 Description of the Blended Project illustration case ................................................. 64 8.2 When to secure the grant approval? ........................................................................ 65 8.3 What is the impact of different PPP structures on the level of the grant?................ 67 8.4 What is the expected grant amount if the project is expected to be revenue-

    generating? .............................................................................................................. 68 8.4.1 Calculation of the grant using the flat-rate method ..................................... 69 8.4.2 Calculation of the grant using the discounted net revenue method ............ 69

    8.5 Who will be the beneficiary of the grant? ................................................................. 73

    9 Particular issues regarding Major Projects ....................................................... 74 9.1 Relevant regulations ................................................................................................ 74 9.2 Securing a grant from ESI Funds for a Major Project .............................................. 75

    9.2.1 Grants application requirements ................................................................. 75 9.2.2 Assessment of grant applications................................................................ 77

    10 Getting technical support .................................................................................. 80 10.1 JASPERS ................................................................................................................. 80 10.2 EPEC ........................................................................................................................ 81 10.3 The Connecting Europe Facility ............................................................................... 81

    11 Conclusion ....................................................................................................... 83

    Annex I – Blended Project illustration case calculation tables ............................