Largest Romanian Operational Program of 2014-2020 period – Large Investments (LIOP), approved by European Commission

The European Commission approved on July 10th, 2015, the largest Romanian operational program of the 2014 – 2020 budgetary period namely Large Investments (LIOP) with a non-reimbursable European contribution of approx. 9.4 billion Euro. This program addresses several development priorities of Romania as highlighted below:

  1. Transport infrastructure – allocated 5.1 mld. Euro (6.8 mld. Euro with national financing) which include i.a. finalization of the three main transport corridors (road, train and Danube) belonging to TEN-T network from Nădlac in West of Romania at the border with Hungary to Constanṭa, largest port on the Black Sea. Most challenging of all projects to be financed from LIOP will be the construction of the highway between Sibiu and Piteşti which will ensure the smooth passage of the mountains, contribute to the increase of traffic safety and reduce travel time, thus leading to significant economic savings and gains.
  2. Environment related infrastructure – allocated 3.8 mld. Euro (4.47 mld. Euro with national financing) with the aim to complying with EU Directives and with the commitments of Romania’s Integration Treaty for water and waste sectors as well as in view to protecting biodiversity and coastal erosion.
  3. Energy and energy efficiency – allocated 0.52 mld. Euro (0.6 mld. Euro with national financing) with complex objectives in compliance with Europe 2020 strategy of sustainable, intelligent and inclusive growth. Important to note that during 2007-2013 with EU support, Romania fulfilled the commitments for 2020 in the field of renewable energy but only for solar and wind due to the very generous incentive scheme implemented by the Romanian Government (on investment side with 50% subsidy and on operational side by supporting a rewarding price for the green certificates). POIM financing dedicated to green energy production will be directed only for sectors not enough exploited such as biomass, waste to energy, geothermal etc. In addition funds are available for energy efficiency major projects such as rehabilitation of district heating network in Bucharest, cross border interconnection of gas pipes and strengthening of electricity transport network in order to better cope with the renewable generators connection to grid.

It is the last operational program for 2014-2020 to be approved by EC, from now on Romanian authorities can start implementation of all seven programs if there are mature projects to be financed. This has been in fact one of the major obstacles which prevented a higher absorption during 2007-2013 besides corruption and indecision of authorities. Lack of viable projects could be the major threat during current programming period as well. Just as an example, the feasibility study for the much needed and discussed Sibiu – Piteşti highway has only recently been signed. It will take at least two years to finalize it and then 1-2 years for the tender related to construction works to be finalized. This means that we will see the complete highway from Nădlac to Constanṭa ready only after 2023. Still 10 years to go until final goal will be reached!

It is important to note that, according to EU Directives, TEN-T core routes have to be finalized until 2030 while the comprehensive network has year 2050 as deadline. Romania has two urban nodes on TEN-T core namely Bucharest and Timişoara. Other countries have one as it is the case of Austria with Vienna, or several such as Poland, UK, Italy, Germany, France and Spain.  Romania is well represented in the field of TEN-T core ports – i) seaports Constantza and Galatzi; ii) inland ports Calafat, Cernavodă, Drobeta Turnu Severin, Giurgiu. In addition, there are RRT (Rail-road terminals) envisaged within TEN-T core in Bucharest, Timişoara and Craiova. Under current TEN-T split between core and comprehensive only the core related projects will be allowed financing from EU 2014-2020 budget.

Same “core” rule applies to railways and naval/maritime routes with Danube strategy playing a key role in the allocation of funds. More specifically, in order to be allowed for financing from POIM, projects related to transport infrastructure have to be “core” and included as priority projects in the Danube strategy approved by EU in 2010 (where relevant) and in the General Transport Master Plan recently adopted by the Romanian Government. For 2014-2020, there are no new projects anticipated, only finalization of those which are under construction from 2007-2013.

A similar situation is met in environment related section of LIOP. All projects represent either continuation of investments started during 2007-2013, or investments planned since before integration (2007), supposed to be implemented some years ago but for various reasons, delayed. The aim of all those projects is to comply with EU environmental acquis in the field of waste water, waste management, Natura 2000 network and fight against effects of global warming (coastal erosion). In addition, given that Romania was the last member state lacking of centralized water distribution networks throughout the country (especially in rural areas), projects in this sector became a priority in 2007-2013 being integrated with waste water related investments. The ultimate objective is that all localities with more than 2,000 inhabitants to benefit of waste water sewage systems while localities with more than 50 people to have access to water distribution system which would supply safe drinking water.

In the field of energy and energy efficiency, LIOP comes with new priorities and projects. Given that an EU Directive stipulates the obligativity of smart meters until 2020, the financing of some such pilot projects is included in the list. The analysis will represent a basis for the Romanian government to plan further measures which would lead to a true liberalization of electricity market and thus to a significant decrease of electricity price. In addition green energy is allocated a certain important non reimbursable financing in order to capitalize on resources such as biomass, geothermal, waste etc.

The successful implementation of LIOP will contribute to the reduction of development gap between Romania and the average level of European Union Members.

 

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