On 19 November, the European Parliament ("EP") voted to approve the Connecting Europe Facility ("CEF") Regulation. The CEF Regulation is likely to become law early in 2014. The CEF Regulation is a funding instrument which earmarks the EU budget for trans-European transport, energy and telecoms projects. It is an important milestone in determining the EU funds which will be available for the projects in the period 2014-2020.
The intention is that the CEF will provide targeted financing for projects with a trans-European dimension. The EP has agreed to assign the CEF a budget of approximately €29.3 billion (based on 2011 prices) for the next EU financial period, which runs from 2014 to 2020. Of the €29.3 billion sum, €23.2 billion has been allocated to the transport sector; €5.12 billion for energy and €1 billion for telecoms.
The CEF Regulation sets out the conditions, methods and procedures for EU financial assistance to support projects of common interest in the fields of energy, transport and telecommunications. In order to be eligible for CEF funding, companies operating in the energy sector should ensure that their project is included on the EU list of projects of common interest, which was recently adopted in October 2013 and will be updated by the European Commission every 2 years. Funding for projects in the transport sector will be allocated on the basis of calls for tender, to projects which fall within the 9 EU "priority corridors" identified in the Annex of the CEF Regulation. Projects in the telecommunications sector must comply with the EU objectives which will be set out in a separate Regulation, to be voted on by the EP in February 2014.
The CEF Regulation also proposes to extend the pilot phase of the so-called "Project Bond Initiative", which was first launched in 2012. The initiative will be subject to a full-scale review in 2015, at which stage it is anticipated that Project Bonds will become a permanent funding instrument. Project Bonds are financial instruments which provide credit enhancement to project companies raising senior debt in the form of bonds to finance infrastructure projects.
Next steps: The CEF Regulation must now be approved by the EU Member States in the Council. The EP and Council already informally agreed on the amendments to the Regulation on 27 June 2013, so the formal seal of approval is not anticipated to generate opposition from the Member States. If approved on time, the Regulation will apply from 1 January 2014.
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