JASPERS in the Environment, Energy and Municipal Sectors

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JASPERS in the Environment, Energy and Municipal
Sectors Cost Benefit Analysis
Prague, 28th November 2007
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Components and Key Issues of CBA

• Purpose of Cost Benefit Analysis
• Identify sustainability and viability issues
• Optimise scope of the project and its individual
  components
• To determine level of support realisable from EU
  Cohesion Fund
• Methodology requirements and Jaspers involvement
• Outlined in Working Document 4 with some changes
  made to previous guidelines
• Advice on interpretation of guidelines
• Review and assistance in the preparation of cost
  benefit analysis

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Type of Past Jaspers Involvement

• Methodology Queries
• Preparation of CBA guidelines in Romania and
  Bulgaria
• Update of guidelines in Poland
• Methodology guidelines for demand and risk
  assessment in Slovakia
• Questions concerning interpretation of guidelines
  
• Preparation of CBA
• Support in ensuring most appropriate option is
  selected
• Review and advice on optimisation of EU grant
  contribution and calculation of the contribution
• Advice on wider affordability and sustainability
  issues and methods to improve project
  sustainability

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Key Issues Lower Sustainability

• EU compliance requirements
• Wastewater services to populations above 2,000
• Wastewater higher degree of treatment and
  sludge management issues
• Solid waste landfill rehabilitation and
  diversion requirements
• Energy focus of carbon reduction and efficiency
• Issues
• Higher costs of the project with impact on
  affordability
• Changes in the methodology in particular the
  calculation of the EU grant element
• Less tangible benefits reducing economic benefits

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Key Issues Reduced Funding Gap

• Change in methodology with inclusion of maximum
  co-funding rate fixed for the priority axis
• EU Grant Decision Amount Maximum Co-Funding
  Rate
• The inclusion of Maximum rate reduces the funding
  amount, but project scope means that greater
  financial sustainability issues should arise
• Project options to overcome issues
• Ensuring optimum calculation of incremental
  revenue with complexities associated with common
  tariff levels
• Establishing adequate basis for calculation of
  incremental operating costs
• Ensuring cost eligibility
• Identification and optimisation of additional
  sources of finance to support EU grant

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Concluding Remarks

• CBA is central to the feasibility study and
  application process
• Assists in optimising the project
• Provides the basis for determining level of EU
  financing support
• Projects are excepted to be less sustainable
• Higher cost projects owing to development status
  and EU compliance needs
• Change in methodologies mean that lower EU
  financial support can be expected
• Jaspers assistance
• To improve project financial, cost and economic
  sustainability
• Ensure that best practices are applied in project
  evaluation and comply with EU evaluation needs