All eyes on NRRP

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The total value of the projects under the National Recovery and Resilience Plan (NRRR) Romania will send to the European Commission will be 35% higher than the 29,2 billion euro allocation, according to Cristian Ghinea, minister of Investments and European Projects. Negotiations with the European Commission will start on May 1st, and endorsement talks in the Council of the European Union in ECOFIN will take place during July and August. The first money will be allotted no earlier than September this year.

The new political majority in Bucharest, in which the USR Plus alliance plays an important role and gives the minister in charge of European funds – Cristian Ghinea, has assumed a political mandate to reform the Romanian administration and economy. A significant part of this commitment is based on the funding available through NRRP. The political decision is for Romania to make full use of the loan segment provided by the European program, which is 14,9 billion euros. “It is a cheap loan […] with a close to zero interest rate, with the EU guarantee and a very long return term”, stated Minister Cristian Ghinea.

We ask for more to get enough

No Member State has presented the final plan so far and formal negotiations have started with no country. Some states already sent full chapters, others, including Romania, sent some components for preliminary consultations.

Over-allocation in the early stages of the NRRP negotiation is a tactic adopted by the beneficiary states, as it ensures that as many projects as possible are eligible for the Commission. According to the Minister of European Funds, other European countries have also opted for this approach, including Croatia (140%), Germany (124%), Hungary (108%) and Greece (141%). At the national level, the Bucharest City Hall (PMB) proposed projects with a total value of 7 billion euros. “I would like as many of them to be financed through NRRP”, said the mayor Nicușor Dan, specifying at the same time that a large part of the projects refers to urban mobility (trams purchasing, the extension of tram lines), greening the city (900 million euros), modernization of the district heating system (one billion euros), extending hospitals and other social projects. In the district heating area, the PMB plans refer to the modernization of the network, digitization in both the transmission and distribution networks, as well as introducing smart metering to the end consumers.

Mature projects with firm commitments are funded

PMB has no projects in the process of being implemented, the mayor highlighted. “The speed of preparing and submitting projects is very important in the NRRP. So for all the projects I mentioned and for all the projects that you will find in the list of projects we submitted to the Ministry of European Funds, we will need a sustained effort in the coming months to write feasibility studies so that the projects can be submitted in full when the ministry asks for them,” Nicușor Dan said. He mentioned 50 projects, which PMB plans to carry out later this year and implement by 2026.

Public investment projects funded by NRRP should contribute to improving the economic condition and increasing Romania’s resilience. A very important element is the potential of these projects to be implemented by the end of 2026; for this, an essential condition is “to be mature projects with an advanced degree of elaboration of technical and economic documentation, and with binding commitments from final beneficiaries to conclude public contracts or sectoral contracts, as appropriate, by the end of 2022 for a minimum of 70% of the amount allocated in the form of a grant, i.e. at the end of 2023, for the rest of the grant allocation”, writes the GEO on NRRP.

Another important element is that the funds available under the NRRP will also be able to finance projects started already after 1 February 2020.

Areas of the assistance of NRRPs

The European Mechanism has been built on six pillars; energy does not appear among them as a distinct area. However, there will be many projects with an impact on the energy sector because they can be framed in segments such as the transition to a green economy, digital transformation, smart, sustainable and inclusive growth, social and territorial cohesion.

In March, the Coalition for the Development of Romania complained about the Executive’s lack of transparency on the projects and reforms to be included in Romania’s National Plan for Recovery and Resilience.

Collecting individual interventions, we learned a little bit about them. Projects on hydrogen energy production will be included, as this is one of the strategic directions of the European Union, said the Minister of Energy, Virgil Popescu, at the ZF Power Summit 2021, in late February. On the same occasion, the Minister specified that Secretary of State Dan Dragan “will manage all hydrogen projects because we have to send them to be included in the National Plan for Recovery and Resilience and there are hydrogen projects in Romania, as you know”. Two such intentions were announced before. Hidroelectrica has included in its investment strategy a project for hydrogen production by hydrolysis and the development of e-mobility networks. Also, Romgaz and OMV Petrom want to invest in a joint hydrogen production project in a wind farm in Dobrogea, announced in November 2020 Niculae Havrileț, Secretary of State in the Ministry of Economy, Energy and Business Environment.

Agriculture Minister Adrian Oros announced at the end of February that 10 important projects for agriculture are to be included in the NRRP, including water management projects (for irrigation, drainage and desertification prevention) totalling 6,5 billion euros.

Transport and digital transformation

Ghinea said that along with road, rail and underground transport, at least 28% of the financing will be provided, about 9 billion euros. Under the same pillar on the “Green transition” will be included projects for waste management, energy and seismic rehabilitation, renewable energies and energy efficiency.

One chapter of general interest is also the one on digital transformation, where the realization of the government cloud and the introduction of interconnected digital systems in the administration are clearly specified.

All the other allocations depend on the NRRP

The 2021-2027 structural funds will be open for projects that cannot qualify for the NRRP list. The list of the projects to be financed by the Modernization Fund will also be finalized after the NRRP be completed. The Ministry of Energy has the list of primary and secondary legislation drafts needed for the Modernization Fund, which can reach around 7 billion euros by 2027, said Niculae Havrileț, State Secretary in the Ministry of Energy, at the conference “Decarbonization: How fast? Where to?”, organized by Energynomics on 9 March.

“At present, the Ministry of Energy, together with the Ministry of European Funds, in a program supported by the EIB, is drafting three important elements for implementation in the framework of the investments that will be ready in a few months. We need to transpose the European Directive 401, establish a financing guide and an aid scheme. These elements are in work, together with specialists from the Ministry of Investment and European Funds, but also with specialists from NGOs specialized in renewable electricity production”, said Havrileț.

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