Formats envisaged in the Common Provisions Regulation for major projects

1. Formats envisaged in the Common Provisions Regulation for majorprojects 11th meeting of the Expert Group on Delegated and Implementing Acts for the ESI Funds 25 June 2013

2. Second draft of application form - Main changes • General: • - the order of sections changed as discussed at 1st meeting • A. THE BODY RESPONSIBLE FOR IMPLEMENTATION OF THE MAJOR PROJECT, AND ITS CAPACITY

3. B. A DESCRIPTION OF THE INVESTMENT AND ITS LOCATION

4. C. TOTAL COST AND TOTAL ELIGIBLE COST

5. D. FEASIBILITY STUDIES CARRIED OUT, INCLUDING OPTION ANALYSIS, AND THE RESULTS

6. E. A COST-BENEFIT ANALYSIS, INCLUDING A FINANCIAL AND AN ECONOMIC ANALYSIS, AND A RISK ASSESSMENT

7. F. AN ANALYSIS OF THE ENVIRONMENTAL IMPACT

8. F. AN ANALYSIS OF THE ENVIRONMENTAL IMPACT, TAKING INTO ACCOUNT CLIMATE CHANGE

9. G. state aid

10. H. THE FINANCING PLAN

11. Format for Notification • - Changes for Application Form made also in Notification (where same information is required) • - Minor wording suggestions taken on board

12. Implementing act on the guidance for the methodology for the cost-benefit analysis of major projects 11th meeting of the Expert Group on Delegated and Implementing Acts for the ESI Funds 25 June 2013

13. Objective of the implementing act • - Implementing Act • to present a set of working rules to ensure consistency and rigour in preparing CBAs and in their assessment • to set out a methodology for the calculation on discounted net revenue (in accordance with Article 54 CPR) • - Practical guide to CBA (update of 2008 guide) • to provide project promoters with practice-oriented methodological guidance for the preparation of CBA

14. Main elements • 1 General Principles • Objectives of CBA • Methodologicalprinciples • Elements of CBA • 2Stages of CBA • 1) Presentation of the socio-economic context and definition of objectives; • 2) Identification of the project; • 3) Results of feasibility studies with demand and option analysis; • 4) Financial analysis; • 5) Economic analysis; • 6) Risk assessment.

15. Stages of CBA • 2.1 Presentation of the socio-economic context and definition of objectives, identification of the project, feasibility of the project with demand and option analysis • 2.2 Financial analysis • - Discounted cash flow methodology (5% FDR in real terms) • - Other principles: incremental method, reference periods by sector, residual value • - Data required: Investment costs, Re-investment costs, Replacement costs, Operating costs, Revenues (plus polluter-pays principle, full-cost recovery, affordability), Source of funding • - Results of the financial analysis: evaluation of financial profitability, determination of the contribution from the Funds, financial sustainability • - Financial analysis in Public Private Partnership

16. STAGES OF CBA – cont'ed 2.3 Economic analysis - Key steps of economic analysis: conversion of market to shadow prices, fiscal corrections, corrections for externalities, discounting of the estimated costs and benefits (social discount rate of 5,5% and 3,5%) - Calculation of the economic performance indicators (ENPV, ERR and B/C) - The minimum economic benefits by sector to be considered - Climate change considerations - Application of cost-effectiveness analysis 2.4 Risk assessment - Sensitivity analysis - Qualitative risk analysis including measures for risk mitigation - Additional: probability distributions and quantitative risk analysis - The minimum risks to be taken into account

17. Main changes to CBA methodology