Download JASPERS in the Environment, Energy and Municipal Sectors Cost

JASPERS in the Environment, Energy
and Municipal Sectors
Cost – Benefit Analysis
Prague, 28th November 2007
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;
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