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JASPERS in the Environment, Energy and Municipal Sectors Cost – Benefit Analysis. Prague, 28 th November 2007. Components and Key Issues of CBA. Purpose of Cost Benefit Analysis Identify sustainability and viability issues; Optimise scope of the project and its individual components;

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JASPERS in the Environment, Energy and Municipal Sectors

Cost – Benefit Analysis

Prague, 28th November 2007

components and key issues of cba
Components and Key Issues of CBA
  • Purpose of Cost Benefit Analysis
    • Identify sustainability and viability issues;
    • Optimise scope of the project and its individual components;
    • To determine level of support realisable from EU Cohesion Fund;
  • Methodology requirements and Jaspers involvement
    • Outlined in Working Document 4 with some changes made to previous guidelines;
    • Advice on interpretation of guidelines;
    • Review and assistance in the preparation of cost – benefit analysis
type of past jaspers involvement
Type of Past JaspersInvolvement
  • Methodology Queries
    • Preparation of CBA guidelines in Romania and Bulgaria;
    • Update of guidelines in Poland;
    • Methodology guidelines for demand and risk assessment in Slovakia;
    • Questions concerning interpretation of guidelines
  • Preparation of CBA
    • Support in ensuring most appropriate option is selected;
    • Review and advice on optimisation of EU grant contribution and calculation of the contribution;
    • Advice on wider affordability and sustainability issues and methods to improve project sustainability;
key issues lower sustainability
Key Issues : Lower Sustainability
  • EU compliance requirements
    • Wastewater : services to populations above 2,000;
    • Wastewater : higher degree of treatment and sludge management issues;
    • Solid waste : landfill rehabilitation and diversion requirements;
    • Energy : focus of carbon reduction and efficiency
  • Issues
    • Higher costs of the project with impact on affordability;
    • Changes in the methodology in particular the calculation of the EU grant element;
    • Less tangible benefits reducing economic benefits;
key issues reduced funding gap
Key Issues : Reduced Funding Gap
  • Change in methodology with inclusion of maximum co-funding rate fixed for the priority axis
    • EU Grant = Decision Amount * Maximum Co-Funding Rate
    • The inclusion of Maximum rate reduces the funding amount, but project scope means that greater financial sustainability issues should arise;
  • Project options to overcome issues
    • Ensuring optimum calculation of incremental revenue with complexities associated with common tariff levels;
    • Establishing adequate basis for calculation of incremental operating costs
    • Ensuring cost eligibility;
    • Identification and optimisation of additional sources of finance to support EU grant;
concluding remarks
Concluding Remarks
  • CBA is central to the feasibility study and application process
    • Assists in optimising the project
    • Provides the basis for determining level of EU financing support;
  • Projects are excepted to be less sustainable
    • Higher cost projects owing to development status and EU compliance needs;
    • Change in methodologies mean that lower EU financial support can be expected;
  • Jaspers assistance;
    • To improve project financial, cost and economic sustainability;
    • Ensure that best practices are applied in project evaluation and comply with EU evaluation needs;
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