Comparative situation on the stage of Operational Programmes during May 1st, 2012 – June 14, 2013

The paper attached includes the comparative situation on the stage of Operational Programmes during May 1st 2012 – June 14, 2013, horizontal measures implemented so far and those planned to attain the absorption objective.

There are presented:

Regional Operational Programme (POR)
Sectoral Operational Programme Environment (POS M)
Sectoral Operational Programme Transport (POS T)
Sectoral Operational Programme Boost in Economic Competitiveness (POS CCE)
Sectoral Operational Programme Human Resources Development (POS DRU)
Sectoral Operational Programme Administrative Capacity Development (PODCA)
Technical Assistance Operational Programme (POAT), Rural Development National Programme (PNDR)
Operational Programme for Fisheries (POP)

Statements by PM Victor Ponta and other Executive members at the working meeting

PM Victor Ponta

Good afternoon, distinguished colleagues, I wanted to have this meeting, and there are some things I want to say in the presence of mass-media, because it is a first moment of analysis of the way in which in this government year, we managed to unblock or change things regarding the absorption of non –refundable funds from the European Union. I speak about the two dimensions – on the one hand, surely the funds for agriculture, direct payments, Rural Development Programme and as of yesterday, Minister, nobody congratulated you, and you have the official notification on Fisheries Programme. Please, provide some details. Good news are not news, but please, give them!

Daniel Constantin:
Yes, thank you, Mr. Prime Minister, I spoke earlier in the press conference, I received yesterday the official letter from the European Commission and they told us those payments that were interrupted on the Operational Programme for Fisheries, from January 13, 2012, this interdiction was practically banned. The payments were interrupted because of serious deficiencies, as the letter sent by the European Commission outlines.
The same letter outlines the fact that following the efforts made by authorities during an year and a half, since the payments were interrupted, the main deficiencies were remedied, significant progress was recorded, and today, we may receive payments of 50 million EUR which the state budget, the Romanian state covered, to be paid to farmers without recovering from the European Commission.
I want to tell you that it is a programme worth 307 million EUR, of which, unfortunately, Romania has not accessed so far, but 14 millions, the remaining money was blocked. We have requests currently, of 300 percent, one billion EUR projects that are submitted and I hope not to encounter problems from now on in drawing these European funds.
I want to further tell you that the deficiencies – because it is very important – were recorded during 2010-2011-2012 government period and have major impact, unfortunately.
Last year, there were disengaged 22 millions EUR, this year, because they were unblocked later, it is likely to engage other 10 millions. What is more serious is that it is likely that the European Commission be more careful in the 2014 -2020 financial perspective on earmarking on this programme. It is important that today, we have all sessions already closed, the European funds will come to Romania and the beneficiaries surely have not suffered so far, but the state budget is relieved of an extremely important sum.

PM Victor Ponta
Good, therefore we have the Programme for Fisheries unblocked. Please, use it as much as possible, we have disengaged sums, but it is important, nevertheless, we managed to do it. On Rural Development – 56, 2 percent – absorption to this date.

Daniel Constantin
Yes, it is a degree of absorption … Practically, we have five billions EUR, funds paid by farmers and already received from the European Commission. I want to tell you, compared to May 2012, then, there were 3, 8 billions EUR paid and reimbursed. Therefore, in one year time, 1, 2 billion EUR only on Rural Development, without taking into account the direct payments, which only in March and April this year, amounted to 1, 6 billion EUR. Per whole, in 2012, agriculture drew European funds of 2, 5 billion EUR, this year, we wanted to reach a higher sum, the absorption degree increasing as you said, from 43 percent to nearly 57 percent, on Rural Development.

PM Victor Ponta
We always deal with the cohesion funds, and less with this. Do you have any problem in using within the exercise, of the sums earmarked on Rural Development Programme? Are there special problems?

Daniel Constantin
There are problems generated first by personnel, because, unfortunately, in 2010, when there was that staff cut at the Payment Agencies and APIA and APDRP, the institutional reform closed. 10 percent of the staff and from APIA and APDRP was laid off, so that there is indeed currently a huge workload on employees, and this is why, we are late with discounts anyhow. I want to tell you as a positive thing, compared to 2012, when I inherited an insufficient budget on co-financing, and in year 2013, there is in the state budget, enough resources to draw as many funds as we aimed at. Therefore, the co-financing is already ensured in the state budget and from this standpoint, there are no problems. The only problem raised is the staff related one both at APIA, and at APDRP, the main problem.
I want to tell one more thing. There is still a single problem, not necessarily relative to public system, but to co-financing, cash flow, that, unfortunately, because of the problems on the liquidities market, does not function too well, the beneficiaries do not have enough funds to make the payments, to ask afterwards the respective reimbursements, but APDRP, the Agriculture Ministry started a policy to assist those who have already projects, for us to try to create lending instruments, banking instruments, to help them attract, have the necessary money to make the payments, as the reimbursement principle is operating everywhere with respect to European funds. Therefore, the respective societies, public authorities have to engage sums; afterwards, we make the deductions. Therefore, from this point of view, there is certain emotion over the next period, but I do hope to have on PNDR the first programme with real 100 percent absorption.

Victor Ponta
I want to ask you close this subject, together with the Finance Minister, to have a meeting with commercial banks representatives, because I understand that only two banks give loans for the unfolding of those programmes and if there is a type of framework – agreement, discussed obviously with the National Bank Governor, only with the commercial banks, we will have increasing chances. If they do not lend the farmers, they cannot achieve projects or works and afterwards, we to defray them. And it is this vicious circle of the lack of lending; afterwards, I will request you to organize a meeting with the Finance Ministry and the commercial banks.

Daniel Constantin
Yes, only with a brief comment. I want to tell you that I had numerous meetings with the banks. Some became flexible, others not.
We consider even that to have direct payments, where annually we receive from the Commission, only the European Commission 1.3-1.4 billion EUR, to have an auction, for a single bank to win, the bank will engage that on the rural development side, there will be provided loans or long term loans or bridge loans, in order to ensure the necessary cash flow on the market. So we consider including this option, but here's a broader discussion that we need to do, as you pointed out well, with BNR, in first instance.
Victor Ponta: Ok. Back to national tragedy, the greatest disaster that we inherited from previous governments on the Structural Funds. What was on May 1?
7.4% was the absorption rate surely, to which we added the additional advances from the Commission and pre-suspended, Environment Program, unblocked in November, Madam Minister - right? - Officially, I managed to get it unlocked in November, POS DRU unblocked in February, right?
ROP released in April and Transport Operational Programme released this week.
Well, the official paper. So basically they were all blocked. Of course if you listen to the TV to those who occupy positions of here, they will tell us, that it was all very well, based on audits completed in November 2011 - right? I inherited blocked programs and 7.4% absorption rate, in absolute numbers, that I doubled; we have now 15.18% reimbursement from the Commission. In total, however, and if we add the advances, we have here and please give to that always this talk on percent is like the discussion with four minutes - we have the documents. Overall, Romania has received so far, reimbursements and advances of 5 billion EUR of 19, whom we had available - 26.2% - 15.1% absorption and the rest of advances and other payments which came into state treasury . I want to make today a little analysis on each program and especially to focus on the programme to increase competitiveness - the only one left still under pre-suspension and concerning which, we must have a positive result even for a significant part of the axis if not everywhere. The ROP unlocked from 15.4% - the president talked about great absorption, to praise you, from 15.4%, we are at 29.56% but we have supracontraction. How are we, Mr. Deputy?

Liviu Dragnea
I say we are well. Surely, beyond the discussions about the agriculture fund, on structural funds – as the graphs say as well as the situations, POR is the most dynamic Operational Programme. It had a 100 percent increase, compared to what was done in May 2012 up to date. Practically, Romania absorbed through Regional Operational Programme, 541 million EUR, the absorption rate doubled, practically from 15 percent to 29, 56 percent in this period. The ROP was indeed suspended a long time, we did not manifest ourselves then, just because it was not unblocked, we were interested for the programme to take place in good conditions; we did not stay aside during the period when it was suspended, we drafted all documents, we introduced some measures that made an essential contribution to the increase in the degree of absorption, and the expenditure we sent to the European Commission, namely we replaced reimbursement with defray. The fact that now, local authorities are not anymore compelled to first earmark money from their own budget and wait from the reimbursement from the European Commission, which produced a complete blockage, in the entire local administration, because on the one hand, they did not have money from their own resources, the banks did not give loans, now they sent for defraying bills with works carried out, money is being paid on the spot, and in three days, they make the payments to beneficiaries, which gives us the safety that until the end of this year, we reach an almost 50 percent absorption degree, and until the end of the programming period, we reach an 100 percent. This is the situation at the Regional Operational Programme. So far, we made contracting a lot above 100 percent; we have expenditure statements sent to the European Commission, worth 540 million EUR, intermediate payments are worth 541 millions EUR. We have approved projects with an increase of 21 percent, compared to former period, and regarding programme unfolding, things go very well.
We have a direction that deals especially with monitoring the unfolding the procurement procedures, any local authority encountering difficulties when …, procurement procedures, is assisted so that the absorption be effective, as what I discovered at the Ministry, namely a big mistake – it is not enough to hurry and make funding contracts, to check the documentation and sign the contract, it is important to assist the beneficiary until the completion of the project. You must know that in territory, there have been many blockages, hindrances from the system, all kind of employees who were late with approvals, all these are coordinated and monitored from Ministry for regional development agencies so that there are no more obstacles for implementation.
Victor Ponta
OK. We have two programmes in which the growth is much more significant, the absorption degree practically tripled, not only doubled. But, in absolute figures, it is worse normally. Upon environment, 4, 37 percent absorption degree, the pre-suspension was lifted in November, now, you are at 15, 46 percent absorption degree, but I understand that the pace was a bit slowed down, what problems do you have?

Rovana Plumb
I decided that as of next week, to send control teams at the level of beneficiaries to stop delay in the construction works, both on water and sewerage infrastructure, and waste infrastructure, this is why I created within the Ministry – a support –department that will monitor, alongside the Managing Authority, the way the works are carried out and we have, besides all the measures we took together in Government, to streamline the absorption pace – surely, we will need to further discuss and take some measures to increase the speed of data processing, namely the DNC submitted to the Certification and Payment Authority for the Environment Ministry has 60 millions EUR from April sent to ACP, and today, it further sent 70 millions EUR. My request is for the pace to grow, regarding ACP, the cooperation is very well for the rest. Minister was informed about this situation, and I am sure that there will be taken measures, we have money this time, we have to see what happens on the spot, as Mr. Vice – Premier told, as the constructions are practically slowed down, and I said that we will move the control teams. Practically, the Environment Sector Operational Programme, since I took over the mandate, has a 4 times increase compared to May 2012 level, therefore, twice the double at the level of the entire Structural and Cohesion Programme. Surely, it is the effort of the team I coordinate and whom I thank and the entire Government for the measures I took. I brought 500 millions in this period. 500 millions EUR with 40 millions less than the Regional Operational Programme and I am sure that through the joint effort of all, because we work very well with Minister Teodorovici, we will increase the absorption pace.

Victor Ponta
The disaster from POS- DRU. Nobody thought that we can unblock it. Do you have, Minister Campeanu, from the famous extraordinary level, the praise of Mr. Boc and the others, how much did they have?

Mariana Campeanu
5, 48 percent.

Victor Ponta
5, 48 percent, now, 16, 28 percent.

Mariana Campeanu
16, 28 percent and we collected effectively 565, 8 millions EUR, with an increase of 197 percent upon collections. What I wanted to tell you is that we already have projects submitted for 1, 2 billions EUR. In these brief days, since I launched all cools, on all axes, and also we have an important problem, we deal to solve the problems for the future audit that will be in September and they will stay two weeks here, and we will resolve to recover all debts, these are important problems, and we have to make checks on the field, because the demands started being submitted in a slower pace and we want to discover why. Now, we have money, and we do not have requests to verify.

Victor Ponta
In a way and that was the message I wanted to convey through press, now we started to have other problem, we started to have money and the projects do not come anymore. So far, everybody complained that they have projects and no money is earmarked, now, we earmarked the money from the Treasury, we gave loans, we unblocked the programs and we start not to have programmes anymore. I hope the Government is not guilty for it. I want to convey all of you this message to the private beneficiaries but also to the institutional ones. You will see in the end, that at PO-CCA alike at the technical assistance, we have money, we do not use it as we do not ask it.
I speak about institutions, this time. Regarding individuals, or local authorities, Environment, POSDRU, all the others, we have now money, and the private beneficiaries do not access it. The worst thing which should be the best this year – the Transport Programme. Mrs. Boagiu helped to have it suspended, everybody congratulates you, Mr. Fenechiu these days, I do not congratulate you anymore, it is very good that you unblocked it. 6, 46 percent. In exchange, you have works worth six billions EUR, how many do you have?
Relu Fenechiu
No, we still have to take from the Commission four billion EUR. I want to tell you that today, we are ready to have authorized for payment and sent nearly 900 millions lei and over the next period, we do authorize 1, 2 billion (…). It is fortunately or unfortunately for others, the most consistent programme and for this reason (…), there are so many figures. Therefore, we have 500 millions EUR which we can deduct until mid August from the European Commission and also we hope in the deduction of about 200 millions EUR from EIB financings.
I sent you the material, Mr. Prime Minister.

Victor Ponta
Today, we should until Wednesday, set the projects that were funded from EIB or the national budget and which we put, starting with the metro, right?

Relu Fenechiu
We did not introduce the metro there, it is separated, it does not enter into discussion, as there, and we cannot deduct what has been worked so far. We can only deduct for the future there. I sent you those projects, in general, of road infrastructure which were funded by EIB, and which we can deduct from the budget of the European Commission.

Victor Ponta
Explain, the EIB gives reimbursable credits, and we should give money back. If we assign it to the Transport Programme, it is unrefundable, we should not give anything back. Therefore, the cheapest possible money.

Relu Fenechiu
Yes, I want to further stipulate that we have a contracting degree of 79 percent today, we still have 20 percent to contract, nearly one billion EUR. We have to focus as of now, on strengthening the funds implementation. This is why, upon the request of the Commission in the audit report, we will set up the Agency for Projects Monitoring, agency funded from European funds and also, we focus on the control of administrative capacity at beneficiaries, with the control structure of the Management Authority. I want to thank Mr. Bolos for the activity carried out at the head of Managing Authority, and to recognize that without him there, I would have never managed to unblock the Transport Sectoral Operational Programme. Thank you!

Victor Ponta
Let us keep it open, the Transport POS. ..I know how much you fought to unblock it.

Relu Fenechiu
This is the reason why we set up this Monitoring Agency. We have to put these projects in motion, we have great problems owing to some auctions made by EX – ISPA, and as we did not pay those service providers, today, there is nobody to make the expropriations. By a joint order that the Finance Minister had to sign, we should as of this week, unblock that money and go straight. I request your support for these actions to take place as soon as possible, as days are passing. Thank you!

Victor Ponta
I will introduce the Finance Minister and the Agriculture Minister who signed today the order with EX- ISPA. The Administrative Capacity Development Operational Programme, we had here big problems with procurements. I do not know why during 2010 -2011, there were big problems with procurements. But the auditing was done, from 11, 07 percent, we are at 24, 63 percent. It is nevertheless not enough.
(…)