Environmental Assistance to Eastern Europe - Annual Report 2000
3. New initiatives
New strategy for the Danish environmental support programme for Eastern Europe, 2001-2006Background
The new strategy of the Danish Ministry for Environment and Energy saw the light of day in March 2001, and the implementation of the strategy is now well underway.
Before being adopted, the strategy had been circulated for external comment, and the main themes were presented and discussed at a workshop with the Danish resource base on 29 November 2000. The workshop attracted great interest and a large number of participants representing companies, authorities and NGOs, and many committed and constructive suggestions for how to fine-tune the strategy were presented.
Purpose of the strategy
The overall purpose of the new strategy is:
 | to contribute as much as possible to the protection of the environment in Eastern Europe by assisting the Eastern European countries that have applied for EU membership in their efforts to implement EU environmental requirements and international environmental conventions, |
| to assist the SNG-countries and other non-EU applicant countries in their approximation to an enlarged EU and to reduce pollution endangering the health of the populations; to reduce transboundary pollution affecting EU countries; to protect nature and the biodiversity and to implement international environmental conventions, |
| to contribute to ensuring that the political and economic developments taking place are environmentally sustainable, in particular by supporting a market-based development and advancement of democracy, including accountability in the private sector, involvement of the population and of NGOs in decision-making processes in the environmental area, and increased integration of environmental considerations in other sector policies, |
| promote the use of Danish environmental expertise and technology of benefit to areas covered by this programme. |
The strategy for the Danish environmental support programme incorporates all relevant environmental decisions taken by the Danish Folketing, relevant results and recommendations from the Report by the National Audit Office of Denmark on environmental assistance to Eastern Europe from 1999 and from the external evaluation of the environmental support programme concluded in October 1998.
Activity areas of the strategy
With the new strategy for 2001-2006, DANCEE has focused on especially two overall themes:
EU approximation as a driving force behind the improvements of the applicant countries in the environmental area and the "Environment for Europe aimed in particular at SNG-countries with no prospects of EU membership and therefore to a great extent lacking the political incentive to take measures to improve the environment. Efforts to promote EU policies and action plans as such and support the ratification of and compliance with international conventions will be intensified.
The activity areas for the coming strategy period continue to be improvement of the quality of air, protection of the quality of water and the supply of drinking water, waste, administration of natural resources and control of pollution caused by chemicals. The chemical area is a new prioritised activity area.
In addition, three multidisciplinary activity areas will be weighted more heavily in the new strategy: institutional strengthening, assistance for participation by the public in environmental decision-making processes and involvement of the private sector.
Implementation of the strategy
Implementation of the strategy will be effected by developing and implementing 3-year country programmes for the individual countries of co-operation and through a number of regional initiatives.
The purpose of the country programmes is to develop more long-term planning of activities under the Danish environmental support programme. The new set of country programmes will aim at focusing assistance on fewer activity areas and perhaps selected geographical areas, such as counties, in the country of co-operation. In connection with the country programming, the Danish assistance will be coordinated with that of other multi- and bilateral donors with a view to achieving a greater synergy effect.
The country programme will form the framework of the preparation of projects, primarily projects offered under the environmental support programme and projects invited as part of thematized rounds of applications. All country programmes are expected to be revised in 2001.
Activities in the individual countries of co-operation will be adjusted concurrently with the accession of EU applicant countries. Furthermore, in the long term, the strategy anticipates a large number of initiatives in the Balkans.
The new strategy for 2001-2006 thus forms a strategic basis, whch has now been updated to accommodate the experience gained during the period 1993-2000, and which, at the same time, forms a flexible framework of continual changes in demands and activity areas which will inevitably occur in Central and Eastern Europe, the Balkans and the SNG-countries in the course of the next five years.
Strengthened project monitoringIn 1999, the evaluation which was made of Danish environmental assistance in 1998, was followed up by Report no. 11 by the National Audit Office of Denmark on Danish bilateral assistance to Central and Eastern Europe since 1994.
The evaluation as well as the Report by the National Audit Office recommended a strengthening of the project followup.
In 1999, the project follow-up was strengthened by implementing the external manual for project owners and the internal project manual for staff, setting up guidelines and goals for how to follow up on projects.
As a supplement to these tools, in 2000 DEPA initiated the development of monitoring plans for existing and new projects.
The purpose of the monitoring plans is partly to give higher priority to the monitoring of existing projects, partly to ensure an effective follow-up on the projects to allow DANCEE to take corrective measures if a project proceeds in a less acceptable way.
Depending on the complexity and size of the individual projects, an assessment was made in 2000 of the need to supplement the project follow-up tools that have already been implemented with further activities. An important tool to ensure better project follow-up on complex/large-scale projects is project visits and reviews.
So far, DANCEE has regularly visited existing projects, but the development of monitoring plans for existing projects in the individual countries of co-operation makes the prioritisation of visits more systematic and increases the quality of the visits.
A large number of the monitoring visits are made by local project coordinators, who speak the local language and are thus in a better position to collect information about the project recipients' opinions, needs and wishes in relation to the individual projects. This allows DANCEE to collect important information about projects that can otherwise be difficult to access.
In order to streamline and make the reporting by the local project coordinators to DANCEE more effective, a common reporting format for monitoring visits was developed and implemented in 2000, and the local project coordinators were also equipped with cameras for photo documentation.
ISPAThe pre-accession facility ISPA (Instrument for Structural Policies and Pre-Accession), amounts to ECU 1,000 million over the years 2000-2006, reserved for large-scale infrastructure projects in the new EU applicant countries in Central and Eastern Europe. Half of the money has been earmarked for transport projects and the other half for environmental projects. To qualify, the projects must exceed ECU 5 million, and it must be clearly documented that they assist the countries in meeting the accession requirements and complying with the EU environmental acquis. ISPA can make grants of up to 75%, exceptionally up to 85% of the public investment in an environmental project.
For each year, a fixed sum of ISPA funds has been allocated to each applicant country on the basis on the size (area), number of inhabitants and GDP of the countries.
Applicant countries have to submit applications for assistance to the Commission in accordance with the ISPA application format. This format requires clarification and documentation of a large number of aspects relating to the project, including a full feasibility study, financial analyses, VVM-analyses and tender documents.
The ISPA facility is administered by the DG REGIO (formerly DG XVI) of the Commission. If a project application is finally approved by the ISPA Management Committee, the Commission grants the amount and makes an international call for tenders based on the project information and documents submitted.
DANCEE support for developing TORs for the preparation of ISPA projects
At the beginning of 1999, it turned out to be a problem that no project preparation were taking place in the applicant countries for the ISPA facility starting in 2000 and that, on account of internal delays, the Commission did not have financial means available for granting technical assistance (TA) to promote the project preparation.
On the initiative of DEPA, DANCEE then, in the period from April to October 1999, granted DKK 5 million for initial project preparation of Terms of Reference (TORs) for about 65 ISPA environmental projects in nine out of the ten applicant countries (except Slovenia), based on projects initially selected as prioritised projects between the applicant country concerned and the Commission's DG XVI. Terms of Reference (TORs) were subsequently handed over to the individual applicant countries and to DG REGIO for further initiatives to be taken, such as the preparation of feasibility studies, financial analyses and tender documents based on TORs.
In January-February 2000, DANCEE financed appraisals/further project preparation of three of these projects at the request of DG-REGIO (totalling DKK 452,000), as the project prerequisites subsequently changed substantially, and as there was doubt as to whether the economic cost calculations were sufficient.
The preparation of the 65 projects has been a difficult task, partly because of the Commission's own deadlines, partly because in the initial phase of ISPA, DG REGIO continued to change the criteria for the ISPA projects and thus also for the TORs for the individual projects.
Furthermore, DG REGIO has failed to involve and use the experience gained by DG ENVIRONMENT (formerly DG XI) from their many years of co-operation concerning the PHARE programme in the recipient countries, which has prolonged the project identification process and given rise to misunderstandings and frustrations in the recipient countries.
It is estimated that without the Danish assistance to the recipient countries, there would be an acute lack of environmental projects in the pipeline for ISPA. DANCEE has been singled out for the work implemented by the Commission's DG REGIO, which has stated jointly with DG XI that without Danish assistance, there would have been no project preparation for the ISPA facility in 1999.
It has subsequently turned out (at the end of 2000) that, as a result of these efforts, at least as many environmental projects as transport projects have been approved by the ISPA Management Committee.
EU ISPA Management Comittee
Decisions regarding the allocation of funds are taken by the ISPA Management Committee, which has so far held eight meetings - the latest meeting was held on 9 February, 2001 - and DEPA has participated in seven of these meetings.
Formerly, the transport projects had proceeded a lot further than the environmental projects. One of the reasons for this was that the identification of projects was based on the ten European transport corridors selected under the TINA programme.
As of the end of 2000, the distribution of ISPA funding is now more or less evenly distributed between transport and environmental infrastructure projects, partly as a result of the Danish assistance provided during the project preparation. Furthermore, DG ENVIRONMENT (formerly DG XI) has launched the PEPA project (Programme of Priority Environmental Projects for Accession of the Applicant countries), assisting the applicant countries in defining clear priorities for environmental investments in the countries concerned. At the moment, financing strategies for two countries have been developed via this project. At the same time, the project is aimed at establishing a medium-term ISPA project pipeline in each single applicant country.
It appears from the enclosed list of projects from the ISPA Management Committee (handed out at the meeting in Brussels on 24 November, 2000) that until the end of 2000, the Committee had approved ISPA grants to a total amount of EUR 497,668,979 for 42 environmental projects and EUR 532,861,052 for 29 transport projects.
Ongoing discussions in the ISPA Management Committee are concentrated on the following main areas:
| the information level in relation to the presentation of ISPA projects in the Management Committee, |
| involvement of DG ENVIRONMENT in the environmental assessment of the projects - especially in relation to the necessary VVMassessments, |
| the ISPA support rate for the individual projects, including the economic sustainability of the projects, |
| the capacity of the applicant countries and the regions in relation to the preparation and implementation of ISPA projects, |
| project ownership- including privatisation of ISPA-assisted projects and co-financing with IFIs, |
| monitoring of the ISPA projects during and after implementation, |
| coordination with other assistance programmes, especially PHARE, and with the activities of bilateral donors in the recipient countries. |
In connection with the most recent approvals of ISPA projects (November 2000), funds have been set aside for technical assistance (TA) to the recipient countries, in recognition of the fact that the capacity in these countries in relation to project preparation and especially implementation is insufficient at the moment. Training programmes and appraisal of the recipient countries' capacity in these areas have been initiated.
DANCEE assistance for the preparation of ISPA applications from the applicant countries
DANCEE has earlier assisted and is at the moment providing bilateral assistance to the applicant countries for the preparation of projects for ISPA financing in e.g. Bulgaria (two projects), Romania (six projects), Estonia (four projects) and Lithuania (one project). Project preparation typically includes all the preliminary work in the form of feasibility studies, financial analyses, VVM-assessments and drawing up of the final ISPA application. The applications are handed over to the applicant countries, which then forward the project applications for approval by the ISPA Management Committee.
These projects are pure TA-projects, as DANCEE has not calculated with a DANCEE investment component in the subsequent implementation phase, since international calls for tenders are made for ISPA projects. Generally, the ISPA Management Committee is not interested in co-financing the implementation of ISPA projects with bilateral donor funds. The remaining funds for a given ISPA project (the remaining 25%) have to be co-financed by the recipient country/region/city itself, often in the form of a loan. The participating banks have been the EBRD, NEFCO/NIB and EIB.
DANCEE has, however - as the only bilateral donor - participated in a cofinanced implementation of two ISPA environmental projects in Romania. In these projects, DANCEE follows the EU tender rules. For one project in Estonia, DANCEE has been asked to co-finance the implementation of a water and waste water project, and for this project, DANCEE follows internal (Danish) tender rules. DANCEE has been invited to finance these projects, as it has proved impossible for the recipient countries (the receiving region/city) to put up the co-financing needed (min. 25%). It should be remembered in this connection that the total costs of each ISPA project is minimum EUR 5 million.
Future DANCEE assistance for ISPA-projects
DANCEE closely follows the development in the applicant countries' ISPA environmental strategies and project pipelines and evaluates the need for assistance with ISPA project preparation activities. The purpose of this is to ensure that DANCEE does not support activities overlapping with existing ongoing preparation activities and that DANCEE is able to intervene with assistance to ensure that the applicant countries get their share of these large-scale ISPA environmental investments on time.
On the part of DG REGIO, funds have been set aside for ISPA project preparation in the applicant countries. The amounts allocated for this purpose are EUR 200,000 per project, which is estimated as being too low compared to the costs of a complete ISPA project preparation process. Furthermore, many of the applicant countries do not dispose of the advisory capacity needed to complete a qualified project preparation.
It is DANCEE's experience that both the applicant countries and DG REGIO would like to have the ISPA projects prepared with bilateral assistance via the DANCEE programme. This has turned out to give a higher quality in the project applications and to shorten the preparation time.
DANCEE would like to continue to offer technical assistance to the applicant countries for the preparation of ISPA projects, but in connection with this work, DANCEE would like to focus more on identifying project components for internal (Danish) financing during the implementation phase.
Furthermore, DANCEE is going to focus on the needs of the applicant countries for assistance during the implementation phase and on the need for assistance in the recipient regions during the implementation and subsequent takeover/ operating phase of the ISPA projects. What DANCEE has in mind here is especially building up (through training and education) the administrative capacity of the receiving region/city in relation to operation and maintenance of large-scale ISPA environmental infrastructure plants.