EU Funds in Romania

Do‘s and Don‘ts

Norbert Höckl

Bucharest, 28 Feb 2013

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Business Development • Strategies & Business models

• Internationalization & outsourcing

• Sales activation, new business development

• Organization & growth

Performance Management • Development and optimization of strategies,

organization and processes

• Balanced scorecard

• Business model optimization

Turnaround Management • Safeguarding liquidity

• Restructuring / recapitalization

• Risk management & risk reporting

• Interim management

Corporate Finance • Target search, M&A

• Investment, spin-off, investor search

• Corporate valuation / due diligence

• Financing / re-financing

• Capital market / IPO

• Capital market coach*

• Budgeting & controlling

• Financial models

• Subsidy and Grant management

GCI Management focuses on 4 integrative consulting practices

GCI MANAGEMENT – AREAS OF COMPETENCE

* Vienna Stock Exchange - mid market segment

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GCI Focus

GCI Management offices

GCI Management acts out of the heart of Europe from where it handles

international mandates

• Beijing

• Bucharest (since 2006)

• Denver

• Milano

• Munich

• Vienna

• Established 1991 as a consulting and investment

company, mother holding stock listed

• As an investment company GCI has always been

interested in grants for own portfolio companies

• Funding consulting for clients in RO, AT, DE, CZ, SK,

HU, BG

• Funding consulting in Romania since 2006/2007: over

200 million lei have been obtained for our clients

Europe

Regional coverage (partner network)

Core markets (D,A, CH,I,RO)

Coverage representative offices

GCI MANAGEMENT – TARGET AREAS

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REFERENCES

GCI Management Clients – Eu Funding

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Review and current status

GENERAL INFORMATION

Both State and EU non-reimbursable funds are available for investments

For the current EU programming period is 2007 - 2013.

For this period € 33 billion in funding are allocated to Romania.

This amount shall be distributed for projects from private and public beneficiaries.

The allocation of funds is delayed considerably.

The absorption of the available funds has also lagged behind considerably.

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The learning curve of the authorities has been apparent in the last years.

We expect a continuation of efficiency improvements from the authorities.

Romania is an alleged heaven for grants.

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Operational Programmes

• Sectoral Operational Programme “Increase of Economic Competitiveness” (SOP IEC)

• Sectoral Operational Programme “Human Resources Development” (SOP HRD)

• Regional Operational Programme (ROP)

• Sectoral Operational Programme “Environment” (SOP ENV)

• Sectoral Operational Programme “Transport” (SOP T)

• Operational Programme “Administrative Capacity Development” (OP ACD)

• Operational Programme “Technical Assistance” (OP TA)

The National Programme for Rural Development (NPRD)

Cross-Border Cooperation Programmes

• Ukraine and Moldova

• Black Sea Region

• Bulgaria

• Serbia

STRUCTURE OF EU-FUNDS IN ROMANIA

7 operational funds, the national development program for agriculture and

4 cross-border cooperation programs address different beneficiaries.

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Each investment has to meet the requirments

of, and be properly filed in,

the matching programme.

Increase of Economic Competitiveness (IEC)

• Total Amount 3.011.000.000 €

• Origin of Funds: ERDF, State Budget

• Main benefficiaries: Large companies; SMEs; Local authorities; NGOs; Micro enterprises;

Partnerships (with universities or local authorities); R&D public institutions

Human Ressource Development (HRD)

• Total Amount: 4.253.000.000 €

• Origin of Funds: ESF, ERDF, State Budget, Local Budgets, Private Financing

• Main beneficiaries: Schools, Universities; Training companies; Central Authorities; Industry

and Commerce Chambers; Large companies and SMEs

Regional (REG)

• Total Amount: 4.384.000.000 €

• Origin of Funds: ERDF, State Budget, Local Budgets

• Main benefficiaries: Local Authorities, Intercommunitary Development Agencies, Social

Services Providers, State Universities, CVT Providers, SMEs, Industry and Commerce

Chambers

Environment (ENV)

• Total Amount: 5.611.000.000 €

• Origin of Funds: SCF, ERDF, State Budget, Local budgets

• Main beneficiaries: Local Administration, Intercommunitary Development Agencies; Water and

Sites Administrations

Transport (T)

• Total Amount: 5.694.000.000 €

• Origin of Funds: SCF, ERDF, State Budget

• Main beneficiaries: Administrators of Transport Infrastructure; Ports and Airports

Administrators; Ministry of Transport

Administrative Capacity Development (ACD)

• Total Amount: 246.000.000 €

• Origin of Funds: ESF, State Budget

• Main benefficiaries: Central and Local Administration; Centralised and Decentralised Services

Technical Assistance (TA)

• Total Amount: 212.000.000 €

• Origin of Funds: ERDF, State Budget

• Main beneficiaries: Management Authorities, Intermediate Bodies

OPERATIONAL PROGRAMS

7 operational programs address private and public beneficiaries

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Increase of Competitiveness (IEC)

Small and medium sized

enterprises

Increase of Competitiveness (IEC)

Large enterprises

Human Ressource Development

(HRD)

Maximum grant

EUR 1.500.000

0%

25%

50%

75%

100%

Eligible

investment

EU fund

50%

0%

25%

50%

75%

100%

Eligible

investment

EU fund

70%

0%

25%

50%

75%

100%

Eligible

investment

EU fund

95%

Maximum grant

EUR 5.000.000

Maximum grant

EUR 500.000

SOME EXAMPLES OF ELIGIBLE COSTS AND POSSIBLE FUNDING

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Land max. 10%

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Ma

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Pro

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Land max. 10%

DIFFERENT FINANCE INTENSITY

Co-financing of up to 95% of eligible costs is possible.

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Call of proposals Project Approval

The major steps in the implementation of EU funding

• Each programme is implemented at the most detailed

level through call of project proposals:

- Open calls of proposals with continuous filing

- Open calls of proposals with a deadline

- Closed calls of proposals with a deadline (between 1

and 3 months)

• Open calls are started and either have a budget until a

deadline or the entire budget of the programme part

• Closed calls have a yearly filing period

• Open calls have the principle of “first come first served”

- That means the project is evaluated as soon as it is

filed

• In closed calls the projects are evaluated after the

deadline

- The timeline for evaluation is around 2 months.

According to GCI experience this period was grossly

underestimated by the management authorities

- We expect the future timeline to be closer to the initial

estimation as the authorities gain experience

FROM 1 TO 9 MONTHS

IMPLEMENTATION PROCESS

EU funds unfold in two steps in Romania

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Administrative Verification

• Verification that:

- the filing document of the project

contains all required documentation

- all required documents are attached in

proper order and the correct format

- all documents are valid at the moment

of filing

• If a project has fulfilled all conditions of

the checklist the applicant is informed

about this fact and the project advances

to the next step

• If a project has not fulfilled all of the

conditions, the project is rejected

• This step should last about one week but

this period was underestimated according

to our experience

Eligibility Verification Project Evaluation

MANAGEMENT AUTHORITY CLARIFIES AND EVALUATES IN DETAIL.

PROJECT APPROVAL PROCESS

• The projects that have advanced from the

first step are verified for:

- the eligibility of the project

- the eligibility of the applicant

• This verification is performed also by

means of a checklist and the projects

must fulfill all the conditions of that

checklist

• If a project has fulfilled all the conditions

of the checklist it passes to the final step

• This step should last about one week but

this period was underestimated according

to our experience

• The projects that have advanced into the

final step are evaluated by an expert

commision against a criteria matrix.

- There are usually several matrix

sections wherein the project in some

cases must have a minimum number of

points in order to be ranked

• The top-ranked projects that are within

the budget of the call are then proposed

for financing and the applicant is invited

to sign the financing contract and, in

some cases, to provide additional

documents.

- The timeline for evaluation is around 2

months. According to GCI’s experience

this period was underestimated by the

management authorities. We expect the

improvement of the situation as the

authorities gain experience

DEPENDING ON THE PROGRAMME UP TO 2 MONTHS

A filed project is approved in three steps

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Grant volumes depend upon the specific part of the operational programme for which the project

is eligible. The Grant intensity varies up to 50 / 70 / 95% but not more than 25.000.000 €.

Eligible investments are: tangible and intangible assets, land, buildings, R&D (only for SMEs),

training programmes, improvement of energy consumption, use of renewable energy sources,

ICT development, tourism development (only SMEs).

Each programme is divided into several priority axes those being further divided into one to

several key areas of intervention. The application process varies wildly between different

programmes and even with the same programme between different key areas of intervention or

priority axes.

A project can receive funding from an appropriate Programme, so the first step is always the

identification of the financing source within the EU programmes.

Issue What to take care of

POSSIBLE GRANTS

Programme

Application

Process

Eligible costs

Grants

EU funding can be regarded as a complex but highly attractive

co-financing source.

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EU

Funding

Optimize the Application

Keywords and -issues have to be well

placed in order to meet evaluation criteria

and get ranked top.

Maximize Grants / Subsidy

Increase of the eligible costs as part of

the entire project

State-of-the-art presented project

High quality documentation both from

technical and economic points of views

Romanian Business Style

Romanian way of presenting the

documents of the application

Organisational Project Setup

Anticipation of future purchasing

procedures financial and project

accounting

Proper Programme Selection

Correct identification of the programme

t<hat can provide funding for a specific

project

GCI Management is analyzing the interdependent success factors of an EU

fund application in order to drive and manage the process at its best.

SUCCESS IN EU FUNDING IS A MATTER OF COHERENT WORK

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13 SUCCESS FACTORS

DON‘Ts -

• Pressure and lack of time to draft a professional

application, due to a delayed start of the financing

project drafting process

• Wrongly estimated timeframe between the end of

the project application and the start of the project

• Negligent drafting of the financing application and the

formal mistakes that result from this

• Using only the western European methods and not

respecting the structure and format of Romanian

documentation

DOs +

• Time and patience in the preparation, concept and

documentation development for the financing project

• Understand and comply with all requirements of form

and content

• Clarify any ambiguities by having discussions with

the authorities before filing the project

• Filing of petitions to amend partially or totally

unrealistic requirements of the applicant guidelines

• Planning a larger reserve of time between the end of

the project application and the start of the project

• Complex requirements regarding the project

organization and the accounting after obtaining the

grant should be considered when filing

Time is also here of essence.

A good preparation and a longer period of development are prerequisites

for a successful financing project.

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The tender process is a very sensitive process. Handle it with care.

Pay attention to

• Draft a thoroughly verified tender book meeting all the requirements for transparency,

equal opportunities and publicity

• Allow enough time for bid preparation linked with the implementation plan

• Notify the authorities as soon as possible about changes in the implementation plan or

budget re-allocation

• For preparing the reimbursement claims and audits keep all documents (such as

offers, invoices, protocols, etc.) in a separate closet in appropriate folders as soon as

they are issued

• If the accounting system is different than the usual Romanian type, explain the

traceability of the documents

• Respect the requirements for information publicity and visual identity

SUCCESS FACTORS

The implementation of the project shall be according to the submitted plan.

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It all starts with the feasibility study.

Pay attention to

• Allocate time buffers when defining the initial implementation plan, especially to the

tender procedures and the equipment delivery

• Dedicated project management team (project manager, financial responsible and

purchasing responsible)

• Careful financial resource planning (time buffer for bridge loans and financial buffers

for possible delayed reimbursements)

• When drafting the feasibility study good balance between details of technical solution

and flexibility in implementation

SUCCESS FACTORS

A dedicated project management team is an important key success factor

for a good implementation.

16 GCI OFFERS CLEAR ADDED VALUE

We support our clients through the entire process with knowhow and

operational ressources.

Application Support (Months)

Implementation Support (depends on project)

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Filing of the financing

application

Receiving all the amount

granted A folder with all the required

documentation

Financing Concept and

Documentation (Weeks)

2

• Support for fulfilling of all

obligations from the

financing contract

• Support for the

intermediate and final

reports drafting

• Support for drafting of the

reimbursement claims

• Checking that all the

required documents are in

the folder to be filed

• Keeping contact with the

authorities

• Supporting the client to

answer any questions

related to the filed

documentation

• Support during the

financing contract

negotiations

• Definition of the

appropriate project

structure to get the

maximum financing

• Drafting of all the

documents in Romanian

format and style in order to

file the project due to local

patterns

• Inserting the appropriate

keywords in the right

places to increase the

chances of funding

Eligibility Check (Days)

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• Identification of the exact

programme and key area

of intervention for the

project

• Verifying the formal

requirements for the

respective call

• Verifying of the eligibility of

the company and the

project for the respective

call

• Evaluation of success

chances of the project

A grant project

Uniquely, the intensity and the volumes of grants available for Romania are higher, compared to other

European countries. „The grapes are sweet, but they are hard to reach.“

17 CONTACT

Bucharest

Str. Nicolae Racota 5

011391 Bucharest, sector 1

Tel: +40 21 310 35 79

Fax: +40 21 310 35 80

gci.ro@gci-management.com

www.gci-management.com

Beijing

Vienna

Milan

Munich

Denver

Bucharest

Norbert Höckl

E: n.hoeckl@gci-management.com | M: +40-723-463255