In the current planning period, Latvia will have successfully used the finances allocated by the European funds – EUR 4.53 billion. This is thanks to previously employed risk assessment measures and the government’s decision to allocate additional state budget funds for the realization of reserve projects, as reported by Finance Ministry.
31 December 2015 marked the end of the 2007-2013 EU fund planning period. 31 March 2016, on the other hand, was the last day when institutions could submit payment documents about realized EU fund projects to the State Treasury.
At the same time, risks exist that could potentially affect justifications behind expenditures submitted to the European Commission. For example, in addition to the submission of documents to the EC, it is also necessary to carry out audits of expenditures. There are also multiple unfinished projects whose completion terms have been extended. According to information compiled by Finance Ministry, additional reserve or compensating projects are at 5%. The ministry predicts risk aversion tools are sufficient for making sure Latvia does not lose EU financing.
Most of the failed or incomplete projects (19) are planned to be finished in 2016; others will be completed one by one in 2017, 2018 and 2019 using guidelines provided by EC. As previously stated by FM – the primary and financially significant projects that are at risk of delays are the development of Krievu Island infrastructure and the cleanup of tar ponds in Incukalns. Those are the large projects approved by EC.
Krievu Island project was considered a high-risk project from the very beginning. There have been many complications during its realization, including construction service procurement delays and changes added to technical solutions. One positive aspect of this project is that it will be possible to relocate coal handling operations, which is the main source of environmental pollution, to the new terminal on Krievu Island. Unfortunately, it will not be possible to relocate bulk cargo handling operations. This is why it was not possible to realize the project’s main goal in 2015 – establish modern infrastructure on Krievu Island, help restore Riga’s historic and cultural centre for future cityscape development, prevent environmental degradation and maintain the port’s competitiveness.
It is currently planned to finish the project by the end of 2018. The EC was informed of the situation and possible solutions in 2015. The project’s executor plans to secure the project’s realization by relieving Andrej Port and Eksport Port’s territory in according to Riga City Council’s approved territorial plan for 2018-2030.
In regards to the cleanup of Incukalns tar ponds, authorities have reached an agreement in regards to the division of the project into stages. The project is planned to be finished within the 2014-2020 planning period. Right now, Latvia is waiting for an official decision from the EC in regards to the confirmation of changes in this project. Delays and complications in this project are related to the atypical chemical composition of tar and the terminated contract between the State Environmental Service and the construction company.
Finance Ministry believes one of the most significant factors why projects are not realized in time, aside from objective conditions, include insufficient management over the projects, lack of professionalism, proper planning and risk management. FM urges all potential and standing funding to be especially responsible and careful to make sure each project is successful and achieves its established goals.