52010DC0589

[pic] | EUROPEAN COMMISSION |

Brussels, 21.10.2010

COM(2010) 589 final

REPORT FROM THE COMMISSION

ANNUAL REPORT ON THE COHESION FUND (2009) SEC(2010) 1231 final

TABLE OF CONTENTS

1. Financial execution of the 2000-2006 period in 2009 and closure of projects 3

2. Economic environment and conditionality 7

3. Audits and financial corrections 8

4. Irregularities notified by the Member States 11

5. Evaluation 12

6. Information and publicity 13

Regulation (EC) No 1084/2006 establishing a Cohesion Fund and repealing Regulation (EC) No 1164/94 does not require the presentation of an annual report on the Cohesion Fund.

Therefore this report is presented in conformity with Article 14(1) of Regulation (EC) No 1164/1994 and thus covers the implementation during 2009 of Cohesion Fund projects adopted under the 2000-2006 period as well as ex-ISPA projects in the Member States concerned, including Bulgaria and Romania.

As a consequence, this report covers Cohesion Fund operations in the thirteen beneficiary Member States as of end-2006, i.e. Greece, Spain, Portugal, Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia, as well as ex-ISPA projects adopted in the 2000-2006 period in Bulgaria and Romania. It must be recalled that, as a result of economic growth, Ireland has not been eligible since 1 January 2004, nevertheless, on-going Cohesion Fund projects are still to be closed.

Details on the implementation in 2009 of projects adopted under the 2000-2006 period for each Member State are presented in the Annex to this report.

1. FINANCIAL EXECUTION OF THE 2000-2006 PERIOD IN 2009 AND CLOSURE OF PROJECTS

Payments made in 2009 for projects adopted under the 2000-2006 period

Given that all commitments for the Cohesion Fund projects financed under the 2000-2006 programming period have been executed by 31 December 2006, the financial resources available for the Cohesion Fund in 2009 were limited only to payment appropriations.

The 2009 initial budget for the 2000-2006 Cohesion Fund projects amounted to EUR 3,892 million. However, the final budget was reduced to EUR 2,777 million. The cut is justified by significantly better execution in 2008, where payments exceeded the voted budget by nearly 30 %. In order to cover the gap between the available resources and the demand for payments in 2008, transfers have been made from the budget line related to the 2007-2013 Cohesion Fund programmes. This was caused by a lower start-up of the 2007-2013 period and thus in 2008 the Member States opted to balance the delay by focusing on the implementation of the 2000-2006 projects.

In 2009 the trend was reversed and the outstanding 2000-2006 payment appropriations have been transferred to the 2007-2013 Cohesion Fund and ERDF programmes, which allowed for 100 % execution of payments credits for the Cohesion Fund programmes and projects financed under both programming periods. The available appropriations of EUR 2,777 million have been fully executed by the end of 2009, resulting in nearly EUR 300 million more payments made in 2009 when compared with the 2008 execution (EUR 2,489 million).

As far as the ex-ISPA budget lines are concerned, the available appropriations have been executed at 100 %.

At the end of 2009, the average absorption rate (payments vs. commitments) of all current beneficiary countries for both the Cohesion Fund and former ISPA projects was 75.8 %. The low absorption for Bulgaria at the end of 2008 (39.8 %) significantly improved in the course of 2009, resulting in a rate of 56.5 %. The other Member States range between 65.8 % (Poland and Romania) and 92.8 % (Ireland).

Table 1: Implementation of the Cohesion Fund and ex-ISPA payments in 2009 (Euro)

Ex-ISPA | 400.000.000 | +128.969.059 | 528.969.059 | 528.969.059 | - |

Greece | 3.565.195.978 | 2.715.334.857 | 76,2% | 849.861.122 | 23,8% |

Spain | 12.915.179.288 | 10.519.496.170 | 81,5% | 2.395.683.119 | 18,5% |

Ireland | 625.755.407 | 580.710.223 | 92,8% | 45.045.184 | 7,2% |

Portugal | 3.497.201.489 | 2.741.059.557 | 78,4% | 756.141.931 | 21,6% |

TOTAL EU-4 | 20.603.332.162 | 16.556.600.807 | 80,4% | 4.046.731.356 | 19,6% |

Cyprus | 54.014.695 | 40.029.810 | 74,1% | 13.984.885 | 25,9% |

Czech Republic | 1.226.581.086 | 975.579.344 | 79,5% | 251.001.742 | 20,5% |

Estonia | 425.431.731 | 330.768.303 | 77,7% | 94.663.429 | 22,3% |

Hungary | 1.481.998.333 | 1.028.122.934 | 69,4% | 453.875.399 | 30,6% |

Latvia | 713.987.456 | 541.309.058 | 75,8% | 172.553.278 | 24,2% |

Lithuania | 825.354.775 | 661.411.795 | 80,1% | 163.942.980 | 19,9% |

Malta | 21.966.289 | 17.532.611 | 79,8% | 4.433.678 | 20,2% |

Poland | 5.634.539.614 | 3.708.555.930 | 65,8% | 1.925.983.684 | 34,2% |

Slovakia | 766.117.246 | 586.031.109 | 76,5% | 180.086.137 | 23,5% |

Slovenia | 254.197.825 | 202.417.662 | 79,6% | 51.780.164 | 20,4% |

TOTAL EU-10 | 11.404.063.930 | 8.091.758.556 | 71,0% | 3.312.305.376 | 29,0% |

Bulgaria | 876.947.183 | 495.486.300 | 56,5% | 381.460.884 | 43,5% |

Romania | 2.037.250.711 | 1.340.892.809 | 65,8% | 696.357.902 | 34,2% |

TOTAL EU 2 | 2.914.197.894 | 1.836.379.109 | 63,0% | 1.077.818.786 | 37,0% |

TOTAL | 34.921.593.986 | 26.484.738.472 | 75,8% | 8.436.855.518 | 24,2% |

Closure of projects from the 2000-2006 period

At the end of 2009, the total number of closed Cohesion Fund projects for the 2000-2006 period (including ex-ISPA projects) reached 299. The number of projects remaining for closure decreased from 976 at the end of 2008 to 893 at end of 2009. Table 4 provides information on the projects closed until the end of 2009 (per Member State).

Table 4: Number of CF projects closed until the end of 2009 (including ex-ISPA)

Member State | Total number of CF projects | Projects closed as of end 2009 | Number of open projects as of end 2009 |

Number of Projects | Total Paid in Euro |

Period | Period |

2000-2006 | 1994-1999 |

Bulgaria | 2.413.615 | - | 2.413.615 |

Cyprus | - | - | - |

Czech Republic | 113.008 | - | 113.008 |

Estonia | - | - | - |

Greece | 2.452.289 | - | 2.452.289 |

Spain | 21.592.738 | 4.771.861 | 26.364.599 |

Hungary | 40.497.367 | - | 40.497.367 |

Ireland | - | - | - |

Latvia | - | - | - |

Lithuania | 649.156 | - | 649.156 |

Malta | - | - | - |

Poland | - | - | - |

Portugal | 205.714 | 4.987.861 | 5.193.575 |

Romania | 8.067.402 | - | 8.067.402 |

Slovenia | - | - | - |

Slovakia | - | - | - |

TOTAL | 75.991.289 | 9.759.722 | 85.751.011 |

Management and Control systems

In the Directorate General's Annual Activity Report for 2009, for the functioning of the management and control systems (2000-2006), an unqualified opinion was given for the Cohesion Fund systems in six Member States (Cyprus, Estonia, Greece, Malta, Portugal and Slovenia).

For nine Member States, the opinion was qualified with a moderate impact as a result of material deficiencies affecting key elements of the systems (Bulgaria - transport sector, Czech Republic, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia and Spain).

Only one CF sector in one Member state (Bulgaria - environmental sector) was put under a reservation in the Directorate-General's Annual Activity report for 2009 primarily due to breaches of public procurement rules. In 2010 work is on-going to rectify the identified problems together with the national authorities.

4. IRREGULARITIES NOTIFIED BY THE MEMBER STATES

In 2009, the Member States communicated to the Commission, in accordance with Regulation (EC) No 1831/94, altogether 109 notifications of irregularities involving a total affected amount of EUR 67,304,951 in respect of projects co-financed by the EU. From this amount, EUR 56,673,503 has been recovered, and the remaining amount still has to be recovered. The countries reporting the majority of cases are Portugal, Spain and Poland (27, 20, and 19 respectively). Portugal reported 39% of the involved amount. It is also worthwhile to note that Hungary with four notifications, is second in terms of amount involved. In addition, during the same period Bulgaria communicated to the Commission, in accordance with Regulation (EC) No 1828/2006[2] applicable for the programming period 2007-2013, 17 notifications of irregularities involving a total affected amount of around EUR 3.6 million in respect of projects co-financed by the EU.

The number of notifications shows a significant decrease, compared to the previous year, however, the involved amount remains at the same level. The main types of irregularities reported are ineligible expenditure, and infringements of public procurement rules. These two typologies cover almost 75% of all cases reported.

Table 6: Irregularities communicated by Member States in 2009 (in EUR)

Member State | Number of irregularities | Financial amounts | Amounts awaiting recovery |

Bulgaria | 17 | 3.578.740 | 3.578.740 |

Cyprus | 0 | 0 | 0 |

Czech Republic | 3 | 1.924.920 | 0 |

Estonia | 0 | 0 | 0 |

Greece | 14 | 4.780.520 | 1.684.211 |

Spain | 20 | 4.351.765 | 3.622.443 |

Hungary | 4 | 18.449.851 | 40.387 |

Ireland | 0 | 0 | 0 |

Latvia | 0 | 0 | 0 |

Lithuania | 2 | 4.491.703 | 0 |

Malta | 1 | 39.133 | 39.133 |

Poland | 19 | 2.275.178 | 49.542 |

Portugal | 27 | 24.575.760 | 1.332.009 |

Romania | 0 | 0 | 0 |

Slovenia | 1 | 2.552.398 | 0 |

Slovakia | 1 | 284.983 | 284.983 |

TOTAL | 109 | 67.304.951 | 10.631.448 |

5. EVALUATION

The Commission and the Member States carry out appraisal and evaluation of all co-financed projects. The projects to be financed by the Fund are adopted by the Commission in agreement with the beneficiary Member States.

The Commission carries out the ex-post evaluation of the Cohesion Fund. The previous evaluation was published in 2005 and looked at a sample of 200 projects implemented over the 1993-2002 period. A new ex-post evaluation was launched in 2009 looking at all Cohesion Fund and former ISPA projects implemented during the 2000-2006 period. In the framework of a set of 3 interlinked "work packages", the evaluation will assess the contribution of the Cohesion Fund and ISPA to the development of the EU transport system, to achieving the EU acquis in the field of environment and the effect of ISPA as a preparation for the Structural and Cohesion Funds programmes. In addition, ex post cost-benefit analyses will be carried out for a sample of transport and environment projects, identifying lessons for future programming periods.

6. INFORMATION AND PUBLICITY

As indicated in the annual report for 2007, issues concerning the Cohesion Fund are, as from 1 January 2007, dealt within the Coordination Committee of the Funds (COCOF, according to Regulation (EC) No 1083/2006).

Several issues of common interest for ERDF and Cohesion Fund were presented or discussed during the meetings of the COCOF in 2009, for example:

- Commission Regulation amending Regulation (EC) No 1828/2006 setting out rules for the implementation of Council Regulation (EC) No 1083/2006 laying down general provisions on the European Regional Development Fund, the European Social Fund and the Cohesion Fund and of Regulation (EC) No 1080/2006 of the European Parliament and of the Council on the European Regional Development Fund;

- Commission decision amending the Decision concerning the financing of the programme for the use of operational and non-operational technical assistance at the initiative of or on behalf of the European Commission under the European Regional Development Fund (ERDF) and the Cohesion Fund (CF) for 2009;

- Commission decision concerning the financing of the programme for the use of operational and administrative technical assistance at the initiative or on behalf of the European Commission under the European Regional Development Fund (ERDF) and the Cohesion Fund (CF) for 2010;

As regards the Commission measures on information and publicity, the focus in 2009 was two-fold. First, to ensure the publication of the list of beneficiaries of EU Funds managed by the Commission in partnership with Member States in line with Article 7.2 of Commission Regulation (EC) No 1828/2006. Second, the Directorate-General for Regional Policy published details of major projects, including those financed by the Cohesion Fund, both for the 2000-2006 and 2007-2013 period. The details of many of these projects are available in a searchable database on the INFOREGIO website. To date, there are over 300 projects listed in the database (which include major projects and other projects financed through the 2007-2013 programmes).

[1] Includes corrections made by Member States, following agreement under the relevant procedure or as a result of implementation of action plans and formal Commission decisions. Includes corrections implemented as a result of Commission audit work but also corrections carried out in the course of implementation or closure of projects.

[2] OJ L 371, 27.12.2006, p.1, as amended by Regulation (EC) No 846/2009, OJ L 250,23.09.2009