1. The grant application is submitted before commercial close

In this case, the grant applicant must be able to provide to the Commission the results of feasibility studies including financial and economic analysis (this is a mandatory requirement in the case of major projects31). The financial analysis determines the appropriate level of contribution from the EU Funds32, besides evaluating the financial profitability of the investment and the financial sustainability of the project.

There are two main advantages to submitting the grant application before commercial close:

• The entire process is shortened because it is not necessary to wait for the award of the PPP contract to submit the grant application; and

• The private sector is able to take the EU grant into account in its proposal.

There is also a drawback:

The Commission awards the grant at the level resulting from the Cost-Benefit analysis. There is a risk, once the call for tenders has been launched, that the received bids are much higher (or much lower, making the EU Funds over-financing the project) than what was estimated in the feasibility studies and in the Cost-Benefit analysis. Therefore, the real need for co-financing will be superior or lower to the actual EU grant. If such a situation occurs, the application may need to be re-submitted taking into account either one of these realities (although it is noted that the same situation may arise in case of traditional projects, where the funding gap post-procurement may be considerably reduced or increased in case contracted investment cost differs substantially from that estimated during the feasibility stage).

One way of avoiding the risk described in the paragraph immediately above is for the grant applicant to regularly communicate with both the Commission and the national authorities from the earliest stage of a project. In addition, this risk could be avoided if, in the tender documents, the award criterion of the PPP is not lowest price but rather something independent of the level of grant (such as amount of additional capex, or duration of the contract, for instance).

The Commission has a legal obligation to decide on the grant approval within three months from the day of submission33.

It is important to note that the three months period assumes that the grant application contains all relevant information needed for approving the project. If this is not the case, the application review process may be interrupted by DG REGIO while further information is requested from the grant applicant. In order to reduce the risk of such interruptions it is especially important to have a clear presentation of the PPP preparation and tendering process, as this could be one area in which DG REGIO might request additional information.

The Directive 2004/18 on Public Procurement sets the minimum delays between the tender publication and the receipt of proposals at 40 days from the day the tender was published in case of a restricted procedure. In the case of a competitive dialogue the delay is 37 days. The grant applicant should bear in mind that those are minimums. The complexity of infrastructure projects will most likely require longer delays.

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31 Council Regulation (EC) No 1083/2006, Article 40 (c ) and (e).

32 Working Document No.4 of the Commission, "Guidance on the methodology for carrying out Cost-Benefit analysis", p.7

33 Council Regulation (EC) No 1083/2006, Article 41.