A closer look at the Award Decision
Flexibility
The award to a particular project can be revised downwards. Annex 2 of the Award Decision states the circumstances foreseen by the EC in which this might happen:
- Two of the circumstances have been known for a long time already: the value of the award is lowered “accordingly” (Puzzled by “accordingly”? See below) if…
- …the relevant costs faced by the Project Sponsor when it reaches Final Investment Decision are lower than the estimate used in the NER300 application;
- …an intangible asset acquired for the purpose of the project is sold before it has remained five years in the establishment of the “recipient” (Puzzled by “recipient”? See below). This is consistent with the EC’s answer to FAQ 99.
- One novelty, not anticipated at the time that FAQ 99 was answered, has snuck into the Award Decision under section 5, ‘Other proposed changes’: The EC will tolerate changes to the scope of a project. The text says, “Changes shall be duly justified and may only be implemented if and when the Commission agrees and where appropriate amends the Award Decision accordingly.” This could be quite significant.
New absolute deadline for entry into operation
The ‘date of entry into operation’ is the date given in the 3rd column of the table of awarded projects in Annex 1. The Award Decision says that if the project doesn’t operate at all for any single period of one year following that date of entry in operation, the EC will revoke its Award Decision ex nunc, i.e. effective as of the end of end of that one-year period. The EC’s answer to FAQ 79 did not foresee this policy. It says,
79) What happens if a project cannot meet the 4 years deadline for entry into operation due to unforeseen circumstances?
The time window for the disbursement of NER 300 funding (except for upfront funding) will be shortened as it will start from the date of entry into operation as foreseen in the Award Decision. If the project enters into operation at a later date, it will therefore have a shorter time window for disbursement of the NER 300 funding.
Changes to the Specifications for Legally Binding Instrument
Annexed to the Award Decision is a new version of the old Specifications for the Legally Binding Instrument. A comparison of the two versions is available here. The changes are:
- The concept of a ‘disbursement period’ is introduced. Unless a project’s date of entry into operation falls on Jan 1, it will face six disbursement periods (if the date of entry into operation is Jan 1, it will face only five). The middle disbursement periods are whole years from Jan 1 to Dec 31.
- Some details on the timing of NER300 award payments has been moved from the Annex 3 (SLBI) of the Award Decision to Annex 2 to isolate in Annex 3 responsibilities that are strictly the Member States’ and Project Sponsors’. Thus, Annex 2 says “Member States shall submit payment requests for annual funding disbursement to the Commission at the latest by 15 July each year following the relevant disbursement period” and “Annual funding disbursements are to be transferred to the Member States within 30 days from receipt of the payment request as appropriate,” while Annex 3 says, “Annual Funding Disbursement shall be paid to the Project Sponsor in the year following the relevant disbursement period, within 30 days from its transfer to [the Member State].” Details of the steps that need to be taken each year to secure an NER300 payout irrevocably are given here.
- The EC has decided that it will be the ‘Knowledge-Sharing Body’ referred to in the old SLBI.
- The Project Sponsor sends knowledge-sharing reports straight to the EC, not via a competent authority in the Member State.
What to make of “accordingly”?
If relevant costs at Final Investment Decision are lower than estimated in the NER300 proposal by an amount N, then by how much exactly does the EC reduce the award? It is not clear. The EC could potentially do one of three things:
18 Dec 2012
Whatever policy it opts for will need to be applied consistently to all projects in this situation.
What to make of “recipient”?
“Recipient” is a word that crept into the NER300 lexicon through a mistake in drafting. It is undefined in the NER300 Decision, but the EC intends it to be understood as ‘Project Sponsor’. The EC imported the rules on relevant costs from the Guidelines on State Aid for Environmental Protection, from which the term originates. “Project Operator” (as in “operator contribution”) is used synonymously with Project Sponsor in the NER300 Decision.