Due to strict criteria, Croatian Railways will have to pay 63 million kuna more than planned.
The Central Finance and Contracting Agency for EU programmes and projects (SAFU) has found irregularities in the implementation of projects for the construction of railway lines Dugo Selo-Križevci and Gradec-Sv. Ivan Žabno, and has therefore issued a decision on financial correction, which in effect means a reduction in the amount of financing from EU sources. This has caused consternation in the Ministry of Transport, which is in charge of the projects, reports Jutarnji List on December 8, 2017.
According to the decision, the co-financing of the Dugo Selo-Križevci railway line has been reduced by as much as 5%, and the Croatian Railways (HŽ) will have to pay 62 million kuna more than planned. The Gradec-Sv. Ivan Žabno project has been hit with a 0.41 percent correction, so the difference in funding is slightly less than 800,000 kuna.
These two decisions by the SAFU have caused enormous dissatisfaction and consternation at HŽ and the Ministry of Transport, which is ultimately responsible for the projects. The Ministry has officially informed the SAFU that it did not agree with its decisions.
Informed sources say that this could be just the beginning of cuts in co-financing of projects by the state agency. The SAFU staff have already started checking EU-funded projects managed by public companies Croatian Roads, Croatian Railways and Croatian Waters, and they apply criteria which is far more stringent than those prescribed by the European Commission. Therefore, there is a high risk that the government agency could transfer a significant part of the construction costs of various projects to the state budget. Also, as opposed to the European Commission's auditors, they refuse to negotiate about the correction percentage.
“This is unbelievable. Imagine if there was a five or ten percent correction on the Pelješac Bridge project, which is worth more than two billion kunas. We are shooting ourselves in the leg. The European Commission gives us grants, and then our own agency takes some of these funds for unknown reasons and transfers costs to the state budget,” said an informed source.
According to unofficial information, the auditors are currently looking into documentation for projects of Dubrovnik Airport, the Vodice bypass road and the construction of the road entrance to Ploče.
The problems started earlier this year when the government gave to the Ministry of Regional Development and EU Funds a supervisory role for the implementation of projects co-financed by the EU funds. The Ministry of Regional Development adopted the common national rules, which determine the correction rates. The guidelines set out four possible main correction rates, of 5, 10, 25 or 100 percent.
In addition to applying stricter guidelines than those prescribed by the European Commission, the SAFU staff review almost all items of projects in question to determine if everything is in line with the public procurement rules. On the other hand, the auditors from the European Commission used to randomly select and control about 10 percent of the total project cost.
The Ministry of Regional Development and EU Funds has declined to comment on the issue.
If the current practice continues, all significant projects which are funded by the European Union could eventually in large part be paid from the state budget instead.
Translated from Jutarnji List.
