COHESION FUNDMONITORING COMMITTEE

11 April 2008

Jurijs SpiridonovsMinistry of Environment

Head of Project Development Department

2

Funding available 2000 – 2006 EUR 355.38 M*

Funding approved 2000 – 2006 EUR 355.38 M*

Total eligible expenditure EUR 574.68 M

Total planned project funding with

ineligible expenditure and

value added tax EUR 695.82 M

Allocation of CF Funding

*to cover eligible costs

3

Status of Disbursements to Contractors

as on 25/09/2006

DISBURSEMENTS MADE (eligible expenditure):

103,853,770.17 EUR

VAT 18%

EUR 9,637,367.31 TOTAL

EUR 113,491,137.48

as on 25/04/2006

DISBURSEMENTS MADE (eligible expenditure):

88,765,403.82 EUR

VAT 18%

EUR 7,410,397.56 TOTAL

EUR 96,175,801.38

From 01/11/2007 to 31/03/2008

DISBURSEMENTS MADE (eligible expenditure):

EUR 69,980,014.47

VAT 18%EUR 12,596,402.60

TOTALEUR 82,576,417.08

As on 01/11/2007

DISBURSEMENTS MADE (eligible expenditure):212,237,520.43 EUR

VAT 18%EUR 28,690,647.15

TOTALEUR 240,928,167.58

4

Disbursements to Contractors in 2003 - 2010, M EUR (total expenditure)

10,27

30,00

52,04

65,99

154,42

216,92

153,96

12,22

0

50

100

150

200

250

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

5

Disbursements to Contractors in 2008, M EUR (total expenditure as on 31/03/2008)

2 672

5 987

8 691

25 346

23 888

19 574

30 469

22 255

26 297

21 708

17 242

12 790

0

5 000

10 000

15 000

20 000

25 000

30 000

35 000

Jan Feb Mar Apr Mai Jūn Jūl Aug Sep Okt Nov Dec

6

Disbursements claimed and received from EC by 31 March 2008

7

30 34

97106

70 70

197

210

01.11.2007. 31.03.2008.

Piegādes

Darbi

Pakalpojumi

Kopā

Status of Agreements

EUR 485 M (total costs)

EUR 504 M (total costs)

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Increase in number of agreements signed, 2002 – 2008

3 4 6

29 34 34

9 1115

51

104 106

716

31

47

69 70

3

0

50

100

150

200

250

2002 2003 2004 2005 2006 2007 2008

Pakalpojumi

Būvdarbi

Piegādes

9

Physical progress Status of agreements as on 31/03/2008

38

32

2

30

42

41

65

16

109

101

20

Pabeigtie līgumi (219 milj. EUR)

Realizācijā esošie (284 milj.EUR)

Plānotie iepirkuma konkursi 2008(166 milj EUR)

Pakalpojumi Piegādes Būvdarbi Kopā

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COMPLETED PROJECTS (I)

Project implementation completed, final report and final expenditure statement submitted to the European Commission:

Solid waste management in Ventspils region, No.2000/LV/16/P/PE/004 Solid waste management in Ziemelvidzeme region, Latvia, No.2001/LV/16/P/PE/006. Solid waste management in Ziemelvidzeme region, stage II, No.2006/LV/16/C/PE/001. Development of water supply and sewage services in Ventspils,

No.2000/LV/16/P/PE/003; Solid waste management in Liepaja district, No.2001/LV/16/P/PE/005, Development of water supply and sewage services in Jelgava,

No.2000/LV/16/P/PE/002

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COMPLETED PROJECTS (II)

Project implementation completed, winding-up report and final declaration of expenditure submitted to the Ministry of Finance:

Jurmala water services development, No.2001/LV/16/P/PE/008 Technical assistance for environment projects in Latvia, No.2000/LV/16/P/PA/001

Development of water supply and sewage services in Riga, No 2000/LV/16/P/PE/001 Solid waste management in Austrumlatgale region, No.2002/LV/16/P/PE/010 Solid waste management in Dienvidlatgale region, No.2002/LV/16/P/PE/011

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AUDITS AND CHECKS

In December 2007 there were 15 audits carried out in the Ministry of Environment, including system audits, procurement and payment audits, sample checks of expenditure and checks of declarations of final project expenditure conducted by the MoEn Internal Audit Department, MoF Financial Control Department, State Audit Office, KNAB and audit companies.

From 01/07/2007 to 31/12/2007 the Ministry of Environment conducted 18 on-the-spot checks

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MAIN PUBLICITY EVENTS (I)

In 2007 it is already the fourth time that the Ministry of Environment presented the annual award

„Ābols 2007” (Apple 2007) to municipalities for their contribution in implementation of projects in the area of environmental infrastructure and

environmental protection.In 2007 there has been a higher activity of the

municipalities and interest to participate in this competition - twice as much applications were

received than the year before, in total 55. Prizes were awarded in categories of cities, towns,

agglomerated municipalities and rural municipalities.

Prize award ceremony was held on 22 November 2007.

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MAIN PUBLICITY EVENTS (II)

On a regular basis, the Ministry of Environment informs the society about main events in the framework of Cohesion Fund projects, incl. signing of works, services and supplies agreements, commissioning of construction objects and other important events.

On 05/03/2008 MoE’s Guidelines for implementation of publicity activities to the Cohesion Fund implementation bodies and final beneficiaries were updated, incl. samples for informative and publicity plan, memorial planks, press releases.

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TOPICAL ISSUES AND RISKS

There is a risk that implementation of the project Development of Ventspils district heating system will not be completed by December of 2009. The same risk exists for the project Development of water services in Riga, stage III, however in this project 5 procurement agreements have been signed and construction is in progress.

The Cabinet of Ministers on 12 February 2008 adopted the Decision No.9 to allocate state budget funding to cover increase in costs for the projects Development of water services in the river basins of Eastern Latvia, Solid waste management in Piejura region and Maliena region solid waste management, and on 19 February 2008 - the decision No 11 to allocate state budget funds for the projects: Development of water services in Daugavpils, stage II, Development of water services in Olaine and Jaunolaine (approx. EUR 30 M in total), as well as supported in principle allocation of state budget funds to the project Development of water services in Ventspils, stage II.

Issues within the competence of municipalities (ownership rights, approvals from responsible institutions, etc.) significantly affect the implementation progress of projects, e.g., Development of water services in Riga, stage III.

There is a problem of regulatory instruments (incl. guidelines), recommendations and instructions in the competent authorities are developed after the specific actions within the projects have taken place (e.g., in case of EC audit opinion on the project Solid waste management in Dienvidlatgale region), or during project implementation, when it is almost impossible to make corrective actions according to the new requirements.

Problems related to attraction of qualified personnel for work in state and municipal institutions affect the capacity of institutions involved in the management of EU Funds.

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SOLUTIONS TO PROBLEMS

To decrease the impact of increase in construction costs on projects being implemented the Ministry of Environment in cooperation with final beneficiaries carry out modifications to technical specifications of procurement tenders, reducing scope of work that does not affect the technological process and project objectives.

To increase the competition and reduce project costs the Ministry of Environment together with final beneficiaries by elaborating procurement strategy for the project, chooses the optimum amount to be procured (dividing into lots or joining into one procurement). At the same time comparison is made between the results of the tender and the planned agreement value (incl. by inviting competent experts), in case of necessity launching tenders repeatedly.

The risks identified in regard to delays in particular projects are thoroughly analysed and in cooperation with final beneficiaries solutions are found for averting and reducing these risks and problems.

For projects in which increase in costs has taken place, from now on during drafting of the winding-up report a repeated cost-benefit analysis will be carried out.

THANK YOU FOR YOUR ATTENTION!

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