Team of “Stroitel” newspaper
“I thank all representatives of European and Bulgarian institutions that responded to the invitation of BCC and with their presence underlined the crucial importance of the topic of the forum.” With these words the Chairman of BCC Eng. Svetoslav Glosov opened the conference “Cohesion Policy 2014 – 2020 – Challenges and Perspectives”. The event, organized by the Bulgarian Construction Chamber (BCC) in partnership with “Stroitel” newspaper and under the patronage of Iskra Mihaylova – Chair of the Committee on Regional Development of the European Parliament, was held at “Sofia Hotel Balkan”. The forum brought together senior government officials of Bulgaria, of the European Parliament, the European Commission and OLAF – the European Anti-Fraud Office.
Among the participants was the Deputy Prime Minister for EU Funds and Economic Policies Tomislav Donchev, Minister of Regional Development and Public Works Lilyana Pavlova and Minister of Environment and Water Ivelina Vasileva, Sofia Mayor Yordanka Fandakova, the Honorary Chairman of BCC Eng. Simeon Peshov, Deputy Chairmen Eng. Ivan Mirinski and Eng. Nikolay Stankov and Eng. Ivan Boykov, Executive Director of BCC. Special guests were Vittoria Alliata di Villafranca, Director of Directorate General for Regional and Urban Policy of EC, and Margarete Hofmann from OLAF.
Eng. Glosov expressed thanks to Iskra Mihaylova that she was the main driver for the conduct of the event. “The time chosen for the conference is not accidental. We are at the beginning of the programming period 2014 – 2020, when it is extremely important to evaluate the results of the financing under the cohesion policy 2007 – 2013, to analyze the lessons learnt from the implementation of the operational programs, in order to continue in the coming years to take advantage of the opportunities that EU funds provide us and to overcome the challenges that lie ahead,” said the BCC Chairman. He stressed the importance of EU funds for the development of Bulgaria, for the opportunities to strengthen the competitiveness of the economy and to improve the quality of life of people. In his speech Eng. Glosov presented the functions and priorities of BCC, reminding that the Chamber was established by law and is one of the most prestigious professional organizations in the country. “The state has given it to lead the Central Register of Professional Builders, in which currently are recorded more than 4,600 Bulgarian and foreign companies. The Chamber is an internationally recognized member of FIEC and of the Association of European International Contractors. The publication of BCC – “Stroitel” (Builder) newspaper reaches local and central authorities and diplomatic missions in Bulgaria. For the second year the Chamber monitors public procurement, examines the conditions affecting negatively on the competitive environment. It prepares monthly analyses aiming with them to show the weaknesses in tenders because the subject of public procurement is a priority in business. It is no secret that in the last four-five years the construction industry relies heavily on tenders that form almost 80% of construction output in the country. Problems in the field of tendering procedures directly affect companies,” explained Eng. Glosov.
In the analysis of gaps from the previous programming period 2007 – 2013 he pointed out that because of a number of mistakes was allowed suspension of projects under OP “Environment” and of two axes under OP “Regional Development” – “Integrated Sustainable Urban Development” and “Sustainable Development of Tourism”. The Chairman of BCC reminded the difficult situation in which companies were last year. “The companies were forced to work without funds, for their own account. We became creditors of the state. The situation had extremely negative effect on the sector. The result was de-capitalization of the companies, suspension of payments to sub-contractors and suppliers, increasing inter-company debt,” he said. In connection with the creation of a healthier business environment Eng. Glosov outlined the priorities of the BCC, namely the imposition of clear market rules, fair competition and transparency in public procurement.
He added that the Chamber participates with an expert position in drafting a new law on public procurement, so that the standards set in the European directive for tenders, to become part of the national regulations. According to him, among the objectives of the organization is the introduction of standard procedures and contracts and of electronic tenders.
“Recently with a decision of the Board of the Chamber we appealed to institutions in the new programming period to be used as standard for contracts the conditions of FIDIC,” said the BCC Chairman. He added that the organization has a clear position against the irregularities in tenders, fraud with EU funds and corruption. “For us is important the presence at the forum of Margarete Hofmann from the European Anti-Fraud Office (OLAF). In the face of BCC OLAF will find a reliable partner. We can work together to prevent irregularities in the absorption of EU funds,” Eng. Glosov turned to Director “Policies” of the European Office.
As regards the development of the construction sector, he noted that due to the economic crisis the strong years of the industry remain back in time. For 2014 branch “Construction” generates gross value added of 4.8%. In times of economic difficulties in the sector are employed over 175 thousand people, it became clear from the data submitted by him. He stressed that the efforts of the Chamber are concentrated in building a transparent and competitive business environment in the sector, in policies for solving problems and making good messages not only to the industry but also to the state.
“Our hopes are now focused on the new programming period 2014-2020. For both Bulgaria and the European budget, one of the challenges is the most appropriate one, namely the spending of the EU funds. BCC is trying to help the institutions with this matter as well. For almost a year we have started a debate on one of the largest infrastructure projects that should be implemented by 2020 – the passage through the Kresna Gorge. Some years ago it was decided to build a 15-km facility. This is a large-scale initiative not only for our country but also for Europe. United in an Expert Council, the leading international and Bulgarian scientists and experts shared the opinion that the construction of a long tunnel through the Kresna Gorge is inappropriate due to the engineering-geological, seismic, economic and environmental uncertainties which are jeopardizing the project completion within the Operational Programme “Transport and Transport Infrastructure” 2014 – 2020”, explained Eng. Glosov. He handed to Iskra Mihaylova and Vittoria Alliata di Villafranca the resolution of the Expert Council on the construction of Lot 3.2 of Struma Motorway.
Eng. Glosov said that the Chamber strongly supported the decision of the Ministry of Regional Development and Public Works and the National Company Strategic Infrastructure Projects to design an alternative route through the gorge comprising short tunnels, trestles and a ground road. According to him, BCC is ready to render the necessary support for the design a new alternative for crossing the Kresna Gorge through experts, developments and proposals. “The construction sector has a great potential and I am confident that it will provide many new jobs and prosperity in the coming years” summed up Eng. Glosov.
After him, the floor was taken by the Chair of the Committee on Regional Development of the EP Iskra Mihaylova. She pointed out that the forum had united the efforts of a representative of Bulgaria in the European Parliament and of the BCC. “In the period while preparing the conference several times I got a series of questions – why with BCC, why on this topic, why at this moment and why with the support of the Alliance of Liberals and Democrats for Europe. The answers to these questions are the essence of the whole idea of the conference. I am convinced that the construction industry in Bulgaria not only provides 175 thousand jobs, but has the potential for more; it can ensure economic growth and help all institutions in the country to deal with the successful absorption of the Cohesion and Structural funds, to attract more investments in the country. The main topics of EU are growth, employment and competitiveness. Bulgarian construction industry in practice has proved that it is competitive and can be stronger. The sector has greatly contributed to the development of native economy. That is why I believe that the forum demonstrates the possibilities and potential of future development based on the experience already gained, on the negotiations, on the comparison with our other member states, on the basis of the mistakes we made, etc. This is a good start for cooperation with the Chamber and we will continue to work jointly,” said Iskra Mihaylova.
She pointed out that in 2015 completes the implementation of the planning period 2007 – 2013. “The past seven years were the first in which our country could benefit from EU support and realize a successful regional policy through the operational programs,” reminded Mihaylova. In her words, it is extremely important the funds allocated from the European taxpayer, including the Bulgarian one, to be spent in the most transparent manner, within the concept of publicity, legality and appropriateness. “This is our task. The Alliance of Liberals and Democrats for Europe is the fourth political group in the EP, but not in significance. We support European values, work for more Europe and defend entrepreneurship. ALDE is interested in growth, in jobs, in successful business,” added the MEP.
At the beginning of her speech, Vittoria Alliata di Villafranca, Director of General Directorate “Regional and Urban Policy” of the European Commission, apologized on behalf of the European Commissioner for Regional Policy Corina Cretu, who was prevented to join the forum and to visit Bulgaria because of problems at Brussels airport.
“Accept the congratulations of European Commissioner Cretu to Bulgarian authorities – for the successes achieved in the management of EU funds. Here, in Sofia can be seen how much you have done thanks to your wonderful mayor Yordanka Fandakova,” said Villafranca. She commented on the need for administrative capacity at central and local level to prepare and manage the activities financed by EU funds. In her words, this problem was common to Eastern European countries. But she thinks Bulgaria has dealt with it and has made significant progress. “75% of the funding for your country is disbursed to date. About 2 billion euros still remain. Hardly anyone in Bulgaria will have a rest this summer because the funds have to be absorbed by the end of 2015,” she added.
According to cited in her presentation data 60 percent of the money for infrastructure in Europe is provided by the EU structural funds and in a situation of financial crisis such investments would be unaffordable on a national level. Villafranca said also that Bulgaria needs also investments in workforce and education, research and innovation so as to build capacity for economic development. “Certainly there are important tasks in the field of transport to connect to the European network, construction of waste water treatment plants, fight against corruption. Until they are met we can say that investors will be attracted to Bulgaria. But what I saw inspires my confidence and hope. Whenever I come here, I meet competent people who are ready to work,” said Villafranca.
“Around this table are gathered the people who should produce better decisions concerning the movement of money and more concrete results. These are the people both at the EU level and at the level of Bulgaria. There is no other format. So, if we comment good decisions – they have all the chances to be implemented.” With these words Deputy Prime Minister Tomislav Donchev joined the conference. He said that currently the country has five operational programs approved by Brussels. OP “Regions in Growth” and OP “Environment” are in technical procedure and are expected to be soon adopted by the European Commission, became clear from the statement of Donchev. “The new programming period follows the maxim “Money against reforms”. And we started a lot of changes that need to produce results. We realized how important is the effective programming and the principle of partnership. It is imperative investments to be directed only to the reformed sectors. An example is the water sector,” he explained.
According to him, it is necessary to make special efforts on the least developed regions in the country. “The belief from the old programming period that in a mode of genuine competition between the regions will benefit also the less developed ones proved an illusion. As a result of the modest administrative capacity we see that when there is a competitive selection of projects, they are quickly outpaced by the more experienced and aggressive administrations from the more developed parts of Bulgaria,” said Donchev. In his words, if not particular attention is paid to these regions disparities between different parts of the country will increasingly grow. “Lessons learnt determine our future steps. Measures are needed in terms of codification and improvement of the regulatory framework. We are working on the two key laws that should be the attention of Bulgarian Parliament before the summer vacation. Both are under interagency coordination. These are the EU Funds Act and the new Public Procurement Act. They will play a key role so that the money goes where there is a greater need of it and to be distributed fairly,” said the Deputy Prime Minister.
As challenges to Bulgaria until 2023 he pointed the preparation for shrinking EU grants and use of more credit instruments. “Quality control and personal responsibility of the units in the system are also under discussion. Local elections are coming now and all units on irregularities will receive hundreds of signals. Half will prove with a character of defamation. But they all will be processed. This will swallow huge amounts of money and a lot of time of the administration. The question is who will take responsibility for clogging the state machine without negatively affecting the motivation of citizens to seek irregularities,” said Tomislav Donchev. He explained that for a second time in a year of local elections is seen “enthusiasm” on the control of the implementation of projects which prevents them and slows the money absorption. Therefore Donchev said he would think about to introduce legally criminal liability when the applied signal is unfounded and even malicious.
Speaking to reporters after the conference he said that there is no member state that in the first programming period was able to absorb 100% of the funds allocated by the EU. Concerning the errors, Donchev said that thanks to the heavy including collective measures taken by Bulgaria we continue to be among the countries with the lowest level of gaps. Deputy PM pointed out that under most operational programs they are below the materiality threshold of 2%. “This programming period we will begin a year earlier than the previous one. Not all member states are in this situation. In fact we have already started the first schemes under OP “Innovation and Competitiveness” and OP “Human Resources Development,” he added.
Asked how will be covered the financial corrections of municipalities on the implemented EU projects, Deputy PM said that for this there cannot be a solution at large. “Corrections are different – some of them are undoubtedly merit of the state. I am talking about examples from 2008 – 2009 when the national legislation was not synchronized with the European. We cannot seek individual responsibility in municipalities when another authority of the state – the court has decided who will be the contractor. So a common approach is impossible. The blame should be differentiated. I am making a report to the Council of Ministers with analysis of all cases with a try to determine in which situation who is to blame. This will be the basis on which the state will decide which financial corrections should be made on behalf of the state budget and which – paid by beneficiaries. There are also cases in which the blame should be shared,” said Deputy PM Donchev.
Eng. Simeon Peshov, Honorary Chairman of BCC: Preventive control should be strengthened
As an Honorary Chairman of the Bulgarian Construction Chamber I would like to say that during the Forum, we received very valuable information, which will be helpful for the industry. I will use this opportunity to make three suggestions. Please increase the funding for feasibility design, design and main geological survey. These are the foundations of the quality projects implementation during the programming period 2014 – 2020. We have quite good practices but also a bad experience. We must strive for a higher quality. We have raised this question repeatedly. There are improvements however I believe we still need to work on it.
Ten years ago we opened the topic of integrated approach to water projects. There is already a significant progress with this matter. However I would like to raise a question which seems negligible at first sight, but it is extremely important for the builders in the towns and villages. During the execution of water projects we cut the asphalt along the lane to lay a sewer or water pipe, and then we put the asphalt again. This is a quality process, however, the streets look damaged. We know that this is a complex issue however for the next water projects we should consider re-asphalting wherever necessary.
We think that the preventive control should be increased, however, the subsequent one is undue at times. Once the tender documents have been thoroughly reviewed and the project is being finalized, an audit authority appears and imposes sanctions of 10% to the municipality. This reflects on the builders.
I would like to thank the participant representatives of the national and the European institutions. I believe that today’s forum is a big step to future synergies.
Eng. Svetoslav Glosov, Chairman of BCC: The construction of a long tunnel through the Kresna Gorge is inappropriate
The participation of Margarete Hofmann from the European Anti-Fraud Office (OLAF) at the Forum is very important for us. OLAF will find a reliable partner in the face of BCC. We can work together to prevent irregularities during the investment of the EU funds.
For both Bulgaria and the European budget, one of the challenges is the most appropriate one, namely the spending of the EU funds. BCC is trying to help the institutions with this matter as well. For almost a year we have started a debate on one of the largest infrastructure projects that should be implemented by 2020 – the passage through the Kresna Gorge. Some years ago it was decided to build a 15-km facility. This is a large-scale initiative not only for our country but also for Europe. United in an Expert Council, the leading international and Bulgarian scientists and experts shared the opinion that the construction of a long tunnel through the Kresna Gorge is inappropriate due to the engineering-geological, seismic, economic and environmental uncertainties which are jeopardizing the project completion within the Operational Programme “Transport and Transport Infrastructure” 2014 – 2020.
The Chamber strongly supports the decision of the Ministry of Regional Development and Public Works and the National Company Strategic Infrastructure Projects to design an alternative route through the gorge comprising short tunnels, trestles and a ground road. BCC is ready to render the necessary support for the design a new alternative for crossing the Kresna Gorge through experts, developments and proposals.
Tomislav Donchev, Deputy Prime Minister: We are working on key laws for absorption of EU funds
We are working on two key laws that should draw the attention of Bulgarian Parliament before the summer vacation. Both are under interagency coordination. These are the EU Funds Act and the new Public Procurement Act. They will play a key role so that the money goes where there is a greater need of it and to be distributed fairly.
There is no member state that in the first programming period was able to absorb 100% of the funds allocated by the EU. Thanks to the heavy, including collective measures taken by Bulgaria, we continue to be among the countries with the lowest level of gaps. Under most operational programs they are below the materiality threshold of 2%. This programming period we will begin a year earlier than the previous one. Not all member states are in this situation. We have already started the first schemes under OP “Innovation and Competitiveness” and under OP “Human Resources Development”.
Vuttoria Alliata di Villafranca, Director of GD “Regional and Urban Policy” of the European Commission: EUR 2B remain to be disbursed under the operational programs
75% of the funding for your country is disbursed to date. About 2 billion euros still remain. Hardly anyone in Bulgaria will have a rest this summer because the funds have to be absorbed by the end of 2015.
60 percent of the money for infrastructure in Europe are provided by EU structural funds, in times of financial crisis such investments would be unaffordable at a national level. Bulgaria also needs investments in workforce and education, research and innovation, so as to build capacity for economic development. Certainly, there are important tasks in the field of transport to connect to the European network, construction of waste water treatment plants, fight against corruption. Only until they are completed, we can say that investors will be attracted to Bulgaria. But what I saw inspires in me confidence and hope. Whenever I come here, I meet competent people who are ready to work.
Lilyana Pavlova, Minister of Regional Development and Public Works: Builders will have a lot of worк
I am glad to often meet with representatives of the Bulgarian Construction Chamber. The conference “Cohesion Policy 2014 – 2020 – Challenges and Perspectives” is important and useful because it allows us to make a survey of where we are and what way we go from here. Despite the many challenges we faced during the period 2007 – 2013 I am confirmed that we can successfully complete Operational Program “Regional Development” (OPRD). We will not only consider the absorbed funds under it but also the fact that thanks to the received BGN 360 million from the European solidarity over 77 Bulgarian towns changed their appearance.
With these investments the medium was renewed – streets, pedestrian zones, bicycle lanes and many parks. This has no direct economic impact. It is indirect and people can feel that they live in better conditions and in more aesthetic cities. Parallel with this, over 1,500 buildings, schools and kindergartens were renovated. This is a very important investment thanks to which our children study in more beautiful, warm and cozy schools. Almost 100 tourist attractions received funding under OPRD and over 380 buildings of cultural infrastructure – theatres, opera houses, libraries and museums. Together with it we worked on the rehabilitation of municipal and smaller class republican roads. OP “Regional Development” is a bouquet of investments in municipal, urban, educational, cultural and social infrastructure.
Yordanka Fandakova, Mayor of Sofia Municipality: We will continue to build on the achieve
During the programming period 2007 – 2013 we were able to build administrative capacity that allows us to move forward. This was not an easy process. In the beginning we had a lot of difficulties. Sofia Municipality has extremely serious and stable team with which we have prepared for the programming period 2014 – 2020. With the new projects we will build on the implemented so far. One of our main tasks is to work integratedly. We want to show that EU funds change the quality of life in Sofia. In the implementation of the projects so far this is best seen in the construction of the metro. It changes the urban environment.
Municipal projects for the first programming period are worth BGN 3 billion. About BGN 2 billion are grant funds. These are 89 projects. Throughout the period despite the difficulties we had over the years, we managed to do so as not to stop a single project and to continue with own funds until receiving appropriate support from the operational programs.
Ivelina Vasileva, Minister of Environment and Water: In order to go forward, we should not repeat omitted mistakes
Undoubtedly 2015 is very important year. This is the year in which it is necessary to achieve full mobilization of the forces because we complete the old programming period 2007 – 2013 and start the new one – 2014 – 2020. Eight years ago Bulgaria had the opportunity through European solidarity to invest nearly BGN 3.5 billion in the environment. At the start of the first programming period we knew that a lot of work and challenges were ahead of us and on the way so far we gained substantial experience, we learnt a number of lessons. We went through a difficult year in which we were put to the test both by the Ministry of Environment and Water as Managing authority of OP “Environment 2007 – 2013”, and by our beneficiaries and the construction industry. It was necessary to mobilize all efforts to continue the implementation of OPE so as to finish the programming period with success.
Up to now were built 32 waste water treatment plants from a total 58, according to the projected number in the operational program, i.e. the average progress is 71%. A total 2,070 km water and sewage networks were built. In the sector “Waste” is projected implementation of 20 regional systems for waste management. So far were completed the landfills in Burgas, Vidin, Botevgrad, Malko Tarnovo, Sofia Municipality and others.The average progress is 60%. These are the numbers behind which lie much efforts.
Margarete Hofmann, Director Policy of the European Anti-Fraud Office (OLAF): Detected irregularities for the last seven years amount to EUR 1.5
OLAF intervenes when there is suspicion of corruption and fraud with EU funds. It is the last point of control at European level. We identify and investigate serious violations and misconduct on the part of European institutions, including the European Court of Auditors, the European Parliament and individual agencies to protect the reputation of the EU. As a result of our investigations can be reached to disciplinary proceedings but also to criminal actions. Not least OLAF supports member states in their efforts to prevent fraud and observe the legislation.
Cohesion policy has always been among the key of EU both in terms of financing, and in the impact on economic growth. However, there are many possibilities for fraud. The European Court of Auditors focuses on cohesion policy where there is a level of error of 6.7%. This is the highest percentage in comparison with other areas. The media also frequently discuss corruption cases related to structural funds. Many of our investigations deal with signals on the operational programs.