Finding the funding
If you don’t ask, you don’t get and when it comes to funding, ports should be asking, urges Felicity Landon
How much red tape would you be prepared to untangle, how many hoops would you jump through, if the reward at the end was a cool few million Euros of help with a major investment project?
It seems some European ports are reluctant to get caught up in bureaucratic form-filling, or worrying about state aid implications, or sceptical about offers of financial support that might seem too good to be true … or, perhaps, they are simply unaware of what’s on offer.
The Connecting Europe Facility (CEF) finances projects which fill in the ‘missing links’ in Europe’s transport, energy and digital network – and there’s a total of €26.2bn available over the next seven years. “Eligibility for funding at a port could be up to 40% [of the total cost] if a project was addressing a specific bottleneck and/or accessibility to infrastructure around hinterland connections,” says Jonathan Millins, who heads up the East of England’s European office in Brussels. “Within that total, €11.3bn has been ring-fenced for projects in member states eligible for the Cohesion Fund [those whose Gross National Income per inhabitant is less than 90% of the EU average], and these countries could have up to 80% funding for a project.”
The Motorways of the Sea project continues under the auspices of CEF, although Mr Millins points out that the emphasis on connectivity within Europe could be a sticking point for some deepsea ports looking for funding, as MoS eligibility is usually based on projects involving two or more European partners.
Ports seeking CEF funding are required to make their application through the national ministry of transport, but there’s another funding pot with a more direct route – Horizon 2020, flagged up as the biggest EU research and innovation programme ever, with nearly €80bn of funding available over seven years (2014-2020).
Formerly the Framework Seven (FP7) programme, Horizon 2020 remains focused on excellence in science but there’s a new emphasis on taking things to market and on innovation in all sectors, says Mr Millins. “So where a port is unlikely to be a lead partner in a €20m Horizon 2020 research project, it could be the test bed or deployment area for something new and innovative. And applications for Horizon 2020 can be made direct.”
Brian Simpson, former MEP and chairman of the EC’s Transport and Tourism Committee, was appointed the European co-ordinator for Motorways of the Sea last year, and one of his roles is to get more ports and their partners involved.
“Within MoS, we have just under €1bn to spend over the next three years on port, maritime and hinterland investment – it isn’t chicken feed,” he says. “This is a great opportunity for ports. Sometimes the funding can go towards a project the port was already looking at – and we can contribute up to 40%.”
There is a lack of awareness of what’s on offer, he says, and he highlights a particular reluctance among British ports, where he believes there are concerns about state aid implications in a largely privatised sector. UK ports need to take a more ‘European’ view and think strategically outside their boxes, says Mr Simpson. “It won’t be state aid, because in MoS you are dealing with other countries.”
There are three priorities within MoS – developing and enabling the use of alternative fuels, such as LNG; the transport and logistics chain, including reducing paperwork involved in transporting goods by sea; and the human element, including training port employees and seafarers.
Where are ports best at taking up European funding opportunities? Brian Simpson says Scandinavia and all around the Baltic Sea, particularly in the drive to use alternative fuels. Ports in Germany and, to a lesser extent, the Mediterranean, have also been more proactive.
For ports looking to secure funding, he advises: “First, get another partner in the project – the more partners involved, the better. Second, it is about fixing what you want to do in line with our priorities. More often than not in Europe, ports will focus on their priorities, not ours, and that is what makes it [an application] fail. They should make sure their project fits our priorities, and then the world is their oyster.”
He admits that there is a lot of paperwork involved – ‘and I wish there was less of it’ – but adds: “It is public money and we have to account for it and it has to be right.”
And there are opportunities for MoS funding for projects going beyond Europe’s borders. “For example, Israel wants to be involved. It is better and more cost-effective to send oranges by ship to Venice and transport them by rail the rest of the way – but we have to make sure the cargo gets to Venice and that the rail across Italy is suitable. Morocco is another example. We see it as MoS linking in our TEN-T network with Africa’s development of their infrastructure – for example, high-speed rail in Morocco.”
European funding consultant Richard Morton, managing director of Jura Associates, says: “There is this general feeling that there are lots of ‘eurocrats’ but actually INEA [the Innovations and Networks Executive Agency, successor to the TEN-T EA] is not there to trip you up and not there to not give you funding. They are there to help you make the best of what is available.
“However, nobody just hands over money. You have to have a project that’s linked to the strategies within Europe and you have to be able to justify it.”
Helsingborg, Sweden’s second largest container port, is one of seven port partners in the ‘LNG in Baltic Sea Ports’ project, financed by the Motorways of the Sea programme. Each of the partners is planning port infrastructure to offer LNG bunkering.
“We have completed a pre-study for an LNG plant in Helsingborg, funded by Europe, and now we are going to send in an application for financial aid to start construction of the plant, for marine and also for serving trucks,” says Per Olof Jansson, who retired as the port’s former chief executive and is leading the LNG in Baltic Sea Ports project.
Phases 1 and 2 of the project received 50% funding from Europe – now Helsingborg is looking for funding towards the €20m initial investment in the plant. “We hope to have a positive answer to our application in September/October, and then start work so we could have the plant ready in 2017,” says Mr Jansson.
Applying for European funding does involve a lot of work, he agrees. “But we have used a consultant to help us fill in the forms, describe the project and complete the documents. Yes, some ports think it is too much bureaucracy to get this money so they might be a bit reluctant, but we think that when you have done it once it is easier to take on the next time – and we are on the third time. And if you can get 30% or 40%, that is a substantial amount of money. We might initiate other projects in the future – who knows?”
Financial support on a global level
On a global basis, the World Bank Group plays an important role in supporting port and related infrastructure investments, particularly in developing regions.
That support includes technical advice and assistance as well as the actual lending, says Reynaldo Bench, the World Bank’s waterborne transport and ports specialist, based in Washington. The obvious advantage for projects in the poorest countries can be very good credit terms where mainstream bank lending simply wouldn’t be available – and sometimes a grant, too. However, Mr Bench says: “The criteria for the World Bank to lend money follow the same due diligence as any bank. While developing countries are normally our area of focus, the World Bank would not finance anything that is totally unviable.”
All projects go through a long and detailed review process before they are submitted to the board of directors for approval, he says. “And if the project involved some disputed area, for example, that would be picked up at that stage. A project would not be submitted for approval if it didn’t reach the basic criteria.”
Interestingly, he says the situation in the capital markets means that the attractiveness of the World Bank has shifted for many, from financial advantages to the technical knowledge it offers. “Many middle income countries come to us for our knowledge and global expertise, not just for money, because for these countries more capital is available.”
Among the headline port-related development projects being driven by the World Bank is the Abidjan-Lagos Trade and Transport Facilitation project, to reduce trade and transport barriers across West Africa through port and road improvements. Another is the Intermodal and Rail Development Project for Tanzania, a project with four components to deliver reliable open access infrastructure on the Dar es Salaam to Isaka rail segment.
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